China is already in a state of de-growth. And with rising inflation, the world’s second-largest economy is encountering a dangerous era.
Before the Covid pandemic hit China, this economy has been facing a slowdown in recent years.
An article from the UK-based Financial Times on June 6 pointed out that China’s economy is in an era of de-growth.
According to the Financial Times, an information analysis method was used to study China’s economic growth in 2013. It concluded that the economy could not continue to grow at a high speed but would slow down step-by-step.
Roughly every ten years, the average growth rate would drop by one percentage point. After three decades, China’s growth rate would fall to 5%, thus forming a consumption-oriented society. The final result would be a pyramid-shaped growth trend.
By 2022, China’s economy has almost entered a period of 5% growth.
The declining stage shows that China’s economy is already in a state of de-growth.
In the era of de-growth, it isn’t easy to do any business. While selling things at a higher price than in the past seems possible, the money recovered faces higher costs and higher inflation levels. It is virtually impossible to sustain reproduction at all.
This would lead China into a dangerous era characterized by high inflation.
The article points out that, in the past, the inflation rate of 8% was still tolerable. But under de-growth, maybe the 5% inflation would destroy people.
The latest data shows that China’s consumer price index surged by 2.1% in April from a year earlier, the fastest rise since November 2021.
The producer price index rose 8% in April from a year earlier, also faster than expected.
During the recent Covid outbreak, China continued to implement a zero-Covid policy. The lockdown measures have severely damaged China’s economy.
On May 25, Chinese Premier Li Keqiang presided over a conference on stabilizing the economic market. He said that China’s economic troubles are more severe than two years ago.
Li Keqiang revealed that China’s national treasury was empty. He told officials that the money would depend on their localities unless there were another catastrophic natural disaster.
Xie Tian is a professor at the University of South Carolina Aiken. He said that the economic situation in China has deteriorated in the past two years due to the impacts of the Covid outbreak.
Xie said that China’s industrial output would drop significantly due to the suspension of operation and the severe lockdown in cities and provinces.
Taiwan Caixin Media chairman Xie Jinhe said that, in the past 30 years, China’s economy has grown by leaps and bounds. However, this driving force has changed a lot, and the Chinese Communist Party would become the main force pulling down the global economy.