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.