China's rosy GDP number are not all that it seems to be

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cassowary
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China's rosy GDP number are not all that it seems to be

Post by cassowary » Mon Jan 18, 2021 10:36 pm

About China's booming* GDP
The economic data Beijing released Monday seems to suggest that China has met expectations that it would be the only major economy to grow in 2020. China being China, there’s much more—and less—to the story.

The top-line data make China a rare good news story in the pandemic year. Inflation-adjusted GDP growth hit 6.5% in the last three months of the year, making it 2.3% for 2020. This contrasts with the rest of the world, where social distancing and lockdowns have triggered some of the worst contractions on record and raise the specter of long and difficult recoveries.

Some of Beijing’s cheerleaders want you to believe this is mainly because the Chinese government acted so aggressively to suppress the pandemic. That story sits uneasily alongside Beijing’s slow-rolling of early information about Covid-19 when more information sharing might have helped other countries.

Beijing adopted particularly aggressive lockdowns once it did act, sealing off entire cities and even now locking down apartment buildings or neighborhoods at a moment’s notice to suppress outbreaks. To the extent anyone can trust Beijing’s data about virus spread, it appears to have Covid mostly under control.

But a closer look at the economy suggests the growth has come from somewhere other than Beijing’s putative suppression of the pandemic. China’s Communist Party reverted to its old economic-crisis playbook to goose debt and exports while tightening political dominance over the economy.

New credit has exploded, with total public and private debt expected to exceed 270% of GDP in 2020, up 30 points in one year. Most of that has gone to state-owned firms and exporters. Smaller, more productive private companies that serve the domestic market report credit shortages. This undermines long-term growth but suits President Xi Jinping’s goal of consolidating Party control.

One clue that something’s amiss is that retail-sales growth slowed as the fourth quarter progressed, slipping to 4.6% year-on-year in December and now significantly lagging overall GDP growth. Lockdowns explain bad retail sales in the West, but China is supposed to be open for business. Dipping sales suggest, as economist Michael Pettis argues, that much-needed rebalancing toward domestic consumption is stalling or reversing as the global pandemic crisis drags on. The economy was driven through 2020 mainly by fixed-asset investment and that old standby, real estate.

This means a major challenge is looming behind Monday’s good news. Unless China can unlock and expand its productive private economy, it will never be able to manage the burden of the debt Beijing has created to generate Monday’s bump in GDP. Yet China’s evolution toward a true market economy was reversing under Mr. Xi before the pandemic, and political control is increasing now.

China’s unbalanced recovery represents an enormous lost opportunity for the Chinese people. It will also eventually present a serious challenge to Mr. Xi or one of his successors.
In China, things are usually not as it seems on the surface. China's rosy GDP growth rate of 6.5% was mainly due to exports, growing debt and real estate. Remember all those ghost cities, we talked about?

China's total debt to GDP (both public and private) is now 270%. Much of this debt is by state owned enterprises which accounted for nearly half of defaults last year.

Trump is right. China's economy has weak legs. Cut off Chinese exports and the ecnomy crashes bringing an end to CCP rule. If only Trump had 4 more years to accomplish the task. He could have been another Reagan who brought down another Commie giant, the USSR.

But this plan requires the cooeration of EU and Japan. Everybody must relocate their factories away from China and impose tariffs on Chinese exports.
The Imp :D

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Doc
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Re: China's rosy GDP number are not all that it seems to be

Post by Doc » Tue Jan 19, 2021 4:16 am

cassowary wrote:
Mon Jan 18, 2021 10:36 pm
About China's booming* GDP
The economic data Beijing released Monday seems to suggest that China has met expectations that it would be the only major economy to grow in 2020. China being China, there’s much more—and less—to the story.

The top-line data make China a rare good news story in the pandemic year. Inflation-adjusted GDP growth hit 6.5% in the last three months of the year, making it 2.3% for 2020. This contrasts with the rest of the world, where social distancing and lockdowns have triggered some of the worst contractions on record and raise the specter of long and difficult recoveries.

Some of Beijing’s cheerleaders want you to believe this is mainly because the Chinese government acted so aggressively to suppress the pandemic. That story sits uneasily alongside Beijing’s slow-rolling of early information about Covid-19 when more information sharing might have helped other countries.

Beijing adopted particularly aggressive lockdowns once it did act, sealing off entire cities and even now locking down apartment buildings or neighborhoods at a moment’s notice to suppress outbreaks. To the extent anyone can trust Beijing’s data about virus spread, it appears to have Covid mostly under control.

But a closer look at the economy suggests the growth has come from somewhere other than Beijing’s putative suppression of the pandemic. China’s Communist Party reverted to its old economic-crisis playbook to goose debt and exports while tightening political dominance over the economy.

New credit has exploded, with total public and private debt expected to exceed 270% of GDP in 2020, up 30 points in one year. Most of that has gone to state-owned firms and exporters. Smaller, more productive private companies that serve the domestic market report credit shortages. This undermines long-term growth but suits President Xi Jinping’s goal of consolidating Party control.

One clue that something’s amiss is that retail-sales growth slowed as the fourth quarter progressed, slipping to 4.6% year-on-year in December and now significantly lagging overall GDP growth. Lockdowns explain bad retail sales in the West, but China is supposed to be open for business. Dipping sales suggest, as economist Michael Pettis argues, that much-needed rebalancing toward domestic consumption is stalling or reversing as the global pandemic crisis drags on. The economy was driven through 2020 mainly by fixed-asset investment and that old standby, real estate.

This means a major challenge is looming behind Monday’s good news. Unless China can unlock and expand its productive private economy, it will never be able to manage the burden of the debt Beijing has created to generate Monday’s bump in GDP. Yet China’s evolution toward a true market economy was reversing under Mr. Xi before the pandemic, and political control is increasing now.

China’s unbalanced recovery represents an enormous lost opportunity for the Chinese people. It will also eventually present a serious challenge to Mr. Xi or one of his successors.
In China, things are usually not as it seems on the surface. China's rosy GDP growth rate of 6.5% was mainly due to exports, growing debt and real estate. Remember all those ghost cities, we talked about?

China's total debt to GDP (both public and private) is now 270%. Much of this debt is by state owned enterprises which accounted for nearly half of defaults last year.

Trump is right. China's economy has weak legs. Cut off Chinese exports and the ecnomy crashes bringing an end to CCP rule. If only Trump had 4 more years to accomplish the task. He could have been another Reagan who brought down another Commie giant, the USSR.

But this plan requires the cooeration of EU and Japan. Everybody must relocate their factories away from China and impose tariffs on Chinese exports.
Yeah even with Biden lifting the sanctions the Chinese economy is in deep trouble
“"I fancied myself as some kind of god....It is a sort of disease when you consider yourself some kind of god, the creator of everything, but I feel comfortable about it now since I began to live it out.” -- George Soros

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cassowary
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Re: China's rosy GDP number are not all that it seems to be

Post by cassowary » Tue Jan 19, 2021 6:16 am

Doc wrote:
Tue Jan 19, 2021 4:16 am
cassowary wrote:
Mon Jan 18, 2021 10:36 pm
About China's booming* GDP
The economic data Beijing released Monday seems to suggest that China has met expectations that it would be the only major economy to grow in 2020. China being China, there’s much more—and less—to the story.

The top-line data make China a rare good news story in the pandemic year. Inflation-adjusted GDP growth hit 6.5% in the last three months of the year, making it 2.3% for 2020. This contrasts with the rest of the world, where social distancing and lockdowns have triggered some of the worst contractions on record and raise the specter of long and difficult recoveries.

Some of Beijing’s cheerleaders want you to believe this is mainly because the Chinese government acted so aggressively to suppress the pandemic. That story sits uneasily alongside Beijing’s slow-rolling of early information about Covid-19 when more information sharing might have helped other countries.

Beijing adopted particularly aggressive lockdowns once it did act, sealing off entire cities and even now locking down apartment buildings or neighborhoods at a moment’s notice to suppress outbreaks. To the extent anyone can trust Beijing’s data about virus spread, it appears to have Covid mostly under control.

But a closer look at the economy suggests the growth has come from somewhere other than Beijing’s putative suppression of the pandemic. China’s Communist Party reverted to its old economic-crisis playbook to goose debt and exports while tightening political dominance over the economy.

New credit has exploded, with total public and private debt expected to exceed 270% of GDP in 2020, up 30 points in one year. Most of that has gone to state-owned firms and exporters. Smaller, more productive private companies that serve the domestic market report credit shortages. This undermines long-term growth but suits President Xi Jinping’s goal of consolidating Party control.

One clue that something’s amiss is that retail-sales growth slowed as the fourth quarter progressed, slipping to 4.6% year-on-year in December and now significantly lagging overall GDP growth. Lockdowns explain bad retail sales in the West, but China is supposed to be open for business. Dipping sales suggest, as economist Michael Pettis argues, that much-needed rebalancing toward domestic consumption is stalling or reversing as the global pandemic crisis drags on. The economy was driven through 2020 mainly by fixed-asset investment and that old standby, real estate.

This means a major challenge is looming behind Monday’s good news. Unless China can unlock and expand its productive private economy, it will never be able to manage the burden of the debt Beijing has created to generate Monday’s bump in GDP. Yet China’s evolution toward a true market economy was reversing under Mr. Xi before the pandemic, and political control is increasing now.

China’s unbalanced recovery represents an enormous lost opportunity for the Chinese people. It will also eventually present a serious challenge to Mr. Xi or one of his successors.
In China, things are usually not as it seems on the surface. China's rosy GDP growth rate of 6.5% was mainly due to exports, growing debt and real estate. Remember all those ghost cities, we talked about?

China's total debt to GDP (both public and private) is now 270%. Much of this debt is by state owned enterprises which accounted for nearly half of defaults last year.

Trump is right. China's economy has weak legs. Cut off Chinese exports and the ecnomy crashes bringing an end to CCP rule. If only Trump had 4 more years to accomplish the task. He could have been another Reagan who brought down another Commie giant, the USSR.

But this plan requires the cooeration of EU and Japan. Everybody must relocate their factories away from China and impose tariffs on Chinese exports.
Yeah even with Biden lifting the sanctions the Chinese economy is in deep trouble
Yeah. Xi's idea of managing the economy is to order the economy to grow by 6.5%. To the communist mind, an economy that grows by itself is incomprehensible. Everything needs to be planned. This was done by ordering banks to lend to property developers who were ordered to build even though there is insufficient demand. Then he claims growth despite being unable to sell half the aparments. The developers cannot pay the banks but the banks were ordered not to foreclose on the loans. So the debt bubble goes on.

You can call it the planned capitalist economy. What an oxymoron. The only capitalist part are the exporters who have to sell to real capitalist economies. The rest of it is a planned economy. Everybody impose tariffs and the house of cards come tumbling down.
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Re: China's rosy GDP number are not all that it seems to be

Post by neverfail » Tue Jan 19, 2021 3:23 pm

cassowary wrote:
Mon Jan 18, 2021 10:36 pm
About China's booming* GDP
The economic data Beijing released Monday seems to suggest that China has met expectations that it would be the only major economy to grow in 2020. China being China, there’s much more—and less—to the story.

The top-line data make China a rare good news story in the pandemic year. Inflation-adjusted GDP growth hit 6.5% in the last three months of the year, making it 2.3% for 2020. This contrasts with the rest of the world, where social distancing and lockdowns have triggered some of the worst contractions on record and raise the specter of long and difficult recoveries.

Some of Beijing’s cheerleaders want you to believe this is mainly because the Chinese government acted so aggressively to suppress the pandemic. That story sits uneasily alongside Beijing’s slow-rolling of early information about Covid-19 when more information sharing might have helped other countries.

Beijing adopted particularly aggressive lockdowns once it did act, sealing off entire cities and even now locking down apartment buildings or neighborhoods at a moment’s notice to suppress outbreaks. To the extent anyone can trust Beijing’s data about virus spread, it appears to have Covid mostly under control.

But a closer look at the economy suggests the growth has come from somewhere other than Beijing’s putative suppression of the pandemic. China’s Communist Party reverted to its old economic-crisis playbook to goose debt and exports while tightening political dominance over the economy.

New credit has exploded, with total public and private debt expected to exceed 270% of GDP in 2020, up 30 points in one year. Most of that has gone to state-owned firms and exporters. Smaller, more productive private companies that serve the domestic market report credit shortages. This undermines long-term growth but suits President Xi Jinping’s goal of consolidating Party control.

One clue that something’s amiss is that retail-sales growth slowed as the fourth quarter progressed, slipping to 4.6% year-on-year in December and now significantly lagging overall GDP growth. Lockdowns explain bad retail sales in the West, but China is supposed to be open for business. Dipping sales suggest, as economist Michael Pettis argues, that much-needed rebalancing toward domestic consumption is stalling or reversing as the global pandemic crisis drags on. The economy was driven through 2020 mainly by fixed-asset investment and that old standby, real estate.

This means a major challenge is looming behind Monday’s good news. Unless China can unlock and expand its productive private economy, it will never be able to manage the burden of the debt Beijing has created to generate Monday’s bump in GDP. Yet China’s evolution toward a true market economy was reversing under Mr. Xi before the pandemic, and political control is increasing now.

China’s unbalanced recovery represents an enormous lost opportunity for the Chinese people. It will also eventually present a serious challenge to Mr. Xi or one of his successors.
Cassowary,

Your quote, coming as it does from the Wall Street Journal would I would normally normally consider authoritative; but look again. It is labelled an OPINION piece, not a report or an analysis . That sheds a different light on the essay and its content.

Please note: an unbalanced recovery is still a recovery. The author of this essay nowhere claims that the PRC economy is due for a contraction any time soon.

Note also the clause "Mr. Xi or one of his successors". The choice of words implies that the author is talking about long term challenges that the PRC leadership shall have to attend to sooner or later whereas the bains afflicting the US economy and those of most other Western countries are immediate and pressing.

I would suggest that time is on the side of the PRC; not The West.

Trump is right. China's economy has weak legs.
:lol: So how does America's soon-to-exit liar-in-chief define the current shape of the US economy; along with those of the UK and Europe? Had he won the recent election Trump would probably brush the question aside with one of his cheery dismissals of the "Oh, America is going great" genre. That is sounds good to his supporters would not make it true.

Cassowary, when are you doing to give up hitting your head against a brick wall hoping for an impending collapse of the PRC?

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Re: China's rosy GDP number are not all that it seems to be

Post by Sertorio » Tue Jan 19, 2021 3:44 pm

neverfail wrote:
Tue Jan 19, 2021 3:23 pm

Cassowary, when are you doing to give up hitting your head against a brick wall hoping for an impending collapse of the PRC?
Never, as that fantasy is his true raison d'être...Without it he would have nowhere to turn...

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Re: China's rosy GDP number are not all that it seems to be

Post by cassowary » Tue Jan 19, 2021 8:47 pm

neverfail wrote:
Tue Jan 19, 2021 3:23 pm
cassowary wrote:
Mon Jan 18, 2021 10:36 pm
About China's booming* GDP
The economic data Beijing released Monday seems to suggest that China has met expectations that it would be the only major economy to grow in 2020. China being China, there’s much more—and less—to the story.

The top-line data make China a rare good news story in the pandemic year. Inflation-adjusted GDP growth hit 6.5% in the last three months of the year, making it 2.3% for 2020. This contrasts with the rest of the world, where social distancing and lockdowns have triggered some of the worst contractions on record and raise the specter of long and difficult recoveries.

Some of Beijing’s cheerleaders want you to believe this is mainly because the Chinese government acted so aggressively to suppress the pandemic. That story sits uneasily alongside Beijing’s slow-rolling of early information about Covid-19 when more information sharing might have helped other countries.

Beijing adopted particularly aggressive lockdowns once it did act, sealing off entire cities and even now locking down apartment buildings or neighborhoods at a moment’s notice to suppress outbreaks. To the extent anyone can trust Beijing’s data about virus spread, it appears to have Covid mostly under control.

But a closer look at the economy suggests the growth has come from somewhere other than Beijing’s putative suppression of the pandemic. China’s Communist Party reverted to its old economic-crisis playbook to goose debt and exports while tightening political dominance over the economy.

New credit has exploded, with total public and private debt expected to exceed 270% of GDP in 2020, up 30 points in one year. Most of that has gone to state-owned firms and exporters. Smaller, more productive private companies that serve the domestic market report credit shortages. This undermines long-term growth but suits President Xi Jinping’s goal of consolidating Party control.

One clue that something’s amiss is that retail-sales growth slowed as the fourth quarter progressed, slipping to 4.6% year-on-year in December and now significantly lagging overall GDP growth. Lockdowns explain bad retail sales in the West, but China is supposed to be open for business. Dipping sales suggest, as economist Michael Pettis argues, that much-needed rebalancing toward domestic consumption is stalling or reversing as the global pandemic crisis drags on. The economy was driven through 2020 mainly by fixed-asset investment and that old standby, real estate.

This means a major challenge is looming behind Monday’s good news. Unless China can unlock and expand its productive private economy, it will never be able to manage the burden of the debt Beijing has created to generate Monday’s bump in GDP. Yet China’s evolution toward a true market economy was reversing under Mr. Xi before the pandemic, and political control is increasing now.

China’s unbalanced recovery represents an enormous lost opportunity for the Chinese people. It will also eventually present a serious challenge to Mr. Xi or one of his successors.
Cassowary,

Your quote, coming as it does from the Wall Street Journal would I would normally normally consider authoritative; but look again. It is labelled an OPINION piece, not a report or an analysis . That sheds a different light on the essay and its content.

Please note: an unbalanced recovery is still a recovery. The author of this essay nowhere claims that the PRC economy is due for a contraction any time soon.

Note also the clause "Mr. Xi or one of his successors". The choice of words implies that the author is talking about long term challenges that the PRC leadership shall have to attend to sooner or later whereas the bains afflicting the US economy and those of most other Western countries are immediate and pressing.

I would suggest that time is on the side of the PRC; not The West.

Trump is right. China's economy has weak legs.
:lol: So how does America's soon-to-exit liar-in-chief define the current shape of the US economy; along with those of the UK and Europe? Had he won the recent election Trump would probably brush the question aside with one of his cheery dismissals of the "Oh, America is going great" genre. That is sounds good to his supporters would not make it true.

Cassowary, when are you doing to give up hitting your head against a brick wall hoping for an impending collapse of the PRC?
Its from the editorial board. So I consider it as having merit. Consider the evidence. China has built "ghost cities" for years. This counts as part of their GDP growth. Now, in a capitalist economy, developers would be punished by the free market for building unwanted apartments which they cannot sell. Their banks will demand their money back and they go bankrupt.

But not in Communist China. The CCP wants to show the world a consistent 6.5% growth. So we can't have a property market crash and property companies as well as banks going bust. So the central bank lends money to the banks who in turn lends more money to the property developers who are again ordered to build more for the next year. They need to achieve 6.5% target.

This reminds me of the 5 year plans during the USSR and Mao's days. Only in a commie country can GDP growth be planned. China has always depended on exports for growth. That is still doing well, thanks to open markets in the real capitalist economies. Now, China has been talking about using domestic demand as an engine of growth. That's what China needs to do. Get its people to spend more money and not rely on exports.

But the Chinese people are frugal and don't spend much. They only have one kid. So they can't rely on him or her for their old age. So they need to save for their retirement. Domestic demand did increase, according to the WSJ article, but not as much as GDP growth. That's a bright spot. At least DD increased, albeit modestly.

But this bright spot is over shadowed by a unfortunate piece of data - the WSJ reported that total debt (both government and private) now amounts to 270% of GDP. That's high. A lot of State Owned Enterprises are in trouble. It is not a surprise. They are not run for profits but for political needs of the CCP.
The Imp :D

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Re: China's rosy GDP number are not all that it seems to be

Post by neverfail » Tue Jan 19, 2021 11:11 pm

cassowary wrote:
Tue Jan 19, 2021 8:47 pm


Its from the editorial board. So I consider it as having merit. Consider the evidence. China has built "ghost cities" for years. This counts as part of their GDP growth. Now, in a capitalist economy, developers would be punished by the free market for building unwanted apartments which they cannot sell. Their banks will demand their money back and they go bankrupt.

But not in Communist China. The CCP wants to show the world a consistent 6.5% growth. So we can't have a property market crash and property companies as well as banks going bust. So the central bank lends money to the banks who in turn lends more money to the property developers who are again ordered to build more for the next year. They need to achieve 6.5% target.

This reminds me of the 5 year plans during the USSR and Mao's days. Only in a commie country can GDP growth be planned. China has always depended on exports for growth. That is still doing well, thanks to open markets in the real capitalist economies. Now, China has been talking about using domestic demand as an engine of growth. That's what China needs to do. Get its people to spend more money and not rely on exports.

But the Chinese people are frugal and don't spend much. They only have one kid. So they can't rely on him or her for their old age. So they need to save for their retirement. Domestic demand did increase, according to the WSJ article, but not as much as GDP growth. That's a bright spot. At least DD increased, albeit modestly.

But this bright spot is over shadowed by a unfortunate piece of data - the WSJ reported that total debt (both government and private) now amounts to 270% of GDP. That's high. A lot of State Owned Enterprises are in trouble. It is not a surprise. They are not run for profits but for political needs of the CCP.
Hi Casso.

I have to concede that you provided a good answer there that even I can accept (and you know that for me that is rather rare ;) :) ) My one disagreeemt is with the final paragraph - the national (public and private) level of debt.
In 2018, the national debt of Japan amounted to about 236.57 percent of the gross domestic product.

https://www.statista.com/statistics/267 ... oduct-gdp/.
As you can see Japan's national debt as % of GDP is in the same 'range' as that of China - yet I have never read a single post by you alluding that the Japanese economy is in imminent danger of collapse and with it their regime of government (and the sky is destined to fall etc). You seem to reserve such dire forecasts for the PRC.

The Japanese "secret" as to how they can get away with this seems to be that virtually the entire debt is borrowed from their own people. Like Chinese Japanese are frugal and believe in saving for a rainy day. (This seems to be a universal east Asian custom.)

I have no doubt that the PRC likewise borrows from its own in like manner. By contrast the USA with a per capata national debt approxinately half that of the two east Asian giants has borrowed quite a lot of it from foreign lenders (the two biggist of which have been the PRC and Japan) is far more vulnerable to an abrupt withholding of further funds - along with withdrawl of existing loans through a mass selloff of American bonds due to a sudden loss of confidence. The two east east Asian debtors seem impervious to such a run.

(And speaking of PRC "ghost cities": do not get the impression that Japanese governments are not just as capable of doing silly, futile things with borrowed money. In their desperation to spend the Japanese economy out of its post-1989 crash stagnation they have paved the beds of mountain streams with concrete and built bridges that go nowhere.)
http://factsanddetails.com/japan/cat23/ ... #chapter-5

The Japanese government has built grand dams, bridges, railways and roads, plus countless smaller projects, that Japan doesn't really need. Cities are full of vacant public buildings and government-funded museums and concert halls that no one uses. In the countryside there are expensive government-funded projects that have been dubbed tunnels and bridges to nowhere. Much of money to pay for the bridges nowhere comes from the postal saving system, pension contributions, bonds and postal life insurance premiums---one of the primary reasons Japan has the highest debt to GDP ratio in the developed world.

The government has funded multi-billion dollar bullet trains, expressways and bridges that serve only a few people, gigantic overpasses that provide access to small country lanes, useless dams, and "airports for radishes." There are airports with no planes that pay passengers to use them and deep-water ports with no ships. Over 60 percent of Japan's coastline and the riverbeds of many major river bank are fortified or covered with concrete that serves little purpose other than to create ugliness.
It makes you want to cry.

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Re: China's rosy GDP number are not all that it seems to be

Post by cassowary » Wed Jan 20, 2021 9:00 am

neverfail wrote:
Tue Jan 19, 2021 11:11 pm
cassowary wrote:
Tue Jan 19, 2021 8:47 pm


Its from the editorial board. So I consider it as having merit. Consider the evidence. China has built "ghost cities" for years. This counts as part of their GDP growth. Now, in a capitalist economy, developers would be punished by the free market for building unwanted apartments which they cannot sell. Their banks will demand their money back and they go bankrupt.

But not in Communist China. The CCP wants to show the world a consistent 6.5% growth. So we can't have a property market crash and property companies as well as banks going bust. So the central bank lends money to the banks who in turn lends more money to the property developers who are again ordered to build more for the next year. They need to achieve 6.5% target.

This reminds me of the 5 year plans during the USSR and Mao's days. Only in a commie country can GDP growth be planned. China has always depended on exports for growth. That is still doing well, thanks to open markets in the real capitalist economies. Now, China has been talking about using domestic demand as an engine of growth. That's what China needs to do. Get its people to spend more money and not rely on exports.

But the Chinese people are frugal and don't spend much. They only have one kid. So they can't rely on him or her for their old age. So they need to save for their retirement. Domestic demand did increase, according to the WSJ article, but not as much as GDP growth. That's a bright spot. At least DD increased, albeit modestly.

But this bright spot is over shadowed by a unfortunate piece of data - the WSJ reported that total debt (both government and private) now amounts to 270% of GDP. That's high. A lot of State Owned Enterprises are in trouble. It is not a surprise. They are not run for profits but for political needs of the CCP.
Hi Casso.

I have to concede that you provided a good answer there that even I can accept (and you know that for me that is rather rare ;) :) ) My one disagreeemt is with the final paragraph - the national (public and private) level of debt.
In 2018, the national debt of Japan amounted to about 236.57 percent of the gross domestic product.

https://www.statista.com/statistics/267 ... oduct-gdp/.
As you can see Japan's national debt as % of GDP is in the same 'range' as that of China - yet I have never read a single post by you alluding that the Japanese economy is in imminent danger of collapse and with it their regime of government (and the sky is destined to fall etc). You seem to reserve such dire forecasts for the PRC.

The Japanese "secret" as to how they can get away with this seems to be that virtually the entire debt is borrowed from their own people. Like Chinese Japanese are frugal and believe in saving for a rainy day. (This seems to be a universal east Asian custom.)

I have no doubt that the PRC likewise borrows from its own in like manner. By contrast the USA with a per capata national debt approxinately half that of the two east Asian giants has borrowed quite a lot of it from foreign lenders (the two biggist of which have been the PRC and Japan) is far more vulnerable to an abrupt withholding of further funds - along with withdrawl of existing loans through a mass selloff of American bonds due to a sudden loss of confidence. The two east east Asian debtors seem impervious to such a run.

(And speaking of PRC "ghost cities": do not get the impression that Japanese governments are not just as capable of doing silly, futile things with borrowed money. In their desperation to spend the Japanese economy out of its post-1989 crash stagnation they have paved the beds of mountain streams with concrete and built bridges that go nowhere.)
http://factsanddetails.com/japan/cat23/ ... #chapter-5

The Japanese government has built grand dams, bridges, railways and roads, plus countless smaller projects, that Japan doesn't really need. Cities are full of vacant public buildings and government-funded museums and concert halls that no one uses. In the countryside there are expensive government-funded projects that have been dubbed tunnels and bridges to nowhere. Much of money to pay for the bridges nowhere comes from the postal saving system, pension contributions, bonds and postal life insurance premiums---one of the primary reasons Japan has the highest debt to GDP ratio in the developed world.

The government has funded multi-billion dollar bullet trains, expressways and bridges that serve only a few people, gigantic overpasses that provide access to small country lanes, useless dams, and "airports for radishes." There are airports with no planes that pay passengers to use them and deep-water ports with no ships. Over 60 percent of Japan's coastline and the riverbeds of many major river bank are fortified or covered with concrete that serves little purpose other than to create ugliness.
It makes you want to cry.
What I said was that China’s economy is not as rosy as official gdp numbers say. Because much of it was made up of unproductive construction of unwanted buildings. The only good part is exports which are doing well. So if the world hits them hard by imposing tariffs like what trump did, the economy will collapse and so will the CCP.

I didn’t predict the economic collapse if we carry on as before. But it will collapse if the US, EU, Japan and other countries impose tariffs and encourage factories to pull out from China.
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Re: China's rosy GDP number are not all that it seems to be

Post by neverfail » Wed Jan 20, 2021 4:48 pm

cassowary wrote:
Wed Jan 20, 2021 9:00 am

What I said was that China’s economy is not as rosy as official gdp numbers say. Because much of it was made up of unproductive construction of unwanted buildings.
Some of it no doubt would be as you say but not possible it could be all of it. See my reference to government wastage in Japan and see how closely the PRC situation resembles that.
The only good part is exports which are doing well. So if the world hits them hard by imposing tariffs like what trump did, the economy will collapse and so will the CCP.
China's exports might have risen this year gone by but so too have its IMPORTS - and the two are connected:
Chinese exports expanded faster than expected in October, providing support for the recovering economy and driving increasing demand for imports, which rose for a second straight month. ... That left a trade surplus of $58.4 billion for the month. Economists had forecast that exports would climb 9.2% and imports 8.6%.

https://www.bloomberg.com/news/articles ... s%208.6%25.
Both have happened despite the best efforts of Trump and his so-called "trade war". Just as well because even if it were possible for the US, EU & etc to cause such a plunge in PRC exports as you visualise it would in a sort of "domino effect" bring about PRC cutbacks on imports: unfairly punishing those third countries currently doing well out of exporting to the PRC.

The PRC has acheive that "in apparent defiance of economic gravity" in another way also. Considering that much of the world including the PRC's biggest export outlets are in post-coronavirus recession; by rights these should have by now out of economic necessity have cut back in imports from the PRC (and elsewhere) due to collapsed demand.
I didn’t predict the economic collapse if we carry on as before. But it will collapse if the US, EU, Japan and other countries impose tariffs and encourage factories to pull out from China.
You make the error of presuming that these countries are currently strong while comparatively the PRC is inherently weak. Given the sorry state they are all in at present these two countries and the EU trade pact would likely risk doing more damage to themselves than to China were they to try that ploy.

Face facts Cassowary: the PRC has become too important even to the wellbeing of every one of those Western powers you mentioned to be treated with such disdain.

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Re: China's rosy GDP number are not all that it seems to be

Post by cassowary » Wed Jan 20, 2021 11:01 pm

neverfail wrote:
Wed Jan 20, 2021 4:48 pm
cassowary wrote:
Wed Jan 20, 2021 9:00 am

What I said was that China’s economy is not as rosy as official gdp numbers say. Because much of it was made up of unproductive construction of unwanted buildings.
Some of it no doubt would be as you say but not possible it could be all of it. See my reference to government wastage in Japan and see how closely the PRC situation resembles that.
I agree that there is a resemblance of wastage with Japan. So be reminded that Japan had a "]lost decade" as a result. Japan too used taxpayers' money to build infrastructure in order to keep jobs and the economy growing but at a price - economic stagnation.

When the free market is hampered, economic growth was also hampered. Japan borrowed money from its citizens to, as you said, build bridgest to nowhere. The free market was not allowed to do its job in asset allocation. You see, inefficient companies are supposed to go bust, thereby releasing resources for companies that are efficient. Customers, capital and employees are supposed to flow from failed companies to successful ones. This makes the economy more efficient,

Now China is scared stiff of letting its government owned enterprises to go bust. This has political implications for the CCP. So they keep shoveling money into these inefficient firms. However, the Chinese government does collect tax revenue from its efficient export sector. This helps them to stay in power. If the world imposes tariffs to deny this revenue stream, then the CCP could be in trouble.
The only good part is exports which are doing well. So if the world hits them hard by imposing tariffs like what trump did, the economy will collapse and so will the CCP.
China's exports might have risen this year gone by but so too have its IMPORTS - and the two are connected:
Chinese exports expanded faster than expected in October, providing support for the recovering economy and driving increasing demand for imports, which rose for a second straight month. ... That left a trade surplus of $58.4 billion for the month. Economists had forecast that exports would climb 9.2% and imports 8.6%.

https://www.bloomberg.com/news/articles ... s%208.6%25.
Both have happened despite the best efforts of Trump and his so-called "trade war". Just as well because even if it were possible for the US, EU & etc to cause such a plunge in PRC exports as you visualise it would in a sort of "domino effect" bring about PRC cutbacks on imports: unfairly punishing those third countries currently doing well out of exporting to the PRC.

The PRC has acheive that "in apparent defiance of economic gravity" in another way also. Considering that much of the world including the PRC's biggest export outlets are in post-coronavirus recession; by rights these should have by now out of economic necessity have cut back in imports from the PRC (and elsewhere) due to collapsed demand.
I didn’t predict the economic collapse if we carry on as before. But it will collapse if the US, EU, Japan and other countries impose tariffs and encourage factories to pull out from China.
You make the error of presuming that these countries are currently strong while comparatively the PRC is inherently weak. Given the sorry state they are all in at present these two countries and the EU trade pact would likely risk doing more damage to themselves than to China were they to try that ploy.

Face facts Cassowary: the PRC has become too important even to the wellbeing of every one of those Western powers you mentioned to be treated with such disdain.
Collectively, the world is stronger than China. Yes, Chinese imports have risen which helped countries. To defeat China in this economic war, the rest of the world needs to suffer some losses in lesser exports to China. But if the factories shift to Vietnam, India or Mexico etc, then their imports will rise and ameliorate or even totaly make up for the fall in Chinese imports.

Its worth the price for the world to get rid of the CCP before they end up dominating the world.
The Imp :D

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