Phil Inman argues on The Guardian:
China is a one-trick pony. Without the US and Europe to soak up its factory output, it doesn’t have a growth plan. Except that isn’t quite true. Like Japan in the 1980s and the UK in the decade before the boom, it has a liking for property investment. As a sideline to its enormous manufacturing sector, there is an ever-expanding apartment and office-building craze.
A reliance on manufacturing and property in Beijing is as unbalanced as the UK’s binge on property and financial services until 2007. No wonder the Chinese miracle is, temporarily at least, coming to a halt.
Growth has slowed, with a drop in manufacturing output chiefly to blame. Part of the fall can be blamed on high inflation, which has eaten into corporate profits and personal incomes and wealth. Policies to tackle rising prices have had little impact on the way households view the future and inflation expectations remain high. This has the effect of discouraging investment and consumption.