Pekingology China's Economic Transition
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Oct 2, 2025 Dinny McMahon, Head of China Markets Research at Trivium China, and Andrew Polk, Co-Founder of Trivium China, dive into China's economic challenges. They discuss the looming middle-income trap and the critical role of innovation and productivity in overcoming it. The guests highlight 2035 as a pivotal point for China's economy due to demographic changes and deglobalization. They also explore why housing is crucial for growth and who influences Beijing's economic decision-making, shedding light on Xi Jinping's unique approach to welfare and fiscal policy.
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China's Core Economic Challenge
- Beijing frames its economic problem as avoiding the middle-income trap while delivering common prosperity amid rising debt and aging demographics.
- Officials seek a structural shift that raises incomes and reduces debt reliance rather than expanding welfare via borrowing.
Property Crash Creates Fiscal Black Hole
- The property collapse drags growth, erodes household wealth, and starves local government budgets previously funded by land sales.
- That fiscal stress forces local austerity, hurting spending, contractors, and confidence across the economy.
Innovation Is The Unifying Fix
- Beijing sees productivity and technological innovation as the common solution to debt, demographics, and deglobalization.
- Innovation must replace property-led investment to free resources for higher-value growth.