China’s economy looks like a charred Peking duck

China’s economy resembles a charred Peking duck. You know it is done to a crisp when President Xi Jinping frantically searches to turn off the stove.

In his New Year address to the Chinese people earlier this week, he talked about “uncertainty,” “pressure,” and “challenges” during his speech televised on state broadcaster CCTV.

Then, as if realising his tone risked turning a malaise into a meltdown, he came up with the usual caveat, “Everyone should be full of confidence.” It was frankly laughable after a year of persistent gloom engulfed the economy.

The danger is that 2025 will follow a similar trajectory. “China’s go-go days are behind it as the world’s second-largest economy struggles with the bursting of the biggest real-estate bubble ever,” The Wall Street Journal reported on Wednesday.

“[It] is burdened with excess. Millions of empty or unfinished apartment blocks, trillions of dollars in debt straining local governments and ballooning industrial production [that is driving] an export surge that is igniting trade tensions worldwide,” the WSJ said.

The overall story is of an economy that is again growing off exports.

Brad Setser at the Council on Foreign Relations

Dangers of excess: 

• China’s trade surplus soared to US$785 billion in the first 10 months, according to data released in November. 
• Nations across South America and the European Union have already imposed tariffs on steel and electric vehicles to protect crucial industries. 
• The United States has also targeted Chinese exports. But now President-elect Donald Trump has threatened to impose a 60% baseline tax on all Chinese goods this year.

Delve deeper: “With Chinese export prices still falling, export volume growth was enormous. The overall story is of an economy that is again growing off exports,” Brad Setser at the Council on Foreign Relations posted on X, formally known as Twitter.

Between the lines: “[But] there are deep-seated doubts as to whether [Beijing] has the political conviction to address China’s deflationary economy,” George Magnus at Oxford University wrote in a commentary for The Wire China in November.

China Factor comment: Still, it is Trump’s return to the White House later this month that poses a colossal “challenge” to the Chinese economy. How his relationship with Xi evolves “will have profound implications” for the rest of the world. Peking duck anyone?