China On Track For Lost Decade; Won't Surpass Us

Desmond Lachman, a former IMF official, predicts that China's economy is struggling and could go through a lost decade like Japan. This means that China may no longer be the leader in economic growth. However, this also means that we don't need to worry about China overtaking our economy.

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A person who used to work for the International Monetary Fund says China's economy might have a bad time for ten years. This is like what happened to Japan a long time ago.

Growth was strong earlier this year after the end of COVID restrictions last year. However, recent indicators suggest growth is slowing down.

Desmond Lachman wrote in Barron's that China's housing and credit market bubbles caused a lot of the financial problems. Lachman says that Japan went through a similar situation in the 1990s.

The era of China leading growth and driving commodity prices may be coming to an end. This is according to a statement from an expert. China is currently the world's second-largest economy.

People are worried about China's economy. This has caused problems in markets. Some people think that zero-COVID policies aren't helping. Investors from other countries are leaving Chinese markets.

Lachman works at American Enterprise Institute now. He said China didn't sustain a good recovery. He wasn't surprised because home prices fell for 12 months and local governments struggled to repay debts. Land sales also stopped.

China won't have a housing bust like the US did, but the government's support for their housing market and unproductive local governments will limit credit for other parts of the economy.

Lachman said that one good thing about China's possible lost decade is that we don't have to worry about China taking over our economy anymore. He compared this situation to when Japan was thought to be an economic powerhouse in the 1980s, but it turned out that their economy was not as strong as people thought.

The economy being slower can make prices for commodities and Chinese exports drop, which can help with inflation, according to him. He also thinks that this might make the Federal Reserve less strict about their monetary policies.