
China’s Economy Slows Sharply - prostoalex
https://www.nytimes.com/2018/12/14/business/china-economy-xi-jinping.html
======
rrggrr
I continue to believe - as I've said in prior HN comments - that the Chinese
leadership welcomes this slowdown and the related trade dispute as a means to
rebalance the domestic economy, while placing the blame for the rebalancing on
the United States. I note that at least one distinguished China watcher
agrees:

[https://carnegieendowment.org/2018/07/27/china-s-best-
option...](https://carnegieendowment.org/2018/07/27/china-s-best-option-for-
responding-to-trade-war-pub-77039)

~~~
NicoJuicy
I have my sincere doubts about this.

China always had a requirement to grow 6% for every city. So I believe some
numbers are inflated ( mostly about real estate eg. Ghost cities, ..). This
doesn't give many issues, because there is actual growth.

The reasoning goes that when the growth slows, the entire pyramid goes
crumbling down ( debts).

As weird as it is, I think it's an objective overview of everything China
related. It's a personal hunch of all the FOMO I read about China and can't
support it with links.

The reasoning I follow is: expansion internally (China), expansion externally
( requirement) with Africa / one road one belt, knocking down on bank fraud,
no export of money internationally, ... In the process, trying to become too
big too fail.

We'll see if I'm right about this.

Ps. I could be wrong, so comments are appreciated

~~~
clomond
My understanding is that both of you can be right.

The "Chinese government" is not a singular, monolithic entity in the same way
the "US Government" is actually a bunch of departments, branches and
jurisdiction levels each with competing and sometimes differing interests and
goals. (but yes, it is more unified in China in the sticking to party line).

The Chinese federal government has been wanting to make this re-balancing for
a long time (a shift away from exports towards domestic consumption, and
shifts from inefficient state owned enterprises to companies that can operate
more efficiently and are "market oriented").

Where you are also correct is that many of the inflated GDP numbers and
"inefficient" investments / capital towards things like ghost cities are
mostly driven by state governments, in their attempt to meet the "goals" as
stated by the federal government.

~~~
friedman23
> and shifts from inefficient state owned enterprises to companies that can
> operate more efficiently and are "market oriented")

Do you have evidence of this? Isn't one of the biggest US complaints that many
Chinese businesses are indistinguishable from the government?

~~~
clomond
I've seen it in various economics articles/readings on the topic regarding the
governments long term economic strategy. (see article below I found)

You are also right - yes one of the biggest complains IS that many Chinese
businesses are "owned" by the government with lots of influence there.
However, the big resistive force here preventing this further breakup is that
they are such huge employers, and it is not politically easy to reduce and
remove so many people from the payrolls. So it has been a slow process.

Here is an article roughly related:
[https://www.forbes.com/sites/kenrapoza/2015/12/30/china-
star...](https://www.forbes.com/sites/kenrapoza/2015/12/30/china-starts-
breaking-up-its-state-owned-enterprises/#1e4940e5f606)

~~~
neolefty
I love all these "You are also right" comments. One of the skills I hear about
being prized in Chinese culture is the ability hold two conflicting ideas in
your head at once, without feeling stressed about it.

And that skill seems to help when trying to understand China itself!

~~~
1996
Being able to manage what seems to be multiple "conflicting" ideas at once and
without stress should be prized in every culture.

The world is not black or white. Enlarging your perspectives always help.

~~~
thomasz
Conflicting ideas means believing that princess Diana was murdered by MI6 and
that she was kidnapped by another shadowy party. Or that migrants will
simultaneously take all the jobs and that they all just come to leech our
welfare system dry.

~~~
zaroth
On a macro level it is absolutely possible for immigration to both depress
wages and overburden the welfare system.

------
askaboutit
Every economy has a plateau then a fall, then a pull back up again. I think
the aggressive trade stance and hard line politics by China might have played
a major role. As it’s frightened both the local businesses and foreign
businesses and lead to all global powers starting to put tariffs and trade
barriers up, all due to China wanting to get away with pretty blatant
violations of fair trade, huge import taxes on foreign goods, great firewall
blocking any foreign purchase easily, hugely subsidised mail, forced ownership
sharing, lowered safety regulations, lack of pollutant regulation etc. chuck
in a house market with terrible quality at a high price and you’ve got a
balloon waiting to pop. I don’t blame the Chinese for wanting to buy any house
outside of China. But they’ve taken their “build junk make bank” mentality to
the world and it can’t last much longer.

~~~
vkou
> blatant violations of fair trade, huge import taxes on foreign goods, great
> firewall blocking any foreign purchase easily, hugely subsidised mail,
> forced ownership sharing, lowered safety regulations, lack of pollutant
> regulation

'Free' trade benefits industrialized nations, while mercantilism benefits
developing nations. Every currently industrialized nation has, at some point
in its past, been incredible protectionist, blatantly violated IP laws, had
atrocious safety, employment, and pollution regulations, and large taxes on
foreign imports.

China is just catching up to what the rest of the developed world has gone
through.

Are you expecting them to look at the history of how the United States, and
Europe developed, and go: "Well, gee, protectionism, lax safety regulations,
and access to foreign resource markets worked really well for all these other
countries... But we shouldn't repeat their success!"

~~~
mruniverse
Yeah they shouldn't follow that history.

The US also had slavery.

~~~
vkou
Great, so now that you're at the top, you want to pull the ladder up?

~~~
munificent
If "pulling the ladder up" includes things like "not allowing the world
climate to be destroyed" or "preventing disregarding human rights violations
and worker quality of life" then, yeah, probably.

Giving each country a fair shot at developing even if they didn't happen to
get on that ramp at the same time as some Western countries is a good goal.

At the same time, that's not such a vital principle that we should sacrifice
other moral or pragmatic imperatives to get it. China may have gotten a late
start, but that doesn't give them the right to ignore everything we've learned
since then about a country's obligations to its people and the world.

------
mrkstu
The pullback of outflows capital to foreign locations is the most telling to
me.

Chinese companies are starting to be net sellers instead of net acquirers of
foreign assets.

That would be fine if it was just because they were getting better return on
their capital inside China, but in reality it is to pay back runaway debt and
inability to complete asset purchases due to government capital controls.
Those controls would be unnecessary if the Chinese economy was in a healthy
state.

The question isn't whether a contraction is in the offing, but how deep and
large it is and what kind of knock on effects it has globally.

~~~
CoolGuySteve
What happened in the early 90s recession when Japan pulled back on foreign
investment? Did they cause the recession or were they wiped out by it?

The only thing I remember as a teenager then was the Japanese briefly gaining
and losing control of the NBC/GE conglomerate.

~~~
jandrese
IIRC overall the Japanese lost their shirt on those deals and it lead to an
entire lost decade economically. I would not be surprised at all to learn that
the Chinese government was inflating figures for political purposes and are in
trouble now that the chickens are coming home to roost. It's super tempting
for authoritarian regimes to cook the books to look better internationally.
There was also seemingly a belief in the government that if they could
maximize the trade surplus with the world they could somehow "win" at the
economy.

~~~
antt
Funnily enough the 90s saw better growth for median incomes in Japan than the
10s have so far for the US. If anything Japan looks like they managed their
crisis much better by pushing the losses up rather than down.

------
keepsimple
As a Chinese grew up in China and have been living in US in recent years, I am
already used to how US media reports about China. The bottom line: I have not
seen _any_ US media reporting China truthfully. NPR is usually the worst, but
others not much better.

What happens is that, because of untruthful reporting in US media, people in
US does not know or understand what's going on in China. It seems a miracle
that such a big country grew like crazy in 30 years without democracy. But if
you how much average Chinese invest in their education and how hard they work,
you will not be surprised.

The only real problem China is facing is its political system, not its
economy. Compared to improving the political system, the economy is much, much
easier.

~~~
dionian
Democracy isnt required for prosperity, as China has shown. Prosperity doesn't
give you freedom though.

~~~
pzone
We've yet to see whether world-leading levels of per capita prosperity are
achievable without freedom. At a minimum, freedom offers a strong competitive
edge.

~~~
paraditedc
_> We've yet to see whether world-leading levels of per capita prosperity are
achievable without freedom._

Look no further than The World Factbook by CIA:

2 QATAR

13 UNITED ARAB EMIRATES

15 KUWAIT

22 SAUDI ARABIA

[https://www.cia.gov/library/publications/the-world-
factbook/...](https://www.cia.gov/library/publications/the-world-
factbook/rankorder/2004rank.html)

------
barrow-rider
Has it really slowed, or just been putting out shady statistics for a while
that show growth that isn't there?

~~~
volkl48
The article points to less easily faked data to indicate the slowdown, not the
official statistics that are widely known to have a tenuous relationship with
reality.

~~~
onlyrealcuzzo
Look -- I'm as skeptical of the Chinese miracle as anyone.

But serious question: if the data was really as fake as everyone says,
wouldn't the official and unofficial exchange rate of the Yuan be a lot
larger?

If the Chinese are basically pretending the economy has grown 500% and it's
only grown 100%, wouldn't the value of the Yuan prove it?

~~~
landryraccoon
You can fake stats sure, but can you fake the fact that everything sold in an
Apple store and half the stuff on Amazon or Walmart is made in China now?

~~~
sct202
Plus we have a pretty good gauge of trillions of $ of stuff that goes into
China and trillions of $ of stuff that comes out that is not the same.

Like really people, China is probably faking some stats, but they're clearly
rich and making a ton of money and stuff.

~~~
jjeaff
You say that as if manufacturing product for someone else was a highly
profitable business. There is a reason more and more has gone overseas. The
margins are vanishingly small and continuing to drop.

------
porpoisely
I'm sure I've read this same story for the past 5 or even 10 years.

I am certain that the chinese economy will face a recession one day and I am
sure nobody in the media will know why or how. Maybe I'm alone in thinking
these articles are such a waste of time. It tells us nothing.

~~~
sonnyblarney
No, it tells us that the Chinese economy is slowing, and by all measures it
has been over the last 10 years.

~~~
jjeaff
And there really is not telling how much it is slowing. Especially since the
Chinese government is suspected/known to provide misleading or blatantly false
economic statistics for the country.

------
apo
I think of China as epicenter of a gargantuine deflationary hurricane. The
cycle goes something like this:

1\. Chinese economy slows down.

2\. Chinese leadership realizes it's only one real recession away from
existential threat.

3\. Chinese government floods the market with fake money.

4\. Chinese factories expand and export still more goods, despite weak demand.

5\. World inventories pile up, depressing prices across the board.

6\. Factory orders dry up around the world, sending host economies downward.

7\. GOTO 1.

~~~
the_duke
The US and the EU have been flooding the markets with money ever since the
recession too, though, with low to negative interest rates and bond buys.

The EU is in a worse state than the US with an interest rate of 0.0 and
therefore no room to maneuver in case of a new downturn.

For either three of those markets, the flooding can't continue indefinitely.

~~~
konschubert
The problem seems to be they flooding the markets with money and giving money
to consumers are two different things.

------
nosleeptill
Having done business in China, and having friends still in China, as one of
them put it, "China has more problems than you can count."

China is really a complex house of cards, it looks more foreboding than it
actually is in reality.

The second the economy slows the consumers hide, and go back to stuffing cash
into their mattresses.

I think Trump is a fool, but in the case of China I think we need a fool.
Trump believes he's invincible, so he doesn't get caught up with the "apparent
facts" about China and it's economy.

~~~
RhodesianHunter
We've needed someone to push back against China for some time now.

I just wish it had been in consultation with our allies instead of flipping
the middle finger to all of them at the same time.

~~~
watertom
Everyone is scared of China, so getting our allies to work in concert wouldn't
happen, that's why we need a fool. Once everyone realizes that China isn't a
tiger, it's easier to get our allies on board.

Western businesses have also wised up, realizing that partnering in China just
means that you are forced to give away your IP. China is reliant on western
countries partnering and giving away the IP for a shot at the Chinese market,
but things have not panned out so well for Western countries because the
consumer market in China is rigged against western companies. Also the
consumers in China are scared rabbits, their motto is save, save, save, and
then save more. It's going to take 2 or 3 generations to change the consumer
habits.

Manufacturing is starting to leave China for cheaper countries that don't
require you to give away your IP, just like it took 40 years for China to
become a manufacturing powerhouse, but it can unwind in a few years.

~~~
yesforwhat
> Everyone is scared of China, so getting our allies to work in concert
> wouldn't happen

Wrong. [https://en.wikipedia.org/wiki/Trans-
Pacific_Partnership](https://en.wikipedia.org/wiki/Trans-Pacific_Partnership)

------
gigatexal
They should sell more knockoffs of popular products ;)

Has there been any research into the truthfulness of the Chinese released
growth numbers in the past? What’s to prevent them from inflating or
artificially deflating them to serve some other purpose?

~~~
yesforwhat
You might be right, but I don't think ANY country welcomes a real deep dive
into how much of the global economy is fraudulent.

No one will like the answer.

------
jacquesm
And that is assuming that the previous and present day reporting are correct.

~~~
anoncoward111
That's definitely an issue, but I would like to add that many of us feel the
US govt too engages in lying through data.

The biggest one in my mind is the unemployment rate. Even though Labor
publishes nuanced statistics and revises them for accuracy, Trump and the
media focus solely on the lowest tier of unemployment rate, which is the one
below 4%.

To be included in this rate, you must currently be receiving unemployment
benefits from the state. Additionally, you must not be working part time at
all, such as someone who drives uber for a few hours a week, or someone who
picks up minimum wage shifts as a cashier or waiter. Lastly, you must submit
weekly reports (through an imho easy to use online portal) of where you
applied for jobs. You also cannot be in university, or living abroad (except
Canada).

These hurdles are enough to remove literal millions of people from the
official unemployment stat vis a vis the workforce participation stat. And
yet, the incessant focus on Unemployment Rate probably won't stop.

~~~
triviatise
There are multiple levels of unemployment U1-U6, they go from the most liberal
to the most conservative view unemployment. Ultimately the absolute number
doesnt matter that much, it is the trends.

The "official" number is the U3, but if you prefer to use the U6 you can. No
one is lying about unemployment.

U1:[47] Percentage of labor force unemployed 15 weeks or longer.

U2: Percentage of labor force who lost jobs or completed temporary work.

U3: Official unemployment rate per the ILO definition occurs when people are
without jobs and they have actively looked for work within the past four
weeks.[48]

U4: U3 + "discouraged workers", or those who have stopped looking for work
because current economic conditions make them believe that no work is
available for them.

U5: U4 + other "marginally attached workers", or "loosely attached workers",
or those who "would like" and are able to work, but have not looked for work
recently.

U6: U5 + Part-time workers who want to work full-time, but cannot due to
economic reasons (underemployment).

You could even consider the labor participation rate as an unemployment
number. That would include retired people, the wealthy that don't need to
work, stay at home moms etc.

~~~
anoncoward111
Did you not read my comment? I explicitly mentioned that there are multiple
forms of unemployment statistics measures by Labor, and that workforce
participation statistic is most accurate.

Yet, you will never ever hear these stats on TV or from Trump. It is solely
just screaming about "RECORD LOW UNEMPLOYMENT", when it is anything but a
healthy employment situation.

~~~
RhodesianHunter
Politician cherry picks number that makes him look good!

News at ten.

~~~
anoncoward111
Except every politician has done this for this specific stat. Why are you
defending it so vehemently when it is a pitiful indicator?

~~~
Latteland
People do talk about other unemployment rates, the labor participation rate.
like on the marketplace daily radio show/podcast.

------
bitxbit
China’s problem is that its resource was cheap labor (or bluntly put modern
day slavery).

------
zachguo
China's economy will slow, no doubt about it. CCP worries about it way more
than Trump. But car sales and anecdotes are not really good ways to measure
the economy. If you have doubt about those GDP numbers published by China.
Take look at metrics such as freight traffic and trade stats.

~~~
seanmcdirmid
You mean the Li Keqiang index.
[https://en.m.wikipedia.org/wiki/Li_Keqiang_index](https://en.m.wikipedia.org/wiki/Li_Keqiang_index)

~~~
zachguo
Thanks for sharing.

------
gerdesj
"China’s economy has slowed sharply in recent months, presenting perhaps the
biggest challenge to its top leader, Xi Jinping, in his six years of rule."

Note the word: rule.

~~~
singularity2001
what is so note-worthy about that?

~~~
DeonPenny
It's that he became the leader for life. So because there's no term rule is
the better wording.

------
ngcc_hk
Do not fall into the trip to analysis china using a communist Marx model based
on economy and/or state level. It is always the People you worry about even
though there is no democracy.

Unlike Soviet Union, the chinese has moved out as people to the west for many
years now. Huawei even nearly has a chance to use their code to get a strong
hold of 5g. Can you even imagine Russia live in USA and with firm there or
Hollywood need to get the agreement of china to ...

The game is not just about a trade. The politics of playing of game of game
from shaping the agenda, control the verb (discourse academic speak) and the
hard to fight the culture (unlike Muslim you can have a perfect English
speaking chinese working in most guarded place and then part of the 1000
person thing).

I think the game at large is what is the “interesting” part and the west is
losing to the horror of us who think human rights, Liberty, freedom to speak
(or access information) is fundamental rights.

But the west accept chinese can be on their own and even worry about their
economy.

You lost. If you play a game like this.

------
dana321
Take a look, its not just China. Its everything.

------
jiveturkey
i hope this isn’t flamebait ... please treat it as an innocent question. has
trump done a good thing or bad thing?

------
samfisher83
30 year their economy was on par with India. Now it's on par with the us.
Would some personal freedoms be great? Yep but I think having food in your
stomach is more important. As long as they continue to do that Communist party
will be ok.

------
diminish
> Official data shows it grew 6.5 percent in the three months that ended in
> September, compared with a year earlier.

Either Trumpism works, or the article is just weak.

~~~
douglaswlance
Punishing unfair trade practices works. It's always worked.

~~~
swagasaurus-rex
For whom? The bigger player? The one with a trade deficit with the other? The
one with less domestic supply of traded goods?

------
xttblog
没有大家想象的那么差

~~~
jmts
Google translates this to: "Not as bad as everyone thinks"

[https://translate.google.com/#view=home&op=translate&sl=auto...](https://translate.google.com/#view=home&op=translate&sl=auto&tl=en&text=%E6%B2%A1%E6%9C%89%E5%A4%A7%E5%AE%B6%E6%83%B3%E8%B1%A1%E7%9A%84%E9%82%A3%E4%B9%88%E5%B7%AE)

------
resters
Much like the now disgraced/debunked Judith Miller article helped garner
massive support for Bush's Iraq war, this article is meant to support Trump's
anti-China rhetoric and trade war.

We're supposed to conclude that Trump's tariffs have dealt a serious blow to
China's economy, and thus to suppress our disgust with the policy, since it
will not take much more time for China to beg for respite.

It should be obvious by now that there is a concerted effort to amplify
unfavorable publicity for the Chinese government, the Chinese people, and the
Chinese way of life.

Also, fwiw, since when does it make sense to draw massive micro-economic
conclusions from interviews from a handful of people? If this were news it
would be an economic paper, not an article cobbled together out of a few
interviews/quotes.

~~~
HillaryBriss
> our disgust with the policy

a prediction: the next US president (almost certainly a Democrat) will
continue these policies or other very similar policies. the next president
will not suddenly "lighten up" on China.

~~~
chillacy
I wonder if TPP would have fared better than tariff threats. That seemed to be
the way Democrats we’re going to contain China, by forging trade alliances
with SEA and chinas neighbors.

~~~
HillaryBriss
i don't know how big its effects would have been for the US economy.

it seemed like there were pro/con TPP factions in the Democratic voter base. i
recall Sanders being against TPP because he thought it was too favorable to
certain US companies (e.g. pharma, entertainment) and their shareholders
without doing much for workers or for other US industries.

------
jeisc
Laissez faire, telle devrait être la devise de toute puissance publique,
depuis que le monde est civilisé ... Détestable principe que celui de ne
vouloir grandir que par l'abaissement de nos voisins ! Il n'y a que la
méchanceté et la malignité du cœur de satisfaites dans ce principe, et
l’intérêt y est opposé. Laissez faire, morbleu ! Laissez faire !![4] "Let go,
which should be the motto of all public power, since the world was civilized
... (It is) a detestable principle of those that want to enlarge (themselves)
but by the abasement of our neighbours. There is but the wicked and the
malignant heart(s) (who are) satisfied by this principle and (its) interest is
opposed. Let go, alas".[5]

— René Louis de Voyer de Paulmy d'Argenson

[https://en.wikipedia.org/wiki/Laissez-
faire](https://en.wikipedia.org/wiki/Laissez-faire)

------
contingencies
These articles are coming thick and fast from three sources: The Washington
Post, New York Times and Bloomberg. Nobody else (BBC, Australia, etc.) seems
to be reporting the same, which leads me to believe there's a political
element to this reporting, particularly amidst the current "trade war". (We
don't see a rash of "US Economy Shows Sharply" every time something goes wrong
for the US, although the trend is arguably toward crumbling infrastructure and
reduced competitiveness across the board.)

Against what therefore appears to be a propaganda-laden media landscape, I
would merely add the observation that Chinese people and companies can more
easily stomach slowdowns than the US because they save, don't tend to live
highly leveraged and on subscription like Americans, don't need cars, and
don't have a culture of mutual litigation or life-crushing medical bills.

Therefore, to an American reading "these people lost their jobs a couple of
months early" the effect is insanely worrisome and they believe this to be a
huge problem. In China, having an extended holiday from your seasonal factory
job is generally a non-issue... these people can either hang around and get
other work, or economically hibernate back at home sharing meals with family
and passing time on a tiny budget. It's a different world.

~~~
_dark_matter_
Given your premise that American media is reporting Chinese Economic Slowdowns
more widely than other country's media, there are two options:

1\. Conspiracy - They are working together, and perhaps with the government
and other private entities, to sow a particular narrative 2\. Profit - Their
audiences are particularly interested in these stories, given the e.g.
aforementioned trade war

I'll leave it to the reader to decide which of these it might _actually_ be.

~~~
crazynick4
Do these necessarily have to be exclusive? The CIA is known to have made
organized attempts to influence the media in the past. Virtually every
government does this, it seems implausible to me that we (the US) would be the
only ones with 'objective' reporting. Of course you simply have to namedrop
the term 'conspiracy' to get a knee-jerk reaction and have everyone lean in
the opposite direction of what is otherwise a relatively reasonable option.

~~~
tehduder9
ok..

