Dragon Has No Teeth

THE DRAGON HAS NO TEETH:

China’s Long-Promised Consumer Boom Is a Mirage (Anne Stevenson-Yang, 3/13/26, NY Times)

Even if Communist Party leaders want to unleash more spending, formidable obstacles stand in the way, including a work force increasingly trapped in insecure, low-wage employment, a rapidly aging and shrinking population and a weak social safety net that encourages people to save for emergencies.

China’s people, perhaps more than at any time in the last few decades, are in no mood to go out and splurge. Many have been airing growing anxiety online, posting about falling incomes and scarce jobs. The average income was just over $500 a month in 2025. Unemployment is high.

A fundamental shift that has taken place in China’s labor market is the root cause of these problems.

Since the early 2010s, intensifying global economic competition, automation, the pandemic-era closure of countless businesses, slowing economic growth and China’s protracted property slump have all combined to eliminate millions of manufacturing and construction jobs. This has driven countless workers into a growing service sector that requires fewer skills and offers lower pay.

An estimated 200 million people, or at least one-quarter of China’s work force, are now engaged in insecure “gig” employment — delivering meals or packages, driving ride-hailing cars, selling goods online or doing other short-term work. According to a study last year, nearly half of gig workers have little to nothing in the way of a social safety net — which would include health care, a pension, unemployment benefits, maternity benefits and secure housing. The problem is worsened by chronic government underinvestment in social services. On top of that, advances in technology have given companies a precise view of seasonal demand and simplified recruiting, enabling them to hire and fire workers as needed.

Adding to worker insecurity is China’s household registration system, which restricts access to social services like schooling and health care outside one’s hometown. This effectively ensures that people from China’s vast countryside serve as cheap migrant labor for megacities like Beijing, Shanghai and Shenzhen. Reform of the registration system has been discussed for decades, but eliminating it would shift enormous welfare costs onto those cities, which currently reap benefits from migrant labor without shouldering social costs.

These are hardly a foundation for a vibrant consumer economy, and the future is not looking better.

SMAUG DIES IN THE END:

The rising risk of China turning Japanese: Beijing’s stimulus push may delay crisis, but without deeper reform, China risks a slower version of Japan’s long stagnation (Ronny P Sasmita, February 18, 2026, Asia Times)

Whether acknowledged or not, what is unfolding in China today bears a striking resemblance to Japan in 1989.

China’s property sector, which served as the primary engine of growth for two decades, has become a heavy drag on the economy. Developer giants such as Evergrande are not merely failed corporations; they symbolize the bursting of an asset bubble far larger than anything Japan experienced.

China is also beginning to show symptoms of Richard Koo’s balance sheet recession, this time at the household level. Middle-class families, with roughly 70% of their wealth tied to property, feel poorer as housing prices fall. Consumption slows accordingly.

At the same time, deflationary pressures are intensifying across the economy. Should China slide into a deflationary spiral of the kind Krugman describes, massive private and local government debts will become even more burdensome as the real value of debt rises while prices fall.

THE DRAGON HAS NO TEETH:

China Has Screwed Up Really, Really Badly (Victor Tangermann, Jan 21, 2026, Futurism)

The country’s population has been shrinking since 2022, and judging by the latest numbers, the trend is bound to continue. And as the population continues to age, hundreds of millions could soon be leaving the workforce — a demographic crisis and ticking time bomb in one.

THE DRAGON HAS NO TEETH:

China Looks Strong. Life Here Tells a Different Story. (Helen Gao, 11/13/25, NY Times)

Behind the orderliness of everyday life, a quiet desperation simmers. On social media and in private conversations, there is a common refrain: worry over joblessness, wage cuts and making ends meet. […]

These days, there is a sense of bitter anger among the people at being the voiceless victims of the state’s obsession with world power and beating the United States. That sentiment is likely to grow. The latest five-year plan — the government’s blueprint of economic priorities — that was released last month makes clear it plans to double down on prioritizing national power over the common good.

In April, as the tariff war with the United States intensified, a People’s Daily editorial argued that Beijing can resist American bullying thanks to systemic advantages such as China’s ability to centralize resources and pour them into accomplishing national goals. The backlash on the Chinese internet was swift. While the government boasts, a viral social media post pointed out, everyday struggles like finding work, putting food on the table and educating children are “fraught with difficulty.” Winning the trade war with the United States means “preparing to sacrifice some of the people,” the author wrote. Censors soon blocked the post and others like it.

Years ago, Chinese people would have cheered a People’s Daily editorial like that out of the reflexive nationalism that the government has instilled for decades. That patriotism is nearly drowned out today by those who vent over the problems they face.

Youth unemployment is so high that last year the government changed its calculation methodology in a way that produced a lower number. Even the new figure remains alarmingly high. An estimated 200 million people get by in precarious careers in a gig economy. Consumers, many of whom have seen their net worth shrink in an intractable housing market crash, are cutting back on spending, trapping the economy in a deflationary spiral.

The sense of economic insecurity is leading people to forego marriage and starting families, worsening a national decline in population. Popular frustration also is sharpening the divide between the haves and the have-nots — hardening public resentment against those who are perceived as parlaying economic or political connections into opportunity while most people face dwindling prospects. And mental health problems are believed to be rising, as evidenced by a spate of indiscriminate stabbing sprees and other violent attacks in the past couple of years.

It seems clear that Beijing can no longer count on knee-jerk patriotism to underwrite its increasingly assertive stance abroad. In September, when the Chinese Communist Party staged a lavish military parade to commemorate the 80th anniversary of the end of World War II, many people wondered aloud why that money wasn’t instead spent on addressing the difficulties of ordinary people.

The government recently began cracking down on social media content it considered “excessively pessimistic” — a clear sign it is concerned about this public unease undercutting its agenda. But suppressing criticism instead of addressing its causes will only deepen the disconnect with the people and strain the balancing act that the state has tried to strike between its foreign policy priorities and the domestic support it craves.

THE DRAGON HAS NO TEETH:

The End of the Chinese Dream (Yi Fuxian, Mar. 10th, 2025, Project Syndicate)

Back in 2016, I told the New York Times that China’s aging population and shrinking labor force would prevent its economy from overtaking America’s – a conclusion I had arrived at in the 2007 and 2013 editions of my book Big Country with an Empty Nest. Chinese authorities were not happy. I immediately went from being a state guest to a name on the government’s blacklist. Then, in 2019, I angered the authorities again by publishing a commentary bearing the headline: “Worse than Japan: how China’s looming demographic crisis will doom its economic dream.”

According to the dominant narrative at the time, the “Chinese century” was “well under way” (as The Economist put it). Nonetheless, my findings met with a receptive audience. In the introduction to a November 2020 Brookings Institution book on “the future of US policy toward China,” my commentary was the sole reference listed. (The author, Jeffrey Bader, had been one of the principal architects of the Obama administration’s “pivot to Asia.”) Since then, the dominant narrative has shifted, with many more analysts warning of China’s “Japanification.”

Japan’s experience has confirmed that demographics matter for economic growth, and this will remain the case regardless of whether one looks at Germany, France, China, or any other country. Owing to a rapidly growing workforce and a young population, Japan’s GDP grew from a mere 9% of US GDP in 1960 to 73% in 1995, and its per capita GDP grew from 17% of America’s to 154% in the same period. By 1990, Americans had come to regard Japan as their chief rival, with polls showing that three times more Americans feared the economic threat posed by Japan than the military one posed by the Soviet Union.

Yet Japan’s GDP growth rate has been lower than America’s since 1992.

Fear of a rising China is just a function of Sinophobia.

CAN’T HAVE A CLASH OF CIVILIZATIONS WHEN THERE IS ONLY ONE:

Why Is Xi Not Fixing China’s Economy?: Explanations from insiders range from ignorance to ideology. (Scott Kennedy, 6/30/24, Foreign Policy)

There were four views that commonly came up on why Xi and other top leaders haven’t taken a different approach, which we might dub “The Four Nos” in Chinese political style. The first is, “He doesn’t know.” Some have speculated that Xi is being kept in the dark about the sour state of the economy by cadres who do not want to give him bad news for fear that he would blame the messenger. And so, the thinking goes, they only provide him with sanitized, positive reports. […]

The second idea, “He doesn’t know what to do,” is based on the premise that Xi and other top leaders are well informed but they are facing a variety of problems that are not easy to fix. The list is long—the real estate crisis, ballooning local government debt, the plummeting fertility rate, rising inequality, disaffection in Hong Kong, and expanding tensions with the West and most of China’s neighbors—and solutions are far from simple. […]

The third option, “He doesn’t care,” is rooted in the hypothesis that Xi’s top priority is strengthening the CCP’s monopolistic hold on power and his own personal political dominance. Although the media shows him visiting factories and holding discussion sessions on various economic challenges, his own daily schedule may be dominated by managing security and political issues, including personnel decisions, not the economy. […]

The final answer, “He doesn’t agree,” speculates that the issue is not Xi’s insufficient access to information, indecisiveness and incompetence, or a lack of interest but rather that he and his lieutenants disagree with the criticism that the current policy line is incorrect and not up to the challenge.

CAN’T HAVE A CLASH OF CIVILIZATIONS WHEN THERE IS ONLY ONE:

China needs bold, open-door policies for economic resurgence (NIGEL GREEN, FEBRUARY 6, 2024, Asia Times)

The cumulative effect of three years of economic downturn, erasing a staggering US$7 trillion of value, demands a departure from the smaller measures.

It’s time for Beijing to adopt bolder, “open-door,” internationally minded, and transparent steps to reignite growth and restore confidence in the world’s second-largest economy.

At the core of Beijing’s revival strategy must be a commitment to openness and international collaboration.

China’s economic might has flourished through global engagement, and a renewed emphasis on an open-door policy will not only attract foreign investment but also facilitate the exchange of ideas and technologies.

There is no viable alternative to the End of History.

SMAUG’S BLIGHT:

Shocking Yet Normal? China’s 2023 GDP Growth Is -4.9% or -9.5% (Jennifer Zeng, 1/30/24, Japan Today)

From 2008 to 2012, the actual figures were lower than the official figures, but the differences weren’t too big, from 5 trillion to 0.1 trillion.

From 2013 to 2017, the actual GDP figures calculated using the expenditure method were even greater than the official numbers.

This shows that the GDP calculated using the expenditure method is not always smaller than the official figures. In 2014, it was even more than ￥17 trillion RMB ($2.37 billion USD) higher than the official figure.

Therefore, the expenditure method does not have a so-called “systematic bias” that will underestimate GDP.

In the six years from 2018 to 2023, the gap between the actual figures and the official figures grew wider and wider. Then in 2023, it was more than ￥33 trillion RMB, or about $4.79 trillion USD.

What does this indicate?

It shows that the actual economic situation in China is rapidly declining. Therefore, the scale of fraud also has to be rapidly increased to maintain the so-called 5% growth target.

By the way, the decline in China’s GDP in 2023, if it is denominated in US dollars, is minus 9.5%, not minus 4.9%. That is due to the changes in the ratio of the renminbi to the US dollar.

Lastly, the United States’ GDP in 2023 is estimated to be around $26.85 trillion USD. So if China’s actual GDP is $13.09 trillion, then China’s GDP is only about 49% of the United States, which makes it lower than anything anyone has ever talked about before.

OTHER THAN THAT, HOW’S ABORTION WORKING OUT FOR YOU?:

China’s population time bomb is about to explode (Matthew Henderson, 1/21/24, The Telegraph)

China’s workforce is shrinking and its population aging. There are now 280 million CCP citizens aged 60 or over. Rather than Xi’s vaunted glorious rejuvenation, a massive demographic time bomb in China is ticking.

How did this develop, and will Xi be able to defuse it? Around 1980, the CCP decided that the rate of population growth was harmful and launched mandatory birth planning measures known as the ‘One Child Policy’. Negative incentives and coercive force were then used to drive down birth rates for more than 30 years. By degrees it became clear that things had gone very wrong. Traditional patriarchal bias resulted in widespread selective female abortion, infanticide and abandonment. In China there are now 110 males for every 100 females, amounting to some 34 million ‘excess’ males. The productive labour and taxes of one young worker now have to boost the state pensions of 4 retired relatives. The number of retired CCP citizens will increase more than 30% in the next decade. The current pension system simply cannot handle this.