2024-03-29 21:38:00
[New Tang Dynasty News, Beijing time, March 29, 2024]Rui… Dalio recently said that the Chinese Communist authorities should be committed to solving the debt problem, otherwise they may experience a “lost decade” similar to Japan’s economic stagnation period.
On March 27, Ray Dalio published a blog post on Linkedin, saying that China is facing a “big storm once in a century”, with debt pressure and conflicts between major powers, major technological changes, as well as droughts, floods and The epidemic and other factors are intertwined, creating conditions for this storm to land.
Dalio urged Chinese Communist Party leader Xi Jinping to reduce the debt burden or face a decade of economic stagnation similar to Japan’s. Since 1991, Japan’s bubble economy has burst and the economy has been stagnant for ten years.
He said, “In my opinion, this should have been done two years ago. If not done, China may experience a lost decade.”
Dalio believes that the CCP should now focus on mitigating imbalances, including pension issues, the widening gap between rich and poor, and the risk of war caused by the Sino-US conflict.
But he bluntly said that it is also important to “distinguish the cards in Xi Jinping’s hand and the way he chooses to play them.”
Since 2023, China’s economy has declined rapidly, with lower consumption, lower production costs, and sluggish real estate, indicating that the Chinese economy is falling into a deflationary crisis.
The stock markets in China and Hong Kong continued to fall, reflecting the current economic situation in China. As of March 27, Hong Kong’s Hang Seng Index fell 3.8% so far this year, down 16% from a year ago. China’s stock market once fell below 2,700 points this year, hitting a record low in five years.
The topic of whether China will experience a decade of economic stagnation like Japan has attracted attention from the outside world.
“From an economic perspective, China is unlikely to become the next Japan, and the situation may be even worse.” Nobel Prize winner in economics Paul. Krugman wrote an article in October 2023 pointing out that China has similarities with Japan 30 years ago, such as declining consumer demand and relying on the real estate bubble to support the economy. But the difference is that China is far behind Japan in terms of productivity.
Krugman also raised a question: If China’s economy really stagnated like Japan’s, would it have the social cohesion that Japan has to manage a low-growth country without triggering large-scale social unrest?
“Is it possible to do this under an unstable authoritarian regime?” he questioned.
William of the Harvard Kennedy School. Dr. William Overholt also pointed out in his book “China’s Crisis of Success” that China is likely to repeat Japan’s mistakes and enter a state of stagnation, and China’s situation may be even worse. Oops.
When Japan’s economy stagnated, its per capita GDP exceeded US$40,000; while China’s current per capita GDP is only more than US$10,000. The dissatisfaction of the Chinese people will turn into huge political pressure.
What’s even more frightening is that China’s current debt scale is huge, especially local debt, which has become a “grey rhino” that cannot be ignored.
In response to the difficulties faced by China’s economy, in June 2023, Ning Jizhe, deputy director of the Economic Committee of the National Committee of the Chinese People’s Political Consultative Conference, warned at an economic forum that “the authorities should introduce macro policies sooner rather than later. “Policies should be issued as soon as possible”, and the policy intensity cannot be too small. “We must prevent pessimistic expectations from self-fulfilling and prevent the occurrence of a spiral economic contraction.”
However, none of the policies introduced by the CCP over the past year might save the economy from its dire economic downturn. On the contrary, the CCP’s suppression of foreign companies has caused more foreign capital to withdraw from China, and real estate is on the verge of collapse. Officials have warned real estate companies that “bankruptcy should go bankrupt,” showing that the authorities are unable to solve the problem of the real estate bubble that is regarding to burst.
(Editor: Tang Ying)
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