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The China Bubble
China Up, China Down
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  • Dhako

    I am afraid, it seems after all those breathless comments about the impending gloom and doom of China from the usual Western suspects and their Chinese’s follow-travelers, it seems the Chinese economy is as ever in a rude health with better than expected numbers to show for it.

    In other words, its time for the likes of Mr Gordon Chang and others of his ilk to come out with yet another sensational book foretelling the coming collapse of China. And, of course, not forgetting, its also the time, the denizens of TAI parish, such as the esteemed scholar, by the name of Mr Walter Russell Meade, to update us with one of his periodical slogans of why China is a “bubble economy” that is about to be burst, if it hasn’t already popped.

    Furthermore, of course, not to be outdone by anyone else, its also the time for the western’s biased media (such as the Economist and others) to start speculating the complete crack-up of the Chinese state; given the fact that Chinese economy may be improving but the transformation from an export-led engine to consumer-led service-sector economy is not happening at the speed of light they will like for China to do it. Even if such an argument is merit-less economically, given the fact that such a large tanker that is the Chinese economy will take at least a decade to complete the transformation it requires.

    Hence, its like watching an envious man who is twisting and turning with bile of resentment against the good fortune of others; and who therefore wrack his brain on a daily basis so that he can turn any scintilla of a news – even a glaringly good news – which concern others as something that is only a detriment for those who he wishes ill for them.

    PS: Perhaps, you coul look more evidence of what is going on:

    http://www.ft.com/cms/s/0/1a2bfa38-0126-11e6-99cb-83242733f755.html#axzz45k3gxPGb

    • Tom

      Your rivers are poisoned, you’re having to lease arable land in Africa to feed yourselves, your air quality is worse than LA in the 1970s, and your government seems to be trying to return to Maoism.
      But yes, you’re definitely doing better than expected.

      • Jim__L

        Considering how China does when it does badly, the problems you list are manageable.

    • Jim__L

      The fall in energy consumption certainly isn’t a good sign.

      That said, I’m very happy that close to a billion Chinese have risen out of poverty since trade relations with the US were normalized. I’m hoping that that transformation you talk about — from an export/manufacturing model to a domestic consumption/service model — goes as swiftly as practicable, particularly because it will help China grow its economy without siphoning off jobs from elsewhere.

      I would recommend more market reforms to go with that transformation. China (like Japan before it) has done extremely well by taking from Western (mercantile / industrial) playbooks. The service economy transition has also been more or less successfully navigated by at least one Western power (the US); but eventually, China will run out of history to imitate.

      At that point — Welcome to the bleeding edge! You know we’re making it up as we go along, right? You’ll have to do that, too. That’s why Markets are so critical. Markets can be usefully compared to science — a source of information about the world as it is (pricing), and a test of ideas to see if they’re good ideas or not (occasional small-scale bankruptcy and “correction”).

      It is difficult to emphasize how much a command economy will hold China back. No matter how smart the people are on the Politburo, they simply won’t know what prices ought to be. No matter how smart they are, they will not be able to predict which technologies will flourish and which will flounder.

      Look at the Goldman Sachs types — they don’t have a clue half the time, even though they think they should run everything. The fact that they didn’t get cashiered after the 2008 crash led to the glacial pace of recovery afterwards. Don’t let China make the same sort of mistake.

  • Jacksonian_Libertarian

    “China’s slowdown isn’t good for the world, and it’s certainly not something anyone should be cheering.”

    We are talking about an authoritarian nation run by the Chinese Communist Party. The same nation that is belligerent with everyone of its neighbors, and is using the economic power that foreign capitalists built there, to threaten everyone in the region. I’m just saying, a China getting a beating by reality is a good thing, and I’m cheering about it.

    “China’s exports unexpectedly rose 11.5 percent year over year in dollar terms in March, compared to a 25 percent decline in February.”

    Why is this considered good news? By my calculation averaging the two months together gives about a -7% for both months, and that’s an awful number, even if you believe these numbers, which I don’t. How anyone can reconcile these falling numbers with the supposed high 6.7% growth rate, is beyond my understanding. I also understand that the capital flight has continued to accelerate from the $1 Trillion that left in 2015. That capital flight took 5.55% right of the top of any 2015 growth, and that’s using the Chinese Government’s bogus GDP number.

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