China Risks Cementing Its Structural Flaws

There is much to admire in China’s recovery. Between the second and third quarters, its economy expanded by 4.9 per cent. It is unique among the world’s largest economies in that the IMF expects it to avoid a contraction this year, the Financial Times reported. That owes much to Beijing’s success in stamping out Covid-19, along with the country’s manufacturing prowess. Yet, digging into the numbers, the picture is not quite as rosy as it may seem. Long before the pandemic, the world’s second-largest economy looked dangerously unbalanced. Beijing has placed a tremendous amount of focus on the headline gross domestic product figure as a measure of its economic prowess. A consequence has been that, when growth has been at risk of falling to levels deemed by the Chinese Communist party to be too low, the state has engaged in aggressive intervention. Read more