China’s Economic Struggles

Beijing is stepping up its efforts to scuttle a visit to Taiwan by House Speaker Nancy Pelosi in the coming days, and the Communist Party’s threatening rhetoric makes more sense when considering the domestic context. China’s economy looks increasingly fragile, so it wouldn’t be surprising if the president Xi Jinping resorts to nationalist tightrope politics as a distraction.

The basic story is slowing economic growth. Beijing has set a GDP growth target of 5.5% in 2022, which is modest by historical standards. Even the Party now seems to admit that the country will not achieve this target, at least not honestly, as growth was only 2.5% in the first half of the year. For an economy the size of China, with hundreds of millions of citizens still in poverty, this is the functional equivalent of a recession.

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