Comment by sharetea | Hacker News Reader

Comment by sharetea | Hacker News Reader

Anne Stevenson-Yang, a journalist and software executive who's worked and lived in China since 1985, and now a research director at an investment capital firm, has this to say about China's GDP: "actual Chinese GDP is probably a third lower than is officially reported"

http://www.barrons.com/articles/anne-stevenson-yang-why-xi-j...

"China is sinking into a deflationary recession that’s increasing in speed and may take some time to run its course. Investors have lost faith in the property market, which alone comprises about 20% of GDP, when taking into account the entire supply chain, from iron-ore production to construction to related financial services and appliance sales. Employment and wage compensation will suffer. Consumption will continue to suffer. There’s even an outside possibility that China’s economic miracle could end up in a fiery crash landing, if a surge in banking-system loan defaults outruns government regulators’ attempt to contain such a credit crisis and restore financial confidence."

She has a good video about China's economy here: https://www.youtube.com/watch?v=C2SStFt-k_A

Maybe the article represents a bit of wishful thinking; but the fact that this is the most up-voted comment is also quite revealing.

Another number to watch out for is capital outflow out of China.

"Over the last seven weeks alone, $190 billion has left the country."

http://www.businessinsider.com/chinas-record-capital-outflow...

"by 2018 all of China's excess reserves — cash that it has on hand to use immediately — could be gone."

Why the strong anti-China sentiment on HN? I don't get it.

Probably a combination of inherent cynicism and lack of credibility in Chinese financial statistics.

The particular source here is not the Chinese government but the magazine the Economist and the consulting firm McKinsey. Both are very reputable.

You can go to China or some of the surrounding countries (SE Asia, Japan, Australia) and see for yourself. Or look at the sales reports from Apple. The massively growing Chinese middle class is quite a real thing.

Yet the reaction here is of scepticism, disbelief, denial.

I don't understand that.

No other topic (Europe, US, Africa, Middle-east ...) is met with same.

Actually, it looks to me like Europe's economic prospects are always reported about in a negative way here on hn...

As an European, I'd suspect of bias if they weren't!

Yes, but just before the last two big financial crises, Americans were buying houses they couldn't afford, second and third cars, taking loans etc... I live in Macau, and the Chinese government's recent policy of cracking down on corruption, money laundering and their history of 'massaging' the news, leaves even the Macanese, Hong Kongers and coastal mainlanders suspicious of any economic statistics coming out of the government. Foreign worker quotas here, and the drop in gamblers, VIP especially have resulted in 36% drops from last year. Gambling/Casinos generate 80% of Macau's GDP. I hold out hope for a progressive, free China, but after observing the yellow umbrella movement in Hong Kong, and the mainland's actions and words, I am in despair. The people have been under this type of rule for so long, and the rumors are that the current administration is only going after corruption when done by political rivals, while saving face with their own party. I truly believe consumerism is going to be humbled by a crash here, and hopefully a restructuring to head up with honest accounting by government if they want to be taken serious in the world currency market.

McKinsey reputable???

This company just plays the normal MBA playbook in an echo room and every listens without thinking. Just look at the former (some now bankrupt) companies that hired McKinsey. Amongst them Enron and Swissair.

http://www.ritholtz.com/blog/2011/03/is-mckinsey-co-the-root... http://business.time.com/2013/09/10/mass-layoffs-overpaid-ce...

The sentiment is mostly anti Chinese Government, not the nation / people.

China's Government has been infamous for lying about economic statistics for decades. Their unemployment rate has hardly changed since the 1980s. For a while - 2001 to 2009 - their real growth was so dramatic it didn't matter much that they were lying about everything. Now that the tide is going out on the world's second largest economy, it matters in a big way.

Consistent to that, I'd encourage people to use "The Chinese Government" rather than the more common "The Chinese" that English media loves to use when generalizing. Missing a single word makes it easy to blur the lines, e.g.:

"The Chinese are corrupt and never tell the truth." "The Chinese are only good at at stealing and copying things." "The Chinese cyber-threat ..."

On the other hand, I've noticed in Japan, even with the pervasive anti-China sentiment, news sources are keen to use "Chinese officials" or "China's central government."

"Why the strong anti-China sentiment on HN? I don't get it.

That's quite odd, I notice the opposite. I notice many pro China pieces here on hackernews. Whether it's talking about their green energy, growing economy, financial markets or what have you.

Perhaps you've fallen victim to what's known as hostile media effect? (https://en.wikipedia.org/wiki/Hostile_media_effect)

It says that you tend to notice more negative media & chatter about something you care about or have an interest in, regardless of reality.

And I think this might actually be the case here because the original commentor above wasn't "anti-China" at all. He was stating a contrary viewpoint. Being realistic doesn't mean something is automatically "anti". If there was an article about the U.S middle class growing this year, and someone posted a comment which disputed that, it wouldn't be an "Anti-American" comment.

Speaking of, I see more "what's with the anti-China comments?" more than I notice actual anti-China comments. In fact, I almost never see truly anti-China comments.

Being realistic is different from being contrary, which in turn is different from being a conspiracy theorist. Personally, I consider "Chinese government is fabricating economic statistics" a conspiracy theory territory.

You have a point that being mistaken is different from being hostile or anti, but we do call people "anti-vaccine" when they are just mistaken and as a result genuinely worried about vaccine. I think one should interpret "anti-China" the same way.

http://www.wsj.com/articles/wsj-survey-chinas-growth-stateme...

"More than 96% of respondents to the latest Wall Street Journal survey of 64 economists–not all of whom answered every question–said China’s gross-domestic-product estimates don’t accurately reflect the state of the world’s second-biggest economy.

“Official data are manufactured to fit the government’s narrative,” said Stephen Stanley, chief economist at Amherst Pierpont Securities."

Which is exactly what you would expect in a communist regime with a neutered press.

That's what I'd expect from any middling-to-competent regime, not just the commies (though they of course do it too). For example, the Argentines are famous for making up exchange rates, and my own (American) government has a policy of systematically misreporting inflation and unemployment.

Fabricating statistics wholesale is conspiracy theory. Releasing statistics that are distorted in all sorts of ways because various government organizations have direct incentives to do so is pretty much a statement of fact.

In China, the statistics ARE controlled by one, non-objective party (Party? :-)), so conspiracy theories are somewhat justified.

Even in the much freer US, there are examples of (subtle) information manipulation. Such as releasing numbers that don't fit the government narrative :

- on a Friday afternoon (when all journalists are driving home or drinking at a bar)

- on page 95 of a 96-page report

It's not conspiracy theory territory, Li Keqiang the country's premier actually admitted that many provinces fabricate statistics to look better to Beijing. And there is tons of evidence that their statistics do not match reality. Realistic is China's economy cannot continue to defy gravity, the regular people aren't experiencing the miracle growth. Maybe the wealthy who have their hands in the pie, but for the other hundreds of millions of Chinese, there is no miracle.

This sentiment is wide-spread in US. I think it is a combination of systematic propaganda and ignorance of general public.

The negative viewpoint does not mean anti-China. I'm a Chinese and living in China. There's no need to be so sensitive.

Not anti-China, it is anti-The Communist Party of China. The Communist Party of China is evil.

Xi Jinping: "We love peace" ,But his CPC's State TV commenter on parade: "Look at this missile, it can hit Hawaii"

U.S. help China fight against NAZI, but China under control of The Communist Party of China will become another NAZI

> There's even an outside possibility that China's economic miracle could end up in a fiery crash landing

People have been saying this since Deng Xiaoping took over, over 35 years ago. Actually, they've been saying it for over 65 years.

I think these two events in the last 65 years count as "fiery crash landings":

https://en.wikipedia.org/wiki/Great_Leap_Forward

https://en.wikipedia.org/wiki/Cultural_Revolution

Note the latter created an uneducated generation, and as of late we've been learning a lot more people were slaughtered than was generally thought.

Moving forward past the Gang of Four, it's hard to see how this experiment won't end in tears:

https://en.wikipedia.org/wiki/One-child_policy

Where it's strictly enforced, it results in what's called 4-2-1, where 4 grandparents are supported by 2 parents (as long as they can) are supported by 1 child. That, the lack of a general social safety net, and the general government policy of financial repression (https://en.wikipedia.org/wiki/Financial_repression) appears to be short circuiting a lot of what I presume The Economist article is talking about, for many people are desperately trying to save for their and their elders' old age instead of spending like "normal" consumers. E.g. one reason for the property and other bubbles, which held out the promise of better investment returns.

I suspect very few commenters here have visited China lately. There is a ton of consumer spending in China. Apple stores everywhere in big cities, way more than London or New York for example. The biggest name luxury brands are all over the place. Cost of living in Shanghai is on par w San Francisco, Beijing is probably higher.

Never visited, didn't even read the The Economist article (didn't want to use up my quota of them) but:

There is a ton of consumer spending in China. Apple stores everywhere in big cities, way more than London or New York for example. The biggest name luxury brands are all over the place. Cost of living in Shanghai is on par w San Francisco, Beijing is probably higher.

Are any of these signs of middle-class prosperity?

The general theory here is that you want a huge middle class spending a lot of money. In aggregate, in the US at least in times past, the broadly construed middle class had more wealth than the upper class, spend more, and also provide useful functions WRT to upper class earnings and spending. E.g. how cool are the Apple products that I see for sale in my local Wal-Mart? I.e. to what extent does middle class adaptation of upper class fashions drive changes in the latter?

Yes it's something we think of as key. They also have very busy Uniqlos and Ikeas (if you wanted to get nitpicky those might be thought of as a bit upper middle class there, but then you could look to Taobao or all the local brands). And the fact is that those cities are hugely populous and all those shops are doing a roaring trade.

I'd say the diagram in the article looks pretty on the money in terms of rapid growth of middle class. It's not as big as in, say, Germany of course but it's definitely there and looking very healthy. There doesn't appear to be _significantly_ greater poverty in the streets than in NY, LA, or SF. There is clearly disparity as you might expect in a turbulent emerging economy - the levels aren't too obviously dissimilar to much of the US or UK and visibly greater than western Europe and Nordics. Shanghai already makes many major Western cities look like a backwater.

The fiery crash landing in China was the pre-PRC era, where China was so weak that it was being carved up by the Europeans, Americans and Japanese.

The Cultural Revolution kicked off an era of double digit GDP growth in China, which persists to today.

I think the Cultural Revolution created one of the most politically educated generations in history. The PRC seems to have survived its graduate schools closing for a few years. Didn't the US and Europe see a dropoff in college and grad school during the early 1940s? They managed to survive that.

Personally I think that empowering young people to smash and burn Buddhist sculptures and paintings, and to eradicate the feudal vestiges of China are what helped it onto its current path of prosperity.

Also, the pathology of focusing on bodies instead of GDP per capita can be found in the US in the Social Security debate. Instead of dividing the GDP by the number of people collecting social security, they count bodies working and retired, as if GDP per capita were not rising. This approach only works where there is no GDP growth. GDP per capita in China doubled in the past eight years, and quadrupled in the past thirteen years.

The feudal thinking was that something like 4-2-1 is a problem. The standing committee of the Politburo of the communist party of China knows that the problem was too little economic growth, and too many children for each peasant family. If they thought your way, they really would be worse off.

> The Cultural Revolution kicked off an era of double digit GDP growth in China, which persists to today.

That's, I suppose, chronologically possible. That is, the growth kicked off after the Cultural Revolution.

Note well the word "after". The Cultural Revolution ran for 10 years (1966-1976), per Wikipedia, and then later, after that, China kicked off an era of double digit GDP growth, which persisted in China until maybe a year ago. That "later, after that" part is part of what makes me really skeptical of your view that it triggered the GDP growth.

It seems much more reasonable to suppose that the trigger was Deng's reforms.

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