Update on the Chinese Economy

Plenty happening in the Chinese economy - so here are some links to news, comment and analysis.

A very good summary of the state of play in China, written by China expert, George Magnus. It's well worth a read and highlights the fact that the property boom has implications for the wider economy, and by definition, the world.

Please read: China’s economic model is faltering – does it have the political will to fix it? (George Magnus)

Kenneth Rogoff with an interesting article that the current state of the Chinese property market can be traced back to the global financial crisis of 2008, and is, effectively the result of a debt supercycle. He argues that low borrowing costs, and China's massive investment programme, has generated a debt super-cycle, that has caused the Chinese economy as a whole to experience a slowdown.

Please read: Chinese economic slowdown is a result of debt supercycle (Kenneth Rogoff)

Larry Elliott's take on the current state of the Chinese economy: choppy waters ahead, but there's no reason for thinking that we're on the brink of a Soviet-style collapse and for that we should be grateful.

Yes, China's been responsible for a disproportionately large part of global growth but there are no immediate signs of the government losing control of the economy and imperilling global growth.

Please read: China is too big for a Soviet Union-style collapse, but it’s on shaky ground (Larry Elliott)

Signs that China's post-COVID recovery is weaker than expected, with the news that the People's Bank of China (PBOC) lowered its one-year loan prime rate to 3.45% from 3.55%. That said, a 0.10% cut in interest rates is hardly likely to have a significant effect upon the level of expenditure. But in the bigger picture, a weaker than expected Chinese economy is, of course, bad news for the global economy.

Please read: China cuts key interest rate as recovery falters (BBC News)

The fact that Evergrande, a Chinese property giant, has filed for bankruptcy in the US, is noteworthy. Does it signal that we're on the brink of a collapse in the Chinese property market, and, if so, what does this mean for the rest of the global economy? Worth keeping an eye on this story.

Please read: Evergrande: China property giant files for US bankruptcy protection (BBC News)