by Mitch Kokai
Senior Political Analyst, John Locke Foundation
With Xi Jinping’s stunning shift back into Maoist totalitarianism, China is destined to become an economic mess once again. China’s opening to the world economy, particularly to the U.S. and Europe, now looks to be over. A new communist dark age will soon descend.
In China’s 20th party congress, which ended last weekend, we saw a very ugly glimpse of the future for the Middle Kingdom.
Not only did Xi cement his position as absolute ruler of the nation of 1.4 billion, but showed he’ll do anything to keep power. The image of an aging former President Hu Jintao apparently forcibly being led out of the congress by security is an ominous statement of what Xi has in store for the entire nation.
Faced with the sudden shock of what’s to come, China’s financial markets crashed on Monday, as investors realized that it’s no longer the promised land but now a prison-house economy in decline.
It was just 2014, a mere 8 years ago, that liberal Nobel Prize-winning economist Joseph Stiglitz heralded the advent of the “Chinese Century.” He and other leftist intellectuals fell in love with the notion of what could be accomplished economically with an authoritarian regime such as Xi’s.
No more saying no! No more dragging your feet! The government can do what it wants, without having to worry about all those pesky free-market naysayers! …
… China’s “growth miracle,” built largely on trillions of dollars of U.S. trade and investment and greater openness to the world, has come to a grinding halt. From high-altitude GDP growth averaging 10% a year for over 20 years, China’s growth has descended sharply.
The most recent forecast by the IMF sees 3.2% GDP growth this year, well below the Chinese government estimate closer to 5%.
But there are signs of even deeper trouble. Not only is GDP growth falling but, because of its massive debt (290% of GDP, a stunning level), plunging demand for Chinese goods, and a weakening yuan, China’s struggling.