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The Guardian
a day ago
- Business
- The Guardian
We expected dominance but Peak China may finally have arrived
Proclamations about the inevitability of China's dominance of the global economic system, or the so-called Chinese century, are much less validated by contemporary Trumpian angst than what should be the Communist party's appeal to its intrinsic values and virtues. Common concerns about coercive politics and human rights aside, some notions of China as an unstoppableeconomic, technological and military behemoth sit alongside others focused more on an increasingly sclerotic, over- centralised political economy, that depends on wasteful economic stimulus, and features poor governance and institutions. The fusion of these notions suggests that we may already have reached 'peak China'. At the time of the 2008 financial crisis, China's official, and probably exaggerated, GDP was about $14tn (£10.4tn), or about a third of that of the US. By 2021, it had risen to three-quarters of America's $23.7tn, and there was widespread talk about in which year of the 2020s China would overtake the US. By 2024, however, China's $18tn economy had fallen back to just over 62% of the almost $30tn of the US. In GDP per head terms, China is still no more than 20% of the US. A rising China uniquely lifted its share of global GDP between 2000 and 2021 from 3.5% to 18.5%, but since then it has slipped back to about 16.5%. There is no question that China's rise is at least stalling. The working age and total population are now in relentless decline. The urbanisation rate, just over 60%, is flattening out. Productivity growth has stalled. The long surge in China's share of global manufacturing exports and production has levelled off, and the external environment for China is now much harder and more hostile. A 90-day pause in the US-China tariff war is due to expire on Tuesday, and it is unclear whether it will be extended. Part of the problem is that China has reached the end of extrapolation. The past really is another country. Some of its growth engines could only ever fire once, for example, enrolling children in primary and secondary schools; improving basic healthcare; reaping the demographic dividend of falling dependency rates; and moving people from the countryside to higher-productivity, urban jobs. Some growth also flowed from a number of highly effective policy initiatives such as those captured by the era of reform and opening-up, inspired by Deng Xiaoping: joining the World Trade Organization; creating a genuine market in housing, and exploiting globalisation. None of these can happen again. China's growth model, moreover, based on unrealistically high growth targets and uniquely high investment and savings rates, is becoming swamped by stagnant productivity, debt service difficulties, and misallocation of capital. At the Central Economic Work Conference in December last year, China's premier, Li Qiang, summarised his country's condition by saying candidly that the foundation for sustained economic recovery and growth is not strong, demand is weak, there are pressures on job creation and 'fiscal difficulties' among several local governments. Although consumption has been made a top priority, actual policy measures to make it so have been underwhelming, partly because redistributing economic power to companies and citizens also entails changes in political power, which are anathema to the Communist party. The structural downturn in the property sector, which had at one stage accounted for more than a quarter of the economy, is likely to shrink for the foreseeable future, dogged by lower rates of household formation and smaller cohorts of first-time buyers, both linked to demographics, and a chronic oversupply of unsold and uncompleted real estate. The government has softened its approach to private enterprises and approved a new private economy promotion law to bolster AI, technology clusters and hubs, and reduce regulatory barriers. Low business confidence, though, is not really about regulations but about political interference, and weak demand and profits. The super-globalisation from which China benefited is pretty much over, and the world's biggest export nation is now confronted by a fragmenting and fracturing trade and investment environment in which commerce within blocs is holding up better than trade between them. China's bloc includes a majority of the world's population, but very small proportions of world GDP, investment and wealth. At the same time, developed and middle-income economies, as well as emerging nations, are pushing back against what they perceive to be predatory trade policies by a mercantilist China. Peak China does not stem from doubts about China's industrial prowess and pedigree. It is, though, about two things that can be simultaneously true: China can have world-class companies and trendsetters such as Alibaba, Tencent, BYD, CATL, Huawei and DeepSeek, as well as an economy with systemic imbalances, debt capacity limits, and political and economic contradictions. Put another way, China has islands of technological excellence and leadership in a sea of macroeconomic turbulence and trouble. This characterised Peak Japan 40 years ago, and China is shaping up for the encore. George Magnus is a research associate at Oxford University's China Centre and at Soas University of London. He is the author of Red Flags: Why Xi's China is in Jeopardy
The Guardian
2 days ago
- Politics
- The Guardian
Ion Iliescu obituary
Ion Iliescu, who has died aged 95, served three terms as the elected president of Romania, setting one of the best examples in Europe of how former communist leaders could support democratic reforms and maintain social stability in their countries when the old system of repressive one-party rule crumbled. Iliescu had revealed himself as a progressive during the harsh dictatorship of Nicolae Ceaușescu. He was appointed head of the Communist party's agitation and propaganda department in 1965, the year that Ceaușescu became party leader. For more than a decade Iliescu served him loyally but gradually became disillusioned by Ceaușescu's megalomania. Iliescu did not hide his views and he was forced to accept a series of minor jobs in provincial cities, though he was able to remained a member of the party's central committee. In 1984 he suffered his final demotion by being given the post of running a technical publishing house. There he could have remained, in obscurity, like many other minor party officials from modest backgrounds. Iliescu was born in Oltenita, a small southern town on the Danube. His father, Alexandru, was a railway worker who supported the banned Romanian Communist party and was imprisoned for four years during the second world war. His mother, Maria, was a Roma who left when Ion was an infant, and he was brought up by his stepmother and grandparents. He studied engineering for four years at the Moscow Power Engineering Institute. Back in Romania he joined the Union of Communist Youth in 1944 and the Communist party in 1953. The revolutionary year of 1989 changed the landscape of eastern European politics and gave Iliescu a chance to shine. The collapse of communism in East Germany, Czechoslovakia and Poland in 1989 produced similar demonstrations for change in Bucharest and other Romanian cities, but unlike the behaviour of the authorities in those countries, the security forces in Romania were ordered to shoot protesters. In the turmoil and bloodshed, Iliescu emerged as a leader of the pro-reform forces. He founded a broad-based National Salvation Front (FSN). With the army beginning to split, Ceaușescu and his wife, Elena, fled the capital in a helicopter. They were captured, held at an army base and then shot. Iliescu went on national TV to 'salute the popular movement' and promise free elections, political pluralism and market reforms. As leader of the FSN, Iliescu had authorised the execution of the Ceaușescus. He admitted it in his memoirs, saying he later regretted it. The hope had been, he said, that it would end all resistance to the revolution. Iliescu was named Romania's interim president in December 1989. Apparently shocked by the Ceaușescus' death, his new government abolished capital punishment. In the chaos of the unexpected collapse of the old system, class tensions were high, and there were fierce debates over whether to reprivatise state enterprises and put former communists on trial, or at least bar them from public leadership roles. The Communist party was dissolved and Iliescu left the FSN. He founded the Social Democratic party in a clear sign that he hoped to replace traditional Romanian authoritarianism with Scandinavian-style politics. It was an uphill struggle. In the days after the Ceaușescus' execution more than a thousand people were killed in clashes with the security forces. Street protests against Iliescu's government were constant and in May 1990 Iliescu called on hundreds of leftwing miners to be bussed to Bucharest to break up the protests. The bloody clashes that ensued were called the Mineriads. In spite of the violence, Iliescu remained popular and in June 1990 he won a staggering result, securing 85% of the vote for the presidency. The issue of blame for the post-revolutionary violence continued to fester for decades. In 2018 prosecutors indicted Iliescu for 'crimes against humanity' over the deaths in the clashes that followed the Ceaușescus' execution. In a separate case he was charged with orchestrating the miners' violence in 1990. Both sets of charges were ultimately dropped. In 1996 Iliescu narrowly lost the presidential election to Emil Constantinescu, a professor of mineralogy who had been a leader of the street protests in 1990 that the miners broke up. He represented the centre-right of Romania's new politics, which favoured the rapid privatisation of the country's state-run economy. He had come second to Iliescu in the presidential race of 1992. His promises of rapid economic progress won more support from voters in 1996. Iliescu lost the election but stepped down with dignity. It was the first time in eastern European politics that a former communist leader had accepted electoral defeat. But Constantinescu's period in power disappointed his supporters. His promises of economic advancement came to nothing, and in the 2000 election Iliescu made a comeback. Constantinescu's legacy on foreign affairs was more successful than his policies on domestic issues. He pressed for Romania's membership of the European Union and Nato. This pleased western governments who remained wary of Iliescu. But Iliescu had changed his views and when he resumed power in 2000 he continued the movement towards Romania's membership of the Euro-Atlantic club of Nato and the EU. His term in power ended in 2004 and he largely retired from public life. In a brief statement in May this year he congratulated Nicușor Dan, Romania's new centre-right president, on his election victory. He is survived by his wife, Elena (nee Șerbănescu), whom he married in 1951. Ion Iliescu, statesman, born 3 March 1930; died 5 August 2025
The Guardian
31-07-2025
- Climate
- The Guardian
Chinese official makes rare admission of failings over deadly Beijing floods
A Beijing city official has issued a rare public acknowledgment of official failings in the authorities' response to the severe flooding that hit China's capital this week. Yu Weiguo, a Communist party secretary for Miyun, the northern district worst affected by this week's extreme weather, said in a press conference on Thursday that there were 'gaps' in the city's readiness for the deadly floods. More than 40 people are confirmed to have died in the flooding that hit Miyun and Yanqing, another Beijing district, on Sunday and Monday. Nine are still missing, including four municipal government workers. A year's worth of rain fell within seven days, turning cars upside down and flooding homes. More than 80,000 people have been relocated and more than 100 villages lost power. In total, more than 300,000 people have been affected. 'There were gaps in our preparatory plans. Our knowledge of extreme weather was lacking. This tragic lesson has warned us that putting the people first, putting human life first, is more than a slogan,' Yu said, according to Agence France-Presse. Of the 44 confirmed fatalities, 31 happened at an elderly care home in Taishitun, a town in Miyun. A report published by Caixin, a Beijing-based business magazine, said the water in the nursing home was still knee-deep when journalists visited on Tuesday. The care home, where many residents had limited mobility, is near the banks of the Qingshui River, which overflowed during the deluge. Yu expressed 'deep mourning' for the deaths. His comments are a rare admission of weaknesses in the authorities' preparedness for extreme weather events, which are becoming more common. Beijing authorities said there was 67% more rainfall this year than in previous years. City officials said their disaster prevention plans had been imperfect and there were 'shortcomings' in the infrastructure needed in the mountainous outlying districts of Beijing. Many flood victims interviewed by the Guardian said they did not receive advance warnings about the extreme weather. 'The government was caught off-guard, they didn't know in advance either,' said Li Qingfa, a 75-year-old Miyun resident. 'We didn't really receive any specific warning. We didn't receive any training in confronting the disaster.' On Monday, before the scale of the destruction was apparent, Xi Jinping, China's leader, said government departments should 'make every effort to protect people's lives and property'. Additional research by Jason Tzu Kuan Lu and Lillian Yang
