Here are the reasons, according to Nobel laureate economist Paul Krugman, why the Chinese economy is doomed to stagnation:

Because of the country’s aging population and the difficulty young people have finding employment, China’s labor force is also shrinking. According to official Chinese statistics, the country’s young unemployment rate hit a new high of 21% in the most recent quarter.

Krugman said that China’s demand has been slow to recover after the epidemic because of the country’s imbalanced economy. Real estate, which accounts for approximately a fifth of China’s GDP, and manufacturing both shrank in May.

Because of these issues, analysts are worried about China’s future. In particular, Krugman warned that the country risked falling into the “middle income trap,” a pattern common to rising nations in which economic growth peaks and then levels off.

The key issue is whether or not China can achieve social cohesiveness on par with Japan, which has been able to sustain slower development without widespread hardship or social unrest. I’m no China expert by any stretch of the imagination, but is there any reason to believe that China, particularly under an unpredictable authoritarian administration, could really carry this off? Additionally, he stated.

The slow pace of China’s economic recovery has prompted concerns from other specialists. One think tank claims reopening attempts are “doomed to fail” since demand remains weak, while another expert calls China’s reopening attempt a “charade.” Treasury Secretary Janet Yellen shared these sentiments last week when she told Bloomberg TV, “Growth has slowed, but our labor market continues to be quite strong.” No recession is in my forecast. The latest inflation numbers were quite promising.

Some Democratic senators aren’t persuaded by the Fed’s attempts to combat inflation, despite the confidence of Powell and administration officials. Elizabeth Warren, a senator from Massachusetts, has previously told Insider that she wants the Federal Reserve to halt rate rises to shield Americans from the effects of economic tightening.

Warren warned that a return to the Fed’s aggressive rate increase campaign may be “devastating” for the economy and “disproportionately harm marginalized communities” because of the spike in Black unemployment. “Chair Powell must keep the Fed’s pause on rate hikes in place and avoid further rate increases that threaten our economy and risk throwing Americans out of work,” said economist and policy analyst John Williams.

Although Powell acknowledged in June that rate rises had a negative effect on Americans, the battle to reduce inflation is far from done.

“I would almost say that the conditions that we need to see in place to get inflation down are coming into place,” he said. For the actual gross domestic product, it would entail growth much below the norm. The labor market would be seen as relaxing. It would include things like improving the quality of the pipes used to transport products. All the pieces are there, but it will take some time before we see any impact on inflation.

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