John Rapley
China’s economy has become something of a Rorschach test. The 5% growth target for 2024 that Xi Jinping yesterday said the country had met? One set of economists looks at it and says the economy is collapsing, the figures are probably fudged, and that a recession is likely to begin this year anyhow. The other side says the government is probably right, and that while Beijing’s economy is slowing, these problems may be overcome in 2025. They can’t both be right, even if they both have a point. But the camp to which you belong to appears to be determined by where you sit.
Western analysts, using aggregate data and a liberal interpretative lens, tend to see China’s economy as beset with insurmountable structural obstacles embedded in Communist Party rule. Because the leadership is reluctant to give more political power to the people as their incomes rise, the CCP persists with an industrial development model based on repressing wages to boost investment in export-manufacturing industries. Unable as a result to break out of the middle-income trap, which would require shifting towards an economy based on domestic consumption, the regime has consequently left itself vulnerable to the coming wave of Donald Trump’s tariffs. Then, the thinking goes, the economy may enter a real crisis.
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