The Economist this week
Highlights from the latest issue
• For the past 20 years China has been the most reliable source of growth in the world economy, contributing a quarter of the rise in global GDP over that period. Its success has for the most part been powered by pragmatism, as the ruling Communist Party mixed market reforms with state control. Now, however, China’s economy is in danger.
• The first problem is the zero-covid policy. More than 200m people have been living under pandemic restrictions. Many are sleeping on factory floors so they can keep working, but industrial output has dipped and for the full year China may struggle to grow faster than America for the first time since 1990. Western vaccines are still banned, some 100m Chinese over the age of 60 are not yet triple-jabbed, and the zero-covid policy looks set to continue into next year. Since it is associated with Xi Jinping, China’s leader, criticism of it is regarded as sabotage.
• The second problem is Mr Xi’s ideological approach to economic policy. His aims are rational: to tackle inequality, monopolies and debt, and to ensure that China dominates new technologies and is fortified against Western sanctions. But his strategy is to expand the scope of the least productive part of the economy—the government-run one—while buffeting the private sector with fines, regulations and purges. Venture capitalists say they have switched to betting on the biggest subsidies, not the best ideas. For the first time in 40 years, no major sector is undergoing liberalising reforms. Without them, China’s growth will suffer, and that will have global consequences.
Zanny Minton Beddoes