Troubles in China prove the need for change in Europe’s economy
The slowdown in the Chinese economy this summer has caught all analysts off-guard. Benjamin Zeeb and James Bartholomeusz explore what this means for EU economic policy.
One by one, it seems, the pillars of conventional economic wisdom are crumbling away. With so much of their intellectual credibility reduced to rubble in the wake of the 2008 crisis, neoliberals could at least until recently claim they had correctly foreseen the path of globalisation in the early-21st Century: the Asian economies, especially those of China and India, would continue to rise and lead worldwide development with consistently strong growth and few, if any, hiccups. This summer, however, yet another tenet of our world-view has come under attack.
There is much debate over the causes of the malaise in the Chinese economy, but the most salient explanation is as political and cultural as it is economic. The country’s development since the reformist premiership of Deng Xiaoping has been astounding, but Beijing’s aspiration to be this century’s superpower means not only continuation but acceleration. It is no longer befitting for the People’s Republic to be the low-cost, low-quality workshop of the world, however lucrative this might be – the Communist Party, ironically, has come to the view that a truly modern nation is best-served by a skilled and affluent middle class. Hence the hasty introduction of stakeholder finance, and hence the equally speedy market crash.
Shanghai’s finance district is one of the economic powerhouses of east Asia.
