Dean Baker
Sometimes things are in fact more complicated than they seem, but sometimes they actually are much simpler. The story of China’s weak economy falls into the latter category.
Insofar as the world’s largest economy (that’s China folks) is suffering from economic problems right now it is primarily a story of inadequate demand. This means that it is capable of producing far more than households and businesses in China are buying. That is why they are looking to export so much to the rest of the world.
Like most economists, I think China can best remedy this situation by increasing domestic demand. This is in fact not hard to do if the government wants to. To my mind, they would be best off spending money improving their Social Security and health care systems, bringing both up to rich country standards. That would make a huge difference in the lives of hundreds of millions of Chinese.
But there are other ways to increase demand. As I’ve written before, they could send out $2,000 checks to every person in China. And if President Xi has a sense of humor, he could put Donald Trump’s name on them.
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