My 15-Year-Old Daughter Died. I Recently Found A Box Of Hers — And What Was Inside Left Me Shaken.

 From editor: isn't every child a treasure?

Ana at age 5, on her first day of kindergarten. Courtesy of Jacqueline Dooley

When my daughter Ana was 11, she was diagnosed with a rare cancer called inflammatory myofibroblastic tumor (IMT). Five years later, on March 22, 2017, Ana died from her disease.

In those first months after Ana died, grief manifested as an ache in my chest and an inability to do much more than sit in my yard and watch the birds at my feeders. I stopped working for about six months, outsourcing my freelance marketing projects to subcontractors while I moved through life in a daze.

As each year passes, my grief shifts and changes. It never fades. It’s just... different. For me, surviving grief requires adaptation. It’s taken me a long time, but I’m finally OK with not hanging on to every single memory, ritual and symbol that reminds me of Ana.

As I approach the seventh anniversary of losing Ana, I don’t need or want to keep retelling the story of her death. I want to remember her life and the unique things that made Ana, well... Ana. There’s one memory, in particular, that is still sharp and clear in my mind — Ana’s imaginary world. She called it Arkomo.

Ana loved tiny things. She collected them like treasure : Minuscule stuffed animals. Shells that fit into the palm of her hand. The world’s smallest plastic frog.

When she was a toddler, Ana would gather her collection of toys into a huge pile in the center of the living room and throw a major tantrum if I tried to clean it up. She would sit and play beside the pile until, inevitably, she got tired. Then she’d curl up on some stuffed animals and take a nap. She was like a little dragon fiercely guarding her gold.

Ana eventually moved on from those piles of toys to more structured worlds. She built cities out of wooden blocks, Legos or cardboard. She placed her tiniest toys inside them. She played with them for hours, drawing her younger sister, Emily, into these magical places. Ana was always the boss. Her animals always had starring roles in every adventure.

Ana at age 8, during a day of apple picking. Courtesy of Jacqueline Dooley

For a very brief period of time, Ana’s worlds dominated my home. They appeared on the dining room table and the floor of the den. They appeared in Ana’s bedroom and in Emily’s. They appeared on my coffee table, taking over until I made the girls pack it up and put it away. These initial worlds would inform what was to become Arkomo — Ana’s most beloved world.

***

Ana built Arkomo from clay, Legos, bits and pieces of Playmobil sets and more than a few Polly Pocket dolls — the kind that were about an inch tall. It was a world that unfolded on Ana’s dresser incrementally with trees, houses, roads made from bricks of red and brown vinyl (secured from a local store that sold model train supplies).

She made a sign that read “Welcome to Arkomo” — a name she came up with on her own — and populated the little world with ridiculously small toys called Squinkies. They were rubber people and animals that stood about half an inch high.

The foundation of Arkomo was shaky. It was made from wood blocks secured by blobs of clay with some baked polymer components. The whole thing was wobbly and precarious.

Every time I put Ana’s clothes away, a half dozen Arkomoians would topple from the dresser like vinyl raindrops. I always diligently put them back, trying to restore them to wherever they’d been when they fell. I would find Squinkies on Ana’s floor for years after that dresser — and Ana — were long gone.

Arkomo took up valuable real estate in Ana’s cluttered bedroom. I’d once complained about this to a friend who advised me, with a raised eyebrow, that I should clean it up while Ana was in school. There was no way I could do that. Ana had spent hours building and expanding Arkomo. Destroying it would’ve broken her heart.

In the way of parents who don’t want to create little sociopaths, I worried. I thought that maybe I was spoiling Ana and that she wouldn’t learn how to clean up her messes if I didn’t crack down on the toys. I worried that maybe Ana was getting too old for imaginary worlds.

Ana at 11, about a month after her liver transplant. Courtesy of Jacqueline Dooley

Ana eventually reclaimed the space on top of her dresser. She turned 10, then 11, and she wanted a stereo and some speakers. She became obsessed with My Little Pony and Funko Pop vinyl toys. She began collecting gemstones, incense and candles. She needed a place to display this stuff. She removed Arkomo, dumping the contents of the little world into a box for easy retrieval.

***

By the time Ana was diagnosed with cancer, Arkomo rarely resurfaced. When she pulled out the box, it was to scavenge a plastic tree or a tiny house for a school project. About a month ago, as I was cleaning the den, I found that box. I knew what was in it. I opened it anyway.

Arkomo was still there: the plastic animals, the vinyl roads, the Playmobil trees. The bits of clay that had held it all together are now crumbled and dry.

I don’t remember the last time Ana played with this stuff. It was likely a decade ago, at least, probably longer. I’ve learned, after seven years of grief, that last times aren’t something that always announce themselves.

Sometimes they’re quiet and subversive. For every last day of school, there are a dozen less grandiose lasts: the last time she watched SpongeBob, the last time she had a sleepover and the very last origami crane she ever folded. I don’t remember the last time Ana played with Arkomo.

I don’t remember the last time, before this year, that I’d opened the box that contained these things that Ana had loved. I don’t remember the last time I sat down on the floor and played beside the child whose face I haven’t seen in so many damn years.

I wish I had taken a picture of Arkomo when it was still on Ana’s dresser. I wish I had paid more attention when she brought her world to life. I wish I had written it all down.

That’s what I would say to you, if you asked me for parenting advice — My God. Write it down. Write it all down.

Ana at 14. "Her hair is turning white from chemotherapy," the author writes. Courtesy of Jacqueline Dooley

On March 22, Ana will be gone seven years. It’s a magical number — seven. A child who is 7 can invent entire worlds. If you break a mirror, you get seven years of bad luck. There are seven colors in the rainbow. Seven Chakras. Seven musical notes. 

Seven years is almost exactly half the length of Ana’s life. She died at age 15, just seven weeks shy of her 16th birthday. I don’t know what any of this means or if it means anything at all. Time is a construct, especially when your child dies before you. These expectations we have of ourselves and our children are meaningless.

As our kids grow up (or even if they don’t ), the details we recall of their childhood — of the children they were that only we got to see — fade. This loss is typically softened by the promise of their lives and of their futures. Growing up is always traumatic. We lose some kind of special magic as we get older. But not growing up — that’s even more traumatic. 

The dusty, broken remnants of Ana’s imaginary world reminded me that the child she was — the child only I really knew — is gone. The woman she was supposed to become is also gone. There are no more firsts or lasts for Ana. 

For the seventh anniversary of her death, I wanted to share something about Ana that only a few of us still remember. I wanted to invite you into Arkomo, a place ruled by the tiniest of keepsakes and the imagination of a girl who is deeply missed. Ana was here. She was amazing. She invented entire worlds. Now you know something private and wonderful about her. Take it with you. Make your own worlds. Remember Ana when you behold tiny treasures. 

刘劲——钱都去哪里了？房地产泡沫中的货币供给

 中国房地产泡沫来自土地供应的不平衡，控制货币供应并无法精准地抑制地产泡沫，反而会影响到很多和地产毫无关系的产业。解决问题的关键是用财政和行政政策直接调节其中的不平衡

截至2022年底，中国广义货币总量M2的规模已经达到266万亿人民币，是同期GDP（国内生产总值）的2.2倍；22年前（2000年），M2规模只有13.8万亿元，是GDP的1.3倍。在2000年至2022年的大部分时间里，M2的增速都超过了名义GDP，这期间，中国M2年均增速约14.4%，名义GDP只有12%。

一般认为，当货币供应增速超过实体经济增速，一定会带来通胀。但是，从2000年至2022年，中国CPI（居民消费价格指数）年均增速只有2.2%。可能有人会说，CPI衡量的只是与居民日常生活有关的商品和服务的价格，经济生活中还有很多项目，比如投资的价格并不在这里反映，它们的价格可能很高。GDP平减指数与GDP统计范围一致，包括居民消费、政府消费、投资支出以及出口商品和服务四大部分，其中，居民消费部分与CPI的统计范围基本一致，二者的差异仅体现在进出口的商品和服务上。从2000年至2022年，中国GDP平减指数的年均增速约3.3%，比CPI略高一些，但远远算不上高通胀。

为什么高速的货币增长没有带来很高的通胀？一种常见的解释是，央行超发了货币，为了避免引起通胀，我们通过发展房地产，把它作为蓄水池，将多余的资金引向房地产，所以虽然没有很高的通胀，但房地产业却产生了很大的泡沫。这种解释的核心要点是货币超发是个政策失误，而房地产泡沫的起因来自这个政策失误。

但仔细推敲，以上说法产生至少两个疑点。首先，管理经济是个非常复杂的事情，但货币供应相对比较简单。像美国用的是市场机制，通过对债券的买卖来提供或者收回流动性；咱们中国行政机制用的多一些，往往直接对货币供应量以及信贷进行行政指导。如果货币超发是个政策失误，央行为什么会犯如此简单的错误？其次，货币超发如果能引起房地产泡沫，为什么没有引起其它种类资产的泡沫？中国股市为什么年回报率大大低于GDP的名义增长？大城市的住宅用地价格确实有很高的增长率，但为什么工业用地价格不增反跌？

为什么印这么多钱？

要理解货币政策、实体经济、资产泡沫之间的三角关系，我们不妨先看看货币政策是怎样形成的。一般来说，国家的货币政策有两个目的：促进经济增长（其中包括保就业），保持价格稳定。所以货币政策是宏观经济政策的衍生和配套，是国家定了增长目标、价格目标后在货币方面的配套政策，而不是反过来，先定下货币增长目标，然后再看经济怎样增长、价格怎样变动。人们往往把货币政策和农田的浇灌联系起来做比方：浇水是为了长庄稼，少了不行多了也不行，一切都得看庄稼长得怎么样。是庄稼的生长驱动浇水的量，而不是先定下浇水的量，再看庄稼怎么长。

所以，货币供应最重要的驱动因素是经济，高经济增长必然需要高货币增长。M2高速增长的现象并不是中国独有，日本、韩国在其经济的高速增长时期，都发生过类似的事情：从1960年至1998年，韩国实际GDP年均增长10.5%，CPI年均增长11%， M2年均增速达到30.8%，M2占GDP比重从10%提高至95%。日本在1947年至1988年期间，实际GDP年均增长7.3%，CPI年均增长6.9%，M2年均增长17.3%，M2/GDP的比例从35%提高至1倍。目前日韩的M2与GDP的比例也都在2左右。

货币增长的另一个重要原因是资产的货币化，即资产从低流动性、非交易状态向高流动性、经常交易状态的转变。就中国而言，有两类重要资产在快速货币化，一类是企业所有的资产，另一类是土地，当然两者也有交叉（企业资产包括一部分土地）。企业的债权和股权融资，土地的商品开发，都是资产货币化的过程。

2000年初，中国A股市场市值总和只有约4万亿元，每年产生的股权融资总额(含IPO和再融资)在800亿元左右；2023年，A股市值总和已经达到94万亿元，加上港股和中概股的38万亿，总共有132万亿，是GDP的一倍以上；每年的融资总额A股有1.6万亿元，海外超过1000亿。融资本身并不产生GDP，但却需要货币供给才能满足融资的需求。2000年初，A股市场每年的成交量约3万亿元，相当于名义GDP的30%；目前，A股年成交量达到224万亿元，接近名义GDP的两倍。资产的交易本身也不产生GDP（除去中介服务的部分），但也需要流动性才能完成交易。

另一个重要的被货币化的资产是土地。2000年初，中国每年新房销售额（即商品房）在4000亿左右，相当于当时GDP规模的4%；2021年全国新房销售额为16万亿元，另外，据贝壳研究院的测算，2021年全国二手房的销售规模在7万亿元左右，两者合计23万亿元，占2021年GDP的20%。2005年至今，中国每年新增的房地产开发贷和个人按揭贷款（以下合称房地产贷款）占当年全部新增贷款的比重约30%。由于中国不允许将来自信托、银行贷款的资金用于缴纳土地保证金及土地出让款，因此房地产开发贷并不包括企业购买的土地，如果把卖地收入也加进去，这个比重平均达到65%。

由此可见，房地产业对货币供给的需求巨大。如果房地产的价格上升过快，必然带来更大的货币需求。中国房地产有很大的泡沫是有目共睹的事实。根据NUMBEO数据库提供的全球主要城市房价收入比，2022年在全球排名最高的前十个城市中，中国有四个城市上榜：上海、北京、香港分别以46.6、45.8、44.9位居前三，深圳以40位居第六。像纽约、洛杉矶这样的国际大都市，房价收入比都在10以下。

这里核心的问题是到底过量的货币供给催生了房地产泡沫，还是房地产泡沫增加了货币供给的需求。我们前面已经否定了第一种说法。那么，如果是先有房地产泡沫，再有高的货币供给，房地产泡沫就一定得有非货币的产生机制。

土地供需不平衡导致地产泡沫

经济学常识告诉我们，价格由供需关系决定，当需求大供给小，价格就高，反之就低。改革开放这40年来，中国的城镇化速度很快，1978年城镇人口只占总人口的18%，到今天已经是65%。 进入城市的人们需要住房，再加上原有居民的改善需求，所以对住宅用地的需求就很大。其中，像北上广深这些一线城市，以及东部、南部沿海地区，由于经济资源禀赋优越，就吸引了最大的人口净流入。而东北、西北、中部、西南的城市，由于经济发展滞后，人口增长就慢。但我们如果审视住宅用地的供给，不难发现，在人口流入快速的地区，土地的供给并没有相应的增速，有的地方甚至非常保守。这样，在发达地区，由于需求大供给少，自然而然就会使住宅用地和住房的价格飙升；而在欠发达地区，由于需求小供给多，在价格低的情况下仍然有很多供给消化不了。由于中国的人口主要集中在东部、南部，发达地区的地产泡沫就形成了中国的主要矛盾。

例如，从2009年至2021年，北京、上海、广东常住人口年均增速分别为1.9%、1.4%和1%，住宅类用地平均增速分别为2.3%、1.5%和1.3%，看起来正好匹配。但如果加上每年大约每人一平米的改善需求（大约每年3%左右增速），这些地方的供给增速就远远低于需求的增速，于是房地产价格就快速上升。反之，以贵州和湖北为例，二者常住人口年均增速只有0.7%和0.2%，但是住宅类用地的增速则高得多，分别为7.6%和7.3%；更极端的是东三省，黑龙江、吉林和辽宁常住人口分别年均下降1.7%、1.2%和0.2%，但是它们的住宅用地供应量却比北京、上海、广东要大，年均增速分别为2.4%、3.4%和4.2%。所以这些经济欠发达地区的房子往往过剩。

以上是中国土地供需关系中的一个在空间地理位置上的不平衡。

土地供需关系中的第二个不平衡来自中国发展的特有模式：地方政府的土地财政。从政府的角度来看，中国国家经济发展的主要责任在地方政府，而地方政府在财政收入上又严重依赖土地收入。1994年分税制改革大幅降低了地方政府可以享有的流转税和所得税收入，但却把所有与土地有关的税收，包括城镇土地使用税、耕地占用税、土地增值税、契税、房产税，以及当时规模还很少的土地出让收益全部划给了地方政府。2000年，土地出让收入仅占地方财政总收入的5.9%，2021年这一比重已经提高至44%，如果再算上其他与土地相关的税收，地方政府财政收入中一半以上（54%）来自土地。

为了发展经济，地方政府最常用、最主要的方法就是招商引资。地方政府主要靠两种方式吸引资本，一是给予各类税收优惠，二是把工业用地以非常便宜的价格出让。企业进来了，带来了就业机会，就业机会吸引人口流入，人口流入产生住房需求。然而，由于大量土地已经用作工业用地，农业用地又有总量的限制，留给住宅的就自然会少，于是地方政府就拿出相对少量的土地进行住宅建设。这少量的土地可以卖个高价钱，因为需求大供给少。反过来，来自住宅用地的高收入又可以反哺低价工业用地给地方政府带来的损失。于是，土地财政就形成一个闭环，经济得到发展，农村人口可以进城工作，日益高企的住宅用地价格给地方政府带来源源不断的融资……

2022年，中国工业用地、商业用地和住宅类用地的挂牌均价分别为235元/平方米、1354元/平方米和3104元/平方米，住宅用地价格是工业用地的13倍。对比日本，从1975年至2021年，日本全国住宅用地价格与工业用地价格比基本稳定在2倍左右，这表明在日本两类用地的价格涨跌基本一致。从2008年至2022年，在土地出让总面积中，工业用地占53%，住宅类用地占31%，而在土地出让总收入中，工业用地只贡献了7.5%，住宅类用地则贡献了75%。

土地财政这种模式在改革开放初期是个相当完美的闭环，吸引了大量来自港澳台地区以及欧美、日本、韩国的企业，这些外资带来了技术和先进的管理经验，给经济注入巨大活力。但由于中国经济体量巨大，不可能长期靠吸引外资来发展经济，内生性增长必然成为主力军。但以土地财政为核心的招商引资政策对内生性增长却并没有多大帮助：无论是上海把深圳的企业吸引过去，还是苏州把广州的企业吸引过去，对中国经济的整体来说都没有多大意义，因为整体来说没有增量，是个零和游戏。从2008年至2022年，住宅类用地的价格每年增长9.4%，商业用地价格每年增长了1.6%，工业用地不仅没涨，还以每年1.9%的速度下降，已经反映出这种模式的困境——土地财政走到了尽头，一方面吸引企业越来越难，另一方面住宅用地的泡沫已经大到了系统性风险的地步。

我们把土地财政带来的这种不平衡叫做两个泡沫——工业用地的负泡沫和住宅用地的正泡沫。在《中国房地产有两大泡沫，但背后原因只有一个》一文中（发表在《经济观察报》），我们对这种经济现象有更为详细的分析。土地财政的失效，说明地方政府的发展模式、融资方式都出了结构性问题。必须解决这些结构性问题，才能支持中国经济的进一步发展。

房地产泡沫背景下去杠杆的后果

我们得病了去看医生，医生在开药前必须找到病因才可能根治。没有找到病因而开些治表的药物只能掩盖问题的严重性，而让病情持续恶化。同样，如果我们认为房地产泡沫来自货币超发，而不是反过来的因果关系，我们自然会试图通过控制货币的增加来控制资产泡沫。但如果像我们在前面分析，房地产泡沫来自土地供应的不平衡，控制货币供应并无法精准地抑制地产泡沫。而如果一定想用控制货币供给来对地产泡沫产生效应，就肯定会对整个经济产生很大的副作用，会影响到经济中很多和地产毫无关系的产业。

过去几年，中国经济一直处在去杠杆状态。2015年和2016年，中国社会融资规模存量年均增速尚在30%左右，2017年开始迅速下降，到2018年末已经下降至10%，此后一直保持在这个水平。

在整体社会融资中，贷款增速相对稳定，仅从13%略下降至10%左右；受影响最大的是表外融资，包括信托贷款、委托贷款和银行承兑汇票三项。表外融资在2008年金融危机后发展迅猛，增速一度高达30%以上，2015年和2016年，随着全国发生多起金额巨大的银行票据案件，政府收紧了银行承兑汇票业务，表外融资增速明显下降，信托和委托贷款暂时未受影响，2017年表外融资的增速仍有18%，2018年开始资急剧收缩，到2018年下半年已经是负增长并一直持续至今，2017年，表外融资存量占社会融资存量的比重约13%，目前只有5%。

由于中国金融体系的特殊性，不同的企业在金融体系中有不同的地位、不同的风险指数。其中，政府和国有企业（尤其央企）地位最高、风险最低，而民营企业、中小企业的地位低、风险大。所以，成本最低的银行贷款主要优先给了国有企业、大型企业，有剩下的才可能是民营企业和中小企业，而成本更高的表外融资是很多民营企业重要的融资渠道。从控制金融风险的角度讲，将表外纳入表内管理是合理的，从理论上讲，当表外融资缩减后，应该看到其他融资渠道，比如银行贷款、债券发行等出现相应的增长，但实际上并没有发生，贷款增速是下降的，企业债券增速在2015年和2016年期间约30%，到2022年已经不到10%。因此，从总体来看，在去杠杆的过程中，不同性质的企业受到的影响不同，民营企业、中小企业受到最大的冲击。而房地产泡沫受到的影响并不大。

融资受到限制投资必然会下降。通过比较A股上市公司国有企业和民营企业投资支出占营业收入的相对规模，可以看到：国有企业投资支出较为稳定，2015年至2019年间，投资支出占营业收入的比重基本保持在11%左右，2020年开始略有下降，目前保持在9%左右。民营企业投资下降非常明显，2015年至2017年间，其投资支出占营业收入的比重在20%左右，2018年开始下降，目前只有10%左右，下降了50%。

2021年秋天的房地产行业去杠杆是对地产的更加精准的打击。但如果房地产泡沫主要由土地供需的不平衡导致，对房地产企业去杠杆也不会实质性地解决房地产泡沫问题，因为房企只是土地供需关系中的一个中间体，最终的供给方是政府，需求方是老百姓。如果对房地产企业去杠杆太宽松，地产泡沫依旧在；如果对房地产企业去杠杆太严厉，会使地产企业破产但并不能从根本上改变土地的供需关系。再者，由于土地财政的真正推手是地方政府，主要受益者也是地方政府，如果卖不出去地，地方政府会成为最大的受害者。

总结和建议

理解供需关系是理解经济的核心。当经济体系中出现泡沫，无论是正的还是负的，都说明供需关系有不平衡的成分。货币供给是系统性的，货币供给的多少会影响到经济整体的增长以及各类资产、货物、服务的价格高低。中国的发达地区房价过高，有巨大的泡沫，这是不争的事实。但同时中国股市长期回报低于经济增速，而且估值较低；CPI相对于高速增长的经济来说也是相对较低。说明房地产的资产泡沫是局部性的，来自土地的供需不平衡。在本文中我们指出土地的供需不平衡来自两个因素：土地供给和经济增长在地理位置上的不平衡，以及土地财政带来的对工业用地的过渡供给和对住宅用地的过少供给。

解决土地供需问题的关键是用财政和行政政策直接调节其中的不平衡。比如为了缓解发达地区的地产泡沫，或者我们需要提高发达地区的住宅用地供给，或者我们可以把更多的经济资源向欠发达地区调配，用以进行人口的引流。其次，由于土地财政和地方政府的发展策略高度相关，要调节土地的供需关系就必须调整地方政府的发展定位以及融资方式。很明显，如果地方财政高度依赖出让土地带来的收益，土地财政就很难改变。所以，一个可能的改革方向是进行一次新的分税改革，给地方政府更多的流转税、所得税分成，而把大部分土地出让收入回归中央政府。这样，地方政府在发展经济时，就不会有巨大的动机使住宅用地持续升值。另一方面，由于和土地财政联动的地方政府招商引资政策已经日益乏力，应该重新思考地方政府在经济发展中的作用。一个简单的做法是把地方政府调配的资源以降低税收的方式转移给老百姓，用以提高消费需求，这样既可以提振内需又可以缓解产能过剩。

在过去几年去杠杆的过程中，一个不可忽视的事实是民营企业在整个金融体系中的地位过低，因此去杠杆在很大程度上变成了去民营经济的杠杆。但民营经济又是中国经济中效率最高、创新能力最强的一部分，因此也是未来经济高质量发展的主力军。让民营企业和其他性质的企业在经济中有同等的地位是下一步改革亟需解决的问题。

The West hasn’t grasped the scale of the disaster facing China

 China’s Spring Festival has huge demographic and political significance.

It’s the last surviving relic of a past world, where extended families gathered at their home villages to share respectful greetings to the old, wishes for prosperity (“Gong xi fa cai” in Mandarin) among the younger generation, and joy at the births of new heirs and descendants.

Nearly 40 years of the coercive One Child Policy, not to speak of uncounted deaths from Covid-19 among the elderly last Spring Festival, has taken an irreversible demographic toll on festival jollity.

This year it is snow, not the pandemic, that is disrupting travel and spoiling the party. But this too is a starkly apt metaphor for the wintry grip of Xi Jinping’s authoritarian power. “Good wishes, get rich” rings hollow in these days of economic stagnation and decline.

At home and abroad, much attention was paid on February 6 to an extraordinary Chinese stock market rally, apparently based largely on news that Xi Jinping was in conclave with market regulators over new measures to revive market confidence.

No doubt the timing of this characteristically command economy intervention was carefully chosen to evoke festive cheer. Anyone in the West buying into it, however, needs to take a step back and think again. After all, the rise was led by recognisably state-directed investors.

For years Xi has made much of his achievements in “lifting millions out of poverty”, quietly ignoring the point that this was more about removing Communist ideological blockers to prosperity than it was implementing a better-balanced economic model.

This year, the other shoe has fallen. Bad loans, rent-seeking by inept local government and state-owned enterprises overproducing led to a disastrous property bubble that has now burst. The 30pc share that the property sector held in the economy is now a millstone dragging it into the mire, with other sectors falling into disarray around it.

Beyond the immediate crisis, things aren’t much better in the longer term. China’s workforce is ageing and shrinking, creating a headwind for growth. Younger generations, meanwhile, are increasingly disaffected. Youth unemployment hit a record high of over 21pc in June 2023. The Government’s response was to stop publishing the figures. Small wonder then that market sentiment is so cautious.

While Western media outlets are increasingly willing to publish harsh criticisms of the Chinese leadership’s economic ineptitude, international institutions are still treading cautiously. In December, the World Bank published a readable, elegant China Economic Update which outlined in meticulous detail the quantitative evidence for a slew of ills currently afflicting the Chinese economy.

As befits the organisation’s expertise and credibility, the report also offers a series of suggestions as to what it would be “appropriate” for China to do to revive its fortunes. Given the degree to which Xi Jinping has taken personal control of the levers of state power, he is unquestionably the sole arbiter of high-level economic policy. It’s accordingly of note that there is nowhere in the entire 58-page document a single reference to the Chinese Communist Party (CCP), let alone Xi Jinping.

Diplomatic niceties and corporate nerves mean that this failure to name names is replicated in much heavy-weight Western assessment and analysis. The result is a widespread, misguided impression that China has an economy run much like any Western free market, with issues that might “appropriately” be dealt with in a relatively conventional manner.

It is probably true that a well-planned and executed programme of coordinated reforms could lessen a number of China’s current economic headwinds. But they will not be so dealt with, because that is not what Xi Jinping does.

An artificial, short-term surge in market optimism whipped up by the February 6 buying spree does not amount to a credible policy for fixing the mess that the CCP has made of its post-Covid revival, or for liberal economic reforms.

Xi Jinping has a completely different agenda, which includes such economically risky aims as annexing Taiwan, and continuing his support for Putin’s Russia. All his intervention in the stock market has done is highlight how irrelevant conventional market forces are in China.

China’s national strategy under Xi is driven by a political, military and economic contest with the West - ANDREW CABALLERO-REYNOLDS/AFP

Most rational Western analysis agrees that economic engagement with the PRC is unavoidable. China’s economy is locked in a population doom spiral, loaded with bad debts. But as bad as the economic situation is, the political risks should weigh even heavier.

China’s national strategy under Xi is driven by a political, military and economic contest with the West. The autocrat has staked his reputation on hard, exclusive Chinese nationalism and independence from the Western-led rules-based order. He has already shown in Hong Kong something of his intentions for Taiwan.

Last year, it was reported that 68pc of major corporations bought political risk insurance in 2022, compared with 25pc in 2019. China, where firms are subject to sudden expropriation, and operate at the whim of political overlords, was seen as a particular risk factor, and one it was increasingly hard to insure.

The US investment bank chief executive who last September said he was “highly cautious” about Chinese risk in late November stated bluntly that if there was war in Taiwan, all bets would be off; his bank would exit China if the US government ordered him to.

Economists and business analysts focusing on the prospects for a rise in GDP or a fall in unemployment are focusing on entirely the wrong issues. Our understanding of the Chinese economy was flawed, failing to see how much was built on debt and thin air.

The next thing to unravel could be our last, treasured illusions about how Xi will react to his country sinking into an economic mire, with a falling population. It’s time to prepare for a new cold war.

China’s economy is about to implode. We will all feel the aftershocks

 Evergrande, the embattled Chinese real estate giant with debts of $300 billion, has just been ordered to liquidate by a court in Hong Kong. What effect will this have, both within China and across the global economy?

This latest twist is no surprise. Evergrande has long been dead in the water. The point to grasp is that Evergrande’s latest setback will not trigger a financial crisis in China; it is rather the result of the financial crisis which has been deepening for at least four years.

For far too long, up to 30 per cent of the Chinese economy had depended on a grossly inflated domestic property bubble. By 2020, when the government finally took urgent measures to limit this debt, its corrosive effects had distorted and disabled both the formal banking sector and also the much less accountable and manageable Shadow Banking system. Both are now in serious disarray as a result.

Ramifications of this unregulated borrowing and lending crisis have spread across the economy at large. The collapse of the property and construction bubble has weakened domestic economic confidence, deepening the unemployment crisis and posing major challenges to local government budgets. These domestic concerns have led to the current implosion of the Chinese stock market. In turn this has compelled foreign investors to take a more realistic position on China risk than believing the golden goose fables still being peddled by Beijing. Meanwhile, with some notable exceptions such as EVs, contraction of markets abroad for Chinese products has highlighted how much China remains export-dependent in a cooling global economy.

All of this calls into question the capacity of the Chinese leadership to halt and reverse the decline of the wider economy. Western commentators have been saying for years that China still has significant potential to revitalise its stagnant economy. Provided swift and deep-rooted reform policies are driven through, China could still pull itself out of the current downward spiral.

But this prospect is rapidly vanishing. The piecemeal efforts Beijing has made to prop up failing property giants like Evergrande and their backers, including the likes of Zhongzhi and Wanxiang, have had no fundamental impact. The CCP needs to devolve more economic powers to the private sector, and reverse the trend to ever-tightening centralisation. Yet Xi Jinping, seemingly unable to relinquish the self-defeating Marxist-Leninist ideology of strengthened Party and personal control, has abandoned the former and doubled down on the latter.

Evergrande had effectively defaulted by late 2021. It lost around 66.3 billion that year. Its founder sold $343 million of shares that November. Losses in 2022 were around 14.6 billion. Complex efforts since to manage debt down have all failed, which is reflected in Monday’s Hong Kong ruling. Evergrande’s operation in the US applied for bankruptcy in August last year. The chances are minimal that Evergrande creditors, whether in China or abroad, will see any of their money back.

The Hong Kong ruling may not in itself deliver the death-blow to Evergrande; the chances of full PRC co-operation in the process of liquidation in mainland China are slim. Some other formula will probably be adopted to disperse its toxic fragments more discreetly. But this too symbolises the issue of credibility the CCP is facing. Beijing remains astride the obsolete economic tiger on which Party power and authority has long depended. Now the tiger’s days are plainly numbered, the Chinese leadership still lacks both the vision and courage to dismount.

But the risks of clinging to this misguided orthodoxy are growing. The new generation of Chinese workers, who should drive forward the revival of their nation, no longer enjoys the growth which brought their parents out of poverty and into the now disintegrating housing market. Their inheritance has been frittered away buying millions of properties that will never be completed. Local government, in default of any more realistic strategy, has become largely dependent for its budgets on questionable land sales to developers who are now going under in their tens of thousands. Public resentment and disaffection with the CCP is on the rise. Xi and his henchmen, as yet safe in their Party citadel, may have fewer and fewer choices to make.

China's rapidly dwindling future will shape the world for decades to come

 2024 is the year of the incredible shrinking China.

The country's growth has been treated like an inevitability for decades. Everything was getting bigger — its cultural influence, geopolitical ambition, population — and seemed poised to continue until the world was remade in China's image. The foundation for this inexorable rise was its booming economy, which allowed Beijing to throw its might around in other areas. But now China's economy is withering, and the future Beijing imagined is being cut down to size along with it.

The clearest sign of this diminishment is China's worsening deflation problem. While Americans are worried about inflation, or prices rising too fast, policymakers in Beijing are fretting because prices are falling. The consumer price index has declined for the past three months, the longest deflationary streak since 2009. In the race for global economic supremacy, deflation is an albatross around Beijing's neck. It's a sign that the Chinese economic model has well and truly run out of juice and that a painful restructuring is required. But beyond the financial problems, the sinking prices are a sign of a deeper malaise gripping the Chinese people.

"China's deflation is the deflation of hope, the deflation of optimism. It's a psychological funk," Minxin Pei, a professor of political science at Claremont McKenna College, told me.

The fallout won't be contained to China's shores. Because the country's growth sent money stampeding around the globe over the past few decades, its contractions are creating a seesaw effect in global markets. The foreign investors who helped to power China's rise are running to avoid catching the funk on their balance sheets, and governments the world over are starting to question the narrative of China, the dauphin. What Beijing does — or fails to do — to fight this malaise will determine the course of humanity for decades to come.

Flirting with disaster

It may seem counterintuitive, especially given the Western experience of the past few years, but deflation is in many ways scarier than inflation. Inflation occurs when there's too much demand for too few products — people want to buy things, but there simply isn't enough stuff to go around. By contrast, deflation happens when there are plenty of goods and services available but not enough demand. Businesses are then forced to slash prices to entice consumers to come out and spend. Every economy sees recessions or downturns — periods of declining demand and sinking confidence that force companies to put their wares on sale — but sustained deflation is what happens when those maladies make themselves at home and decide to stay.

China's deflation worries started in earnest in the summer. Consumer prices contracted 0.3% in July compared with the same month a year before — something that hadn't happened since the depths of the pandemic. While other advanced economies were taking off too fast, China was showing signs that it might be getting stuck. Prices seemed to stabilize in August — until pork prices started to decline dramatically, pushing down the aggregate price index in October, November, and December. There was some hope for policymakers, though, since much of the deflation was driven by pork prices, which are extremely volatile in China. But recent data shows that core inflation, which excludes more volatile categories such as food and energy, is similarly anemic, rising just 0.6% year over year in December.

Charlene Chu, senior analyst at Autonomous Research

Charlene Chu, a director and senior analyst at Autonomous Research, said the major question for Beijing was whether the price declines would continue into 2024 or whether the country could reignite some demand. She wasn't hopeful for the latter.

"I lean toward deflationary pressures continuing to build, but the data continuing to go back and forth through the year," Chu told me via email.

China's primary problem, though, is debt, particularly in the real-estate sector, which makes up 25% to 35% of the country's GDP. Years of overbuilding — by about double the population, according to some estimates — and slowing population growth caused prices to collapse. The real-estate trouble has ravaged the balance sheets of Chinese households — many of which have sunk a massive proportion of their savings into property — and cast a pall on the rest of the economy.

"Chinese people have 70% of assets in housing, so you can imagine the effect on confidence," Wei Yao, the chief economist at Société Générale, told me. "This is the factor why this deflation could be long-lasting."

Seeing their investments tank has led many people to stop spending. Fifteen years ago, Wall Street assumed that the Chinese consumer would ultimately become the dictator of the global economy. Now they're in hiding. Even as the country emerged from the deep freeze of its "Zero COVID" policy, retail sales growth was disappointing compared with some analysts' projections.

"I think it is unrealistic to believe that deflationary pressure will disappear when there is still so much pressure on property prices and consumers are in savings mode," Chu said.

Now I'm trapped

In 2002, Ben Bernanke, who went on the chair the Federal Reserve, gave a seminal speech about how to combat deflation. As an economic historian, he spent his academic career studying the Great Depression — the mother of all deflationary events — and based on his research, he had come to a few conclusions. I'll give you a few that are relevant to China's current situation:

1. Deflationary events are rare, but even moderate deflation — "a decline in consumer prices of about 1% per year," as Bernanke put it — can zap growth out of an economy for years.

2. In a deflationary economy, debt becomes more onerous to pay back because money is scarcer, a situation known as "debt deflation."

3. The "prevention of deflation is preferable to having to cure it."

   

   Xi Jinping refuses to try the policies that could help pull Chinse out of its national economic malaise.Xie Huanchi/Xinhua via Getty Images

Japan is a more-recent example of the deflation trap. Japan is maybe, just maybe, getting out of a 25-year dance with the deflation demon. After decades of supercharged growth, the country's economy collapsed in the 1990s because of heavy debt and an aging population. Together, those forces pushed the country into deflation, kept wages suppressed, and dampened consumer spending. Sound familiar?

What we learned from Japan's years of stagnation is that once deflation sets in, the only way out is through a painful restructuring of debt. Société Générale's Yao told me that if Beijing quickly embarked on such an anti-debt campaign, it could prevent the funk from setting in. The problem is we have yet to see evidence that the Chinese Communist Party is willing to do that.

Fire? What fire?

Of course, if the Chinese Communist Party asked Bernanke what to do about deflation, he'd probably tell them to take dramatic action yesterday. Spray the money gun, start dropping cash from helicopters, get people spending again. Deflation can only be slayed by boosting demand. But the CCP's unwillingness to directly help Chinese households, even in the depth of the COVID-19 crisis, makes this kind of support unlikely.

"China gave no fiscal support during the pandemic," Yao reminded me during our talk. "Every other large economy gave some kind of stimulus."

Sure, Beijing has taken measures over the past year to loosen financial conditions for banks and state-owned businesses. It has also cut interest rates a little bit and given a $140 billion lifeline to struggling local governments. But wonky supply-side mechanisms take time to make their way into the lives of normal people and spur demand — if it happens at all. At best, they can keep deflation from taking hold, but they can't turn it around to growth.

"Any true acceleration next year will require either a major global upside surprise or more active government policy," analysts at China Beige Book, a surveyor of the Chinese economy, said in a recent note to clients.

It's not as if the CCP is in the dark about the economy's struggles. China's leader, Xi Jinping, even made mention of the reality that Chinese people were suffering financially during his New Year's speech — a first for him. And while the party's apparatchiks may seem stoic as they announce that China's GDP growth is meeting expectations, their softer tone and more aggressive courting of international business belies their concern. The question is, if Beijing knows how bad things are getting, why aren't they doing more?

Analysts are split on why there's been no fiscal support to households. In a research note published in August, Logan Wright, an analyst at Rhodium Group, argued that China's ability to deliver fiscal stimulus was greatly overestimated. Beijing's levers "are far more impaired than commonly understood," Wright told me in a recent phone interview. "The problem is that China doesn't collect much tax outside of its investment-led growth model," he added. Up to its eyeballs in debt obligations and without a robust fundraising mechanism, Beijing doesn't have the cash bazooka it once did.

But there's another, perhaps bleaker, possibility. It's not that Beijing can't deliver stimulus, it's that it simply won't do it. Xi doesn't believe in direct cash payments to people. And now, since all of China is run by a one-man band, that's all that matters.

"I reached the conclusion that there is a bit of ideology," Yao told me. "In a sense, Xi Jinping wants to develop his own economic order. He's trying to avoid making the same mistake as the West, which is wasting money and spending things that don't generate long-term returns. In that perspective, sending checks to households doesn't generate long-term returns."

Maybe it's a little of both. There have been times in the history of the Chinese Communist Party when different factions — reform vs. anti-reform — had the space to debate and change the government's course on policy. In Xi's China, that space is gone, shrunk into whatever can fit in the palm of his hand.

It's not just the economy

Under Xi, all kinds of spaces in China have gotten smaller. (OK, it's not his fault that the population is shrinking.) But his government has led to the narrowing of any space beyond the reach of the CCP. That includes the arts and intellectual life, a variety of forms of individual expression, and private business. China before Xi was a place learning to handle a plurality of voices — as long as they weren't brazenly attacking the country. China during Xi is a place where people online speak in code to express even their minor dissatisfaction, only to watch CCP censors rub their words away.

"Chinese people have to shrink their ambitions," Claremont's Pei told me. "People in the government should have their ambitions scaled dramatically."

This ideological shrinking is taking many forms: Beijing's nominally anti-corruption drive is back in full swing, ensnaring officials from all over the government who strayed from the Xi line. Billionaire businesspeople are on notice that their wealth will no longer protect them from the CCP's harsh gaze. Foreign investors are running for the hills. Even China's flagship One Belt One Road infrastructure loan program has been pared down. "They're not bestriding the world anymore," one former US diplomat posted in East Asia told me.

This doesn't necessarily mean China poses no adversarial challenge to the US. It just means Beijing is prioritizing where it invests in that competition. Xi will not back off from investing in the military because reunification with Taiwan remains his paramount goal. The central government will continue to invest in technology and in advancing industries where it thinks it can press any first-mover advantages. Think: electric cars, batteries, and solar panels.

"We don't think the US faces a growth challenge from China anymore at this stage," Rhodium Group's Wright said. "The concern from the US and Europe are the spillovers from excess capacity." In other words, China will pick its fights more selectively and defend its economic advantages more fiercely. A world built larger through global financial connections will disconnect and disperse into smaller nodes.

Do not expect a shrinking China to be a shrinking violet. Outside loaning money, magnanimity has never been Beijing's strong suit. The slights that smarted when it was a growing superpower will only hurt more in shrunken stature. Xi will never let go of saving face. That's the nature of a one-man reign.

Genetic sequence of coronavirus was submitted to US database two weeks before China’s official disclosure, documents show

 Katherine Dillinger, CNN

The genetic sequence of SARS-CoV-2, the virus that causes Covid-19, was submitted to a National Institutes of Health database two weeks before its release by the Chinese government, according to documents that were shared with US lawmakers and released Wednesday.

The sequence doesn’t indicate the origin of the coronavirus but undermines the Chinese government’s claims about its knowledge of the information, one expert told CNN – and could have cost critical weeks in the development of a vaccine against the virus.

On December 28, 2019, virologist Dr. Lili Ren of the Institute of Pathogen Biology at the Chinese Academy of Medical Sciences & Peking Union Medical College submitted the genetic sequence to GenBank, a “genetic sequence repository that collects, preserves, and provides public access to assembled and annotated nucleotide sequence data from all domains of life,” according to a letter that Dr. Melanie Egorin, assistant secretary of legislation at the US Department of Health and Human Services, sent to House Energy and Commerce Committee Chair Cathy McMorris Rodgers last month.

GenBank is managed by the National Center for Biotechnology Information, part of the US National Institutes of Health.

Ren’s submission “was incomplete and lacked the necessary information required for publication,” the letter says. She was sent a resubmission request three days later, but “NIH never received the additional information requested.” The submission was removed from a processing queue on January 16, 2020, and “the sequence was never made publicly available on GenBank.”

However, a different submission of the genetic sequence that was “nearly identical” to Ren’s was published on GenBank on January 12, Egorin said, one day after the World Health Organization said it had received the sequence from China.

McMorris Rodgers, R- Washington; Subcommittee on Health Chair Brett Guthrie, R-Kentucky; and Subcommittee on Oversight and Investigations Chair Morgan Griffith, R-Virginia, said in a news release Wednesday that the committee’s investigation into the origins of Covid-19 will help policymakers strengthen the nation’s biosafety practices in addition to helping prepare for the next pandemic.

They noted that they received the new information almost two months after they informed the NIH of their intent to issue subpoenas for copies of documents related to any early coronavirus sequences, early Covid-19 cases or other pertinent information.

Dr. Jesse Bloom, a virologist at the Fred Hutchinson Cancer Center, wrote Wednesday in an analysis of Ren’s submission that it “clearly falsifies the Chinese government’s claim that the causative agent of the Wuhan pneumonia outbreak still had not been identified near the end of the first week of January 2020.”

The earlier submission “would have provided adequate information to initiate vaccine production in late 2019 if it had been made public,” he said, noting that drugmaker Moderna “used the spike sequence to design its COVID-19 vaccine” within two days of the January 12 release.

However, he said, the genetic sequence “is unlikely to represent the first virus that infected humans” and “does not provide any new insights into the origin or early spread of SARS-CoV-2 in Wuhan.”

“The belated discovery of the submission underscores the importance of rapid data sharing during outbreaks, since immediate public release of the sequence could have accelerated by several weeks the development of COVID-19 vaccines that saved thousands of lives per week in the United States alone,” he said.

Even two weeks “would have made a huge difference in the pandemic,” agreed Dr. Eric Topol, founder and director of the Scripps Research Translational Institute. The fact that the vaccine program began immediately on publication of the genetic sequence “shows you how important that sequence was.”

“When you sequence a virus – it’s not even just a vaccine – then you’ve nailed it. You know exactly the features, about the spike protein and all the other major components: the nucleocapsid, the envelope, the whole entire panoramic view of the virus. You can’t get that without the sequence.”

The documents should be read in the context of hindsight, says Dr. Kristian Andersen, an evolutionary biologist and director of infectious disease genomics at the Translational Institute.

“In late 2019, nobody knew that a pandemic would later ensue,” he wrote in an email. “This is a really critical part that most people seem to forget – nobody knew back then that a never-before-seen coronavirus only distantly related to SARS-CoV-1 was causing ‘mysterious’ illnesses in patients associated with a wet market in the middle of Wuhan, which would later spark a devastating pandemic.

“Should the sequence have been released at the time and [marked] as preliminary data? Sure, that would have been great, and is a good example of where we could hope to do better in the future,” he said. “Whoever reviewed the sequence at NCBI over the holiday period in 2019 would have no way of connecting this sequence to a ‘mysterious’ illness in Wuhan – because it was yet to be reported.”

CNN’s Jen Christensen and Brenda Goodman contributed to this report.