China's economy faces significant challenges as its once-successful growth model is deemed "broken" by The Wall Street Journal, signaling a shift to slower growth and concerns extending beyond economic data to impact foreign investment and trade relations.
Beijing : China's economy, long hailed for its remarkable growth, is now grappling with deep-seated distress, with even its once-successful growth model deemed "broken" by a prominent American financial publication. The Wall Street Journal, in a comprehensive analysis, highlights that China's economic woes extend beyond its struggling data to encompass its distant provinces, signaling a potentially transformative shift.
The Wall Street Journal's Sunday feature underscores economists' growing consensus that China is on the cusp of an era characterized by significantly slower growth. This trend is exacerbated by unfavorable demographic shifts and an expanding chasm with the United States and its allies, a divide that threatens foreign investment and trade ties.
Rather than mere economic ebbs and flows, this juncture may mark the end of a protracted period of growth, the report emphasizes. "Now the (economic) model is broken," asserts the financial daily, capturing the profound shift underway.
Columbia University history professor and economic crisis specialist, Adam Tooze, comments on the magnitude of this transition, stating, “We’re witnessing a gearshift in what has been the most dramatic trajectory in economic history.”
The report underscores that China's total debt, inclusive of government and state-owned enterprise obligations, has soared to nearly 300 percent of the country's GDP as of 2022. This staggering figure surpasses US debt levels and represents a significant surge from the less than 200 percent recorded in 2012, as reported by the Bank for International Settlements.
Within Beijing's corridors of power, senior officials have acknowledged the limitations of the growth model that has propelled the nation's development for decades, The Wall Street Journal reveals. Chinese President Xi Jinping's direct critique of reliance on debt-fueled construction for economic expansion was delivered in a frank address to emerging party leaders last year.
"Some people believe that development means investing in projects and scaling up investments," President Xi admonished, cautioning against outdated approaches: "You can’t walk the old path with new shoes." However, the report notes that President Xi's administration has taken minimal steps to steer away from China's entrenched growth paradigm.
In the first half of 2023, China's gross domestic product (GDP) reported a year-on-year growth rate of 5.5 percent, according to the National Bureau of Statistics (NBS). The data revealed China's first-half GDP at 59.3 trillion yuan (approximately 8.3 trillion US dollars), with the second quarter noting a 6.3 percent expansion year on year.
As part of efforts to resuscitate its economy, China recently reduced its one-year loan prime rate (LPR) for the second time this year, trimming it by 10 basis points to 3.45 percent. However, the five-year rate, standing at 4.20 percent, remained unchanged.
China's economic trajectory is at a crossroads, with its growth model under intense scrutiny and global implications. As the nation navigates this critical juncture, the world watches to see how it will recalibrate its economic course and manage the challenges that lie ahead.
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| China's Economic Model "Broken" as Growth Model Hits Limits, Wall Street Journal Reports |
Beijing : China's economy, long hailed for its remarkable growth, is now grappling with deep-seated distress, with even its once-successful growth model deemed "broken" by a prominent American financial publication. The Wall Street Journal, in a comprehensive analysis, highlights that China's economic woes extend beyond its struggling data to encompass its distant provinces, signaling a potentially transformative shift.
The Wall Street Journal's Sunday feature underscores economists' growing consensus that China is on the cusp of an era characterized by significantly slower growth. This trend is exacerbated by unfavorable demographic shifts and an expanding chasm with the United States and its allies, a divide that threatens foreign investment and trade ties.
Rather than mere economic ebbs and flows, this juncture may mark the end of a protracted period of growth, the report emphasizes. "Now the (economic) model is broken," asserts the financial daily, capturing the profound shift underway.
Columbia University history professor and economic crisis specialist, Adam Tooze, comments on the magnitude of this transition, stating, “We’re witnessing a gearshift in what has been the most dramatic trajectory in economic history.”
The report underscores that China's total debt, inclusive of government and state-owned enterprise obligations, has soared to nearly 300 percent of the country's GDP as of 2022. This staggering figure surpasses US debt levels and represents a significant surge from the less than 200 percent recorded in 2012, as reported by the Bank for International Settlements.
Within Beijing's corridors of power, senior officials have acknowledged the limitations of the growth model that has propelled the nation's development for decades, The Wall Street Journal reveals. Chinese President Xi Jinping's direct critique of reliance on debt-fueled construction for economic expansion was delivered in a frank address to emerging party leaders last year.
"Some people believe that development means investing in projects and scaling up investments," President Xi admonished, cautioning against outdated approaches: "You can’t walk the old path with new shoes." However, the report notes that President Xi's administration has taken minimal steps to steer away from China's entrenched growth paradigm.
In the first half of 2023, China's gross domestic product (GDP) reported a year-on-year growth rate of 5.5 percent, according to the National Bureau of Statistics (NBS). The data revealed China's first-half GDP at 59.3 trillion yuan (approximately 8.3 trillion US dollars), with the second quarter noting a 6.3 percent expansion year on year.
As part of efforts to resuscitate its economy, China recently reduced its one-year loan prime rate (LPR) for the second time this year, trimming it by 10 basis points to 3.45 percent. However, the five-year rate, standing at 4.20 percent, remained unchanged.
China's economic trajectory is at a crossroads, with its growth model under intense scrutiny and global implications. As the nation navigates this critical juncture, the world watches to see how it will recalibrate its economic course and manage the challenges that lie ahead.
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