Since 1978, the Chinese economy has grown spectacularly. That era of rapid economic growth is over. There are both proximate and structural causes for the economic slowdown. 

The three key proximate causes are COVID, US actions to dominate the commanding heights of cutting-edge technology and the new anti-globalization zeitgeist. The long-term structural causes for the Chinese slowdown include China’s real estate bubble, the bad debts on its bank’s books, its declining demography and rising cost of labor, the limits of its exports-led growth model and the reassertion of state control over the market.

For decades, China enjoyed a virtuous cycle and appeared to defy the economic laws of gravity. Now, the Middle Kingdom will find that it is subject to the same business cycles and animal spirits as everyone else.

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.