China – The critics and cynics are laughing themselves silly

China’s stock exchange lost trillions over a few weeks. There must be blood on the streets. The exports are falling, and there are tens or hundreds of ghost cities with hundreds of millions of unsold units. Believe these numbers to tickle yourself silly and make yourself happy for whatever your interest lies. And the economy is growing at the lowest level at 7%, no more double digit growth. China is at the brink of collapse. And they laughed themselves silly. Many economies and stock markets would have collapsed with such losses in a few weeks.

Sure, many of the greedy and ignorant gamblers would have lost heavy and some lost their life savings and fortunes. The big corporations with share prices plunging must have lost billions each. But as long as the prices are still higher than before the bull run, what they lost were merely paper losses. In fact many did not lose anything except the profit numbers from making billions to making millions. As for individuals, a good example is an actress whose profit was up more than 1b renminbi. Now she is crying as the profit is down to only a few hundred millions.

The ghost cities, how many and the number of units built and empty are subjects of great speculations. There are ghost cities, but how many, no one knows. Singapore used to have 40,000 units of HDB flats unsold. Big problem according to a minister and they quickly sold them by bringing in foreigners to boost the demand.  The Chinese economy is agriculture based and there are a lot of farmers and peasants. The transformation to a manufacturing economy, with people migrating to live in cities, would see hundreds of millions of people relocating and demanding new housing. If these ghost cities are unsold, it is a matter of time for the developers to go broke. When the prices fall, the farmers and peasants would be there waiting to pick up for a song. Some big developers and corrupt officials would have to jump down from these high rise buildings they built or ended in jail. The economic law of supply and demand would kick in.

It is no mean feat to build hundreds of thousands of units of flats. And some are claiming hundreds of millions. No need to quarrel over the numbers. There are many countries that don’t even have the money to build 100 units of flats. For the developers to build hundreds of thousands or millions of flats, unsold, is no mean feat. At least they have the capacity to build them and pay for the construction cost and material.

While Singapore thought it a great achievement to build flats to wait for applicants to occupy them, the scale and philosophy of building in China is quite different. They build industrial estates after industrial estates and wait for them to be occupied. Who would have the last laugh?

30 years ago, China was a very poor country, no money, no skills, no technology, no trained manpower, no big new cities, no ghost cities, no industrial parks, no bullet trains, no big international banks, no savings, practically no everything. Every country in Asean and across the world is richer than China.

Today, China has several international banks that ranked the biggest in capitalisation in the world. It is the biggest buyer of American T bills and the biggest creditor to America. It has hundreds of new cities bigger than New York and San Francisco. It is producing 3 million engineers and scientists every year. It has industrial parks in every city and starting to export industrial parks overseas. It is the biggest factory to the world. It is the biggest trade partners to more than 20 big countries in the world. It produces not only bullet trains, but anything under the sky, you name it, China produces it.

The depth and breath of China’s economy and society with many sectors untapped, will allow China to grow for another century. What is very basic and important is that the Chinese economy is growing more than it is consuming, a net surplus. What is so bad about 7% economic growth? How many countries can manage a 3% growth?

What is the meaning of a 7% growth in China with a US$10 trillion economy? It means in 10 years, the economy will double to US$20 trillion. Just a comparison, the Indian economy is US$2 trillion. In every 10 years, the Chinese economy, if it maintains a growth rate of 7% would have created 5 Indian economies at today’s size. How is that to fit for size?

China has a lot of problems. How many countries have no problems? What happens to those countries that have no problems and were richer than China 30 years ago? They are still the same, practically unchanged, while China has outgrown them to become the world’s biggest economy in purchasing power.

To put it in a very simplified way, let me narrate a mundane story to relate to the Chinese phenomenon. I have a friend. He brought his very sick uncle from Malaysia for treatment in Mount Elizabeth Hospital. The name of the hospital tells you what it means on your pocket. His uncle was suffering from stage 4 cancer and was given less than a couple of months to live. But he still insisted to put him in Mount Elizabeth.

Some of his colleagues were wondering why he bothered to spend so much money in Mount Elizabeth when the case was as good as gone. His answer was that he could afford it. Money was not important, and if he could give his uncle his best, with a little hope of recovery, he had no problem spending his money which he has plenty.

China is in such a position, with a lot of money, a lot of talents and skills and producing a lot of products for the whole world. It can afford to lose some, as long as it does not squander everything away.  And the Chinese leaders are no fools but men of talent and conviction and dedication. They would stumble now and then, met with big crisis and challenges. They would overcome. The wealth and depth of talents and economy would keep China going stronger and stronger. This is not a poverty stricken China with nothing, no money, no talent, no skills, no industry and no big guns to protect its own interests.

You think China came back from bankruptcy to what it is today by fluke, like the founding of America by Columbus?  Do you think that to run a country so diverse as China, with 1.4b people, to turn it around from poverty to be a contender for world supremacy as a rich and powerful country can be done by foolish leaders? The whole of China is like a drawing board, planned meticulously by the planners and strategists, from super highways, super cities, high quality universities, a complex of think tanks in defence and international policies, in national developments, science and technology, in social and economic policies, etc etc. You think they are just planning to build two casinos or a few airport terminals and a few new towns or a new MRT line? You think you put a dud as a President like the US and nothing will go wrong?

The critics, cynics and doomsayers can continue with their erotic dreams of a China in dismay, to be a broken, poor and weak country once more, to be bullied and oppressed by foreigners. They said the one who laughs last laughs best.

While they are praying daily to their Gods for China to collapse, China just powers on to become richer and more powerful by the days. Keep praying for your Gods to answer your call for damnation of China.