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Potential Chinese Economic Crisis and Its Impact on Russia: Analysis and Predictions

For Russia, which is totally dependent on China, this is negative news

Economists continue to assess processes in China as deflationary, expressing concern about its economic condition. However, the difficulty lies in the opacity of Chinese statistics, and the analysis is carried out on the basis of indirect data, writes New York Times

Disturbing Parallels

This bell becomes especially alarming given the experience of Japan and other Asian “tigers” that went through the crises of the 90s. In their case, a deflationary period lasting approximately one and a half to two years preceded the economic collapse.

Examples from History

Even the Russian economy went through a similar period before the 1998 default. However, due to the small scale of the economy, it was relatively short.

China’s Long Path to Deflation

For China, with its huge economy, the deflationary period may be longer than for Japan. This is cause for concern, since the depth of the decline and the duration of complete stagnation can be significant.

Consequences for Russia

For Russia, which is totally dependent on China, this is negative news. In the event of a crisis, China would likely use its colonies, draining their resources, to delay its collapse. Moreover, Russia’s China-centric economy would be in a bind if China were to face a full-blown crisis.

Context:

American economist and Nobel Prize laureate in economics Paul Krugman believes that China is experiencing Japanese-style deflation and high youth unemployment, which indicates the beginning of an era of “stagnation and disappointment.”

Paul Robin Krugman – American economist, economic geographer and publicist, laureate of the 2008 Alfred Nobel Prize in Economics. Doctor of Philosophy, Member of the American Philosophical Society

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Author: Mark Voroshilov

2024-01-20 16:36:24
#Deflation #China #wakeup #call #Putins #Russia

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