“Until 1990, Japan was the most successful large economy in the world. Almost nobody predicted what would happen to it in the succeeding decades. Today, people are yet more in awe of the achievements of China. Is it conceivable that this colossus could learn that spectacular success is a precursor of surprising failure? The answer is: yes.”
Martin Wolf argues at the Financial Times that China faces an extended slowdown for two reasons.
First, the county will have difficulty exiting the middle income trap, where “sustaining rapid increases in productivity and managing huge structural shifts as the economy becomes more sophisticated is hard.” Second, its economy will have difficulty transitioning from an investment-led growth model to robust consumption.
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