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China has a fateful choice to make

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China has a fateful choice to make

The Ukraine war, Covid, and the real estate bust herald a crossroads for the world's biggest nation.

Noah Smith,

5 min read
3 take-aways
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China is in a bind, facing crises made worse by its ambitions to overturn the liberal world order.

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China is in a bind: Internationally, its support for Russia in the Ukraine invasion has put Beijing at odds with the West and may expose it to secondary sanctions. Domestically, regulatory crackdowns, a real estate slump and zero-COVID policies are damaging economic growth. Financial journalist Noah Smith ties China’s responses to these crises to President Xi Jinping’s ambition to create a new world order, providing an engrossing take on the political realities driving the Chinese leader.


China is confronting several crises, both external and internal.

Four developments are threatening China’s economic growth and the government’s stability: First, Russia invaded Ukraine. The abrupt military action forced China into a dilemma – it could remain a bystander, leaving its ally to its own fate, or it could provide aid that would risk sanctions from the West. Second, government attempts to direct economic activity into sectors viewed as more worthy by Beijing have created economic uncertainty and regulatory risks that undermine China’s investment appeal.

Third, zero-COVID policies are shutting down entire cities and industries, having an enormous ...

About the Author

Noah Smith is a former Bloomberg columnist and assistant professor of finance at Stony Brook University. He blogs at Noahpinion.

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