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China’s Economy Slows Sharply (nytimes.com)
389 points by prostoalex 7 months ago | hide | past | web | favorite | 244 comments

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:


Rebalancing the domestic economy toward greater household income is necessary to provide sustained growth in China, and that's what Michael Pettis argues in your link to his blog.

Make no mistake though, the national and Party leadership is deathly afraid of low growth and it is exactly what they seek to avoid. The leadership knows they must create domestic consumer demand and that this must happen through an increase in household spending or, as Michael Pettis notes, in spending on behalf of households. Low auto sales seems like evidence that this isn't happening quickly enough.

They can use the threat of trade war to convince others of the need for this shift, but actual trade war, or actual low growth? No thanks. When you are riding a tiger, you don't want it getting too hungry.

China has a long history of civil unrest, the Taiping Rebellion being a good example. Twenty to thirty million people were killed, and economic depression following a trade war was the impetus. The result of this horror was China on her knees, and is precisely what the leadership seeks to avoid. https://www.facinghistory.org/nanjing-atrocities/nation-buil...

The return to authoritarianism can be seen as battening down the hatches before the storm. Shifting spending to household income goes against powerful interests. A large national health program and social security could help, but debt funding is not an option now, and the alternative is taxing wealthy individuals and wealthy local governments. This also creates unrest.

> China has a long history of civil unrest

> The return to authoritarianism can be seen as battening down the hatches

Obligatory not a "China expert" but I think you're very much correct. A lot of people don't seem to understand how different, and explosive, the political situation is in China. There is very little social trust, certainly little trust in government, and things could fly apart quickly and violently. The CCP is in a very difficult situation, trapped between fragmented and competing power bases, from a gigantic and angry rural underclass to godlike and kleptocratic SOEs to the tier-1 (and even 2) cities who by this point are practically mini-states with a law unto themselves. It is no surprise they have pulled every trick in the book to try to keep the music playing.

I totally agree that there needs to be a proper national health and social security system; this will be on the same magnitude as the "New Deal" the US had after the great depression. This could only be accomplished by a massive tax, and even more importantly power, overhaul. Xi Jinping is totally unreadable to me and I have no idea whether he is consolidating power just because that's what "strongmen" do or because he understands he needs it to execute on the desperately needed reforms. I doubt anyone not literally in the Politburo could say for sure. I hope it's the latter.

I keep saying this every year but the stakes just keep getting higher - things in China will come to a head sooner rather than later. And when they do, I want to be very far away, because it is a whole lot of shit, and a very big fan...

Regarding Xi's motivations with respect to his "strongman" actions, this document about Xi before he became the Gen Sec might shed some light:


Thank you for that, hadn't seen it. Very interesting, if somewhat dated, but perhaps cause for cautious optimism.

I can't speak to the rest of your comment, but tax overhaul is certainly a high priority for the Party right now.


But also isn’t China half way through its industrial revolution, with still a massive rural population almost living in the previous century? Are there other examples of countries that stalled in that process and the political consequences of a two tier population?

The rural labour pool is running pretty low at this point, it’s mostly just kids growing up and going to work in the cities rather than actual untapped capacity. Of course given China’s scale that’s still millions of workers looking for jobs every year. I’d say at this point China is very much an industrialised country with a young but burgeoning domestic economy.

Wages for manufacturing workers have been rising steadily as a result though and low value manufacturing that relies on the lowest wages is moving on to places like Vietnam. It’s still pretty rough out in the countryside, my wife is Chinese and I’ve been out in the countryside, but it is getting better.

> China has a long history of civil unrest

oh come on... China has a long history. (period)

within that is periods of civil unrest and various degrees of prosperity and peace.

Its a bit unfair to paint them as a chaotic state... they're far from that.

China has had 4 or 5 revolutions (depending on whether you want to count the Cultural Revolution; it was perhaps an anti-revolution where while revolutions normally attempt to overthrow the government, the cultural revolution attempted to maintain the government's power) in the last century. There are few countries in the world that can say they've gone through five revolutions within the last century. https://en.wikipedia.org/wiki/Chinese_Revolution

I believe it has a long history of unrest in the modern era compared to all large countries (measured by population) out there. The Chinese government knows their own history and people well, and I believe they are managing the risk with a serious mindset. Their methods may be up for debate, but they're not of the mindset that there's no risk.

I don't think this is the best way of looking at things.

China is virtually a continent unto itself. It's a huge and fractous territory. It is little surprise that when the empire fell at the beginning of the 20th century after 4000 years, in the most tumultuous period of world history, that it went through a long phase of war and revolution. It was divided among the West's great powers, repeatedly invaded by a rising Japan, hit by successive ideological waves of nationalism and communism - and had to navigate being the third cog of the Cold War. I don't it's helpful to chalk up the instability of China during this period to some 'essential' characteristic of China; it is not naturally unstable or violent - any country that endured what it has would be unstable and violent.

But you could paint such a dramatic story for many parts of the world.

At the start of the 20th century the UK controlled so much of the world they said the sun never sets on the British Empire. It led the industrialisation of the planet, lost millions of men to the trenches of the first world war, then was nearly wiped out and turned into a slave state by Hitler before successfully liberating Europe with its allies. It went through enormous social turmoil in the middle of the 20th century: socialist governments and ultra-militant unions repeatedly damaged its economy so badly that by the end of the 1970s it was significantly worse off economically than Germany - a country it had flattened in world war just 40 years earlier, and which had then been split in half by the Soviets. Professional and well armed terrorists repeatedly attacked the government, in one case almost managing to assassinate the Prime Minister [1].

That all sounds like a much more traumatic modern history than China's. Despite that there has never been a revolution in the UK. The closest you can find is probably the English Civil War in the mid 1600s, which ended with the king being invited back to become King again after the revolutionaries turned out to suck more than he did.

So I don't think we can just write off China's history or concerns of its leadership by saying it's merely large, and not naturally unstable or violent. For whatever reason China does seem to have gone through far more revolutions than other countries have done despite the apparent lack of external events that could have triggered such instability.

[1] https://en.wikipedia.org/wiki/Brighton_hotel_bombing

"That all sounds like a much more traumatic modern history than China's."

That is so far off the mark.

China was turned into a tributary state by the Western powers. It was repeatedly - successfully - invaded by Japan. Tens of millions died in the fires of civil war and revolution. It industrialised within a span of 50 years. It was hit successively by waves of nationalism, communism, and capitalism in a single century. Nothing compares to ANY of that in the UK's recent history.

The UK was one of the world's great powers at the start of the twentieth century. It drew men, wealth and geopolitical advantage from its empire. It enjoyed the sympathy of Canada and the United States - already far and away the most powerful state in the world. It fought into two world wars, yes, but that did not tear at the fabric of Britain - it never suffered a land invasion, or the realistic prospect of one. Even if Germany had won the air-battle, Britain's navy would always have precluded the possibility of a German armada crossing the channel.

It was not turned into a vassal state by a strange and more powerful civilization. It did not undergo revolution. There were not major ideological explosions. The same political system and governing class stayed in place. Britain had the advantage of industrialising first, in the late eighteenth and early nineteenth century.

The modern history of the UK is exceptional for being so stable.

"Socialist governments and ultra-militant unions". The Labour Party was Keynesian in economics, social democratic in politics, supported NATO and trident and yoked itself to America in the Cold War, and was hardly the direct cause of the crisis of the 1970s - a crisis, by the way, that was general to the West. Unions are, almost by definition, on the soft side of the socialist spectrum - certainly in the context of socialism in the 20th century - hence Lenin's quip about 'trade union consciousness'.

I guess my point wasn't specific to the UK, but rather that quite a few countries have had dramatic and society-redefining events happen to them without experiencing a large number of revolutions as a consequence. So we can't say that China's revolutionary past is an obvious consequence of anything in particular that happened to it.

With respect to which country has had more drama in the 20th century, I'm not sure there's a scale that can be applied to compare them - to me it seems both countries have been through a lot. And that's what I'm getting at. Clearly, experiencing war, invasion or very real threat of invasion (Hitler was trying his best to destroy the navy!) and rapid industrialisation is not by itself sufficient to lead to revolution. There may be something else at work beyond mere events, perhaps a cultural aspect.

The British political parties of the 50s and 60s were hardly Keynesian except in the sense that they liked spending money, and no the crisis of the 1970s wasn't "general to the west". The USA was busy putting a man on the moon in this era, the German economy was outstripping the UK's quite significantly. The UK had to go to the IMF for a bailout its economy was so sick. The cause was pretty clearly and directly militant socialism - once Thatcher got the unions under control and liberalised the economy, the UK caught up with its erstwhile foe and was no longer the 'sick man of Europe'. There was a lot for Thatcher to do because at the time she came to power the British government owned huge quantities of ailing industries, including things like hotel chains and removal companies. Not so dissimilar to China's model where so much industry is state owned.

"Quite a few countries have had dramatic and society-redefining events happen to them without experiencing a large number of revolutions as a consequence. So we can't say that China's revolutionary past is an obvious consequence of anything in particular that happened to it."

This argument is obviously fallacious.

It does not follow from the fact that lots of societies (L) have had X happen to them that no number or combination or tempo of X's can have an effect that was not present in L.

I'm not sure if the proposition that we can't ascribe China's revolutionary past to 'anything in particular that happened to it' is even coherent. How else do you think historical change takes place? From nothing?

"The UK had to go to the IMF for a bailout."

It's now historical consensus that the UK didn't have to do this at all. It was based on a miscalculation of the UK account (not that the economy wasn't in dire straits).

"The crisis of the 1970s wasn't "general to the west".

It was, for at least three reasons: (i) the collapse of the Bretton Woods system and the beginning of dollar seigniorage; (ii) the OPEC crisis in 1973; (iii) and the emergence of widespread stagflation in 1973-1975.

"The cause was pretty clearly and directly militant socialism - once Thatcher got the unions under control and liberalised the economy, the UK caught up with its erstwhile foe and was no longer the 'sick man of Europe'."

I'm not going to get into this, because it's a rabbit hole. But that is clearly a highly simplified and ideologically charged perspective. I would mention that the rate of growth under post-war social democratic Keynesianism was higher than under Thatcherism and her epigones. I would recommend the work of David Edgerton, probably the foremost scholar of British economic history in the twentieth century - whose work reveals a quite different story to your own.

I don't believe it's impossible for you to be correct and for the Chinese government to still be seriously concerned about revolution risk. Whatever the reasons are, it is what it is. FWIW, I do agree with all your points too. A tour through their national history museum in Xian shows how proud they are that Mao was able to finally set China on its own feet on the global stage such that it no longer would be forced to be a vassal state in the future. It opened my mind about why and how the Chinese government creates and implements its foreign policy. It never again wants to be a vassal state, and everything is seen through that lens.

But just as they are worried about the threats from without, they are also worried about the threats from within. This is what I see in their domestic policies.

Interesting point. To expand on it... By analogy, western Europe has a long history of basically continual war, generally featuring some combination of France, Prussia, England, and Spain.

No one analyzes Brexit as a return to literal western European warfare, at most as an analogy of interests.

The last century featured advances in weaponry that changed the cost benefit of armed conflict in a way to make some types of historically prevalent warfare much more rare.

You could argue that the difference with China is the fear that information control and the other authoritarian elements of the communist party are masking significant internal discontent, making the political situation more volatile than can be reliably observed.

And... that civil wars aren't the type of warfare that technology has made more rare. (Really just limiting superpower territorial invasions of other superpowers?).

But who knows. China is such an enormous complicated country that there are basically no parallel examples to help us predict its future... Even China's past is limited help. China of the Tang dynasty was more similar in population to present day Myanmar. Its problems and issues and politics might have basically no discernable relationship to China's real issues today.

Then they shouldn't hype up the real estate price so much, it is draining the domestic consumers dry.

Well, some of them. Others are presumably finding it a path to future wealth, while others are cashing in on realized appreciation.

LoL, u have no idea.

It's a traditional Chinese mindset that people should own land properties or houses. A man who does not own a house would be deemed not worth marrying, thus making overhyping real estate price possible since some people would take it anyway.

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

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.

> 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?

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...

I was reading an article some time back some Chinese businesses in order to get loans had to give a stake in their company to the government. It is not something heard about often but gives the government even more sway over private businesses.

Are they giving a stake to the government, or to the government officials? Because the latter is just plain corruption, and to be honest isn't very surprising anywhere.

I'm sure there are a few technocrats that have this as one of their goals in China but (note: this is speculation) I doubt the reason there is friction from moving away from state sponsored businesses is changing payrolls.

Communist party leaders own huge portions of their state sponsored businesses and directly benefit from their success. Chinese leaders don't want fair competition, they want to be rich.

Yes - but deploying capital in the way that brings the greatest returns is the way to become rich. Many SOEs either break even or make little money, especially when considering their size.(feel free to do research on that). You are saying they wouldn’t want to sell off some of these/make them more efficient (by liquidating some of their holdings or by laying off people who aren’t doing anything so that they can’t deploy that new capital elsewhere?). Many SOE jobs’ main utility here (from the government perspective) is to dispense wages, have people employed and keep employment numbers up. I don’t buy that the real power in China loves the current state of their SOEs.

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!

No, Chinese do not have a culture to have conflicting ideas and not feeling stressed, not as anything I know from my 24 years of living and studying as a native Chinese.

If you are talking about "求同存异" that's for agreeing to have disagreement, which is a common cooperation culture around the globe.

If you are talking about "无为而治" from the Taoism philosophy of doing without actually forcing, that's not something relevant here though.

PS: I am often amused by people coming up with obviously-weird/nonsensical claims on Chinese, China or its culture, and the readers seemingly unable to apply common sense to disapprove them. This, to me, is an unconscious (or actually intentional) way of reinforce stereotype on China, which can be useful, for example, in mwny cases when someone in power wants to mobilize the common people, such stereotype really makes things easier to get approved.

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.

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.

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

Fox news and CNN would beg to differ

Where have you heard this about Chinese culture in particular? I’ve only heard of such a trait in reading Robert Altemeyer’s book The Authoritarians, where it is described as a common trait of right wing authoritarians, who appear to not be very good about comparing the various ideas they have together to see if they are contradictory. Altemeyer describes it as the result of an upbringing that emphasizes loyalty and submission and that posits that truth is something that comes from an authority figure, rather than something that can be derived from available facts for oneself. But I think that applying that critique to an entire country seems harsh, without evidence.

You should be interested in reality rather than projections. Alibaba, Tencent, Baidu, Huawei, etc. are corporate entities separate from the Chinese government.

> Alibaba, Tencent, Baidu, Huawei, etc. are corporate entities separate from the Chinese government.

Not quite.

Since the default expectation is that public companies operate quite independently from the govt., it would be nice to reference some sources alleging with evidence close relationships between these companies and the Chinese govt.

You're clueless

I think Chinese government has to welcome slowing down because it's just impossible to maintain a growth rate like that indefinitely. The GPD of China already come close to that of US. At this scale, the same growth rate is naturally becoming harder and harder to achieve and simply pursuing that number might lead to catastrophic outcome. A slow down in economy growth gives China more time to fix the structural problems caused by rapid growth, and reduces the chances of a sudden crush. Overall I'd say it leads to a much more healthier economy.

It has side effects of course, but Chinese government have much better control of the macro-economy compared to free markets in most other countries, and that would help a lot in avoiding economical crisis. The debt issue is concerning, but I think Chinese government is much faster in acting on and fixing problems.

Some of the slow down mentioned in the article, such as the fall in housing market, seems to be exactly what the government want, as they've tighten the rules for real estate by a lot earlier this year. There're strict criteria people have to meet to be eligible for purchasing a house. This is a good thing because the current real estate market in China is almost insane.

If China did have "much better control of the macro-economy compared to free markets" the they wouldn't have the debt problem.

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

Since every bank in China is under the direction of the central government it's up to a committee therein to decide which companies end up bankrupt. China might look like it has a modern capital market but it's still centrally controlled for key parts. National banks can and will infinitely extend credit lines to unprofitable companies if it's in the governments interest (for example to prevent public unrest).

They have in practice been exporting huge sums of money overseas by buying companies all over the world.

And they have reduced this, government issued: https://www.theguardian.com/business/2017/aug/18/china-moves...

Absolutely no leader welcomes an economic slowdown. Especially not the leader of an authoritarian government.

Your hypothesis does not explain why the Chinese government is acquiescing to American trade demands. If they welcomed this economic slowdown they would be holding firm in trade negotiations.

What we are actually seeing happen is a rebalancing of foreign investment. American businesses have purchased stock in excess in the previous quarters using existing supply chains and are now moving supply chains out of China. Money that used to flow into China is now flowing into neighboring countries such as Vietnam. Mark my words, if the Chinese government allows this transfer to complete it will never come back to China and China's middle and lower class will be gutted.

Imagine if America's manufacturing economy was outsourced to China in the 60s rather than in the 90s when it already had a thriving service economy. That is what is happening in China.

Many people believe that authoritarian leaders are less beholden to their people than democratic leaders and because of this are able to withstand economic disasters easier. What they fail to realize is that when an authoritarian country fails economically there is only one group of people to blame and when judgement occurs it's not through polls but through violence.

FDI is one thing, but remember China, before the trade war even starts, has began to remove benefits from the foreign companies and replace them with domestic companies.

A larger picture here is China is going through its own deleveraging campaign. They can't take more debt to stimulate the economy. Traditionally the government would ramp up massive investments in infrastructure or just remove the control over the overheated housing market. Both of those approaches are now out of the table. The infrastructure result in big debt, while the housing bubble is already the biggest probably in human history. It is unfortunate for the Chinese government to run into the trade war with US now, but it only accelerates the coming of the inevitable, the delayed reckoning.

But China is big enough to make its problem, the world's problem, just like US. It won't be the first to fall in this game, even though it might start it.

They would rather have a slowdown than run into a crisis.....

Sure but that is not the actual trade off. You don't prevent an economic crisis by allowing foreign investment to slow down.

To use another medical analogy the idea that you can prevent an economic crisis by slowing growth is like the idea that you can cure diseases by using leeches to suck out them out.

The way to prevent economic crisis is to stamp out fraud and high risk investment practices (curing the actual disease). Encouraging American business to move factories outside of China does neither of those things.

There's so-called economic reform, such as moving up in supply chain, cutting debts, and reducing reliance on foreign investment.

No sane people would believe indefinite high growth is maintainable, and slowdown is of course welcome if that helps avoid bigger problems down the road.

>No sane people would believe indefinite high growth is maintainable

It might not be but that doesn't mean you don't want it to occur for as long as feasibly possible. Maybe until you even reach parity with the US on a per capita income basis?

> and slowdown is of course welcome if that helps avoid bigger problems down the road

A slowdown is the problem itself, this is like saying you want to die of heart disease now because you might die of cancer later in age.

This is a common pattern amongst Chinese apologist

Economy: Everyone says it's been failing for 10 years -> Chinese leadership is omnipotent regarding economy -> it's just a temporary slowdown, government will print more money -> Chinese leadership planned this slowdown

Human rights: look at US! -> ignore comparisons to other countries other than US -> It's not really a concentration camp, since there's no mass murder -> prisoner organ harvesting isn't bad compared to US separating families at the border, or slavery 300 years ago

> or slavery 300 years ago

I am no apologist for any country, but wouldn't a better point be the very real, widespread, and constitutionally-protected prisoner slavery, which is happening in America today not just 300 years ago?

That’s bad sure, but does it really compare to sourcing 65% of transplant organs, circa 10,000 a year, from executed prisoners in a system with an opaque legal system, minimal civil rights and in which even the number of executions per year is a state secret?

Without trying to justify anything, no system is perfect but at least we can talk about it. In China even having this conversation might make you liable to a citizenship points penalty that could end up with you being denied basic rights like the ability to book even domestic flights.

China literally has forced labor camps.

It's definitely true that it's a stronger argument, but you're playing right into the design of apologist propaganda. By making constant half-assed arguments against something, you get people to disagree with the crap argument then you get other people to present the strongest argument for the sake of arguing. This successfully gets people arguing both sides of an argument about a subject that wasn't part of the original criticism in the first place.

The best trolls tell something almost true to get people involved in a fight about details rather than countering the larger misdirection.

> slavery 300 years ago

The emancipation proclamation was signed January 1, 1863, or 156 years ago.

This is actually pretty genius. Perhaps the Chinese economy is recession-proof. But I doubt it. It's at the height of a 30-year bull market. It doesn't seem insane that a downturn could happen.

And the party seems to be pretty weak when the Chinese economy isn't doing swimmingly. If things finally do turn sour, what a convenient time. You can just blame it on someone else.

The Chinese economy has had plenty of recessions in the last 30 years: 1990, 1998, even 2008 was probably a dip in real terms. It’s not like the economy hasn’t gone sour before.

This time I wonder if some businesses are moving out of China due to the instability of the relationship with the US and China, not to mention the future instabilities to come.

I don’t think so, not yet anyways. Trump is probably a one term president, and most companies are thinking longer term. 1989-90 was much much worse.

I don’t think so

Think again.

GoPro moving some production out of China to avoid US tariffs: https://www.cnn.com/2018/12/10/tech/gopro-china-tariffs/inde...

So what? Does one data point make the case for a sustained long term trend?

It's a single data point because I'm not going to do your research for you.

It's something that happened recently and was mentioned on HN, that's why I provided the courtesy of posting that for you.

Yes, nor am I going to do your research either. The fallacy of the data point is still a thing.


I can tell you that Caterpillar has planned to move almost all production out of China with the majority coming back to the US. They're even spinning up casting plants that have been shuttered for over a decade because of this.

Fyi Australia's economy has also been without a recession in 30 odd years

The rebalancing China needs is towards domestic consumption, even for itself to be more sustainable. What this has done is reduced investment and worsened consumption. It isn't really what the leadership want. China currently retains near the lowest consumption-as-a-proportion of GDP worldwide.

Controlling the Chinese economy is relatively easy with the state corporation machinery through the investment component and brings in robust economic growth in GDP numbers, but consumption really sags.

FWIW the entire western economic system canters around the consumption portions of GDP. That's why everyone loves to export to the US/Europe/Australia. Consumption is resistant to short term economic shocks.

You'll have many around here boasting higher saving rates in Asian nations, but these are the reasons the economies are far behind (inc Japan). Look at the other side of savings, more spending means more is earned as well creating a net social surplus for everyone beyond the private scale of saving. It takes exports to make up for this shortfall.

I think you are partially right: the trade disputes make for a convenient scapegoat for a slowdown that was way overdue. As for how the people take it, will they blame America or the CCP, the latter of which has basically encouraged a lot of moral hazard (you can’t lose on real estate, it’s backed by the government!)? It’s not like they can just throw the turkeys out of it’s the latter.

Why would they want a economic slowdown?

If during a boom the economy picks up significant malinvestment (inefficient or oversubsidized firms, firms that were in a particularly good position to benefit from low-interest loans but weren't necessarily the most competitive firms that should have gotten it, etc. etc.) most of those firms are going to survive until there's a significant bust. China has artificially propped up a lot of industries and firms, and over time the deadweight loss of decisions like that builds on itself like barnacles on a ship, getting worse and worse. While I personally don't think the leadership is smart enough to want a slowdown, it might be a really good thing for their economy in the long term.

They dont, they are saying they want something they can't control happening . Old trick

I guess sudden economic growth can disrupt a lot of things, including potentially the structure of power.

Meanwhile US exports to China are eating dirt. This trade war is not going well for America, although this slow growth headline will be used to bolster a false narrative:


> Meanwhile US exports to China are eating dirt.

US exports to China for 2018 will be around $123-$126 billion.

That compares to $129 billion for 2017, and $115 billion for 2016 and 2015. So US exports will be up vs 2016 & 2015, and down a mere couple billion versus 2017. Meaningless in other words.

Your premise is incorrect. So far China is paying for most of the trade war [1] through its producers slashing prices and by allowing its Yuan to drop in value (which is a wealth transfer from the Chinese people to prop up its exporters so they can hopefully run in place rather than get hit hard). That's why the US isn't seeing any consequential pricing / inflationary pressure at all from the trade war.

[1] https://www.bloomberg.com/news/articles/2018-11-19/china-is-...

Chinese import growth over 2018 was mostly in the double digit range (averaged 14.6% Jan. through Nov.). Its imports from Europe, Japan and ASEAN grew 10% or higher.


They're not identical markets.

Both Japan and the EU (Germany with the world's largest trade surplus) have larger export markets in relation to the size of their economies than the US does. That's also one reason the US runs perpetually large trade deficits with Japan and the EU.

US exports to China haven't gone up meaningfully since 2013 (in fact they declined 2013 vs 2015/2016). That's not the case with the EU and Japan. Has nothing to do with the trade war, which didn't exist in 2013-2016, it has to do with what (and where) the US manufactures and exports.

It's also worth noting that Chinese manufacturing is to one extent or another a representation (proxy) for the US consumer economy, since major US corporations utilize China for so much manufacturing (part of the where and why reference in the last paragraph). US companies make products in China and then sell them to US consumers, which complicates the import/export discussion. This is pointed out constantly in critical discussions (eg about the environment or labor & wages), and ignored in discussions like these where it's an inconvenient fact. Over time the EU and Japan have outsourced less of their major manufacturing to China than what the US has.

If you look at the graph I provided and zoom out to the 5 year chart, you would see a fairly large drop in Chinese imports around 2015-16. Part of that might have been due to commodity price drops, but I suspect the correlation of US export to China with Chinese total import is higher than you gave credit for, in a normal year that is.

Wrong. China is benefitting from an uptick in orders due to tariffs. Also, US exports are down, despite your attempt to write the dip off: https://www.google.com/amp/s/www.bloomberg.com/amp/news/arti...

And that’s from back in October. It’s a loss no matter how you spin it.

Saying I'm wrong, doesn't make it so. Your claim - that US exports are "eating dirt" - is unsupported by the actual export numbers. US Exports are down a few billion dollars only vs 2017, and they're up vs 2015 and 2016. In a $20.5 trillion economy it's entirely meaningless to see a $3 or $5 billion drop in exports to China and doesn't square with your outlandish claim about dirt eating.

China is benefitting from what's called front-loading, which is a temporary bump in exports to beat the implementation of tariffs. It has been widely discussed in dozens of business publications over the last few months (including some breathless articles about ships desperately racing to beat the tariff dates), there's nothing surprising about it.

The gap is what matters, not the year over year totals. Trump’s stated objective was to lower the trade gap and he (so far) is failing. Front loading is evidence that US demand is as high as ever. US companies have no real options other than Chinese suppliers and that’s why they’re buying as much as possible ahead of Trump’s tarrifs, which only really punish US buyers and the end consumers.

The fact that China can use its currency to fight this trade war is only more evidence that the US is being outmaneuvered.

You can spin it all day long, but the US soybean farmers and steelworkers are not winning this trade war.


"Hug a business owner or farmer who exports to China" is the equivalent of a "think of the children" argument. It ignores how little relevance they have in the overall trade with China in order to oversize a problem.

See the sibling comment for how little the total numbers have declined.

Someone is going to get fucked in a tariff change. Tariff changes area always a question of greater good.

1. the Trade balance is bullocks (how do Apple iphones appear in it?) The term dark matter was coined in 2006 by some Harvard economists https://www.dbs.com/aics/pdfController.page?pdfpath=/content...

2. I think the trade war is going pretty well for the US. They basically can't lose it this is why I don't understand that Xi did not compromise in the first place.

To your first point, seems like they'd say anything to try to save face.

90% of the population isn’t gonna care about such drop. The chinese govt isnt gonna let the media color it bad.

The article doesn’t affirm what you are implying. I don’t think its a blame game when you have a country to feed. But long story short - USA will definitely be the first one to blink. China today is pretty much like Russia in the old days. Country was poor and in debt, their people starve or froze to death in millions and still praised their leader. This may as well happen in China today, and noone will blink. Meanwhile in USA I don’t think even average size group of people will allow the country to slide into full blown depression China-style, because some dude in White House wants to play a War game.

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.

> 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!"

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

in the past there was no world trade organization and there were no multi-national free trade agreements. It's like saying china should be allowed to enslave people because it happened hundreds of years ago. There are now laws against it

I've seen this argument parroted multiple times on many different websites. It's either just the blind leading the blind or Chinese sock puppets spreading lies to justify blatant trade abuses

Yeah they shouldn't follow that history.

The US also had slavery.

The US also had slavery.

Are you under the impression that China didn't?

I was and I stand corrected.

I was trying to address the idea that since the US did bad things in the past, it's ok for other nations to do them too.

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

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.

Are we talking the slavery ladder?

I'm talking about all the other 'unfair' trade practices that have been cited.

If you don't want the developing world to follow in the West's footsteps, perhaps we should share some of our wealth with them? Would that be a more palpable alternative?

Earlier today, a study was posted on HN about how the British Empire plundered ~$50T (inflation-adjusted) of wealth from India over it's colonial history. If you want to even the playing field with the developing world, we have a lot of reparations to look forward to.

> If you don't want the developing world to follow in the West's footsteps, perhaps we should share some of our wealth with them?

We are, it's called the global economy, and it has performed a wealth transfer of unprecedented scale these last decades.

> we have a lot of reparations to look forward to.

Colonial reparations are complete crock, because they are based on counterfactual history speculations, and there are absolutely no concrete limits on those.

The Roman empire obviously plundered the British isles for inflation-adjusted astronomical amounts during its colonial history, should modern-day Italians pay reparations to England?

It's absurd.

Arguably, had the Romans not invaded and expanded, much of the Mediterranean and the rest of Europe would have remained 'barbarian' for quite a while. They arguably brought civilization with them into the far-reaches of Europe (obviously at a great toll to the local populations)..

Arguably, the British brought a lot of things with them to India as well, infrastructure, medicine, industry, language. All these things benefit Indians living today, and many millions of Indians living today wouldn't be alive if the course of history hadn't been changed.

How do you put a value on that?

Also, many Indians were killed resisting the colonial invasion, and their descendants are not living today as a result, but would have if the course of history hadn't changed.

How do you put a value on that?

You can twist yourself silly arguing these things back and forth, because there are no physical limits. There are no principles to fall back on, there's only human imagination, you're free to dream up whatever pricetag you want on them.

And that is why colonial reparations are ridiculous.

> Arguably, the British brought a lot of things with them to India as well, infrastructure, medicine, industry, language. All these things benefit Indians living today, and many millions of Indians living today wouldn't be alive if the course of history hadn't been changed.

India's share of the world economy went from 24.4% in 1700 to 4.2% in 1950. India's GDP (PPP) per capita was stagnant during the Mughal Empire and began to decline prior to the onset of British rule.


Well, African Americans were enslaved, but were also taught valuable skills in cotton agriculture. Having carefully weighed the pros and cons of the two, we've concluded that slavery in the United States was a net wash, and, if we were to repeat the experiment again, slaveowners should not owe their slaves any reparations.

> infrastructure

Infrastructure that was paid for, and built by the people of India.

> medicine

Then why did life expectancy in British India go down during the colonial period? And why were millions of people dying in famines, all the while British India was a net exporter of food, to the rest of the empire?

> industry

How did countries that did not get colonised ever manage to industrialize?

> language

What, did Indians communicate with eachother through chest-thumping, and grunts, before someone had the bright idea of teaching them how to speak English? Christ on crutches... This reads a bit like satire.

You can start the negotiations. If things are ridiculous, bring them back to earth.

"Your grandfather's grandfather owes me money"

Where do you go from there, exactly?

Recent history reparations wouldn't be absurd. For instance, the US should start with the American Indians and then the African slave trade.

How about Russia returning the wealth of the Ukrainian people, the Jews, Tuvans, Tatars, Lithuanians,etc? Will you do the numbers please?

I think reparations are the way to go.

> build junk make bank

that's a useful description for an awful lot of products I've purchased over the last 10 years.

in some areas, this market strategy has prevailed so completely that it's really hard for a consumer to find something that's not junk.

> hugely subsidised mail

I noticed this many years ago when ebay vendors from china were able to sell stuff for less that what one has to pay for shipping

What's the implication here in this context?

It is essentially abusing the UBU to subsidize trade from China. There was an excellent NPR story about it: https://www.npr.org/templates/transcript/transcript.php?stor...

Thank you for that link, I am somewhat that it hasn’t become a political issue given the current environment. Do you know if anyone is trying to address this issue?

US announces intent to withdraw from international postal rate system:


Trump has complained about it publicly and is working to withdraw us while the Democrats spin it as Trump trying to withdraw from a 200-year old treaty - we should fix it instead (but we also tried that once and failed in 2016).

I haven't followed it closely but it is a political issue, albeit a minor one that neither side for whatever reason wants to escalate into a major talking point.

(Not a Trump supporter but maybe on this one...)

It's amuzing how people feel forced to add the "I didn't vote for Trump" when defending his actions that they like. Lest someone think they're monsters. The reality is that business-wise he's actually working hard for America's economy, addressing structural nonsense like the mail post treaty. Why can't that be simply something you support, regardless of who you voted for. Why is it implied that the other party decides whether a position is right or wrong by simply choosing the opposite of what a politician they hate chooses?

“Business-wise”, he’s taking a series of random, poorly reasoned actions, some of which happen to be good. Even a stopped clock is right twice a day.

The parent is saying that Trump is bad on most things, but good on one particular thing. You’re trying to claim that he’s good on most things in a category.

People do this all the time for everything because it's a cheap way to supposedly increase the value of your commentary since you're otherwise allegedly unpleased by the subject. It also lets you pander to the audience with "I'm not one of those people, but...".

For example, you can see "I don't like {Javascript,PHP,Apple,Google,Facebook,$tech,$website,$thing}, but..." right here on HN, frequently.

Your first sentence was alright. Afterwards you injected a political opinion into your comment.

"The reality is that business-wise he's actually working hard for America's economy, addressing structural nonsense like the mail post treaty." is a statement that a majority of the people in the U.S would disagree with.

If you want to make your comment unbiased to one political party or the other, then you should remove that sentence.

Your opinion is unnecessarily spoiling this discussion.

That's an unwarranted statement. I'm just pointing out that you make comments under the guise of being "impartial" and supporting rational debate, when in reality you're clearly biased towards one political party.

Your comment was framed as "why can't people freely talk about which politician they support", which is a fairly neutral statement. But, afterwards, you proceeded to say that Trump has been beneficial for the U.S, which is a partisan statement (that most people in the U.S disagree with as per a variety of polls), and furthermore, you claimed that a vast majority of the people in the U.S would support Trump if it were not for their bias against Trump/conservatives, which is an incredibly subjective and partisan statement (and also plain wrong - because many people just dislike Trump's policies).

I mean, just look at this sentence:

>Why is it implied that the other party decides whether a position is right or wrong by simply choosing the opposite of what a politician they hate chooses?

You claim that people who don't support Trump's policies do so solely because they dislike Trump, instead of considering the fact that many people just dislike Trump's policies because they are just intrinsically bad.

People need to do that for fear of losing their jobs or damaging their career prospects I think. Is it possible to be a Trump supporter at any of these big bay area tech firms? Many of my friends tell me they pretend to be apolitical for fear of being fired, but I don't know how exaggerated their stories are.

As far as I know, the US is making noise about it. I don't know if any real changes have occurred.

US filed paperwork announcing withdrawal. There's, I believe, a two year period that kicks in for renegotiation. So the process of moving as fast as it can right now.

> all global powers starting to put tariffs and trade barriers up

That's a bit of a stretch.

> I think the aggressive trade stance and hard line politics by China might have played a major role.

It's a nice distraction to attack China when the source of such things, in this tale, is a U.S. that has taken those stances to extremes unimagined before Trump took office. The U.S. fetishizes "hard line" and "aggressive", and has underminedh norms stretching back generations and has destroyed the U.S.'s reputation on trade and international relations. And all those consequences are intentional, a nationalist goal.

> China wanting to get away with pretty blatant violations of fair trade

I don't know that they have done more than other countries similarly situated, beyond allegations by the current U.S. administration as a justification for nationalist policies. Some things on this list of allegations are insubstantial, and we could make a similar lists for other countries. Is there any independent basis that China is worse than other developing countries or than other economic powers (they are both)?

> they’ve taken their “build junk make bank” mentality to the world and it can’t last much longer

This is just an empty stereotype unless you can back it up. Many high quality goods are made in China, including some that you may be using. There is nothing wrong with making cheaper, low-quality goods either.

One might say that U.S. financial industry is the leading proponent of "build junk make bank", with by far the most serious consequences.

> Every economy has a plateau then a fall, then a pull back up again

That's not actually how economics works at all. In the real world, perhaps outside the wealthy country you live in that has had good economic management (though the U.S. and others seem to be losing their way), countries do fall and never recover.

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.

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.

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.

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.

Adding context to your comment: https://en.wikipedia.org/wiki/Lost_Decade_(Japan)

> the Japanese briefly gaining and losing control of the NBC/GE conglomerate.

Japan never owned GE or NBC. They bought a 51% interest in Rockefeller Center (where NBC was/is based) in 1989 [1], which is just real-estate. The high prices the Japanese often paid for trophy real-estate and businesses during the bubble years, is often held up as a reference point to the end of the run. China began doing something similar just before Xi came to power, then Xi put a hard stop to it.

[1] https://www.nytimes.com/1989/10/31/business/japanese-buy-new...

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.

Americans and westerners who live or have lived in China are typically more critical about china than those that haven’t. We are the ones who notice the empty buildings and districts, and that mall in Beijing that is never going to attract any stores, or why the apartment buildings we live in is half empty but has a thriving ant tribe in the basement.

If anything, reporting on China by western sources doesn’t get anywhere near the actual situation in China because westeners would never believe it was that crazy. News on China by China already leaves a pretty bad impression.

>the empty buildings and districts, and that mall in Beijing that is never going to attract any stores, or why the apartment buildings we live in is half empty but has a thriving ant tribe in the basement.

>would never believe it was that crazy.

That doesn't sound crazy at all, as I've seen plenty of all that in the US...

China builds useless buildings/cities because it raises the GDP and because it's often the only viable way to raise funds for local governments. The Chinese people invest in useless buildings because it is often the only viable way to invest your savings.

Some of the useless buildings built for buildings sake will potentially be filled as people move from rural areas, but a lot won't.


The American equivalent is useless military hardware, including sometimes hardware the Pentagon says it doesn't even need.

Both approaches are wasteful but which is more so is debatable. Our military Keynesianism throws off R&D dividends that apply to civilian use cases, but people could live in those cities.

A lot of the empty cities/buildings/apartments are way overpriced due to speculation, so the people who want to live in them can't because they're way too expensive and the people who afford to live in them don't want to. That won't change unless housing prices crash, which would be devastating to a lot of ordinary Chinese who have their savings invested in the housing market.

More people are buying their second and third home than are buying their first.

A lot of those empty cities (well, districts actually) don't have jobs anyways, so no one actually wants to live in them. In fact, the only reliable way the Chinese government has in getting people to live in them is to move government offices to the area (so civil servants have to live there at least), and then there are problems as the speculators have already come in. This is kind of what the government is trying to avoid in Xiong'an by disallowing speculators (good luck with that).

At this point, there is no way for the housing market to crash gracefully. Maybe in 2011, but not in 2018. The amount of leverage offered up by Chinese banks this time means that most speculators can't simply wait out a downturn.

We have some of that problem too. The use of housing as a financial instrument is a plague from the pit of hell.

I'm sure most militaries of the world have similar pork.

Rather than generalising about all non-Chinese reporting about China you could comment specifically about what you think is misleading or untruthful about this specific article, that might be more enlightening.

That's odd because I've read/heard a lot of reporting that describes China in broadly the same terms you just did, including on NPR. The New York Times just did a series on the rise of China and how it defied all expectations in the west.

Can you point to examples of untruthful reporting on China from mainstream publications? Sounds to me that you came here with an expectation of how the US media reports on China and you've gone out of your way to have it confirmed, ignoring evidence to the contrary.

> 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.

So, in your view:

1. what's the real story about what's going on in China that's being missed in "untruthful" articles like this, and

2. who's reporting that story "truthfully"?

I also would like to hear answers to these questions, but I suspect OP is another ethno-nationalist that perceives grievance against them for any and all actions.

The number one take away I have from interactions with all too many Chinese nationals, unfortunately.

> but I suspect OP is another ethno-nationalist that perceives grievance against them for any and all actions.

It might be more subtle than that. I know some Chinese nationals who report that their culture is to defend the in-group against criticisms in front of an out-group even if they themselves think the criticisms are true. To not do so is a kind of betrayal. This applies to groups as small as a family up to the whole country.

For instance, that cultural attitude were at least part of the fuel for this controversy: https://www.bbc.com/news/world-asia-china-40013486

It does make it difficult to have open conversations about many topics until you're pretty close.

> The only real problem China is facing is its political system, not its economy.

This how thread is about how that is changing. Also, most don't think politics and economics are separate.

> I have not seen _any_ US media reporting China truthfully

What are they getting wrong?

You can't separate the political system from the economy, the two are deeply intwined in all countries.

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

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.

> 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:






Autocracies don't last as governments, not forever.

Give details.

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

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.

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?

The value of the yuan to what, the US dollar? It's pegged and maintained there using foreign currency reserves. It's occasionally adjusted so I guess it could be considered a "dirty float" if you want to stretch that definition a bit.

Also: https://www.investors.com/politics/editorials/new-study-shin...

The yuan is not fully convertible. It is subject to capital controls and a rate set by the government.

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?

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.

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.

Yes but will China ever make a decent pair of pliers or crescent wrench for export? So far the answer is "No!". We've been inundated with one-time-use tool fluff/cruft for a decade now with no sign of it letting up. Good thing we're raising tariffs.

In contrast, Taiwan-made tools are excellent, on a par with USA-made and European tools. Too bad Taiwan is caught up in the tariffs. But I always look for the "made in Taiwan" label anyway. If its present then I know it will work well. And older tools from Taiwan on eBay are good too.

Yuan is a controlled currency

Also known as the Li Keqian index. Too bad he has been marginalized by Xi.

>are widely known to have a tenuous relationship with reality

So, like the New York Times?

citation needed

they sure screwed up during the iraq war. that's a big notable exception to their general excellence at writing about and discovering important and accurate things.

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.

The field of economics certainly has lots of problems with replication and pseudoscience and pigeon superstition, but I'd like to point out that when large-scale events naturally take decades to play out it's a common effect for people to dismiss it, saying "oh they've been saying that for the past fifteen years, let's just move on already."

Sometimes things take that long. That kind of cognitive bias is making it difficult for our species to do any sort of proper long-term planning or even observation of slow problems.

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

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.

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 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.

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

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

That's true for at least 30 years now.

According to Bloomberg, the last Chinese recession was 25 years ago:


When the inevitable happens, it's going to be catastrophic.

The entire population of young adults in a country of over 1 billion has never experienced a recession.

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.

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.

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.

> 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

This summed up my thoughts exactly. It needed to be done but it would have been more well done by literally anyone else.

Its not just China.

Here in the UK for the first time, i've seen multiple billboards with nothing but scraps on them (they've deleted the adverts by scraping the remnants off)

The advertising industry has continued to grow in the UK so I don't think you can read too much into your anecdote.


Maybe advertisers have shifted their spending to social media?

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?

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.

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

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.

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.

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.

The point isn't that the number is a precise measure of unemployment, but that it's correlated to it and can be used for historical comparisons. That's all. As long as the way it's measured stays relatively consistent over time, we can reason that it measures "something", and track how that changes. Calling that something "unemployment rate" is just a label.

Politician cherry picks number that makes him look good!

News at ten.

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

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

Because people looking for work or in states with bad employment numbers can use it as a crutch.

It's easy to blame the president for the reason your coal job is no longer around, yet as soon as people find employment, those on unemployment are moochers.

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

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.

You mean the Li Keqiang index. https://en.m.wikipedia.org/wiki/Li_Keqiang_index

Thanks for sharing.

"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.

what is so note-worthy about that?

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

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.

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

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

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.

> 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.

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

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


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


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.

> 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.

I agree.

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.

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.

Maybe try finding examples for your conspiracy theories that aren’t old enough to have graduate high school.

The Judith Miller article had a horrible humanitarian toll. It's definitely not a conspiracy theory or something to joke about.

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


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.

Surely the markets took a hit today because the world's financial centers have all been duped by such propaganda. Look, even China-friendly South China Morning Post is in on the con, despicable. https://www.scmp.com/economy/china-economy/article/2178089/c...

On the contrary, SCMP is HK based and can often be seen to publish articles openly critical of Beijing, despite mainland ownership.

(Edit: response to below: Yes, I think "formerly independent" as Wikipedia states is perhaps a good summary of SCMP's status, but I don't follow China media much. Used to read FEER a lot years ago, that was great but switched to a closed model and the best journos (some of whom I know) all left.)

I get that you're in China and that everything's relative, but we are comparing SCMP to other globally respected mainstream news sources, and with that reference point it tends towards Chinese interests. https://en.wikipedia.org/wiki/South_China_Morning_Post#Contr...

SCMP is about as China critical as one gets in the worldwide press. Sure, it’s not as critical as the newspaper owned by Falan Gong (Epoch Times), but it is comparable to any western one.

Even after the Alibaba article, a significant share of China critical articles that make it to HN’s front page still seem to be form SCMP.


1 second on Google to confirm you're wrong about the reporting being political. Also, you must be unfamiliar with American media. They've been posting negative articles about the economy for months, with different publications focusing on different parts of the US economy.

Agreed. These articles about China slowing are if anything begrudgingly positive for Trump. If GP thinks NYT, WaPo, and Bloomberg are lining up to make pro-Trump propaganda... well, clearly not familiar with US Media.

Your 'observation' doesn't seem to match reality.

From what I have read, China has had a huge increase in household debt over the last few years. Perhaps five years ago there where not many Chinese people living with debt, but that is no longer the case. Some have even been calling it a credit bubble

Random article about this I googled: https://www.bloomberg.com/opinion/articles/2018-02-15/chines...

In other regards, I have read about the Chinese Economy slow down in non American sources, such as the Economist. However, I will agree that I see it the most in US media (the WSJ seems to have a pretty negative outlook on the Chinese Economy right now)

/me Googles "bbc china economy slows" Sees that you are wrong on first assertion.

If opinionated is truthy stops reading comment. next

There has been some coverage however it seems to me to be notably less frequent. Maybe because I read too much HN so catch a lot of China articles here from US sources.

(Edit: Reply to below: Domestically there is a common acknowledgement of slowdown versus a few years ago, largely effecting real estate, high end discretionary spending such as luxury malls, and high end restaurants and nightclubs. I have not personally noticed any mass unemployment despite often visiting seasonal worker factory areas - including Dongguan pictured in the article - which would nominally be the first affected. Over the last 15 years, food retail prices have risen ~6-10x, faster than salaries (~3-7x?), but you can still get a good breakfast for under USD$1.)

Gotcha, so what is your opinion living in China? Do you notice it?

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.

Another respondent suggested: 3. Bubble chamber effect.

I'll leave it to you to determine whether your false dichotomy is therefore on the rocks.

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.


Financial Times (UK version of Wall Street Journal) is reporting the same. Let's not build a conspiracy theory and ignore the hard evidence.

Just because there is a coordinated media campaign does not necessarily invalidate the issue being presented. For example, MSM reporting on Venezuela's economy ramped up significantly from early 2016 to coincide with a diplomatic push for regime change. Fast forward to present day, Maduro is stil president but the economy is definitely in a even worse shape. Not to mention a lot of the structural problems were already present before Chavismo so their current position wa made inevitable decades ago.

P.S. Chinese households have already leveraged themselves to the brim in the last couple of years, thanks to real estate speculation. Opinions differ on exact figures but most estimates place average household debt in the range of 80% to 100% of disposable income which is close to that of the USA. The government's finances are in okay shape but the people's are definitely not.

Sure, there are issues and there is definitely a speculatory angle to Chinese real estate. That's not debatable. However, I don't think there's an average Chinese household, and it's hard to interpret these genericized and simplified third or fourth hand statistics and draw any valid conclusions. In short, I don't believe (though do not fully dimiss) random other-language reported numbers reported in tabloid format, rather I am inclined believe the people and my own eyes.

I’ve sometimes wondered if there is a journalistic bubble chamber.

I think this (and an 'English language media on China bubble chamber') is probably far closer to the truth than the "conspiracy" being put forward by others. Quite amused at multiple "Googled so it must be true" responses.

You’d think people would have learned something after Bloomberg’s Super Micro shenanigans.

You're wrong.

Your post actually makes me question why it's on the top? Who's up voting it when a simple google search proves your statment wrong?

Comments start at or near the top, then the voting happens.

My guess, China #1

On another note interesting to see a point of view from someone that lives in China... pretty much what I expected.

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