The main argument Zoe Liu makes here is that China’s investment led growth model reached the end of its usefulness in the mid-2000s and the CCPs failure to pivot away from it has caused enormous distortions in the Chinese economy, overproduction in targeted industries, uncompetitive firms, a lack of innovation, and massive accumulation of unproductive debt.
Overproduction and failure to shift to consumption led growth is causing a doom loop of collapsing prices and trade tensions.
Exasperating this is the West turning to protectionism and isolation of the Chinese economy. This causes Xi to triple down on the pursuit of Autarky for fear of losing access to foreign technologies. Thus more subsidies to more targeted industries leading to more overproduction.
Instead she argues the West should use multilateral mechanism, particularly the WTO, to address non-market behaviors by China and further enmesh China into global institutions to both have more influence on Chinese policy as well as cool off tensions.
Such an approach would require revitalizing international institutions that have been undermined by U.S. policy makers in recent years.
The article is lengthy but well written and researched.
1 Comment
The main argument Zoe Liu makes here is that China’s investment led growth model reached the end of its usefulness in the mid-2000s and the CCPs failure to pivot away from it has caused enormous distortions in the Chinese economy, overproduction in targeted industries, uncompetitive firms, a lack of innovation, and massive accumulation of unproductive debt.
Overproduction and failure to shift to consumption led growth is causing a doom loop of collapsing prices and trade tensions.
Exasperating this is the West turning to protectionism and isolation of the Chinese economy. This causes Xi to triple down on the pursuit of Autarky for fear of losing access to foreign technologies. Thus more subsidies to more targeted industries leading to more overproduction.
Instead she argues the West should use multilateral mechanism, particularly the WTO, to address non-market behaviors by China and further enmesh China into global institutions to both have more influence on Chinese policy as well as cool off tensions.
Such an approach would require revitalizing international institutions that have been undermined by U.S. policy makers in recent years.
The article is lengthy but well written and researched.