After all the sound and fury of last week's BRICS summit we are faced with the reality that China as well as several other members and partners of BRICS are from de-dollarizing.
And very few people who go back to the stir-and-fry Chinese stock market or pointing to high foreign currency reserve in PBOC have simply been missing the point. China's peak economy was about 2006-2007, and has been going downwards ever since. The reasons are many, and USA pressure is certainly one of them. Xi and his advisors do understand the importance of switching from export-focused economy to domestic consumers-focused economy. But even that move carries significant risk. After all, it is very difficult, if possible at all, to find a joint solution having the strength of Russia's, NK's, and American's economy while avoiding the pitfalls of each. China's economy is still morphing. Most experts I read believe it will fluctuate between the old path (before 2012) and NK. It is not absolutely doomed to fail, but Xi does not have the vision and his advisors do not have the capabilities.
Domestic consumer orientation is good enough to keep people gainfully employed. However, it's not an answer to your problems if you want to buy things from outside. For that you need exports.
In China's case, domestic consumer orientation, even when boosted and consumers given helicopter money to spend, is NOT enough to keep a good enough employment rate. The Achilles' Heel is the segment of unskilled labor is too high in China. Furthermore, China does not have enough natural resources just for domestic consumption. Therefore IMHO, China's economy will stabilize only after 200-300 million people die off, perhaps more. By natural course, that will take 20 years. If China tries to build a global hegemony as Xi once tried to, the China bubble will burst. Had he been willing to keep a low profile, he could have laid a good foundation for the future prosperity of China. But unfortunately, his team in aggregate do not have such wisdom.
What a tangled web.
After all the sound and fury of last week's BRICS summit we are faced with the reality that China as well as several other members and partners of BRICS are from de-dollarizing.
And very few people who go back to the stir-and-fry Chinese stock market or pointing to high foreign currency reserve in PBOC have simply been missing the point. China's peak economy was about 2006-2007, and has been going downwards ever since. The reasons are many, and USA pressure is certainly one of them. Xi and his advisors do understand the importance of switching from export-focused economy to domestic consumers-focused economy. But even that move carries significant risk. After all, it is very difficult, if possible at all, to find a joint solution having the strength of Russia's, NK's, and American's economy while avoiding the pitfalls of each. China's economy is still morphing. Most experts I read believe it will fluctuate between the old path (before 2012) and NK. It is not absolutely doomed to fail, but Xi does not have the vision and his advisors do not have the capabilities.
Domestic consumer orientation is good enough to keep people gainfully employed. However, it's not an answer to your problems if you want to buy things from outside. For that you need exports.
In China's case, domestic consumer orientation, even when boosted and consumers given helicopter money to spend, is NOT enough to keep a good enough employment rate. The Achilles' Heel is the segment of unskilled labor is too high in China. Furthermore, China does not have enough natural resources just for domestic consumption. Therefore IMHO, China's economy will stabilize only after 200-300 million people die off, perhaps more. By natural course, that will take 20 years. If China tries to build a global hegemony as Xi once tried to, the China bubble will burst. Had he been willing to keep a low profile, he could have laid a good foundation for the future prosperity of China. But unfortunately, his team in aggregate do not have such wisdom.