Ruchir Sharma has rightly punctured dreams of a sustained reopening boom in China (Opinion, Could 21). Certainly, old China hands see its economy as a distant (but far bigger) echo of Japan’s at its 1990 peak, and for the similar factors — weakening demographics and also substantially debt fuelling also substantially investment, in Japan’s case corporate investment, in China’s case infrastructure and residential home.
China is also experiencing the similar US protectionist backlash as Japan did then. This time, although, a sluggish Chinese economy could have extra really serious international ramifications, and not merely in terms of weakening demand for raw supplies such as iron ore and copper. Germany, which extended ago hitched its wagon to China’s star, and benefited hugely from exports of vehicles and machinery could now endure from China’s drive for self-sufficiency. Its automobile exports to China are falling, although Chinese brands are squeezing out German tends to make domestically and are poised to invade the EU industry.
And what are Chinese domestic investors performing — acquiring gold at a premium to planet rates. Not a sign of self-assurance in their personal economy.
Richard Cragg
London KT1, UK
