China's Economic Malaise Was Perfectly Predictable

China's current economic malaise is, of course, very similar to that faced by Japan in the early 1990s. Both the China bulls and the China declinists may be wrong. A third scenario is a "Middle" one between the China Reinvented and China Meltdown scenarios that sees the Chinese economy muddling through its current debt problems. For many of them, China's rise was highly desirable not just because it would lift millions out of poverty, but also because it would enable China to converge with the developed world. Far too often among China bulls, there is an almost religious fervor attached to the inevitability of China's rise. A well-known China bull used to say that between the years 1 AD and 1800 AD, China and India were always the two largest economies in the world. As it became increasingly evident that the zero COVID policy in China was causing long-term harm to the Chinese economy, many analysts at the time highlighted the risks and pitfalls ahead even if China abandoned zero COVID. For instance, I predicted in early January this year that "While domestic consumption is likely to grow strongly this year, it could be held back by at least two constraints: income growth has been weakened by higher unemployment and the job losses caused by zero-COVID, and the property sector remains depressed."