It’s easy enough to say the Chinese economy is slowing down and that is creating problems for some other countries around the world. Never settle for such a comfortable understanding! Might there be deeper ways to think about the problem?
I am not endorsing any of the following speculative hypotheses, rather they are attempts to imbed the Chinese slowdown into what is possibly a broader framework. Here are a few possibilities:
1. We’ve been realizing that autocratic government isn’t as effective as we had thought.
2. We’ve been realizing that virtually all of the world’s emerging economies will be hit by “premature deindustrialization,” China included. China will produce more manufactured goods, but because of automation this will never build a fully-sized middle class in China. And historically service sector jobs have never had the same kind of oomph at lifting a nation over various development hurdles. The same limitations may apply to a variety of other countries.
3. Perhaps developing nations have reached “peak stuff”? That may mean the Chinese manufacturing model, along with the manufacturing models of other nations, will prove less potent than we had thought.
4. Maybe we’ve been learning that a demographic slowdown is harder to reverse, and is more costly for long-run growth, than we had thought.
5. The geopolitical stability of the South China Sea is not as robust as it seemed three or four years ago.
In each case the relevant realization may be popping China, and some other emerging economies, out of better multiple equilibria and into inferior multiple equilibria (“is Greece a Balkans nation or a European nation?”).
Again, I am not dismissing the highly relevant China-specific factors of excess capacity, high municipal debt, real estate bubble, and so on. I am simply wondering what other broader trends may be operating here beneath the surface.