Home » China’s economy is heading for a lost decade, says economist

China’s economy is heading for a lost decade, says economist

by admin
China’s economy is heading for a lost decade, says economist

China President Xi Jinping, who was re-elected to a third term on March 10.
NOEL CELIS/AFP via Getty Images

China’s economy is struggling and likely heading for a lost decade, like Japan.

So says former IMF official Desmond Lachman, who says China may no longer be the world‘s growth engine.

But a lost decade also means that “we no longer have to worry about China eating our economic lunch”.

We’re currently testing machine translations of articles by our US colleagues at Insider. This article was automatically translated and checked by a real editor. We welcome feedback at the end of the article.

China’s economy is likely heading for a so-called lost decade, similar to Japan’s slump three decades ago, according to a former International Monetary Fund official.

After a strong rebound earlier this year, pointing to the end of last year’s COVID restrictions more recent indicators of faltering growth hin.

In an opinion piece in Barron’s Desmond Lachman, a former IMF official, attributed this largely to the bursting of property and credit bubbles in China, noting that Japan experienced a similar bubble in the 1990s.

“The days when China, the world‘s second largest economy, acted as the main growth engine of the global economy and the main driver of international commodity prices may now be coming to an end,” he wrote.

Foreign investors are also withdrawing from China

Concerns about the Chinese economy have rocked markets in recent months, and other experts have warned that the Narrative of reopening through zero tariffs is not what it seems. Foreign investors are also increasingly withdrawing from the Chinese markets return.

See also  The CEO Bastianini to the Banking Commission: "In the new MPS plan 4 thousand redundancies are possible"

Lachman, now a senior fellow at the American Enterprise Institute, said China’s failure to sustain a robust recovery shouldn’t come as a surprise. Property prices have fallen for 12 straight months while local governments are struggling to pay off their debts as land sales have stalled.

While China is unlikely to experience a post-2000s U.S. housing boom bust, the Chinese government’s efforts to shore up its own housing market and weak local governments mean there isn’t much credit for healthier parts will give to the economy, he said.

read too


“One silver lining to a likely lost Chinese economic decade is that we no longer have to worry about China eating our economic luncheon,” Lachman added, “as we did with the supposed Japanese economic miracle of the 1980s, we will find that the Chinese economy stands on feet of clay.”

Another silver lining is that a slower economy will lower commodity prices and Chinese exports, leading to some inflation relief, according to Lachman: “That could allow the Federal Reserve to abandon its newfound monetary religion.”

Read the original article in English here.

You may also like

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Privacy & Cookies Policy