The writer is a senior fellow at Yale Law School and author of ‘Accidental Conflict: America, China, and the Clash of False Narratives’
Will the real Chinese economy please stand up? As China struggles to regain growth momentum, there is great confusion over the diagnosis of the problem. This matters a great deal as Chinese authorities are now rolling out a raft of efforts to jump start the world’s second-largest economy. Yet without the correct diagnosis, hopes of a cure may be dashed.
Some focus on China’s debt-intensive structural imbalances. There are those, including myself, who see the Japanisation parallels of a balance-sheet recession, with depressed asset values overwhelmed by excess liabilities. Others take a political economy perspective, seeing China facing the classic impasse of autocracy. While each of these explanations rings partly true, the match is hardly perfect. The modern Chinese economy is a blended system — one that reflects bits of all these depictions.