There is a fin de siècle feel about China. Growth is fading fast but the stock market is galumphing to evermore exuberant, and seemingly irrational, heights. The property boom is over, as is easy government financing courtesy of land sales. Imports of commodities have slumped, as anyone in Brazil and Angola can tell you. Money is pouring out of China at an unprecedented rate and those who can are busily securing a foreign bolt-hole for themselves in case things turn sour.
In the political sphere, President Xi Jinping has established himself as the most powerful leader since Deng Xiaoping, or possibly even Mao Zedong. Editions of Mr Xi’s speeches regularly hit the bookstores as collective leadership gives way to the cult of personality. Yet there is something brittle about his authority. The more he attacks entrenched interests through an extraordinarily far-reaching anti-corruption campaign, the more vulnerable his own position could become. Even some seasoned China watchers such as David Shambaugh, professor at George Washington University, have thrown caution to the wind by predicting that the end of the Communist party is nigh.
One does not have to be anything like so bold to detect signs of real stress in the economy, which has been the main source of Communist party legitimacy for years. In the first three months of this year, it grew at 7 per cent, its slowest rate since 2008. Some economists say the slowdown is much sharper than official numbers suggest. It is true that China’s newly minted middle class now wants good jobs, clean air, safe food and less corruption more than it wants growth for growth’s sake. Yet if you are looking for flashing red lights, there are plenty around. Take the soaring stock market. At a pinch, you could see this as a sign of confidence, particularly in the vibrant technology sector. Yet, as investors shift frantically out of property and into equities, the ramp-up in valuations looks more frightening than reassuring. This year, the Shenzhen stock index, which is heavy on tech, has more than doubled in value. In May, trading volume on the Shanghai and Shenzhen stock exchanges combined was more than 10 times that on the New York Stock Exchange. Last week, a record 4.4m investors opened stock trading accounts as punters scrambled to get a slice of the fervid action.