China’s Real Economic Crisis
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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For years, Beijing’s industrial policies have led to overinvestment in production facilities in sectors from raw materials to emerging technologies such as batteries and robots, often saddling Chinese cities and firms with huge debt burdens in the process.
Zongyuan Zoe Liu • China’s Real Economic Crisis
When Beijing’s economic planners do talk about consumption, they tend to do so in relation to industrial aims. In its brief discussion of the subject, the current five-year plan states that consumption should be steered specifically toward goods that align with Beijing’s industrial priorities: automobiles, electronics, digital products, and smart a
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Illusion of Consumer Choice in China's E-Commerce Landscape: The e-commerce landscape in China presents consumers with a vast array of products and services, creating an impression of abundant choice. However, this perception is often misleading, as a few large companies dominate the market, shaping consumer preferences and limiting true diversity. As a result, many consumers may unknowingly participate in a system that prioritizes the interests of these dominant players over genuine choice.
As the scholar Mary Gallagher has observed, Beijing has fanned the flames by using social campaigns such as “common prosperity”—a concept Chinese leader Mao Zedong first proposed in 1953 and that Xi revived at a party meeting in 2021—to spur local industrial development. These planning directives and campaigns put enormous pressure on local party c
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Beijing often does not provide financing: instead, it gives local officials broad discretion to arrange off-balance-sheet investment vehicles with the help of regional banks to fund projects in priority sectors, with the national government limiting itself to specifying which types of local financing options are prohibited. About 30 percent of Chin
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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
In order to promote more indigenous high-end technology, Chinese policymakers have in recent years mobilized the entire banking system and set up dedicated loan programs to support research and innovation in prioritized sectors. The result has been a tendency to deepen, rather than correct, the structural problems leading to excess investment and p
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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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Xi’s growing emphasis on making China economically self-sufficient—a strategy that is itself a response to perceived efforts by the West to isolate the country economically—has increased, rather than decreased, the pressures leading to overproduction. Moreover, efforts by Washington to prevent Beijing from flooding the United States with cheap good
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China's leader, Xi, is focusing more and more on making sure China can take care of its own economy. This change is happening because he feels that other countries, especially in the West, are trying to cut China off economically. As a result, China is producing too much stuff, more than it can sell. Meanwhile, the U.S. government is trying to stop China from sending a lot of cheap products to America, but this might just create new problems for the U.S. economy. Instead of solving China's problem of making too many goods, it could make that problem move to other countries around the world.