Why China Can’t Pull the World Out of a New Great Depression

F. William Engdahl

Over the past two decades since China was admitted into the WTO, its national industrial base has made unprecedented strides to emerge as the world’s leading economic producer in many major areas. The academic debates over whether China’s GDP is larger than that of the USA are misplaced. GDP is largely worthless as a measure of a real economy. When measured in real physical economic production, China has left the USA and everyone else in the dust. Therefore, the future course of industrial production in China is vital to the future of the world economy. Globalization of the world economy made it so.

Steel production is still the single best indicator of a growing real economy. In 2021, China produced more that twelve times the tonnage steel as the USA, over one billion tons. The USA, once world leader, managed a piddly 86 million tons. In tons of coal, China produces some 50% of world total coal. She controls 70% of world rare earth mining and over 90% of its processing, thanks to bizarre US policy actions going back several decades. China today is far the world’s largest motor vehicle producer, almost three times the size of the US at 27 million units annually, one third of world total in 2022. China is by far the largest producer of the essential cement for construction, and is the world’s leading aluminum producer. At 40 million tons in 2022, this compares to not even one million tons in the USA. It is also the world’s largest copper consumer. The list goes on.

This is merely to suggest how essential the economy of China has been to world economic growth over the past two decades. A mere four decades ago China was insignificant in world real economic terms. So, if China goes into deep economic contraction, the effect this time will be global. And this is just what is now underway. Important to note, the contraction began well before the severe three-years of China’s zero covid lockdown. Simply put, China since the so-called Great Financial Crisis of 2008 managed to create a financial bubble the size of which the world has never before experienced. That bubble began to deflate, beginning in real estate, around 2019. The scale is systemic and is only beginning.

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