China’s Problems Are Real

https://www.nytimes.com/2023/08/25/briefing/china-economy.html

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China’s economic problems can seem sudden and surprising. Just a few years ago, its economy inspired worldwide envy. Today, signs of trouble appear to be everywhere.

The real estate market is in a serious slump. Consumer spending is weak. Unemployment among young adults has surged above 20 percent — and the government has responded by suspending the release of that statistic.

“The most terrifying thing is that everyone around me is at a loss of what to do next,” Richard Li, the owner of an auto parts business who has closed two of his four stores, told my colleague Li Yuan. “I used to believe that our country would become better and better.”

Today’s newsletter is intended to help you make sense of the turnabout. My main argument is that China’s problems are not, in fact, new. They have been building for years, and Chinese leaders have long vowed to address them. So far, though, they have mostly failed to do so. That failure is catching up to them.

China’s ascent over the past half-century has been remarkable, producing an arguably unprecedented decline in poverty. Even so, the country’s economic model has been familiar: investing in physical capital and education to become more productive and lure residents of rural areas to cities where they work in factories.

In previous eras, England, Germany, the U.S., Japan and South Korea all followed the same model. So did the Soviet Union, after World War II. The economist Gregory Clark called it the only story of economic development.

After countries achieve rapid growth for several decades, they can come to resemble unstoppable forces, destined to dominate the globe. People made such predictions about the Soviet Union in the 1960s, Japan in the 1980s and China in recent years. But you’ll notice a pattern of disappointment in those examples, as Paul Krugman, the Times columnist and Nobel laureate economist, has pointed out.

Thirteen years ago, I visited China to report a story for The Times Magazine and wrote the following:

I did not predict China’s current problems, to be clear. I was agnostic about whether its leaders would take the steps to build a more advanced economy. But I did describe the consensus, both inside and outside China, about what those steps were.

China’s current problems stem from not having taken them. Its leaders have instead doubled down on the same strategies that worked in past decades, like the construction of more apartment buildings and factories. It’s not working.

China still does not have a thriving consumer economy to replace its smokestack economy. It has neglected to build a safety net strong enough to give ordinary workers the confidence to spend more. Health insurance is spotty. “Government payments to seniors are tiny,” Keith Bradsher, The Times’s Beijing bureau chief, wrote this week. “Education is increasingly costly.”

Why hasn’t China taken the necessary steps? Change is hard. The bureaucrats who run legacy industries like construction have more political influence than those who run nascent industries. President Xi Jinping also seems concerned that a robust consumer economy might undermine the ruling party’s authority.

Any article about China’s economy tends to include the caveat that it could turn around soon. So consider this newsletter caveated. But telling a coherent story about why and how China would boom again is becoming harder.

Xi is resisting changes that even Chinese experts have long advocated. The country’s population is shrinking, with the biggest declines ahead. And other countries have become warier of working with China, for geopolitical reasons.

In that 2010 Times Magazine article, I included the following paragraph of caveat. It feels a little different 13 years later:

“China’s 40-year boom is over,” The Wall Street Journal proclaimed in a front-page headline this week. The editors of The Economist agreed: “China’s economy won’t be fixed.”

The country has accumulated enough empty apartments to meet seven years’ worth of demand.

“China is already a superpower, and its current stumbles aren’t likely to end that status,” Krugman wrote recently. “China’s domestic problems make it more, not less, of a danger to global security.”

Donald Trump surrendered at an Atlanta jail and was booked on charges that he tried to overturn his 2020 election loss. He spent about 20 minutes at the jail.

Trump gave his fingerprints and stood for a mug shot, the first taken in his four criminal indictments this year.

Trump posted the mug shot on X, the platform formerly known as Twitter. His account had been dormant since the platform reinstated it in November.

The mug shot is the ultimate memento of a norm-shattering presidency and this social-media-obsessed age, Vanessa Friedman writes.

U.S. officials believe that the mercenary leader Yevgeny Prigozhin died in a plane crash and that Vladimir Putin ordered his killing.

They also believe an onboard explosion brought down the plane.

Putin publicly referred to Prigozhin in the past tense. “This was a person with a complicated fate,” Putin said. “He made some serious mistakes in life, but he also achieved necessary results.”

Prigozhin rose from running hot-dog stands and became one of the most powerful men in Russia, serving as the public face of a force that fought on the country’s behalf across the Middle East and Africa.

In a lawsuit, Maui officials blamed an electric utility for allowing a deadly fire to start. Authorities also released the names of more fire victims, including a 7-year-old, Tony Takafua.

Tropical Storm Franklin hammered the Dominican Republic. It is expected to turn east, away from the U.S.

A majority of emperor penguin colonies in a region of Antarctica lost their chicks as ice melted.

Tiny forests are providing big environmental benefits across the U.S.

As the school year begins, some districts that barred the use of A.I. chatbots are rethinking their stance.

While automation has mainly hurt blue-collar workers, A.I. is putting white-collar jobs at risk.

Kathy Hochul, New York’s governor, criticized the Biden administration for failing to help the state manage a recent influx of migrants.

The number of gender-affirming surgeries in the U.S. nearly tripled from 2016 to 2019, as laws expanded coverage for them.

A man in the Bronx died after a police sergeant threw a cooler at him, knocking him off his motorbike.

Human encounters with bears have become more common in Connecticut. Though the state doesn’t have a bear hunt, a new law allows residents to shoot the animals in self-defense.

The self-help industry teaches us to make the right decisions. But we should feel free to act on our desires, Jamieson Webster writes.

Here is a column by David Brooks on Nikki Haley.

Loch Ness: The search is on, again, for Nessie.

Real estate innovation: It looks like a new development. Technically, it’s also public housing.

State fair: What’s inside a butter statue? It’s not just butter.

Modern Love: As her friends took exciting jobs, she put her eggs in the boyfriend basket.

Lives Lived: John Warnock co-founded Adobe Systems but was probably best known for inventing the ubiquitous PDF, making the paperless office a reality. He died at 82.

Backlash: Nike said it would change course and offer replicas of the jerseys worn by Women’s World Cup goalkeepers after complaints from fans.

W.W.E. loss: The wrestling superstar Windham Rotunda, better known by his stage name Bray Wyatt, died unexpectedly yesterday at 36.

Another record: The Las Vegas Aces became the first team in W.N.B.A. history to reach 30 regular-season wins.

An arm’s impact: Shohei Ohtani’s elbow injury could reshape his career — and the entire free-agent market.

No kids allowed: What happened to the family film? Only 12 major children’s movies are set for release in theaters this year, about half as many as four years ago. Most are adaptations — of a video game, TV show or comic book. Why? The rise of streaming has reduced demand for moviegoing and left studios reluctant to release anything that doesn’t look like a blockbuster.

John Eliot Gardiner, a revered conductor, is accused of hitting a singer for walking off the podium the wrong way at a concert in southeastern France.

Grate zucchini into fritters.

Try a bidet in your home.

Reel in your garden hose.

Take our news quiz.

Here is today’s Spelling Bee. Yesterday’s pangram was matriarch.

And here are today’s Mini Crossword, Wordle and Sudoku.

Thanks for spending part of your morning with The Times. See you tomorrow. — David

P.S. Two Times sports reporters, Matthew Futterman and Tyler Kepner, are joining The Athletic.