© 2018 by Robert Person.  The views expressed on this website are my own and do not represent the official policy of the U.S. Army, Department of Defense, or U.S. Government.

jacob.pettit
Jan 22

China's Command Economic Policies and Slowing Growth

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Data released on China's economic growth this past year reveals the slowest growth in 30 years, and many economists are pointing to the mixed forces of the U.S.-China trade war and conservative economic policies as the cause. China has been one of the fastest-growing economies in the world, and although growth slowed to around 6.6% this year, China's growth in GDP still nearly triples that of the United States (2.3%).

 

However, certain economic and political forces are converging to contribute to a slowing Chinese economy. First, the economic environment of a slowing global economy and a destructive trade war has created uncertainty for Chinese manufacturers and producers. The Chinese Communist Party has strict principles against laying off workers because of the social unrest it creates; despite this, the Chinese unemployment rate rose by about a percent this past year, indicating significant challenges in certain industrial sectors of the Chinese economy. Secondly, conservative economic policies from Xi Jinping's administration intended to manage debt and decrease financial risk, curbed borrowing by local governments and businesses and caused a sharp fall in spending on new subway lines and factories." Taken together, this article predicts that the new data reflects a true transition for China from rapid debt-fueled growth policies to moderate-growth policies while the CPP attempts to create stability in China amongst a chaotic world economic environment.

 

This article was published by the Wall Street Journal and can be found here:

https://www.wsj.com/articles/china-annual-economic-growth-rate-is-slowest-since-1990-11548037761

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