More than a month had passed since my trip back to China. Time had settled the more agitated impressions, so I wanted to continue writing about the economy and the future I could see.

China's largest and most serious economic crisis was demographic. Property weakness, debt explosions and the other problems usually described as the economic crisis were one or two orders of magnitude smaller.

A market economy moves in cycles. Long phases and short phases both belong to the system. High-growth periods are followed by decline. A downturn is painful, but not necessarily malignant. It squeezes out bubbles, changes the structure and makes room for the next period of growth. Nobody can easily predict how long the process will last or how painful it will become. The sensible question was how to live through the bear cycle, either by shortening it or reducing the pain. Too many people were still asking how to avoid it altogether. That was unfortunate.

Every downturn reshuffles wealth. A small number of genuinely hidden elites often catch the opportunity and reverse their position in one move. Overcoming greed and fear remains the hardest part.

After two world wars, humanity realised that the old colonial model could not last. The WTO gradually became the basis of a new model of trade colonialism. That model worked until roughly 2015.

From 1992 to 2015, China was in practice America's largest economic colony. I do not mean that as an insult. China supplied American capital with cheap labour, environmental costs, tax concessions and infrastructure, receiving economic development and technological progress in return. As the scale of production reversed and the technology gap narrowed, China stopped accepting the arrangement. It wanted to move from colony to colonial power. Belt and Road followed. Then came the trade war and everything after it. Strategically, the conflict between China and the United States had become irreconcilable. It would fluctuate, but the overall direction was deterioration.

China's macro strategy was to build its own system of economic colonies so that domestic capacity would have somewhere to go. Belt and Road was the clearest destination. China's position in the Russia-Ukraine war also reflected that strategy, although morally I found it disgusting.

The micro view comes next.