China’s Real Economic Crisis
For example, in 2021, the China Development Bank created a special loan program for scientific and technological innovation and basic research. By May 2024, the bank had distributed more than $38 billion worth of loans to support critical, cutting-edge sectors, such as semiconductors, clean energy technology, biotech, and pharmaceuticals.
Zongyuan Zoe Liu • China’s Real Economic Crisis
According to a March 2024 action plan, the Ministry of Commerce, together with other Chinese government agencies, has offered subsidies to consumers who trade in old automobiles, home appliances, and fixtures for new models. On paper, the plan loosely resembles the “cash for clunkers” program that Washington introduced during the 2008 recession to
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Another example is industrial robotics, which Beijing began prioritizing in 2015 as part of its Made in China 2025 strategy. At the time, there was a clear rationale for building a stronger domestic robotics industry: China had surpassed Japan to become the world’s largest buyer of industrial robots, accounting for about 20 percent of sales worldwi
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In August 2023, the U.S. Commerce Department found that Chinese PV producers were shipping products to Cambodia, Malaysia, Thailand, and Vietnam for minor processing procedures to avoid paying U.S. antidumping tariffs. China’s PV-production capacity, already double the global demand, is expected to grow by another 50 percent in 2025. This extreme o
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According to government statistics, 27 percent of Chinese automobile manufacturers were unprofitable in May; at one point last year, the figure reached 32 percent. Overproduction throughout the economy has also depressed prices generally, causing inflation to hover near zero and the debt service ratio for the private nonfinancial sector—the ratio o
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China's Rising Debt Service Ratio and Its Implications for Economic Stability: China's debt service ratio, which measures the proportion of income that households and businesses use to service their debt, has been increasing in recent years. This rise raises concerns about economic stability, as higher debt burdens can lead to reduced consumer spending and increased default risks. Consequently, policymakers are under pressure to implement measures that balance economic growth with sustainable debt levels to avoid potential financial crises.
In order to meet Beijing’s ambitious production targets, local officials tended to invest in mature technologies that could be scaled quickly. Today, China has a large excess capacity in low-end robotics yet still lacks sufficient capacity in high-end autonomous robotics that require indigenous intellectual property.
Zongyuan Zoe Liu • China’s Real Economic Crisis
China’s sixth five-year plan (1981–85) was the first to be instituted after Chinese leader Deng Xiaoping opened up the Chinese economy. Although the document ran to more than 100 pages, nearly all of it was devoted to developing China’s industrial sector, expanding international trade, and advancing technology; only a single page was given to the t
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Minimal Focus on Household Consumption in China's Five-Year Plans: China's Five-Year Plans have historically prioritized industrial growth and infrastructure development over household consumption. This approach aimed to rapidly transform the economy into a global manufacturing powerhouse, often at the expense of consumer spending. As a result, while China's economy grew significantly, the emphasis on boosting domestic consumption has only recently gained attention in policy discussions.
According to an investigation by The Wall Street Journal, in July, the total amount of off-the-book debts held by local governments across China now stands at between $7 trillion and $11 trillion, with as much as $800 billion at risk of default.
Zongyuan Zoe Liu • China’s Real Economic Crisis
China’s economic planners have failed to recognize that the real driving force of innovation is disruption. To truly foster this kind of creativity, entrepreneurs would need unfettered access to domestic capital markets and private capital, a situation that would undermine Beijing’s control of China’s business elites. Without the possibility of mar
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