By Samantha Aschieris, the Daily Signal | August 29, 2023
China‘s economy, the world’s second largest after America’s, is struggling months after the communist regime ended its stringent zero-COVID policy.
“China’s economic success was largely down to its size and the speed of its abundant inexpensive labor to produce,” Andrew Hale, senior policy analyst in trade policy at The Heritage Foundation, told The Daily Signal in an email. (The Daily Signal is Heritage’s multimedia news organization.)
“This rapid growth was also built on massive debt and a growing labor market,” Hale said of China’s economy.
Hale listed factors that he said “have festered and contributed to rapid Chinese economic decline,” including “a shrinking labor force” and “massive youth unemployment.”
Hale also noted that
the U.S. and other countries have restricted the transfer of technology (China has so far lost the chip war with the U.S. and sanctions have had an effect), the property market bubble has truly burst, … and the [Chinese Communist Party] has prioritized a return to hardline socialist ideology and global saber-rattling/military expansion over economic growth.
Peter St Onge, research fellow in Heritage’s Thomas A. Roe Institute for Economic Policy Studies, weighed in on why Americans should care about China’s economy.
“For the average American, the main impact is even cheaper exports (Chinese taking losses to move product) and possible contagion to the U.S. financial sector, which could put stress on U.S. banks,” St Onge told The Daily Signal in an email.
“A lot of U.S. big business is also exposed, though that’s not regular Americans’ problem beyond the impact on share prices of those China-exposed businesses,” St Onge added.
EJ Antoni, research fellow in regional economics at The Heritage Foundation, had his own take on why Americans should care about China’s struggling economy.
“China’s communist government has been preceding the Biden administration in its drastic interventions in the national economy, fueled by unprecedented levels of government spending,” Antoni told The Daily Signal in an email.
“Americans should be concerned about the outcomes in China because they are a forewarning to America,” Antoni said, specifying the Chinese Communist Party:
If we continue down this unsustainable path of ever-growing government spending, we will find ourselves in precisely the same mess the CCP has created in its own country.
Commerce Secretary Gina Raimondo is meeting with U.S. business leaders and senior Chinese officials this week in China. The trip follows earlier ones by Treasury Secretary Janet Yellen, climate czar John Kerry, and Secretary of State Antony Blinken.
Raimondo’s visit to China, which concludes Wednesday, “is, sadly, another distraction from the fact that President Joe Biden seems beholden to the [Chinese Communist Party],” Antoni said.
“Whether it’s refusing to investigate the origins of COVID, allowing for the theft of American intellectual property, or surrendering the manufacturing sector, Mr. Biden seems intent on putting the interests of the CCP before his own constituents,” Antoni said.
As for the long-term implications for both the U.S. and global economy should China’s economy continue to decline, Antoni said that “China’s decline matter less to the average American than our own economy does because our destiny is in our own hands.”
“Free-market policies are what ultimately allow wealth creation at home, regardless of what is done abroad,” the economist said.
Samantha Aschieris is a senior news producer for The Daily Signal.
