Odd Lots The Four Big Structural Forces Holding Back China's Economy
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Aug 21, 2023 
Zongyuan Zoe Liu, a Maurice R. Greenberg Fellow for China Studies at the Council on Foreign Relations and author of 'Sovereign Funds', discusses the current struggles of the Chinese economy. She highlights the 'four Ds'—demand, debt, demographics, and decoupling—as major hindrances to recovery. Liu analyzes the government's economic policies, the impact of demographic shifts on real estate, and the role of sovereign wealth funds in navigating these challenges. The conversation offers a deep look at how China’s financial strategies are shaped by both internal and external pressures.
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Four Ds of China's Economy
- China's economic recovery has been hindered by four key factors, or the "four Ds."
- These include demand, debt, demographics, and decoupling (or de-risking).
Household Consumption Drag
- Household consumption in China has been a drag on economic growth.
- This trend worsened after 2013, particularly during Xi Jinping's second term.
Reluctance for Stimulus
- Declining household income growth and deteriorating balance sheets contribute to low consumption.
- Direct stimulus is unlikely due to the political implications of empowering households and potentially diluting the CCP's control over capital allocation.
