{"id":470572,"date":"2026-05-28T02:29:16","date_gmt":"2026-05-28T02:29:16","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/470572\/"},"modified":"2026-05-28T02:29:16","modified_gmt":"2026-05-28T02:29:16","slug":"recession-with-chinese-characteristics-american-enterprise-institute","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/470572\/","title":{"rendered":"Recession with Chinese Characteristics | American Enterprise Institute"},"content":{"rendered":"

The Trump-Xi summit was interpreted by some,\u00a0including Xi<\/a>, to represent America\u2019s decline and China\u2019s rise. While\u00a0President Trump\u2019s behavior<\/a>\u00a0often suggests decline, one way or another, China\u2019s rise should be questioned. Due to policy choices and demography, China\u2019s\u00a0long-term economic future<\/a>\u00a0is grim. Perhaps more surprising: in the short term, China\u2019s purely domestic economy may have been shrinking for at least two years.<\/p>\n

\u201cDomestic,\u201d of course, has a giant qualifier. The goods trade surplus neared $1 trillion in 2024,\u00a0$1.2 trillion in 2025<\/a>, and is on course to be extremely large again in 2026. This matters a good deal, even to the internal economy. The money earned by goods exports can spill into internal sectors\u2014offering revenue that can be used at home to pay wages, fund research and development and so on. Internal sectors can be healthier than they look on their own.<\/p>\n

Still, the internal sector is the larger part of the economy and the target of most policy aimed at prosperity and vibrancy. It shouldn\u2019t be propped up by foreign demand. Xi Jinping has stated an intent to\u00a0make the world more dependent<\/a>\u00a0on China and China less dependent on the world. With exports soaring and imports stuttering, the somewhat ironic result that China has become reliant on foreign markets for growth. Utterly reliant.<\/p>\n

One form of GDP accounting breaks the total into net exports plus internal investment and consumption, public and private. In 2024, using official data on\u00a0GDP<\/a>\u00a0and the\u00a0exchange rate<\/a>, the increment to nominal GDP was about $770 billion, with a goods trade surplus of about $990 billion. Goods trade is one component of net exports. The other, services trade, showed a\u00a0$160 billion deficit<\/a>. This implies a small decline in the size of the domestic economy.<\/p>\n

Last year saw a larger decline. Using official statistics,\u00a0the increment to nominal GDP<\/a>\u00a0was $760 billion. The\u00a0services trade deficit was close to $120 billion<\/a>\u00a0and the goods trade surplus was a staggering $1.19 trillion. The purely domestic economy thus shrank by $300 billion. Again, this is just a simple form of accounting, neither causal nor conclusive. But it\u2019s no longer a small aberration. \u00a0<\/p>\n

The start of 2026 is clouded by uncorrected seasonality and as yet incomplete data and revisions. Nonetheless, in the first quarter the\u00a0goods trade surplus<\/a>\u00a0was again clearly larger than the\u00a0increment to nominal GDP<\/a>\u00a0as a whole. There was apparently no change in April\u2014the consumption and investment indicators signaled contraction while the goods trade surplus\u00a0touched $85 billion<\/a>. (And this obviously didn\u2019t begin with the Iran war.)<\/p>\n

Other salient indicators show a similar picture. For the first time since the data was anywhere close to being meaningful, more than 5000 listed non-financials reported\u00a0three consecutive years of earnings declines<\/a>\u00a02023\u201325. A national household finance survey conducted by a Chinese university showed\u00a0wealth declining sharply<\/a>\u00a0from summer 2023 to summer 2025 (latest available).<\/p>\n

National wealth as a whole\u00a0did grow in 2024<\/a>, though this more fully captures net exports. Going back farther, some observers foresaw a boom when zero-Covid policies were lifted. Never happened. Instead, core internal economic indicators were weaker\u00a02022\u201325 than 2016\u201319<\/a>\u00a0while net exports were far stronger. A single angle on always questionable Chinese data is never definitive but internal weakness looks to have since evolved into outright contraction.<\/p>\n","protected":false},"excerpt":{"rendered":"The Trump-Xi summit was interpreted by some,\u00a0including Xi, to represent America\u2019s decline and China\u2019s rise. While\u00a0President Trump\u2019s behavior\u00a0often…\n","protected":false},"author":2,"featured_media":470573,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,114,20868,113,159523,61,1955,60,5766],"class_list":["post-470572","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-china","tag-chinese-economy","tag-economy","tag-gross-domestic-product-gdp","tag-ie","tag-international-trade","tag-ireland","tag-wealth"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/470572","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=470572"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/470572\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/470573"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=470572"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=470572"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=470572"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}