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China Model Is Dead: Can It Rise from the Ashes?



China's jobless college graduates have become an embarrassment to Chinese leader Xi Jinping. The unemployment rate among the country's youth has reached an all-time high, putting the country's severe economic troubles on display at home and abroad.


In August, Xi's administration decided to act: Its statistics bureau stopped releasing the data. This move may be an admission that the Chinese economic model, once hailed as a miracle, is facing its darkest hour.


For decades, the "China Model" was a beacon of hope and envy for many nations around the world. It was the model of authoritarian capitalism, a system that seemingly combined the efficiency of market forces with the stability of one-party rule.


China's meteoric rise from a poor agrarian society to an economic powerhouse was celebrated as a testament to the success of this model. However, it appears that the time for this model may have come and gone.


China's economic woes run deep, and the cracks in the system have been widening for some time. One of the most glaring issues is the escalating unemployment crisis among college graduates. These highly educated young people, once seen as the pride of the nation, are now struggling to find meaningful employment. This not only threatens social stability but also undermines the core promise of the China Model – that economic growth will lift all boats.


The Chinese government's response to this problem, stopping the release of unemployment data, is a desperate attempt to hide the severity of the issue. It is a tacit acknowledgment that the official narrative of a prospering China is increasingly disconnected from the grim reality on the ground.


But unemployment is just the tip of the iceberg. China's economy is burdened by a host of structural problems, many of which were masked during the years of high growth. Excessive debt levels, a rapidly aging population, a distorted real estate market, and a lack of innovation have all combined to create a volatile mix that threatens to derail the nation's economic ambitions.


The Belt and Road Initiative, once a symbol of China's global ambitions, now faces skepticism and criticism from partner nations who have grown wary of China's debt-driven diplomacy. As China's economic challenges become more evident, it's harder for Beijing to convince the world that its model is a blueprint for success.


The question now is whether the China Model can adapt and recover from these deep-seated issues. The necessary repairs would be costly and challenging, and the window for a successful turnaround may have already passed. The government's recent attempts to strengthen the state-owned sector and tighten control over the private sector signal a retreat from market-oriented reforms, which could exacerbate the problems.


For the rest of the world, the decline of the China Model has significant implications. The global economy has become increasingly intertwined with China's fortunes, and any significant disruption in the Chinese economy will have ripple effects worldwide.

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