
Much attention goes to industrial innovation to save China’s sluggish economy. But leading economist Arthur Kroeber, author of China’s Economy: What Everyone Needs to Know®, is not too sure that path is helping the economy, he tells at NPR. “Growth is probably going to be pretty sluggish for a few more years yet. And they’re not going to get this magical nirvana that they hope for,” he adds
NPR:
WOODS: But the strategy may have its limitations, according to Arthur Kroeber. Arthur is one of these long-time China heads. He’s written a book. He started a China macroeconomics firm. He divides his time between New York and Beijing. He says that the government’s theory seems to be that heavy investments in tech will lead to productivity breakthroughs. Those productivity breakthroughs will then lead to higher wages and good jobs
ARTHUR KROEBER: I don’t think that that is very likely, because the problem with that is you look at all these high-tech industries that everyone is so excited about, EVs and batteries and whatnot, but they’re not very profitable.
RUWITCH: Arthur says there’s a capacity glut, a lot of stuff being produced, but not enough buyers to keep businesses standing on their own two feet. Companies in the solar sector are struggling. In batteries, profits are falling. Profitability in EVs is dropping. And a lot of this is due to competition with other companies in China.
KROEBER: Everyone is struggling, so they’re all barely making money. And so they don’t have a lot of ability to hire lots of people and give them big wages.
WOODS: Without those big wage increases, Arthur says, it’s hard to see how growth in high-tech industries will spill over to the rest of the economy.
RUWITCH: He says China’s industrial policy has been successful at a certain level.
KROEBER: They’ve got a lot of very competitive manufacturing industries. But the– but growth is probably going to be pretty sluggish for a few more years yet. And they’re not going to get this magical nirvana that they hope for.
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