Local governments are at the center of concerns about the debt crisis.
But the details have been opaque, while leaving the impression that local governments will be stuck with the bill. The government has outlined spending programs aimed at spurring consumers to spend and businesses to invest. Over the past decade, China has been the source of more than 40 percent of global economic growth, compared with 22 percent from the United States and 9 percent from the 20 countries that use the euro currency, according to recent analysis from BCA Research.Īdding to the worry is the widespread sense that the Chinese authorities are limited in their options to reinvigorate the economy, given mounting debts now estimated at 282 percent of national output - more than that of the United States. This week brought data showing that China’s exports have declined for three months in a row, while imports have dropped for five consecutive months - another indicator of flagging prospects. The risks have been amplified in recent weeks by a slew of developments.įirst came word that China’s economy had slowed substantially in the spring, extinguishing hopes of a robust expansion after the lifting of extreme Covid restrictions. Long the centerpiece of a profit-enhancing version of globalization, China has devolved into the ultimate wild card in a moment of extraordinary uncertainty for the world’s economy. Now that engine is sputtering, posing alarming risks for Chinese households and economies around the planet. As its 1.4 billion people gained an appetite for the wares of the world - Hollywood movies, South Korean electronics, iron ore mined in Australia - the global economy was propelled by a seemingly inexhaustible engine.
For more than a quarter-century, China has been synonymous with relentless development and upward mobility.
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