5/08/2015

China – The nonsense that the analysts would want you to believe


China is in big trouble economically. Its growth rate has gone down from double digits to barely 7%. Serious trouble! There was another article in the msm few days back with the title ‘China’s miracle is running out of steam’ with the author gloating that this is a truth that he had been writing about and is coming true, inevitable.
 

Let’s take a look at China’s 7% GDP growth rate. This is considered bad and China’s economy is going to collapse. Relatively speaking, from more than 10% to 7% is a drop, a substantial fall. Do the opinion makers want to tell you why it is 7% now? When China was growing at more than 10% they were also crying father and mother. Unsustainable, overheating, it will go bust. Now China reined in its runaway economy to make growth more sustainable, intentionally restraining the galloping away economy, it is also bad.
 

And countries making 3% or 4% growth are great, damn great, well done. Even the US and Europe with their less than 2% growth rate is something cheer about, but China’s 7% growth rate is troubling, even if it is intentional held back to cool down the economy. See the bull? They would not even want to know that China has a war chest of more than US$3 trillion to be used, if needed, if intended, to steam roll its economy. It can easily push it up to double digit by burning a bit of its reserves. But that is not what a prudent govt will do. China is engineering a soft landing, and has everything under control and with a lot of money to make it whatever way it wants? Serious trouble?
 

The other issue about China is about not enough immigrant workers from the country side and running out of steam due to labour shortage. What kind of ass thinking is that. China has 1.4b people, many are just breaking out of the poverty trap. Because of the ageing demography, China is short of labour supply? There will be lesser labour supply as the population aged, sure. Is it a good thing or bad thing given a population of 1.4b? Would this lighten the pressure on resource allocation and consumption to bring down the population and allow a good opportunity for restructuring the economy from a low skill to high skill economy with higher productivity and higher value add but less demanding for numbers? The ageing population and the older workers were the less literate population that is something best to reduce and do away with.
 

China’s next phase of economic development and growth could be from a paradigm shift that many developing countries had gone through, from quantitative change to a qualitative change. China has a lot of room to upgrade its economy, to move up the skills ladder where quality workforce is more desirable than quantity of low skill labour.
 

What is the problem? The Chinese leaders are daft, one trick pony, depending on labour and more labour to grow its economy, like the daft labour intensive policies in Singapore? China will see a transition to a new level of growth and it is not even rocket science but a natural progression. The refocus on domestic economy, domestic consumption instead of the high reliance on export, which still has a lot of room to grow. The whole of Asia and Africa is China’s market for growth, not counting Europe and the Americas.
 

China is in deep economic trouble, with US$3 trillion reserves to boot, with an economy growing at a managed 7% growth rate, with a 1.4b pool of untapped talent and a continental size country that needs to be redeveloped?
 

Which are the countries that are really in trouble, with low or negative growth rate, with barely any reserves and high debt, with high cost of living and low productivity, high consumption and low production? China is a low consumption and high production economy with very low cost of production and consumption.
 

Would you believe the silly analysts who wanted you to see what they themselves wanted to see, wanted to believe and keep screaming the glass is half empty? The USA, you wait. China is going to run over and be ahead, to be the world’s number One economy, if not already there, and holding its horses to run at a more manageable pace.
A 7% growth rate for such a huge economy is frightening in absolute numbers. Many countries will be crowing and gloating themselves silly with this number. Sure China has a lot of problems, so do other countries. The fact that they have rode the problems for the last 40 years and still growing speak for itself. Every country will have their host of problems, no exceptions, and China is no exception. It’s the net surplus or positives over the negatives that matters.

9 comments:

Anonymous said...

It’s the net surplus or positives over the negatives that matters.
RB

Tiok. And every political party will also have their host of problems, no exceptions, and PAP is no exception. It’s the net surplus or positives over the negatives of PAP that matters. And thank God, 60% of Sinkie voters knows that very well.

Anonymous said...

PAP used to have net surplus of everything, including political goodwill.

Not everything overspent and nothing left and chalking up negatives everyday.

Anonymous said...

It’s the net surplus or positives over the negatives of PAP that matters.
Anon 8:53 a.m.

That's why PM Lee can afford the time to even write Sudoku code, and publicised on facebook, despite bloggers like RB and others criticise PAP govt policy no end.

And to be able do all this he must be really cool and assured of winning next GE by trouncing the strongest opposition party, the WP. And I believe WP will be trounced next GE not just due to the actions of PAP against AHPETC, but also due to their own weakness. 60% will ask "How to run a country when cannot even properly manage the financial accounts of a Town Council?"

Anonymous said...

And voters know that that the negatives are piling up, but the PAP also knows that the 60% are now more kiasu and kiasi than ever.

They kpkb everyday, about floods, CPF, train breakdowns, high cost of living, but when it comes to making changes, nothing happens. All 'kwai-chai, kwai loi'.

Anonymous said...

Well, China will not collapse and fade away. Thousands of years of civil wars, dynasty changes, revolutions and foreign invasions did not bring about it's demise.

If the yuan does become an important global currency, well, they could follow what the US did to give itself a lifeline on ICU. And China is working hard at it, setting up AIIB, having direct currency changebility with friendly nations all around the world without going through the US$ etc.

Don't bet on China's failure too soon. Many advanced Western countries still have faith in China, though some are pouring cold water on everything and anything the Chinese do

Anonymous said...

Many western countries are collapsing or already collapsed but keep printing money to prolong the impression that all is well.

ℳatilah_Ƨingapura said...

Only bloody fools will trust "quantitative data" coming from either the biased Western media, or the Chinese govt. Lucky for us, China is so important as a global player that there are many firms in the financial community who gather excellent data on China---because it PAYS them well to be right, to be as precise as possible.

Market incentives are great forms of "motivation". 👍

As long as billionaires keep pouring forth from China, you know it is going to not only survive, but PREVAIL.

The drivers of wealth production and upward social mobility are ENTREPRENEURS in the PRIVATE SECTOR--- aka the "capitalists". The creators of REAL value which lift people out of poverty.

China is light years ahead of the western 'welfare states" because the govt doesn't blow its trillions on USELESS "social spending" and essentially leaves it to the market to sort out "social needs". Fortunately Chinese tradition is based on community and family---something the "progressive" west has DESTROYED, and those functions taken over by unsustainable welfare systems where "winners" are penalised and "losers" are rewarded.

In China, you want "help"? Then go to your family or community; don't ask the govt because they will fuck you off.

Innovation, or "copying" is very fast in China. Look at the different models of mobile phones and tablets---they change nearly every month. China isn't constrained by the patent and intellectual property systems of the west which stifle innovation and CapEx because people are too scared to be sued in court for IP "violations".

China signed IP protection agreements under the WTO, and it has turned out to be a double-edged sword for the world, but a potent "weapon" in China's economic arsenal. Intellectual property protection is still quite "loose" in China, but---surprise, surprise---the cuntry which has registered THE MOST Global patents in recent times is (drumroll)...CHINA!

I laugh at the "leftie" western media when they try to dis China--- oooh, only 7% growth. Fucking idiots, the IDEA of being a capitalist to acquire the most 'chips' as possible by producing 'widgets' and charging fees.. so whether it is 7% or 3% recession, fuck that shit. That pile of chips belonging to the Chinese keeps growing and growing DESPITE "slow downs" and "bubbles".

Another favourite punching bag by the western press is "Oh look at the empty cities in China". I say "fuck you", look at the rocking awesome ones---over 600 of them!! Look at Shenzen, going to wallop Hong Kong very soon in awesomeness. (also got very jambu women...). Look at Shanghai---more happening than Paris or Rome!

I tell kids is Oz all the time: "Learn how to code, learn Mandarin, learn how to think critically...then fuck off to Asia after you finish with the shit education system which has sapped your mind. LEAVE! The peers which stay behind will stagnate and end up paying 50% tax to welfare state which is going to cheat them, have job insecurity and probably be saddled with so much debt that they won't get ahead. Be smart. Go to Asia, have a look at China and India. You will be rich very quickly."

Virgo 49 said...

My RC neighbours kept harping that the opposition got no lan chais unlike the PAP elite scholars.

Also, you see the mess they created at Aljunied. How to run a country like that???

That's why the PM can spend his time congratulating the princess birth and do computer games with his now accumulated billions dollar salaries.

They had fixed the opposition proper and good. The daft 60 over percent plus the new citizens will give them another term of office.

Haha see his smile, eyes also cannot see.

Anonymous said...

Still, when the time comes, it's ashes to ashes and dust to dust like the old man. The billions cannot even extend his 91 year lease.