United States of America eSeries: China’s Economic Problems (And Everybody's)

China’s Economic Problems (And Everybody's)

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Insights, analysis and must reads from CNN's Fareed Zakaria and the Global Public Square team, compiled by Global Briefing editor Chris Good

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September 30, 2021

China's Economic Problems (And Everybody's)

For most Westerners, the word "Evergrande" probably meant nothing until recently. Now, the massive Chinese real-estate developer is filling up headlines: With more than $300 billion in debt and sitting on the verge of default, it is prompting references (and dismissals of those references) to Lehman Brothers' 2008 collapse.

Evergrande's problems reveal an underlying vulnerability for China's private sector, Greg Ip writes at The Wall Street Journal. Chinese authorities have sought to rein in a real-estate industry driven by private corporations, Ip writes, noting a move to restrict credit. The power of private companies is a broader point of contention in China, and Ip suggests Evergrande's woes hint that China's private sector will suffer as regulatory hammers drop.

Evergrande's problems mirror everyone else's, Morgan Stanley's Ruchir Sharma writes for the Financial Times, as the global economy has been loaded up with governmental, corporate, and consumer debt in recent years. "In many ways, China follows the same deformed model of capitalism as most western countries, only more so, taking on ever increasing levels of debt to generate less and less growth," Sharma writes.

Trump's Foreign Policy Endures

As Fareed argued in a recent Washington Post column, President Joe Biden has continued many of former President Donald Trump's foreign policies, despite railing against them on the campaign trail—from maintaining tariffs on allies to staying out of the 2015 Iran nuclear deal.

In a Foreign Affairs essay, Richard Haass explores further what hasn't changed. Biden's administration has continued Trump's warming to Taiwan (despite long-held fears in Washington of irking Beijing); has "given credence" to the theory that Covid-19 leaked from a lab; and was slow to export vaccines and supplies, seemingly hewing to Trump's "America first" impulse, Haass writes. Biden kept Trump's promise to withdraw from Afghanistan and has hesitated to open borders to European travelers. Despite Biden's softer, more-internationalist tone, the list goes on.

As for the effects, Haass warns: "In the absence of a new American internationalism, the likely outcome will be a world that is less free, more violent, and less willing or able to tackle common challenges. It is equal parts ironic and dangerous that at a time when the United States is more affected by global developments than ever before, it is less willing to carry out a foreign policy that attempts to shape them."

The Weakness Covid-19 Revealed

Since the start of the pandemic, experts have warned of a pernicious cycle in disease preparedness: urgent responses to crises like Ebola and Zika, followed by years of neglect. At The Atlantic, Ed Yong writes of a broader problem: The US puts plenty of emphasis on medicine (which treats individuals and their maladies) but not enough on public health (which seeks to protect populations).

Public health remains relatively underfunded and less respected than medicine as an academic discipline, Yong writes. Covid-19 also revealed that socio-economic inequality can exacerbate pandemics, as unevenness in things like paid sick leave put various population segments at greater risk. Yong hopes Covid-19 will spark a reckoning with those vulnerabilities, beyond renewing focus on outbreak-response plans and syringe supplies.

China Finds Difficulty, Taiwan Finds Success on Europe's Eastern Edge

In Eastern Europe, the diplomatic struggle between China and Taiwan has tilted in favor of the latter, Soso Dzamukashvili and Eter Glurjidze observed recently at the Rondeli Foundation, a Georgian think tank.

Beijing typically forbids its international partners from diplomatically recognizing Taiwan—which it considers a rogue territory, not an independent country—but in post-communist states like Bulgaria, Estonia, Latvia, Lithuania, Romania, and Slovenia, a recent Chinese economic conference failed to generate top-level interest. In July, Lithuania allowed Taiwan to open a "representative office" under the name "Taiwan"; a Czech delegation visited Taiwan in September 2020; Slovakia sent vaccine donations. With their ingrained liberal-democratic values and bad memories of communism, Dzamukashvili and Glurjidze write that Eastern European countries "are not willing to risk their global image for a cooperation with China that has been nowhere near successful."