Noah Esper

Staff Writer

nle5099@psu.edu

The People’s Republic of China, or the PRC, has seen increasing economic growth since the market-based reforms under Deng Xiaoping. In fact, many political commentators believe that it is this constant economic growth that has allowed China to remain relatively politically stable as many Chinese citizens are willing to tolerate the increasingly totalitarian restrictions of the Chinese government in exchange for economic prosperity. However, China’s rapid growth is now showing signs of slowing and even retracting amid recent price increases along with the slowing of production.

Chief Economic Analyst for Pinpoint Asset Management Zhang Zhiwei voiced his concerns in a recent interview with CNBC. Zhang made note of the production index which has currently dropped to its lowest level since its recording. Along with this, the price index has risen to its highest level since recording. These two factors coupled together could lead to a disastrous case of economic stagflation for the PRC as prices continue to skyrocket while fewer and fewer products are being produced. The reasons for this drop in production is believed to be the direct result of a recent power supply shortage along with material shortages and rising costs of raw materials. 

While at first China boasted a speedy recovery from the coronavirus economic crisis, recent events appear to paint a different picture as China faces economic setback after setback. It’s also important for readers to keep in mind that the PRC is infamous for hiding many of its political and economic failings from the rest of the world, making accurate predictions of China’s economic situation difficult.

However, if the Chinese government doesn’t act fast to deal with this crisis it could easily lead to further disaster for the current regime as economic instability could lead to possible increased political instability as more and more Chinese citizens may start to protest the current government’s totalitarian policies. China has a long history of periods of political instability leading to the fall of many governments and dynasties and it is entirely possible that this could be the beginning of another of these periods of instability. 

If this economic crisis isn’t swiftly dealt with, the consequences won’t just be felt in China. Due to China’s nature as the world’s factory, any slowdowns in production in China will be felt globally, especially in first-world economies like the U.S. which heavily rely on Chinese manufacturing. American consumers will likely see a drop in the availability of certain manufactured goods as the slowing Chinese production tries to keep up with the increasing demand from first-world economies. However, as China deals with the aftermath of this economic crisis this decrease in production could act as a signal for western governments and corporations to focus on domestic industries as the cost and efficiency of Chinese imports comes into question.

While recent supply chain issues are negatively affecting the ability of Americans to consume foreign goods, domestic industries are working to try and pick up the slack as many American based businesses begin preparing for the holiday season with American made goods now becoming more of a financially viable alternative to foreign goods, possibly leading to a new rise in America’s manufacturing sector which will lead to more jobs and economic prosperity for local communities.