In this episode, Michael Taylor and William Clouston discuss the Chinese economy.
After decades of spectacularly rapid growth to become the world’s second largest economy, China now seems to be faltering.
Local government debt has risen sharply due to over-investment in infrastructure, while income from land sales and land taxes has plummeted. Large corporations are defaulting on repayments to investors. Youth unemployment is at a record high. China’s workforce and consumer base is shrinking, while the cohort of retirees continues to grow.
This is sure to cause an extended period of low growth, but is the situation more serious than that? And what are the likely political ramifications?
William and Michael discuss whether China’s current problems could develop into a crisis and consider the potential impacts on the global economy.