The Chinese Communist Party, or CCP, is desperate for economic growth. As China exited the COVID-19 pandemic, policymakers anticipated that the Chinese consumer would be the catalyst for an economic recovery.

That did not happen. The CCP can dictate economic policy to government officials. The CCP can cut interest rates to stimulate the vulnerable Chinese real estate sector. But the CCP cannot compel the people of China to spend and not to save. The CCP cannot compel personal consumption when China’s President Xi Jinping is telling the people of China to prepare for war against the United States .

The economic leaders of China predicted that as China emerged from the pandemic, the economy would expand by about 5% this year. Indeed, in the first quarter of this year, according to always suspect official state statistics, the economy expanded by 4.5%. But economic experts say that economic growth is stagnating in the current quarter. The Chinese people are conditioned to save as there is little to no safety net backstopping the economic fortunes of the Chinese people.

In addition to a moribund household sector, China continues to face the structural challenges of record-high youth unemployment, an over-leveraged real estate sector, weak demand from the private business sector, and an export sector that is under pressure because wages in China are increasingly uncompetitive in the global trade economy. China also suffers from the demographic weight of a rapidly aging population.

In response, China is embarking on an economic path of cutting interest rates and a de facto currency devaluation. But experts know the truth about the Chinese economy from demand statistics for such globally traded commodities as oil, iron, copper, and steel. When Chinese demand for such commodities is weak, prices for the commodities fall. Prices for basic commodities are in the toilet. Oil is trading below $70. Twelve months ago, the price of Brent Crude, the global benchmark, was trading around $120 a barrel. After the United States, China is the second largest consumer of oil. Iron ore prices are weak . Prices for steel are down 15% from their early 2023 peaks. The global price of copper is down almost 15% from a 2022 all-time high, even as the wealthy nations of the world use more copper in the rush to go green.

Perhaps the most telling indicator of Chinese economic weakness is the growing noise that China is devaluing its currency in order to increase its competitiveness for global exports. China’s exports to the world plunged by 8% in May. China is facing increased competition from a rising India and other nations in Asia.

The reality that China is allowing its currency to depreciate is galling for Xi as he is pushing the idea that the Chinese yuan replace the U.S. dollar as the global reserve currency. The Chinese economy is mired in the mud of state planning. So the omniscient state planners are pushing economic string theory.

James Rogan is a former U.S. foreign service officer who later worked in finance and law for 30 years. He writes  a daily note  on finance and the economy, politics, sociology, and criminal justice.