China has reached the end of its economic boom. What comes next should worry every American business — and the rest of the world.
China has reached the end of its economic boom. What comes next should worry every American business — and the rest of the world.
Wtf does infrastructure have to do with anything. There’s lots of Roman infrastructure all over the Mediterranean, when was the last time you met a citizen of the SPQR?
The only correlation building infrastructure has with economic prosperity is that governments often use infrastructure projects to patch over economic lulls and stimulate a lagging economy.
But for infrastructure projects to be a benefit they need to deliver more productivity to the economy than they cost to build, at minimum enough to cover the debt taken on the build it.
China used infrastructure spending to artificially stimulate the economy at a breakneck pace, and now they have all this infrastructure nobody is using. High speed trains nobody rides, entire cities built from scratch with few to no residents or businesses, and there’s only so long you can do that before it becomes unsustainable - which is now.
So what exactly are they going to do with all this infrastructure now, that will save their economy? Sell it? Half the problem is that there is no buyers.
Democracy and free market capitalism are not the ideal form a civilisation should take for many reasons, but they both have very powerful self-correcting mechanisms which have made it the most stable form of nation-state. China’s only protection against being run into the ground was its term limits, allowing leadership to step down gracefully without losing face and new leadership to step up and change with the times. Xi Jinping removed those. It remains to be seen if he has the capacity to steer away from catastrophe.