mead berger shevtsova garfinkle michta grygiel blankenhorn bayles
Anxiety for Xi
Moody’s Downgrades China

More bad news on the commodity front from China. Reuters:

The debt ratio of major steel mills rose 1.6 percentage points to 70.1 percent from a year ago, taking the big mills’ debt to 3.27 trillion yuan ($499 billion), Li Xinchuang, the vice secretary general of the China Iron & Steel Association (CISA), told a conference.

At the same time, steel product consumption in China fell 5.4 percent to 664 million tonnes in 2015 from a year ago, the first drop since 1996, said Li, who is also head of the China Metallurgical Industry Planning and Research Institute.

Moody’s cut China’s credit rating from stable to negative last night, citing lack of faith in the government:

“Without credible and efficient reforms, China’s GDP growth would slow more markedly as a high debt burden dampens business investment and demographics turn increasingly unfavorable. Government debt would increase more sharply than we currently expect,” Moody’s said.

For the record, we have been concerned as well—both by the scale of the problems, and by recent signs of panicky reality-denial by those who sit in the catbird seat. When you also consider the surge in arrests and Party expulsions, and a renewed emphasis on propaganda, it’s hard to conclude that those who know best are anything other than pessimistic as well.

Features Icon
show comments
  • Jacksonian_Libertarian

    Do you remember when all the American leftist Democrats were admiring China’s growth rate, and saying America should do as the Chinese Communist Party was doing?

    While the Chinese Communist Party was eager to accept the credit for the so called “Chinese Economic Miracle”, it was the foreign investors that built state of the art factories in China to take advantage of the Cheap Chinese labor and potential 1 billion consumers that really deserves the credit. What the Chinese Communist Party deserves credit for is the empty cities, buildings, and bullet trains that were built simply for the graft the officials could pocket. They also deserve credit for the greedy land grabs on all their borders, but in particular the outrageous demands and invasions in the South China Sea, a 1,000 kilometers from China’s coast.

    Now that the smart money has left China ($1+ Trillion in foreign currency left China in 2015), and the stupid money is desperately trying to get out, they don’t look so competent anymore do they? A smart observer of China can tell you that the Chinese Communist Party’s real competence level was on full display in the “Water Buffalo” level economy that China had before the Iron Curtain fell, and the foreign investors began uplifting China.

    Now that the foreign investors are gone or leaving, the Chinese economy would stagnate and decline back to some equilibrium point, except that China now has a middle class that is going to be enraged by the loss of their dream of a future of an American level of affluence. A middle class that remembers the poverty and squalor of their youth growing up behind the Iron Curtain. They are going to blame the Chinese Communist Party no matter how hard the Party tries to divert blame by scapegoating poorly connected politicians as corrupt, or waves the bloody shirt by starting a war on their borders. A short look at China’s history of bloody revolutions is all you need to understand just how frightened the Chinese officials now are, that their heads are already on the chopping block.

    • Angel Martin

      PRC Princelings: their kids are at foreign universities, they are illegally moving their $US out of the country, and they own houses in the West. They are getting ready to jump. They know when it all collapses they will have to flee, to avoid ending up like Ceaucescu.

© The American Interest LLC 2005-2017 About Us Masthead Submissions Advertise Customer Service