China’s future isnt what it used to be

Predictions gain currency, set the tone for many decisions, gain some experiential backing, then, things may change.

That’s what’s going on with predictions of China’s economic future and which is resounding in Krugman’s headline for a Dec 23, 2022 NYT column.

The economy has been growing for years, a historic success. The chance that China could become the world’s biggest economy shadows predictions for future events, economic and other.

But the discerning student was obliged to look at the nature of the vespers within the overall trend. In hindsight a muted trajectory is obvious. At least for the likes of Krugman.

• Stein’s Law: “If something cannot go on forever, it will stop.”

“It’s been obvious for years that China’s economy, despite an awesome history of economic growth is wildly unbalanced. Too few of the gains from growth have trickled down to households, keeping consumer spending low as a share of gross domestic product,” he writes. Adding that high rates of investment now chase severely diminishing returns.

The situation is proving unsustainable. For Krugman it evokes Herb Stein’s Law: “If something cannot go on forever, it will stop.”

Too, the predictions need to be rejiggered. Recent weeks find Goldman Sach’s pushing back the proposed date for China’s ascent to Number One World Economy to 2035. The Center for Economic Research pushes the Great Leap Forward forward a few decades. The old Chinese predictions, like their demographics, are showing their age.