Reports of China’s demise are exaggerated

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He explains the paradox by differences in inflation and interest rates. For example, in 2023, China’s nominal GDP grew by 4.6 per cent, but because of deflation, its real GDP grew by 5.2 per cent. For the US, its nominal GDP grew by 6.3 per cent and its real GDP by only 2.5 per cent. The US Federal Reserve has been raising interest rates since 2022, while over the last year, China’s central bank has been cutting them, which has reversed previously large capital inflows into China. This has increased the nominal value of assets measured in US dollars. Lardy...