View: The West needs to be careful if they are cheering China's economic misfortunes

economictimes.indiatimes.com:

China poses to American hegemony.

It's an intriguing thesis, but in China's case it has a glaring flaw: The main challenge we will face from the People's Republic in the coming decade stems not from its rise but from its decline — something that has been obvious for years and has become undeniable in the past year with the country's real estate market crash.

Western policymakers need to reorient their thinking around this fact. How? With five don'ts and two dos.

First, don't think of China's misfortunes as our good fortune.

A China that can buy less from the world — whether in the form of handbags from Italy, copper from Zambia or grain from the United States — will inevitably constrain global growth.

For U.S. chipmaker Qualcomm, 64% of its sales last year came from China; for German automaker Mercedes-Benz, 37% of its retail car sales were made there.

In 2021, Boeing forecast that China will account for about 1 in 5 of its wide-body plane deliveries over the next two decades. A truism that bears repeating is that there is only one economy: the global economy.

Second, don't assume the crisis will be short-lived.

Optimists think the crisis won't affect Western countries too badly because their exports to China account for a small share of their output.

But the potential scale of the crisis is staggering. Real estate and its related sectors account for nearly 30% of China's gross domestic product, according to a 2020 paper by economists Ken Rogoff and Yuanchen Yang.

It is heavily financed by the country's notoriously opaque $2.9 trillion trust industry, which also appears to be tottering. And even if China averts a full-scale crisis, long-term growth will be sharply constrained by a working-age population that will fall by