China’s Economy Slows Sharply
nytimes.com
nytimes.com
https://carnegieendowment.org/2018/07/27/china-s-best-option...
Make no mistake though, the national and Party leadership is deathly afraid of low growth and it is exactly what they seek to avoid. The leadership knows they must create domestic consumer demand and that this must happen through an increase in household spending or, as Michael Pettis notes, in spending on behalf of households. Low auto sales seems like evidence that this isn't happening quickly enough.
They can use the threat of trade war to convince others of the need for this shift, but actual trade war, or actual low growth? No thanks. When you are riding a tiger, you don't want it getting too hungry.
China has a long history of civil unrest, the Taiping Rebellion being a good example. Twenty to thirty million people were killed, and economic depression following a trade war was the impetus. The result of this horror was China on her knees, and is precisely what the leadership seeks to avoid. https://www.facinghistory.org/nanjing-atrocities/nation-buil...
The return to authoritarianism can be seen as battening down the hatches before the storm. Shifting spending to household income goes against powerful interests. A large national health program and social security could help, but debt funding is not an option now, and the alternative is taxing wealthy individuals and wealthy local governments. This also creates unrest.
> The return to authoritarianism can be seen as battening down the hatches
Obligatory not a "China expert" but I think you're very much correct. A lot of people don't seem to understand how different, and explosive, the political situation is in China. There is very little social trust, certainly little trust in government, and things could fly apart quickly and violently. The CCP is in a very difficult situation, trapped between fragmented and competing power bases, from a gigantic and angry rural underclass to godlike and kleptocratic SOEs to the tier-1 (and even 2) cities who by this point are practically mini-states with a law unto themselves. It is no surprise they have pulled every trick in the book to try to keep the music playing.
I totally agree that there needs to be a proper national health and social security system; this will be on the same magnitude as the "New Deal" the US had after the great depression. This could only be accomplished by a massive tax, and even more importantly power, overhaul. Xi Jinping is totally unreadable to me and I have no idea whether he is consolidating power just because that's what "strongmen" do or because he understands he needs it to execute on the desperately needed reforms. I doubt anyone not literally in the Politburo could say for sure. I hope it's the latter.
I keep saying this every year but the stakes just keep getting higher - things in China will come to a head sooner rather than later. And when they do, I want to be very far away, because it is a whole lot of shit, and a very big fan...
https://www.economist.com/china/2018/12/01/why-only-2-of-chi...
Wages for manufacturing workers have been rising steadily as a result though and low value manufacturing that relies on the lowest wages is moving on to places like Vietnam. It’s still pretty rough out in the countryside, my wife is Chinese and I’ve been out in the countryside, but it is getting better.
oh come on... China has a long history. (period)
within that is periods of civil unrest and various degrees of prosperity and peace.
Its a bit unfair to paint them as a chaotic state... they're far from that.
I believe it has a long history of unrest in the modern era compared to all large countries (measured by population) out there. The Chinese government knows their own history and people well, and I believe they are managing the risk with a serious mindset. Their methods may be up for debate, but they're not of the mindset that there's no risk.
China is virtually a continent unto itself. It's a huge and fractous territory. It is little surprise that when the empire fell at the beginning of the 20th century after 4000 years, in the most tumultuous period of world history, that it went through a long phase of war and revolution. It was divided among the West's great powers, repeatedly invaded by a rising Japan, hit by successive ideological waves of nationalism and communism - and had to navigate being the third cog of the Cold War. I don't it's helpful to chalk up the instability of China during this period to some 'essential' characteristic of China; it is not naturally unstable or violent - any country that endured what it has would be unstable and violent.
At the start of the 20th century the UK controlled so much of the world they said the sun never sets on the British Empire. It led the industrialisation of the planet, lost millions of men to the trenches of the first world war, then was nearly wiped out and turned into a slave state by Hitler before successfully liberating Europe with its allies. It went through enormous social turmoil in the middle of the 20th century: socialist governments and ultra-militant unions repeatedly damaged its economy so badly that by the end of the 1970s it was significantly worse off economically than Germany - a country it had flattened in world war just 40 years earlier, and which had then been split in half by the Soviets. Professional and well armed terrorists repeatedly attacked the government, in one case almost managing to assassinate the Prime Minister [1].
That all sounds like a much more traumatic modern history than China's. Despite that there has never been a revolution in the UK. The closest you can find is probably the English Civil War in the mid 1600s, which ended with the king being invited back to become King again after the revolutionaries turned out to suck more than he did.
So I don't think we can just write off China's history or concerns of its leadership by saying it's merely large, and not naturally unstable or violent. For whatever reason China does seem to have gone through far more revolutions than other countries have done despite the apparent lack of external events that could have triggered such instability.
That is so far off the mark.
China was turned into a tributary state by the Western powers. It was repeatedly - successfully - invaded by Japan. Tens of millions died in the fires of civil war and revolution. It industrialised within a span of 50 years. It was hit successively by waves of nationalism, communism, and capitalism in a single century. Nothing compares to ANY of that in the UK's recent history.
The UK was one of the world's great powers at the start of the twentieth century. It drew men, wealth and geopolitical advantage from its empire. It enjoyed the sympathy of Canada and the United States - already far and away the most powerful state in the world. It fought into two world wars, yes, but that did not tear at the fabric of Britain - it never suffered a land invasion, or the realistic prospect of one. Even if Germany had won the air-battle, Britain's navy would always have precluded the possibility of a German armada crossing the channel.
It was not turned into a vassal state by a strange and more powerful civilization. It did not undergo revolution. There were not major ideological explosions. The same political system and governing class stayed in place. Britain had the advantage of industrialising first, in the late eighteenth and early nineteenth century.
The modern history of the UK is exceptional for being so stable.
"Socialist governments and ultra-militant unions". The Labour Party was Keynesian in economics, social democratic in politics, supported NATO and trident and yoked itself to America in the Cold War, and was hardly the direct cause of the crisis of the 1970s - a crisis, by the way, that was general to the West. Unions are, almost by definition, on the soft side of the socialist spectrum - certainly in the context of socialism in the 20th century - hence Lenin's quip about 'trade union consciousness'.
With respect to which country has had more drama in the 20th century, I'm not sure there's a scale that can be applied to compare them - to me it seems both countries have been through a lot. And that's what I'm getting at. Clearly, experiencing war, invasion or very real threat of invasion (Hitler was trying his best to destroy the navy!) and rapid industrialisation is not by itself sufficient to lead to revolution. There may be something else at work beyond mere events, perhaps a cultural aspect.
The British political parties of the 50s and 60s were hardly Keynesian except in the sense that they liked spending money, and no the crisis of the 1970s wasn't "general to the west". The USA was busy putting a man on the moon in this era, the German economy was outstripping the UK's quite significantly. The UK had to go to the IMF for a bailout its economy was so sick. The cause was pretty clearly and directly militant socialism - once Thatcher got the unions under control and liberalised the economy, the UK caught up with its erstwhile foe and was no longer the 'sick man of Europe'. There was a lot for Thatcher to do because at the time she came to power the British government owned huge quantities of ailing industries, including things like hotel chains and removal companies. Not so dissimilar to China's model where so much industry is state owned.
This argument is obviously fallacious.
It does not follow from the fact that lots of societies (L) have had X happen to them that no number or combination or tempo of X's can have an effect that was not present in L.
I'm not sure if the proposition that we can't ascribe China's revolutionary past to 'anything in particular that happened to it' is even coherent. How else do you think historical change takes place? From nothing?
"The UK had to go to the IMF for a bailout."
It's now historical consensus that the UK didn't have to do this at all. It was based on a miscalculation of the UK account (not that the economy wasn't in dire straits).
"The crisis of the 1970s wasn't "general to the west".
It was, for at least three reasons: (i) the collapse of the Bretton Woods system and the beginning of dollar seigniorage; (ii) the OPEC crisis in 1973; (iii) and the emergence of widespread stagflation in 1973-1975.
"The cause was pretty clearly and directly militant socialism - once Thatcher got the unions under control and liberalised the economy, the UK caught up with its erstwhile foe and was no longer the 'sick man of Europe'."
I'm not going to get into this, because it's a rabbit hole. But that is clearly a highly simplified and ideologically charged perspective. I would mention that the rate of growth under post-war social democratic Keynesianism was higher than under Thatcherism and her epigones. I would recommend the work of David Edgerton, probably the foremost scholar of British economic history in the twentieth century - whose work reveals a quite different story to your own.
But just as they are worried about the threats from without, they are also worried about the threats from within. This is what I see in their domestic policies.
No one analyzes Brexit as a return to literal western European warfare, at most as an analogy of interests.
The last century featured advances in weaponry that changed the cost benefit of armed conflict in a way to make some types of historically prevalent warfare much more rare.
You could argue that the difference with China is the fear that information control and the other authoritarian elements of the communist party are masking significant internal discontent, making the political situation more volatile than can be reliably observed.
And... that civil wars aren't the type of warfare that technology has made more rare. (Really just limiting superpower territorial invasions of other superpowers?).
But who knows. China is such an enormous complicated country that there are basically no parallel examples to help us predict its future... Even China's past is limited help. China of the Tang dynasty was more similar in population to present day Myanmar. Its problems and issues and politics might have basically no discernable relationship to China's real issues today.
China always had a requirement to grow 6% for every city. So I believe some numbers are inflated ( mostly about real estate eg. Ghost cities, ..). This doesn't give many issues, because there is actual growth.
The reasoning goes that when the growth slows, the entire pyramid goes crumbling down ( debts).
As weird as it is, I think it's an objective overview of everything China related. It's a personal hunch of all the FOMO I read about China and can't support it with links.
The reasoning I follow is: expansion internally (China), expansion externally ( requirement) with Africa / one road one belt, knocking down on bank fraud, no export of money internationally, ... In the process, trying to become too big too fail.
We'll see if I'm right about this.
Ps. I could be wrong, so comments are appreciated
The "Chinese government" is not a singular, monolithic entity in the same way the "US Government" is actually a bunch of departments, branches and jurisdiction levels each with competing and sometimes differing interests and goals. (but yes, it is more unified in China in the sticking to party line).
The Chinese federal government has been wanting to make this re-balancing for a long time (a shift away from exports towards domestic consumption, and shifts from inefficient state owned enterprises to companies that can operate more efficiently and are "market oriented").
Where you are also correct is that many of the inflated GDP numbers and "inefficient" investments / capital towards things like ghost cities are mostly driven by state governments, in their attempt to meet the "goals" as stated by the federal government.
Do you have evidence of this? Isn't one of the biggest US complaints that many Chinese businesses are indistinguishable from the government?
You are also right - yes one of the biggest complains IS that many Chinese businesses are "owned" by the government with lots of influence there. However, the big resistive force here preventing this further breakup is that they are such huge employers, and it is not politically easy to reduce and remove so many people from the payrolls. So it has been a slow process.
Here is an article roughly related: https://www.forbes.com/sites/kenrapoza/2015/12/30/china-star...
Communist party leaders own huge portions of their state sponsored businesses and directly benefit from their success. Chinese leaders don't want fair competition, they want to be rich.
And that skill seems to help when trying to understand China itself!
If you are talking about "求同存异" that's for agreeing to have disagreement, which is a common cooperation culture around the globe.
If you are talking about "无为而治" from the Taoism philosophy of doing without actually forcing, that's not something relevant here though.
PS: I am often amused by people coming up with obviously-weird/nonsensical claims on Chinese, China or its culture, and the readers seemingly unable to apply common sense to disapprove them. This, to me, is an unconscious (or actually intentional) way of reinforce stereotype on China, which can be useful, for example, in mwny cases when someone in power wants to mobilize the common people, such stereotype really makes things easier to get approved.
The world is not black or white. Enlarging your perspectives always help.
Not quite.
It has side effects of course, but Chinese government have much better control of the macro-economy compared to free markets in most other countries, and that would help a lot in avoiding economical crisis. The debt issue is concerning, but I think Chinese government is much faster in acting on and fixing problems.
Some of the slow down mentioned in the article, such as the fall in housing market, seems to be exactly what the government want, as they've tighten the rules for real estate by a lot earlier this year. There're strict criteria people have to meet to be eligible for purchasing a house. This is a good thing because the current real estate market in China is almost insane.
Since every bank in China is under the direction of the central government it's up to a committee therein to decide which companies end up bankrupt. China might look like it has a modern capital market but it's still centrally controlled for key parts. National banks can and will infinitely extend credit lines to unprofitable companies if it's in the governments interest (for example to prevent public unrest).
Your hypothesis does not explain why the Chinese government is acquiescing to American trade demands. If they welcomed this economic slowdown they would be holding firm in trade negotiations.
What we are actually seeing happen is a rebalancing of foreign investment. American businesses have purchased stock in excess in the previous quarters using existing supply chains and are now moving supply chains out of China. Money that used to flow into China is now flowing into neighboring countries such as Vietnam. Mark my words, if the Chinese government allows this transfer to complete it will never come back to China and China's middle and lower class will be gutted.
Imagine if America's manufacturing economy was outsourced to China in the 60s rather than in the 90s when it already had a thriving service economy. That is what is happening in China.
Many people believe that authoritarian leaders are less beholden to their people than democratic leaders and because of this are able to withstand economic disasters easier. What they fail to realize is that when an authoritarian country fails economically there is only one group of people to blame and when judgement occurs it's not through polls but through violence.
A larger picture here is China is going through its own deleveraging campaign. They can't take more debt to stimulate the economy. Traditionally the government would ramp up massive investments in infrastructure or just remove the control over the overheated housing market. Both of those approaches are now out of the table. The infrastructure result in big debt, while the housing bubble is already the biggest probably in human history. It is unfortunate for the Chinese government to run into the trade war with US now, but it only accelerates the coming of the inevitable, the delayed reckoning.
But China is big enough to make its problem, the world's problem, just like US. It won't be the first to fall in this game, even though it might start it.
To use another medical analogy the idea that you can prevent an economic crisis by slowing growth is like the idea that you can cure diseases by using leeches to suck out them out.
The way to prevent economic crisis is to stamp out fraud and high risk investment practices (curing the actual disease). Encouraging American business to move factories outside of China does neither of those things.
It might not be but that doesn't mean you don't want it to occur for as long as feasibly possible. Maybe until you even reach parity with the US on a per capita income basis?
> and slowdown is of course welcome if that helps avoid bigger problems down the road
A slowdown is the problem itself, this is like saying you want to die of heart disease now because you might die of cancer later in age.
Economy: Everyone says it's been failing for 10 years -> Chinese leadership is omnipotent regarding economy -> it's just a temporary slowdown, government will print more money -> Chinese leadership planned this slowdown
Human rights: look at US! -> ignore comparisons to other countries other than US -> It's not really a concentration camp, since there's no mass murder -> prisoner organ harvesting isn't bad compared to US separating families at the border, or slavery 300 years ago
I am no apologist for any country, but wouldn't a better point be the very real, widespread, and constitutionally-protected prisoner slavery, which is happening in America today not just 300 years ago?
Without trying to justify anything, no system is perfect but at least we can talk about it. In China even having this conversation might make you liable to a citizenship points penalty that could end up with you being denied basic rights like the ability to book even domestic flights.
The best trolls tell something almost true to get people involved in a fight about details rather than countering the larger misdirection.
The emancipation proclamation was signed January 1, 1863, or 156 years ago.
And the party seems to be pretty weak when the Chinese economy isn't doing swimmingly. If things finally do turn sour, what a convenient time. You can just blame it on someone else.
Think again.
GoPro moving some production out of China to avoid US tariffs: https://www.cnn.com/2018/12/10/tech/gopro-china-tariffs/inde...
It's something that happened recently and was mentioned on HN, that's why I provided the courtesy of posting that for you.
Controlling the Chinese economy is relatively easy with the state corporation machinery through the investment component and brings in robust economic growth in GDP numbers, but consumption really sags.
FWIW the entire western economic system canters around the consumption portions of GDP. That's why everyone loves to export to the US/Europe/Australia. Consumption is resistant to short term economic shocks.
You'll have many around here boasting higher saving rates in Asian nations, but these are the reasons the economies are far behind (inc Japan). Look at the other side of savings, more spending means more is earned as well creating a net social surplus for everyone beyond the private scale of saving. It takes exports to make up for this shortfall.
https://mobile.twitter.com/carlquintanilla/status/1073234887...
US exports to China for 2018 will be around $123-$126 billion.
That compares to $129 billion for 2017, and $115 billion for 2016 and 2015. So US exports will be up vs 2016 & 2015, and down a mere couple billion versus 2017. Meaningless in other words.
Your premise is incorrect. So far China is paying for most of the trade war [1] through its producers slashing prices and by allowing its Yuan to drop in value (which is a wealth transfer from the Chinese people to prop up its exporters so they can hopefully run in place rather than get hit hard). That's why the US isn't seeing any consequential pricing / inflationary pressure at all from the trade war.
[1] https://www.bloomberg.com/news/articles/2018-11-19/china-is-...
https://www.ceicdata.com/en/indicator/china/total-imports-gr...
Both Japan and the EU (Germany with the world's largest trade surplus) have larger export markets in relation to the size of their economies than the US does. That's also one reason the US runs perpetually large trade deficits with Japan and the EU.
US exports to China haven't gone up meaningfully since 2013 (in fact they declined 2013 vs 2015/2016). That's not the case with the EU and Japan. Has nothing to do with the trade war, which didn't exist in 2013-2016, it has to do with what (and where) the US manufactures and exports.
It's also worth noting that Chinese manufacturing is to one extent or another a representation (proxy) for the US consumer economy, since major US corporations utilize China for so much manufacturing (part of the where and why reference in the last paragraph). US companies make products in China and then sell them to US consumers, which complicates the import/export discussion. This is pointed out constantly in critical discussions (eg about the environment or labor & wages), and ignored in discussions like these where it's an inconvenient fact. Over time the EU and Japan have outsourced less of their major manufacturing to China than what the US has.
And that’s from back in October. It’s a loss no matter how you spin it.
China is benefitting from what's called front-loading, which is a temporary bump in exports to beat the implementation of tariffs. It has been widely discussed in dozens of business publications over the last few months (including some breathless articles about ships desperately racing to beat the tariff dates), there's nothing surprising about it.
The fact that China can use its currency to fight this trade war is only more evidence that the US is being outmaneuvered.
You can spin it all day long, but the US soybean farmers and steelworkers are not winning this trade war.
https://www.google.com/amp/s/www.marketwatch.com/amp/story/g...
See the sibling comment for how little the total numbers have declined.
Someone is going to get fucked in a tariff change. Tariff changes area always a question of greater good.
2. I think the trade war is going pretty well for the US. They basically can't lose it this is why I don't understand that Xi did not compromise in the first place.
'Free' trade benefits industrialized nations, while mercantilism benefits developing nations. Every currently industrialized nation has, at some point in its past, been incredible protectionist, blatantly violated IP laws, had atrocious safety, employment, and pollution regulations, and large taxes on foreign imports.
China is just catching up to what the rest of the developed world has gone through.
Are you expecting them to look at the history of how the United States, and Europe developed, and go: "Well, gee, protectionism, lax safety regulations, and access to foreign resource markets worked really well for all these other countries... But we shouldn't repeat their success!"
in the past there was no world trade organization and there were no multi-national free trade agreements. It's like saying china should be allowed to enslave people because it happened hundreds of years ago. There are now laws against it
I've seen this argument parroted multiple times on many different websites. It's either just the blind leading the blind or Chinese sock puppets spreading lies to justify blatant trade abuses
The US also had slavery.
Are you under the impression that China didn't?
I was trying to address the idea that since the US did bad things in the past, it's ok for other nations to do them too.
Giving each country a fair shot at developing even if they didn't happen to get on that ramp at the same time as some Western countries is a good goal.
At the same time, that's not such a vital principle that we should sacrifice other moral or pragmatic imperatives to get it. China may have gotten a late start, but that doesn't give them the right to ignore everything we've learned since then about a country's obligations to its people and the world.
If you don't want the developing world to follow in the West's footsteps, perhaps we should share some of our wealth with them? Would that be a more palpable alternative?
Earlier today, a study was posted on HN about how the British Empire plundered ~$50T (inflation-adjusted) of wealth from India over it's colonial history. If you want to even the playing field with the developing world, we have a lot of reparations to look forward to.
We are, it's called the global economy, and it has performed a wealth transfer of unprecedented scale these last decades.
> we have a lot of reparations to look forward to.
Colonial reparations are complete crock, because they are based on counterfactual history speculations, and there are absolutely no concrete limits on those.
The Roman empire obviously plundered the British isles for inflation-adjusted astronomical amounts during its colonial history, should modern-day Italians pay reparations to England?
It's absurd.
How do you put a value on that?
Also, many Indians were killed resisting the colonial invasion, and their descendants are not living today as a result, but would have if the course of history hadn't changed.
How do you put a value on that?
You can twist yourself silly arguing these things back and forth, because there are no physical limits. There are no principles to fall back on, there's only human imagination, you're free to dream up whatever pricetag you want on them.
And that is why colonial reparations are ridiculous.
India's share of the world economy went from 24.4% in 1700 to 4.2% in 1950. India's GDP (PPP) per capita was stagnant during the Mughal Empire and began to decline prior to the onset of British rule.
https://en.wikipedia.org/wiki/Economy_of_India_under_the_Bri...
> infrastructure
Infrastructure that was paid for, and built by the people of India.
> medicine
Then why did life expectancy in British India go down during the colonial period? And why were millions of people dying in famines, all the while British India was a net exporter of food, to the rest of the empire?
> industry
How did countries that did not get colonised ever manage to industrialize?
> language
What, did Indians communicate with eachother through chest-thumping, and grunts, before someone had the bright idea of teaching them how to speak English? Christ on crutches... This reads a bit like satire.
Where do you go from there, exactly?
that's a useful description for an awful lot of products I've purchased over the last 10 years.
in some areas, this market strategy has prevailed so completely that it's really hard for a consumer to find something that's not junk.
I noticed this many years ago when ebay vendors from china were able to sell stuff for less that what one has to pay for shipping
What's the implication here in this context?
https://thehill.com/homenews/administration/411828-us-announ...
I haven't followed it closely but it is a political issue, albeit a minor one that neither side for whatever reason wants to escalate into a major talking point.
(Not a Trump supporter but maybe on this one...)
The parent is saying that Trump is bad on most things, but good on one particular thing. You’re trying to claim that he’s good on most things in a category.
For example, you can see "I don't like {Javascript,PHP,Apple,Google,Facebook,$tech,$website,$thing}, but..." right here on HN, frequently.
"The reality is that business-wise he's actually working hard for America's economy, addressing structural nonsense like the mail post treaty." is a statement that a majority of the people in the U.S would disagree with.
If you want to make your comment unbiased to one political party or the other, then you should remove that sentence.
Your comment was framed as "why can't people freely talk about which politician they support", which is a fairly neutral statement. But, afterwards, you proceeded to say that Trump has been beneficial for the U.S, which is a partisan statement (that most people in the U.S disagree with as per a variety of polls), and furthermore, you claimed that a vast majority of the people in the U.S would support Trump if it were not for their bias against Trump/conservatives, which is an incredibly subjective and partisan statement (and also plain wrong - because many people just dislike Trump's policies).
I mean, just look at this sentence:
>Why is it implied that the other party decides whether a position is right or wrong by simply choosing the opposite of what a politician they hate chooses?
You claim that people who don't support Trump's policies do so solely because they dislike Trump, instead of considering the fact that many people just dislike Trump's policies because they are just intrinsically bad.
That's a bit of a stretch.
It's a nice distraction to attack China when the source of such things, in this tale, is a U.S. that has taken those stances to extremes unimagined before Trump took office. The U.S. fetishizes "hard line" and "aggressive", and has underminedh norms stretching back generations and has destroyed the U.S.'s reputation on trade and international relations. And all those consequences are intentional, a nationalist goal.
> China wanting to get away with pretty blatant violations of fair trade
I don't know that they have done more than other countries similarly situated, beyond allegations by the current U.S. administration as a justification for nationalist policies. Some things on this list of allegations are insubstantial, and we could make a similar lists for other countries. Is there any independent basis that China is worse than other developing countries or than other economic powers (they are both)?
> they’ve taken their “build junk make bank” mentality to the world and it can’t last much longer
This is just an empty stereotype unless you can back it up. Many high quality goods are made in China, including some that you may be using. There is nothing wrong with making cheaper, low-quality goods either.
One might say that U.S. financial industry is the leading proponent of "build junk make bank", with by far the most serious consequences.
> Every economy has a plateau then a fall, then a pull back up again
That's not actually how economics works at all. In the real world, perhaps outside the wealthy country you live in that has had good economic management (though the U.S. and others seem to be losing their way), countries do fall and never recover.
Chinese companies are starting to be net sellers instead of net acquirers of foreign assets.
That would be fine if it was just because they were getting better return on their capital inside China, but in reality it is to pay back runaway debt and inability to complete asset purchases due to government capital controls. Those controls would be unnecessary if the Chinese economy was in a healthy state.
The question isn't whether a contraction is in the offing, but how deep and large it is and what kind of knock on effects it has globally.
The only thing I remember as a teenager then was the Japanese briefly gaining and losing control of the NBC/GE conglomerate.
Japan never owned GE or NBC. They bought a 51% interest in Rockefeller Center (where NBC was/is based) in 1989 [1], which is just real-estate. The high prices the Japanese often paid for trophy real-estate and businesses during the bubble years, is often held up as a reference point to the end of the run. China began doing something similar just before Xi came to power, then Xi put a hard stop to it.
[1] https://www.nytimes.com/1989/10/31/business/japanese-buy-new...
What happens is that, because of untruthful reporting in US media, people in US does not know or understand what's going on in China. It seems a miracle that such a big country grew like crazy in 30 years without democracy. But if you how much average Chinese invest in their education and how hard they work, you will not be surprised.
The only real problem China is facing is its political system, not its economy. Compared to improving the political system, the economy is much, much easier.
If anything, reporting on China by western sources doesn’t get anywhere near the actual situation in China because westeners would never believe it was that crazy. News on China by China already leaves a pretty bad impression.
>would never believe it was that crazy.
That doesn't sound crazy at all, as I've seen plenty of all that in the US...
Some of the useless buildings built for buildings sake will potentially be filled as people move from rural areas, but a lot won't.
Both approaches are wasteful but which is more so is debatable. Our military Keynesianism throws off R&D dividends that apply to civilian use cases, but people could live in those cities.
More people are buying their second and third home than are buying their first.
At this point, there is no way for the housing market to crash gracefully. Maybe in 2011, but not in 2018. The amount of leverage offered up by Chinese banks this time means that most speculators can't simply wait out a downturn.
Can you point to examples of untruthful reporting on China from mainstream publications? Sounds to me that you came here with an expectation of how the US media reports on China and you've gone out of your way to have it confirmed, ignoring evidence to the contrary.
So, in your view:
1. what's the real story about what's going on in China that's being missed in "untruthful" articles like this, and
2. who's reporting that story "truthfully"?
The number one take away I have from interactions with all too many Chinese nationals, unfortunately.
It might be more subtle than that. I know some Chinese nationals who report that their culture is to defend the in-group against criticisms in front of an out-group even if they themselves think the criticisms are true. To not do so is a kind of betrayal. This applies to groups as small as a family up to the whole country.
For instance, that cultural attitude were at least part of the fuel for this controversy: https://www.bbc.com/news/world-asia-china-40013486
It does make it difficult to have open conversations about many topics until you're pretty close.
This how thread is about how that is changing. Also, most don't think politics and economics are separate.
> I have not seen _any_ US media reporting China truthfully
What are they getting wrong?
Look no further than The World Factbook by CIA:
2 QATAR
13 UNITED ARAB EMIRATES
15 KUWAIT
22 SAUDI ARABIA
https://www.cia.gov/library/publications/the-world-factbook/...
But serious question: if the data was really as fake as everyone says, wouldn't the official and unofficial exchange rate of the Yuan be a lot larger?
If the Chinese are basically pretending the economy has grown 500% and it's only grown 100%, wouldn't the value of the Yuan prove it?
Also: https://www.investors.com/politics/editorials/new-study-shin...
Like really people, China is probably faking some stats, but they're clearly rich and making a ton of money and stuff.
In contrast, Taiwan-made tools are excellent, on a par with USA-made and European tools. Too bad Taiwan is caught up in the tariffs. But I always look for the "made in Taiwan" label anyway. If its present then I know it will work well. And older tools from Taiwan on eBay are good too.
So, like the New York Times?
I am certain that the chinese economy will face a recession one day and I am sure nobody in the media will know why or how. Maybe I'm alone in thinking these articles are such a waste of time. It tells us nothing.
Sometimes things take that long. That kind of cognitive bias is making it difficult for our species to do any sort of proper long-term planning or even observation of slow problems.
1. Chinese economy slows down.
2. Chinese leadership realizes it's only one real recession away from existential threat.
3. Chinese government floods the market with fake money.
4. Chinese factories expand and export still more goods, despite weak demand.
5. World inventories pile up, depressing prices across the board.
6. Factory orders dry up around the world, sending host economies downward.
7. GOTO 1.
The EU is in a worse state than the US with an interest rate of 0.0 and therefore no room to maneuver in case of a new downturn.
For either three of those markets, the flooding can't continue indefinitely.
That's true for at least 30 years now.
https://www.bloomberg.com/opinion/articles/2018-07-19/china-...
When the inevitable happens, it's going to be catastrophic.
The entire population of young adults in a country of over 1 billion has never experienced a recession.
China is really a complex house of cards, it looks more foreboding than it actually is in reality.
The second the economy slows the consumers hide, and go back to stuffing cash into their mattresses.
I think Trump is a fool, but in the case of China I think we need a fool. Trump believes he's invincible, so he doesn't get caught up with the "apparent facts" about China and it's economy.
I just wish it had been in consultation with our allies instead of flipping the middle finger to all of them at the same time.
Western businesses have also wised up, realizing that partnering in China just means that you are forced to give away your IP. China is reliant on western countries partnering and giving away the IP for a shot at the Chinese market, but things have not panned out so well for Western countries because the consumer market in China is rigged against western companies. Also the consumers in China are scared rabbits, their motto is save, save, save, and then save more. It's going to take 2 or 3 generations to change the consumer habits.
Manufacturing is starting to leave China for cheaper countries that don't require you to give away your IP, just like it took 40 years for China to become a manufacturing powerhouse, but it can unwind in a few years.
Wrong. https://en.wikipedia.org/wiki/Trans-Pacific_Partnership
Here in the UK for the first time, i've seen multiple billboards with nothing but scraps on them (they've deleted the adverts by scraping the remnants off)
https://www.statista.com/statistics/281583/advertising-spend...
Has there been any research into the truthfulness of the Chinese released growth numbers in the past? What’s to prevent them from inflating or artificially deflating them to serve some other purpose?
No one will like the answer.
The biggest one in my mind is the unemployment rate. Even though Labor publishes nuanced statistics and revises them for accuracy, Trump and the media focus solely on the lowest tier of unemployment rate, which is the one below 4%.
To be included in this rate, you must currently be receiving unemployment benefits from the state. Additionally, you must not be working part time at all, such as someone who drives uber for a few hours a week, or someone who picks up minimum wage shifts as a cashier or waiter. Lastly, you must submit weekly reports (through an imho easy to use online portal) of where you applied for jobs. You also cannot be in university, or living abroad (except Canada).
These hurdles are enough to remove literal millions of people from the official unemployment stat vis a vis the workforce participation stat. And yet, the incessant focus on Unemployment Rate probably won't stop.
The "official" number is the U3, but if you prefer to use the U6 you can. No one is lying about unemployment.
U1:[47] Percentage of labor force unemployed 15 weeks or longer.
U2: Percentage of labor force who lost jobs or completed temporary work.
U3: Official unemployment rate per the ILO definition occurs when people are without jobs and they have actively looked for work within the past four weeks.[48]
U4: U3 + "discouraged workers", or those who have stopped looking for work because current economic conditions make them believe that no work is available for them.
U5: U4 + other "marginally attached workers", or "loosely attached workers", or those who "would like" and are able to work, but have not looked for work recently.
U6: U5 + Part-time workers who want to work full-time, but cannot due to economic reasons (underemployment).
You could even consider the labor participation rate as an unemployment number. That would include retired people, the wealthy that don't need to work, stay at home moms etc.
Yet, you will never ever hear these stats on TV or from Trump. It is solely just screaming about "RECORD LOW UNEMPLOYMENT", when it is anything but a healthy employment situation.
News at ten.
It's easy to blame the president for the reason your coal job is no longer around, yet as soon as people find employment, those on unemployment are moochers.
Note the word: rule.
Unlike Soviet Union, the chinese has moved out as people to the west for many years now. Huawei even nearly has a chance to use their code to get a strong hold of 5g. Can you even imagine Russia live in USA and with firm there or Hollywood need to get the agreement of china to ...
The game is not just about a trade. The politics of playing of game of game from shaping the agenda, control the verb (discourse academic speak) and the hard to fight the culture (unlike Muslim you can have a perfect English speaking chinese working in most guarded place and then part of the 1000 person thing).
I think the game at large is what is the “interesting” part and the west is losing to the horror of us who think human rights, Liberty, freedom to speak (or access information) is fundamental rights.
But the west accept chinese can be on their own and even worry about their economy.
You lost. If you play a game like this.
Either Trumpism works, or the article is just weak.
https://translate.google.com/#view=home&op=translate&sl=auto...
We're supposed to conclude that Trump's tariffs have dealt a serious blow to China's economy, and thus to suppress our disgust with the policy, since it will not take much more time for China to beg for respite.
It should be obvious by now that there is a concerted effort to amplify unfavorable publicity for the Chinese government, the Chinese people, and the Chinese way of life.
Also, fwiw, since when does it make sense to draw massive micro-economic conclusions from interviews from a handful of people? If this were news it would be an economic paper, not an article cobbled together out of a few interviews/quotes.
a prediction: the next US president (almost certainly a Democrat) will continue these policies or other very similar policies. the next president will not suddenly "lighten up" on China.
it seemed like there were pro/con TPP factions in the Democratic voter base. i recall Sanders being against TPP because he thought it was too favorable to certain US companies (e.g. pharma, entertainment) and their shareholders without doing much for workers or for other US industries.
— René Louis de Voyer de Paulmy d'Argenson
Against what therefore appears to be a propaganda-laden media landscape, I would merely add the observation that Chinese people and companies can more easily stomach slowdowns than the US because they save, don't tend to live highly leveraged and on subscription like Americans, don't need cars, and don't have a culture of mutual litigation or life-crushing medical bills.
Therefore, to an American reading "these people lost their jobs a couple of months early" the effect is insanely worrisome and they believe this to be a huge problem. In China, having an extended holiday from your seasonal factory job is generally a non-issue... these people can either hang around and get other work, or economically hibernate back at home sharing meals with family and passing time on a tiny budget. It's a different world.
(Edit: response to below: Yes, I think "formerly independent" as Wikipedia states is perhaps a good summary of SCMP's status, but I don't follow China media much. Used to read FEER a lot years ago, that was great but switched to a closed model and the best journos (some of whom I know) all left.)
Even after the Alibaba article, a significant share of China critical articles that make it to HN’s front page still seem to be form SCMP.
1 second on Google to confirm you're wrong about the reporting being political. Also, you must be unfamiliar with American media. They've been posting negative articles about the economy for months, with different publications focusing on different parts of the US economy.
From what I have read, China has had a huge increase in household debt over the last few years. Perhaps five years ago there where not many Chinese people living with debt, but that is no longer the case. Some have even been calling it a credit bubble
Random article about this I googled: https://www.bloomberg.com/opinion/articles/2018-02-15/chines...
In other regards, I have read about the Chinese Economy slow down in non American sources, such as the Economist. However, I will agree that I see it the most in US media (the WSJ seems to have a pretty negative outlook on the Chinese Economy right now)
If opinionated is truthy stops reading comment. next
(Edit: Reply to below: Domestically there is a common acknowledgement of slowdown versus a few years ago, largely effecting real estate, high end discretionary spending such as luxury malls, and high end restaurants and nightclubs. I have not personally noticed any mass unemployment despite often visiting seasonal worker factory areas - including Dongguan pictured in the article - which would nominally be the first affected. Over the last 15 years, food retail prices have risen ~6-10x, faster than salaries (~3-7x?), but you can still get a good breakfast for under USD$1.)
1. Conspiracy - They are working together, and perhaps with the government and other private entities, to sow a particular narrative 2. Profit - Their audiences are particularly interested in these stories, given the e.g. aforementioned trade war
I'll leave it to the reader to decide which of these it might _actually_ be.
I'll leave it to you to determine whether your false dichotomy is therefore on the rocks.
P.S. Chinese households have already leveraged themselves to the brim in the last couple of years, thanks to real estate speculation. Opinions differ on exact figures but most estimates place average household debt in the range of 80% to 100% of disposable income which is close to that of the USA. The government's finances are in okay shape but the people's are definitely not.
On another note interesting to see a point of view from someone that lives in China... pretty much what I expected.