BRICS member China’s economy could be in jeopardy as all factors indicate a financial decline. China’s economy has now reached high debt levels, and government interference in all sectors has strained both small and medium-scale enterprises. In addition, the aging population is worrisome as more citizens claim benefits from health insurance schemes. The Chinese government covers a portion of medical costs for current and retired workers in urban areas.
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However, the Chinese boom might soon come to an end as its economy is echoing the 2008 financial crisis of the U.S. The Communist country might experience a full-blown financial crisis that could take years to recover from.
BRICS: China Mirroring the U.S. Financial Crisis of 2008
The Chair of Rockefeller International, Ruchir Sharma, told the Financial Times that China’s miracle path no longer exists. Sharma highlighted China’s high debt levels, government interference in all sectors, and the aging population that contributes to the economic decline.
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“China is where the U.S. was in late summer of 2008,” he wrote. Sharma predicted that “the next big step for China is a full-blown financial crisis,” that lies ahead of it. He added that the Xi Jinping administration must get things under control to prevent an “even deeper recession.”
BRICS member China’s failure to liberalize its economy could prove fatal in the long term as foreign investments are not allowed. The lack of capital inflow and outflow could seize the economy making businesses suffer and not thrive. “Beijing is partly immobilized by these debts,” he said, adding that its GDP could gradually begin to decline.
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China has the highest GDP among all BRICS members, with an economy of $19.5 trillion. The other BRICS member, India, comes in a distant second with an economy of $3.5 trillion in 2023. However, the combined GDP of the new BRICS is $31.75 trillion, which is ahead of the U.S. at $25.5 trillion.