China's economy branded a 'time bomb about to explode' in fresh warning

China's economy branded a 'time bomb about to explode' in fresh warning

Paul Krugman said China may look to 'distract from domestic difficulties', and a former Navy Seal predicts China will 'take Taiwan in 2024'

GB News
James Saunders

By James Saunders

Published: 22/01/2024

- 14:09

‘There’s reason to believe that China is entering an era of stagnation and disappointment’

The Chinese economy has been labelled a “time bomb” as the country faces a growing demographic crisis, an expert has said.

The “stark realities” of an aging population and soaring youth unemployment have left China’s citizens unimpressed and passively resistant, said Matthew Henderson, an associate fellow at the Council on Geostrategy.

Henderson noted the effect of the infamous One Child Policy on China’s prospects, where “negative incentives” and “coercive force” were used to quell the country’s birth rate for over three decades.

One impact of that policy is a staggering gender gap in China, where “there are now 110 males for every 100 females, amounting to some 34 million ‘excess’ males”, he said in a column for The Telegraph.

A Chinese Coast Guard ship sails near a Philippine vessel (R) that was part of a convoy of civilian boats in the disputed South China Sea

Diplomatic tensions over the South China Sea have led to a first ever foreign investment deficit for China


Such a gap, and other demographic concerns, have left China with a mountain to climb to secure their long-term economic prospects.

The New York Times’ Paul Krugman said: “It’s not a full-blown crisis, at least not yet, but there’s reason to believe that China is entering an era of stagnation and disappointment.”

And surveys show that China's Gen Z-ers are the most pessimistic of all age groups, Reuters have said, as Chinese youth unemployment has hit 14.9 per cent.

Overseas interest in China has cooled too, with diplomatic tensions with the West simmering over Taiwan, Ukraine and the South China Sea – leading to China’s first ever foreign investment deficit.


Xi Jinping

Despite China's economic gloom, China’s President Xi Jinping is bullish

Wikimedia Commons

But Krugman counselled caution when “gloating about China’s economic stumble, which may become everyone’s problem.”

He suggested China may look to “distract from domestic difficulties by engaging in military adventurism”.

“Systemic problems have over the years become features in China’s $19 trillion economy” said George Magnus, a Research Associate at the China Centre at Oxford University.

Magnus noted widespread debt problems in China, notably in housing – “the real estate market has tipped over after an almost unbroken 20-year boom, which the government itself encouraged”, he said.

He issued a warning that China may face years of stagnation despite its place as the “centre of global exports” and succumb to Japan-style “lost decades”.

Despite the gloom, China’s President Xi Jinping is bullish, said Henderson, quoting the premier’s New Year Message.

In his address, Xi claimed the Chinese economy had “sustained the momentum of recovery” from Covid and that China and Taiwan should share in the “glory of the rejuvenation of the Chinese nation” – which Henderson described as “fantasy”.

“Rather than Xi’s vaunted glorious rejuvenation”, Henderson continued, “a massive demographic time bomb in China is ticking”.

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