Thinking About China
Opinion

China’s Keynesian Model Is Crumbling—It Needs a Trade Deal, Fast

China’s Keynesian Model Is Crumbling—It Needs a Trade Deal, Fast
A container ship heads out from a port in Qingdao, east Shandong Province, China, on May 7, 2025. Chinatopix Via AP
Daniel Lacalle
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Commentary

In the past decade, the Chinese economy has expanded its central-planned neo-Keynesian model, which simply cannot survive without a trade deal. The Chinese manufacturing sector has been directed to follow a running-to-stand-still strategy that simply cannot subsist without the enormous trade surplus with the United States.

Daniel Lacalle
Daniel Lacalle
Author
Daniel Lacalle, Ph.D., is chief economist at hedge fund Tressis and author of the bestselling books “Freedom or Equality” (2020), “Escape from the Central Bank Trap” (2017), “The Energy World Is Flat”​ (2015), and “Life in the Financial Markets.”