In a recent NY Times column, Paul Krugman echoed other Western economists in predicting that the Chinese economy is in “serious trouble” and "is entering an era of stagnation and disappointment” in contrast to the US economy which has “vastly outperformed expectations.” According to Krugman, China under Xi has wrongly “stifled private initiative” and favoured “government-controlled investment” at the expense of mass consumption. "With consumers buying so little, at least relative to the Chinese economy’s productive capacity, how can the nation generate enough demand to keep that capacity in use? The main answer…has been to promote extremely high rates of investment, more than 40 percent of G.D.P. The trouble is that it’s hard to invest that much money without running into severely diminishing returns. "True, very high rates of investment may be sustainable if, like China in the early 2000s, you have a rapidly growing work force and high productivity growth as you catch up with Western economies. But China’s working-age population peaked around 2010 and has been declining ever since. While China has shown impressive technological capacity in some areas, its overall productivity also appears to be stagnating.” https://www.nytimes.com/2024/01/18/opinion/china-economy-xi.html?searchResultPosition=1 Roberts to the contrary again shows it has been China’s state-led productive investment over the past three decades which has led to unprecedented economic growth, rising wages, and consumer spending and “not vice-versa”, and that China’s out-performance over the US and its allies can be expected to continue if it continues along this path. “Western economists continue to argue that the Chinese economy is heading down the drain. I have rejected this familiar refrain on numerous occasions…not because I have unquestioning support for the so-called ‘Communist’ party regime – on the contrary. It is because the Western critique is not factually correct – and also because the aim of that critique is to trash the predominant role of China’s state sector and its ability to sustain investment and production. “The critique aims to distract attention from the reality that the Western capitalist economies (apart from the US it seems) are floundering in stagnation and near slump. “Indeed, the IMF reckons that China will grow by 4.6% this year, while the G7 capitalist economies will be lucky to manage 1.5%, with probably several going into outright recession. And if the IMF forecasts through to 2027 are accurate, the gap in growth will widen. “The U.S. Congressional Budget Office, which makes the official economic projections for the U.S. government policy making, projects that the U.S. economy will grow at 1.8% a year until 2033 and 1.4% year from then onwards. Even if the higher rate of annual growth was achieved the U.S. economy would only grow by 39% between 2020 and 2035 whereas China would grow by 100%. That is China’s growth would be more than two and half times as fast as the US.” https://thenextrecession.wordpress.com/2024/01/26/china-versus-the-us/
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