Accessed Oct. 12, 2020. Should Beijing feel compelled to use force to break the stalemate, for example by imposing martial law and arresting thousands of protesters, Hong Kong will turn into a de facto police state. In 2019, growth totaled $22.5 trillion, the largest in the world. That's roughly 8% more than in 2018. The public has protested pollution, food safety, and inflation. The Balance uses cookies to provide you with a great user experience. But this proves difficult in a political system where there’s only one political party and where all officials are pressed to declare loyalty to Xi. Companies will try to sell to this market, the largest in the world, and tailor their products to Chinese tastes. For decades, it appeared as though the Chinese economy operated by a different set of rules while Chinese regulators were gifted with powers lacking in developed economies. From a massive system of detention and surveillance in Xinjiang to the obliteration of the country’s once robust intellectual discourse, Xi and his allies have moved to tighten Chinese Communist Party (CCP) control over nearly all aspects of economic, political, and social life. It is quickly becoming a world leader in developing 5G technology. While this experience does not rule out the possibility of a more fundamental directional shift toward political pluralism and a rights-based approach to social rule, it seems a wishful hope at best. China’s Leninist state will continue the corrupt or otherwise inefficient allocation of resources, making robust economic growth even more elusive than it already is. China’s recently announced economic indicators for January and February were much weaker than market watchers had forecast. By managing its exchange rate, China can take advantage of this disparity. Australian National University. Accessed Oct. 12, 2020. Accessed Oct. 12, 2020. International Trade Administration U.S. Department of Commerce. That keeps domestic demand low and slows growth. To that end, President Xi Jinping authorized the “Made in China 2025” plan. In 2017, almost 60% of the population lived in urban areas. The future of U.S.-China economic ties David Dollar Tuesday, October 4, 2016. Health Care Costs Will Continue to Increase. Kimberly Amadeo has 20 years of experience in economic analysis and business strategy. Trump, Xi, and the economy: The future of US-China economic competition Tue, Jun 9, 2020 3:30 PM ONLINE EVENT – A discussion on the rapidly shifting economic outlook for US-China strategic competition. China's leaders realize they must reform the economy, How Chinese Companies Facilitate Technology Transfer From the United States, Field Listing: Population Below Poverty Line. "Population Total - China." 5 Bad Things in China’s Future (and 3 Good Ones) "Which 7 Countries Hold Half the World’s Population?" U.S.-China Economic and Security Review Commission. Here is China's growth rate by year, showing how it has slowed since the 10.6% growth in 2010. Accessed Oct. 12, 2020. Nomura estimates China's economy will grow by only 1% in 2020, causing millions of job losses. It can achieve this because China's cost of living is lower than the developed world. China’s government is facing the necessity of instituting delicate economic reforms. Interest rates have been low, so families don't receive much return on their savings. “Urban Population (% of Total Population) – China.” Accessed Oct. 12, 2020. Most discussions of his favorability devolve into anecdotes and crass assumptions in place of the data we have on most other countries around the world. China's economy is measured by its gross domestic product. Massive government spending has stoked China’s unprecedented growth over the last 30 years. These factors are now considerably slowing growth. Beijing Turns Hong Kong Into a Police State. China is also staring at a significant demographic crunch in a few years’ time, with both a shrinking workforce and a rapidly aging population, creating a potential fiscal nightmare. So, the nation relies heavily on exports. View a high-resolution version of this graphic here. As a result, families are forced to save. "Section 2: State-Owned Enterprises, Overcapacity, and China's Market Economy Status," Page 93. Government ownership allowed China to direct the companies to high-priority projects. And while the word “totalitarian” overstates the capabilities of the CCP, Xi certainly aspires to that end. This could cause another revolution. "IIF Weekly Insight Surging Global Debt: What’s Owed to China?" 5 Bad Things in China’s Future (and 3 Good... Nearly seven years into the Xi Jinping administration, China is facing arguably the most restrictive domestic political environment since the aftermath of the June 4 crackdown 30 years earlier. It also created a class of ultra-rich professionals who want more individual liberties. Opinion | China’s economic future is not as bright as it was till recently 4 min read. Young Americans are taught about President George Washington relinquishing power and returning to his farm precisely because the act of abdication is so rare. There still a lot of downward pressure on the economy next year. Government spending created a total debt-to-GDP ratio of 317% as of the first quarter of 2020, the highest on record. This includes debt held by the government, corporations, and consumers. Below are likely signs of a distinct change in the status quo, either signaling an intensification of political control or indicating that the pendulum is swinging back toward political and economic liberalization and reform. China, though vast, has a relatively constrained arable land mass, and will in the future have to import more food as well as try to buy land or crop facilities in other countries. Argument: FACEBOOK TWITTER … In 2019 China will have to tackle not just a slowing economy, but also a protracted trade war with the US. "19. It is also the world's fastest-growing consumer market and second-largest importer of goods. China is classified as a newly industrialized economy. If he remains in power past this date, not only would this signal an extraordinary level of political authority, but it would also signal that China’s trajectory would remain oriented toward Xi’s particular form of CCP domination. Threats, violence, and clampdowns have failed. China's Economic Growth, Its Causes, Pros, Cons, and Future, Why China's Stock Market Is Like a Casino, How a Slowdown of China’s Economy Affects You, The Surprising Ways China Affects the U.S. Economy, China's Plan to Replace the U.S. Dollar with the Yuan, Why You Should Care About the Nation's Debt, The Real Reason American Jobs Are Going to China, The Decline of the Dollar vs Collapse and How to Protect Yourself, Top 10 Economic Predictions for the Next Decade, How a Tiny Change in the Yuan Can Panic Investors. While the record of analysts in predicting such paradigmatic changes is abysmal—thanks as much to authoritarian opacity as to our own epistemic shortcomings—imagining possible futures is critical to how the rest of the world deals with China. Xi’s opponents might accelerate this process, not by initially challenging him, but instead by slowly grinding the government to a halt through inaction and foot-dragging. 4. "Steel Exports Report: China." China has become a world leader in solar technology. On the other hand, as growth slows, the standard of living may fall. Why Biden could lose the left, the peril of persuasion in the Big Tech age, and old rivals join forces in Kashmir. Despite the heroic efforts of some statisticians and social scientists, what the Chinese people think on a range of important policy and political questions remains a fundamental mystery. The Chinese government's spending has been a significant driver of its growth. China fueled its former spectacular growth with massive government spending. Institute of International Finance. China recently installed the Connect program between the mainland exchanges and the Hong Kong stock market. China's economic slowdown keeps getting worse. After years of tightening, the country may be due a reprise—or things could get much, much worse. Chinese companies use this knowledge to make the products themselves.. Jan 06 , 2017. print. As well as the obvious issues of speaking up in an authoritarian state, there is also the issue of “preference falsification,” wherein people misrepresent what they actually think due to social pressure. China's growth has reduced poverty. They must reform to remove asset bubbles. “Field Listing: Population Below Poverty Line.” Accessed Oct. 12, 2020. As the economist Nicholas Lardy writes in his recent book, The State Strikes Back: The End of Economic Reform in China?, since 2012, “private, market-driven growth has given way to a resurgence of the role of the state in resource allocation, and a shrinking role for the market and private firms.” Today, facing a slowing economy and struggling with both deleveraging its debt-bloated system and dealing with the ongoing trade war with the United States, the Xi administration is again wrestling with the question of how large of a stimulus package it should deploy. China's leaders realize they must reform the economy. Such can kicking, however, merely “sharpens the contradictions” (to borrow from Karl Marx), thus making the underlying disputes more complex and seemingly intractable. It’s captured in his reprisal of an old Mao Zedong quote, “Party, government, military, civilian, and academic; east, west, south, north, and center, the party leads everything.” This CCP-centric conception of Chinese modernity now imbues the country’s political culture, leaving little to no room for nonparty individuals or organizations to claim a leading role in the story of China’s rise. Banks are state-funded and owned. National health care expenditures will increase by 5.4% … 5. China is also staring at … U.S.- China trade tensions have continued to play out over the course of 2019. When China … The Rise and Future of China as an Economic Power As the People's Republic of China turns 70, its leader focuses on hyper-growth. Indeed, as the deposed former security czar Zhou Yongkang said in a 2010 speech, maintaining China’s internal stability is “extremely onerous.” China’s accumulating debt levels (now over 300 percent of GDP) will be increasingly difficult to service as its economy continues to slow. 1  That's roughly 8% more than in 2018. For three straight summers, rumors have persisted that President Xi Jinping is facing rising internal dissent that threatens his ability to remain in power. A conventional view is that by, say, 2040, China’s economy will be far bigger than that of the US, with India far smaller still. State-Owned Enterprise Reform in China: Past, Present and Prospects. China Economic Forecast 2020 2021 China’s once robust economic machine which doubled its size in the past decade, is facing severe headwinds as we pass through mid 2020. The Communist Party calls 1949 a liberation. What’s clear, however, is that Beijing believes it has no good options, hence the extraordinary delay by Xi and the party leadership since protests broke out in June. This means that even the much-vaunted Beijing cab driver, the source of all wisdom, may not be giving analysts a clear picture. Its domestic consumer demand is low. Mao likewise objected to the early signs of a leadership cult but later warmed to it as he glimpsed its effectiveness as a political weapon. Tweet. Central Intelligence Agency. State-Owned Enterprise Reform in China: Past, Present and Prospects," Page 350. And if a political system acts as if there is a cult of personality even if there isn’t a shred of sincerity, the byproduct is nonetheless a policy environment that careens toward hypersensitive political correctness and a stifled intellectual climate. This shouldn’t come as a surprise, for it is the natural tendency of all political leaders. Urban housing prices have skyrocketed as low-interest rates fueled speculation. That allows companies to rely less on debt, and more on selling stocks, to fund growth. Accessed Oct. 12, 2020. 5 Bad Things in China’s Future (and 3 Good Ones). Currently, China is the world's largest manufacturing economy and exporter of goods. … RUSSIA AS WE KNOW IT ‘WON’T EXIST’ The next decade will see Russia “seeking to secure itself” … China’s $14tn economy is second only to the US; Standard Chartered reckons that on the basis of purchasing power parity, China will take the number one slot as early as next year. China’s accumulating debt levels (now over 300 percent of GDP) will be increasingly difficult to service as its economy continues to slow. Accessed Oct. 12, 2020. Syndicated Columnist George Will joins 'The Exchange' to discuss China's economic future amid the U.S.-China trade talks. Here is China's growth rate by year, showing how it has slowed since the 10.6% growth in 2010. That being said, several more years of inept governance by the current administration could provoke a leadership challenge premised on his misrule of the economy. U.S.-China Economic and Security Review Commission. It is cutting back on exports, including steel and coal production. Is China Guilty of Currency Manipulation? Sustainably restoring China’s productive capacity in the coming weeks would require an unlikely revival of U.S. demand. What’s certain, though, is that the CCP spends a significant amount of time and resources attempting to subvert, subdue, and sabotage the ability of Chinese citizens to freely express their opinions and to organize around them. World Bank. ... One practical issue at the moment concerns China’s status as a nonmarket economy. China would like to be competitive with developed manufacturing economies in 2035. They pay low-interest rates on deposits so they can lend cheaply to state-owned businesses. Updated: 14 Oct 2019, 11:04 PM IST V. Anantha Nageswaran. By using The Balance, you accept our. Prediction 3: Great downward pressure on China’s economy . President Donald Trump arrives at a moment when China, not the U.S., is the single most powerful actor in the global economy … But China was far freer beforehand. One way to boost wealth is by encouraging investment in China's stock market. 2. State-owned companies make up 25% to 30% of total industrial output, down from 78% in 1978. But China must do even better. Jenna Ross at Visual Capitalist describes how the effects on their economy could foreshadow what the rest of the world can expect. She writes about the U.S. Economy for The Balance. They want to prevent the possibility of another people’s revolution should a pervasive economic downshift occur. While the prospect of Xi Jinping being removed from office is slim, it is not, strictly speaking, impossible. And as has been pointed out repeatedly, including by the occasional senior party leader, enduring political reform requires changes to China’s political system, including allowing more space for civil society and fewer political constraints for the country’s regulators. Accessed Oct. 12, 2020. The government owns strategically important companies that dominate their industries. The World Bank. It controls the big three energy companies: PetroChina, Sinopec, and the China National Offshore Oil Corporation (CNOOC). Huawei is the world's top telecommunications-equipment maker. Yet the intention to remain in power is distinct from the ability to do so, and the real test of Xi’s control over the political system will come in 2022 at the 20th Party Congress, when, according to a norm that previously held since 2002, he would step down from his leadership of the party after two five-year terms. The World Factbook. The People's Bank of China, the nation's central bank, tightly controls the yuan to dollar value. An image of Chinese President Xi Jinping is seen behind a statue of the late Communist leader Mao Zedong at a souvenir shop in Beijing on Feb. 27, 2018. As a result, they don't spend much. Can decriminalization work? Since the state owns many corporations, it must be included. In 2019, growth totaled $22.5 trillion, the largest in the world. Urban Population (% of Total Population) – China, Section 2: State-Owned Enterprises, Overcapacity, and China's Market Economy Status, 19. Unfortunately, the orientation of the CCP and recent political developments in China strongly suggest that the country’s trajectory will remain biased toward further tightening. It’s difficult for an autocrat to determine who’s truly loyal and who’s going along until the wind changes. On Friday, China said it wouldn't be setting a … Yet the economic damage to China is severe, and its prospects for recovery—even with massive financial support—remain uncertain. People have only been willing to turn over personal power to the state in return for rapid increases in personal wealth. As the CCP nears the 100th anniversary of its founding in 1921, with seven decades spent as the sole governing authority in China, analysts have fairly good idea of how the party operates and what it wants. In the 1980s, it was just 20%.. It’s reasonably likely that the CCP’s own estimation of popular support is fairly low, otherwise it would not create such difficulties for researchers looking to measure popular sentiment. Which 7 Countries Hold Half the World’s Population? From agrarian economy to global superpower in half a century—China’s transformation has been an economic success story unlike any other. Lenovo is a world-class maker of personal computers. Niu Li. 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