Throughout 2021 a series of newspaper reports told of China’s economic slowdown. Property giant Evergrande’s struggle with its $200 billion debts was said to threaten China’s economic stability. The Times warned that ‘Momentum ebbs from China’s recovery’ while the Financial Times announced that ‘China slowdown worsens as Covid outbreak exposes weaknesses in consumer spending’. This all had shades of a 2014 documentary when the BBC chief economics editor Robert Peston claimed that the Chinese economy was broken. Has he checked the IMF’s latest figures, shown in Figure 1?
The graph shows that in 1980 the US economy made up 21.35% of the global total (at purchasing power parity, i.e. adjusting for cost-of-living differences), the UK was 3.69% and China was 2.26%. So even though China had 20 times the population of the UK, its total GDP was substantially lower. Since then, China has grown remarkably to become the world’s biggest economy. But is its growth now over? British media suggest that the answer is yes. A property crash is expected to bring the Chinese economy down.
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