According to a scholar, China’s economy is on a path to stagnation, with Beijing unwilling to intervene.

Anne Stevenson-Yang, co-founder of J Capital Research and author of “Wild Ride: A Short History of the Opening and Closing of the Chinese Economy,” provides a critical analysis of China’s current economic trajectory. She contends that China’s leadership is banking on a surge in exports to revitalize its flagging economy but argues that this strategy is fundamentally flawed. Stevenson-Yang attributes China’s economic malaise to a combination of factors, including inconsistent policies, excessive control exerted by the Communist Party, and unfulfilled promises of reform.

 

According to Stevenson-Yang, China’s heavy reliance on exports as a means of economic revival could intensify tensions with its trading partners. The influx of inexpensive goods flooding global markets may exacerbate existing trade disputes and provoke retaliatory measures, potentially deepening the economic gloom within China. She suggests that such circumstances might prompt the government to adopt even more repressive measures to maintain stability, further stifling dissent and constraining individual freedoms.

 

Identifying the root cause of China’s economic challenges, Stevenson-Yang highlights the Communist Party’s tight grip on power as a significant barrier to meaningful reform. Despite calls from economists to loosen control over the private sector and stimulate domestic consumption, Stevenson-Yang believes that the Chinese government is reluctant to pursue such measures, fearing a loss of political control. She points to missed opportunities for liberalization, such as the Tiananmen Square protests of 1989, which instead led to a consolidation of party authority and increased state intervention in the economy.

 

Critiquing Beijing’s approach to economic development, Stevenson-Yang argues against the expansion of industrial capacity as a solution to China’s economic woes. She suggests that this strategy is counterproductive and fails to address underlying structural issues, such as the lack of innovation and overreliance on replicating existing technologies. Despite efforts to stimulate growth through infrastructure investment and export-oriented policies, China’s economy continues to face challenges, including mounting debt and underutilized resources.

Looking ahead, Stevenson-Yang warns that President Xi Jinping’s policy options are dwindling as Chinese consumers remain cautious with their spending and trade partners enact barriers to Chinese exports. Moreover, she asserts that China’s economic model, which prioritizes quantity over quality and replication over innovation, is unsustainable in the long term. While some experts predict a “lost decade” for China characterized by sluggish growth and escalating tensions, others, like Nicholas Lardy, maintain a more optimistic outlook, forecasting continued economic expansion for the country.

 

In conclusion, Stevenson-Yang suggests that the era of reform and opening in China, which began in the late 1970s, is quietly drawing to a close. Despite the remarkable economic transformation witnessed during this period, she argues that China’s current trajectory reflects a return to a “siege mentality,” characterized by heightened state control and a reluctance to embrace meaningful reform. As China grapples with its economic challenges, the implications extend beyond its borders, shaping global trade dynamics and geopolitical relations in the years to come.