The rise and decline of the China economy

 Seattle Times:

Since Deng Xiaoping opened China to the West in the 1980s and instituted a free-market economy, the country experienced a stratospheric rise.

Under Deng and his successors, gross domestic product rose at high rates for four decades as millions of Chinese were lifted out of poverty. China became the world’s workshop as Western capital, technology and corporations flooded in.

By 2010, China became the world’s second-largest economy after the United States.

Xi set a goal of doubling the nation’s economy by 2035, surpassing America.

But it is apparently not to be.

China suffers from a mountain of debt. Empty apartment towers proliferate amid an enormous real estate bubble. For example, the meltdown of Country Garden, one of China’s largest builders, has rippled to affect workers and small businesses.

With deflation setting in, Xi’s goal of turning the country into a consumer-driven economy is out of reach. So is his ambition to expand homegrown advanced technology to lessen the country’s dependence on the West.

Growth has collapsed from the 8% or so of many years to 3% now. Consumer confidence fell to its lowest level in decades this year, and urban youth unemployment is high.

From a demographic standpoint, China’s population is aging quickly, especially its working-age cohort, partly a consequence of its misbegotten one-child policy.

Meanwhile, the unspoken compact between the Communist Party and the population — you let us keep political power and we’ll let you get rich, rise to the middle class — is fraying.

“One of China’s biggest success stories, building a strong middle class, is also becoming its biggest vulnerability,” Max Zenglein, chief economist at MERICS, a China studies institute, told Reuters. “If you look at it from the perspective of a younger person, you are now at risk of being the first post-reform generation whose economic well-being might hit a wall. If the message is tighten up your belts and roll up your sleeves, that’s going to be kind of a hard sell.”

Xi has done himself no favors by continuing China’s policies of intellectual-property theft, subsidizing state-owned companies, requiring technology transfer from Western companies seeking to do business in the People’s Republic and raiding offices of Western corporations under the pretext of seeking spies.

No wonder U.S. Commerce Secretary Gina Raimondo warned during a visit to Beijing this past month that American companies are concluding that China is “uninvestable.”
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It should not be too surprising that communists are not very good at capitalism.  They are also learning that population control has its downsides.  It is a poorly run country that is trying to manage an economy without free enterprise.