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China Economy Forum

How long have we been hearing this,
Today: Chinese economy is collapsing...sell sell sell
2 months ago: Chinese economy is stronger than originally thought ... buy buy buy
3 months ago: purchase manager index shows slowdown ... sell sell sell
4 months ago: China to surpass US economy in two months

end result: stock manipulators getting rich, while individual investors (suckers) being played with their money.
 
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Data point to much sharper slowdown in Chinese economy
Data point to much sharper slowdown in Chinese economy - Fortune

You should be more concern of your own economy.

Questioning India’s GDP figures - The Hindu

Excerpt:

March 12, 2015
A post-Budget survey of 189 CEOs and CFOs has found that a majority of them find the Central Statistical Organisation’s new growth estimate of over 7 per cent for 2014-15 to be too optimistic and “too good to be realistic”. That figure is based on the CSO’s new GDP estimates with base year 2011-12, which replace the earlier estimates with 2004-05 as base.

The decision to revise the base year is, of course, routine and in keeping with accepted practice. To take account of structural changes, accommodate new and better datasets, use improved methodologies of estimation and harmonise statistical practices with those adopted internationally, statistical agencies the world over update their estimates. But the scepticism expressed above arises because of the results of the exercise, especially the revised growth rates. As opposed to the impression that has prevailed thus far that India’s growth (in terms of GDP at constant market prices) has decelerated after 2010-11, declining from 10.3 per cent in that year to 6.6 per cent 4.7 per cent and 5 per cent in the three years ending 2013-14, the new estimates point to a rather robust recovery in growth rates.

Thus, between 2012-13 and 2013-14, as compared to a rise in the rate of growth from 4.7 to 5.0 per cent based on the earlier series, the rate rise now takes it from 5.1 to 6.9 per cent. Moreover, advance estimates for 2014-15 indicate that growth for that year is as high as 7.5 per cent. The view that this is not a correct reflection of what has been happening has been widespread. Even the Chief Economic Advisor of the Government of India has suggested that this kind of surge in growth has possibly not occurred, even though there has been a recovery in growth after 2011-12.

Besides the magnitude of the recovery, there are other features of the new National Income estimates that strengthen this scepticism. To start with, while the growth rates of GDP at market prices yielded by the new estimates are higher, the absolute values of GDP at current market prices as per the new series are lower then the corresponding values in the series with 2004-05 as base.

The figures are as much as 2 per cent lower than that based on the old series (2004-05 base) in 2011-12 and 1.2 per cent in 2012-13, while it is marginally lower to the extent of 0.04 per cent in 2013-14. Secondly, while the growth rates from the 2011-12 series are rising significantly over 2012-13 and 2013-14, the rate of investment as measured by the ratio of Gross Capital Formation to GDP has fallen from 38.2 per cent, to 36.6 per cent and 32.3 per cent. This contrary movement in the investment rate and the growth rate points to a sudden improvement in the efficiency of investment that is difficult to explain.
 
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Chinese ppl request for SALARY RISE !
Yes true . But will they get more wages ? Without rise in wage it will hard to live in China. How much is rice imported from Japan ? 160-200 Chinese money ? More or less ? Cause home grown food products are poisoned which cost hardly 60 yuan right ? .

But Chinese are doing right thing by not raising the wage. If they do so it will increase the price of the cheap Chinese goods . Isn't it the only leverage against others countries products?.... So better not to raise .If I were a communist official in china I will do the same. Who will/ can question me ?
 
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Guys, ignore Indian trolls.

Chinese ppl request for SALARY RISE !

Non-supervisory workers in US see no wage gains, while non-supervisory workers in China see a nearly 20% wage gain year on year
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While manufacturing wages in China increased 18% per year over the 5 years from December 2007 through Dec. 2012, US manufacturing wages rose 2.3% per year. While executive compensation in the US averages 200 times the manufacturing wage, in China it is capped at 10 times the average wage. Tell me, which economy is working for it's working class citizens?

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If these trends continue within the coming decade US and Chinese wages will be near parity
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Economic ‘new normal’ does not indicate problems: PBC
By Li Qiaoyi Source:Global Times Published: 2015-3-13 0:33:02

Deposit insurance system set to be launched in first half of year
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Zhou Xiaochuan, the governor of the People's Bank of China, speaks at a press conference on financial reform during the third session of the 12th National People's Congress in Beijing on Thursday. Photo: AFP


China has not changed its stance on its prudent monetary policy, despite having used various tools to adjust liquidity in the market, the central bank chief told reporters on Thursday.

At a news conference during the ongoing annual legislative session, Zhou Xiaochuan, governor of the People's Bank of China (PBC), also said China is moving toward launching the long-anticipated deposit insurance scheme and fully liberalizing the interest rates mechanism this year.

Reiterating that the country's prudent monetary policy has not changed, Zhou said "a 'new normal' [in the economy] doesn't signify a special, problematic situation. Therefore it's unnecessary to propose a shift in monetary policy."

Adding to some targeted easing measures, the PBC has announced two cuts in benchmark interest rates and a broad-based reduction in the lender's reserve requirement since November 2014.

However, the broad M2 money supply (M2), a gauge of the tightness or looseness of monetary policy, remains moderate following the adoption of a variety of monetary tools, a sign that the monetary policy is still within the prudent and neutral range, Zhou said, who is also a member of the National Committee of Chinese People's Political Consultative Conference (CPPCC), China's top political advisory body.

In China, M2 refers to cash in circulation and all deposits.

Addressing concerns over deflationary pressures, deputy central bank governor Yi Gang, who is also a CPPCC member, said at the same news conference that the producer price index in particular, which has stayed in negative territory for the 36th consecutive month in February, reflects a worldwide pressure in the wake of the recent decline in oil prices, major commodities and iron ore.

The consumer price index, the main gauge of inflation, rose 1.4 percent year-on-year in February, up from 0.8 percent in January, official data showed on Tuesday.

The central bank will keep a close watch on the price levels, while making liquidity adjustments within the prudent monetary policy, Yi noted.

"By maintaining a prudent monetary policy, the government has put a greater focus on implementing the monetary policy in a flexible and discretionary fashion," Jia Kang, the former head of the Research Institute for Fiscal Science under the Ministry of Finance and a CPPCC member, told the Global Times on Thursday.

But the possibility of further easing measures such as additional cuts in the reserve requirement cannot be ruled out, Jia added.

In his government work report delivered on March 5 at the opening of the legislative session, Premier Li Keqiang set the M2 growth target at around 12 percent in 2015, adding that the actual supply could be slightly higher depending on the needs of the economy.

The premier's statement that pointed to a possible higher M2 growth already hinted at flexibility in the context of downward pressure on the economy, Lu Zhengwei, the chief economist at Industrial Bank Company in Shanghai, told the Global Times on Thursday.

Lu believes the current monetary policy is on course to lay the groundwork for meeting this year's official growth target.

The February credit growth figures released by the PBC on Tuesday have shown that the new yuan loans came in stronger-than-expected at 1.02 trillion yuan ($162.79 billion), while total social financing added 1.35 trillion during the month.

The increased easing measures thus far will take time to come to fruition, but it still "may lead to an activity rebound in the second and third quarters to help move overall growth closer to this year's 7 percent target," UBS Securities economists led by Wang Tao, said in a research note e-mailed to the Global Times on Thursday, commenting on the credit growth data.

Also at Thursday's news conference, Zhou said the introduction of the deposit insurance system is an important step in advancing the financial reforms and "I personally feel it will be launched in the first half of the year."

On further liberalizing deposit rates, Zhou said "if there's a chance this year, it is likely that the ceiling on deposit interest rates would be removed. There's a very strong possibility."
 
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Yes true . But will they get more wages ? Without rise in wage it will hard to live in China. How much is rice imported from Japan ? 160-200 Chinese money ? More or less ? Cause home grown food products are poisoned which cost hardly 60 yuan right ? .

But Chinese are doing right thing by not raising the wage. If they do so it will increase the price of the cheap Chinese goods . Isn't it the only leverage against others countries products?.... So better not to raise .If I were a communist official in china I will do the same. Who will/ can question me ?
I didn't see any supermarket here to sell any Japan Rice, Thailand rice true.

U might saw news about some Chinese tourist bought Japan Rice during Japan tours ... it does't mean all Chinese need to eat Japan Rice everyday. I often go local supermark to buy some Germany Beers, i also drink more Chinese Beers.

After seeing daily pics compared China with India, i just tell the truth Chinese living condition much higher and they got more salary, if possible we wanna more !!!
 
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I didn't see any supermarket here to sell any Japan Rice, Thailand rice true.

U might saw news about some Chinese tourist bought Japan Rice during Japan tours ... it does't mean all Chinese need to eat Japan Rice everyday. I often go local supermark to buy some Germany Beers, i also drink more Chinese Beers.

After seeing daily pics compared China with India, i just tell the truth Chinese living condition much higher and they got more salary, if possible we wanna more !!!

Chinese officials confirmed it few months ago. But the clearly and cleverly hide the one of the most important factor . I will quote next to this .

China imported more rice last year due to lower prices of imported rice and a rise in high-end demand, a Ministry of Commerce spokesman said Thursday.

Rice imports were very small compared with China's domestic rice output, spokesman Shen Danyang told a press conference while responding to a report claiming that China's rice import surged last year due to consumers' safety concerns.

China imported 2.58 million tonnes of rice in 2014, up 13.6 percent from a year earlier. The amount was only about 1.3 percent of China's domestic rice production, Shen said, citing customs data.

Shen attributed the rising import mainly to price difference between imported and domestic rice and the increase in high-end demands.

"Some high-income customers in China and high-end restaurants had larger demands for Thai fragrant rice and Japanese rice than before," he said, adding that both reasons were market forces.

The Ministry of Agriculture said more than 96 percent of major Chinese agricultural products passed quality tests in 2014, a proof of stable and improving quality.

NOW here is some serious issue which is omitted in mainstream media of China. Which is due to fear factor of poisoning .
As Toxin Fears Grow, More Chinese Are Buying Imported Rice
Jan 28th, 2015 @ 01:03 am › News Desk
↓ Skip to comments

Despite being the number-one producer and consumer of rice in the world, more Chinese citizens are buying rice imported from Japan and elsewhere due to fears about heavy metals and other toxins, according to Reuters.

While the amount of rice imported to China from Japan in 2014 is still extremely small, it was triple the amount imported in 2013.

This news comes on the heels of revelations in 2013 that rice imported to the U.S. from China and Taiwan was contaminated withdangerously high levels of lead.

Other studies out of China in 2013 and 2014 found that 44 percent of rice samples contained excessive levels of cadmium, while 16 percent of Chinese soil was contaminated.

Imported Japanese rice can cost up to 10 times the price of domestic Chinese rice. Some Chinese are buying rice from Thailand as another alternative, though studies have shown significant levels of lead in Thai rice.

According to the Wall Street Journal, China is also importing enormous supplies of rice to meet demand. The country was projected to import 2.2 million tons of rice in 2014, while it produced 143 million tons itself.

The U.S. imports about 7 percent of its rice supply, according to CBS News, though imports of rice and rice flour have doubled since 1999.

In 2011, a study linked rice sold in the U.S. to high levels of arsenic.

China has suffered a series of food safety scares in recent years, some of which have caused consumers in the country to turn to certain imported products over their domestic counterparts, including importedinfant formula and milk.

So Why you want to import 2.2 million tonnes of RICE when you have production of 143 million tonnes. This is not assumption it's the official data of the past.

On China is so rich and India is so poor. Well don't forget the years to passed by. Which was even worst than India . So when China can grow why can't India ? So thanks for u r concerns we are already grown to an extend where TV , bike , freezer , fan, buying gold , doing small part time business is the new poor of India. I have seen the change even when politicians did nothing . So when new government want to work I have no doubt we will be fine ... and growing.

But I still don't belive the data produced by Communist Party controlled Media as 1+1 may not be 2 just because CPC said so . Poverty is still thrives in large numbers in china .
 
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Yes true . But will they get more wages ? Without rise in wage it will hard to live in China. How much is rice imported from Japan ? 160-200 Chinese money ? More or less ? Cause home grown food products are poisoned which cost hardly 60 yuan right ? .

But Chinese are doing right thing by not raising the wage. If they do so it will increase the price of the cheap Chinese goods . Isn't it the only leverage against others countries products?.... So better not to raise .If I were a communist official in china I will do the same. Who will/ can question me ?
china-rice-1024x710.jpg

China%2520-%2520Rice%2520Imports%25202012-220113.jpg

look how small the import of rice from Japan is.

japan%207f3.jpg

Japan import Chinese rice too.

Minimum%20Wage%20Levels%20of%20Selected%20Cities%20and%20Provinces%20%28Yuan%29.jpg

Minimum Wage Levels of Selected Cities and Provinces (Yuan/month)

you actually believe we all have to buy Japanese rice (implying Japan has that much rice to export)?! FYI Japan import lots of Chinese rice too.
by your logic 'communist officials' should've stopped the rising minimum wage level then.:coffee:

So Why you want to import 2.2 million tonnes of RICE when you have production of 143 million tonnes. This is not assumption it's the official data of the past.
cause we consume that much.
 
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Chinese officials confirmed it few months ago. But the clearly and cleverly hide the one of the most important factor . I will quote next to this .



NOW here is some serious issue which is omitted in mainstream media of China. Which is due to fear factor of poisoning .


So Why you want to import 2.2 million tonnes of RICE when you have production of 143 million tonnes. This is not assumption it's the official data of the past.

On China is so rich and India is so poor. Well don't forget the years to passed by. Which was even worst than India . So when China can grow why can't India ? So thanks for u r concerns we are already grown to an extend where TV , bike , freezer , fan, buying gold , doing small part time business is the new poor of India. I have seen the change even when politicians did nothing . So when new government want to work I have no doubt we will be fine ... and growing.

But I still don't belive the data produced by Communist Party controlled Media as 1+1 may not be 2 just because CPC said so . Poverty is still thrives in large numbers in china .
Lol,funny and stupid Indian. I am speechless . I truly wish our COMMUNIST MEDIA can learn more from India media about how to cheat the people and make them feel happiness with lies.
 
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SWS Reasearch

Investment highlights:
Relieving overhang. It is reported that the MOF recently permitted local government debt substitution quota of RMB 1tn, which permits local government to replace high cost debt(with interest rate of 7%) with low cost local government bond(with interest rate of 3%) when they become due. We believe high cost debt may include bank loans, trust loans and local government financing vehicle(LGFV) bonds. The low cost local government bonds may be issued to particular investors like policy banks or commercial banks, which may obtain PBoC relending at low cost. The debt substitution may save interest expense of RMB 40-50bn for local governments, which would relieve their financial burden, and in turn improve banks’ asset quality. Moreover, it could cut the risk free rate in the market, as the supply of high yield but low risk LGFV bonds would decline and more money would flow into low yield low risk government bond. This would lead to lower yield of bonds and then the expected yield of WMP would also decline, which could cut banks’ funding cost and make banks more incentivized to issue new loans to infrastructure investment and home mortgage, lifting economic growth thereafter.

New loans significantly beat. Feb new lending was Rmb1.02tn as compared to market expectation of RMB 750bn, raising the total balance of loans outstanding by 14.3% YoY. We believe the main reason for the unexpected surge in lending is the PBoC’s loosened lending quota and continuous easing policies. In terms of loans structure, the medium- to long-term portion of enterprise loans rose from 39% in 2014 to 45% in the first two months of 2015, implying improving loan demand from the real economy, which we attribute to fiscal policy initiatives. However the medium- to long-term portion of household loans declined from 23% in 2014 to 21% in the first two months of 2015. But we expect to see mortgage recovery following the interest rate cuts when sales season comes. Meanwhile, the proportion of discounted bills fell from 10% in 2014 to 5%, signalling that banks are more incentivised to boost credit as government investment lowers risk premiums.

Brokerage license. CSRC indicated to give broker license to banks but have no detailed time-table. We believe banks may acquire investment bank license in 2015 but the control on brokerage license would not remove in 2015. According to our calculation, investment bank business accounted for 12% of total revenue of brokers while brokerage business accounted for 40%. Basing on brokers’ total revenue of RMB 260bn and a maximum market share of 30%, the investment bank business could contribute additional revenue of 7bn and net profit of 2.8bn for banks, representing 0.2% of their net profits. So we believe the impact would be limited in the near term, but in the long term the broker license may help banks to offer more diversified products to its wide customer base and enhance its non-interest income.

Stock incentive and employee ownership plan may kick off. Such plan of state-owned financial institutions is reported to be submitted to the state council. If the scheme could finally be permitted and launched, the long awaited stock incentive and employee ownership plan of SOE banks would kick off. We believe BOCOM(3328.HK) and BOC(3988.HK) would be the first two pilots. Maintain Overweight sector rating. Banking valuations are currently at 0.81x 15E PB, vs an average of 1.13x leading PB since 2008. We believe there is still room for valuation recovery, given the relieving overhang of asset quality risk amid continuous easing. Our top picks are Bank of Communications (3328:HK), Chongqing Rural Commercial Bank (3618:HK) and China Minsheng Banking Corp (1988:HK).
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Comment on Shambaugh's recent China collapse article.

"They call this "hocus-pocus" snake-oil wagon pitch "China Expertise-China Watching." It started out in Mao's pre -ping-pong diplomacy era in the early 1970s before Nixon shifted from total blockade to lifting "the bamboo curtain."

A genre of China studies academic scholarship or more like "hocus-pocus" crystal ball divination was spawn in America's academia - from Harvard to Yale, Columbia to Stanford, the ivy leagues to the UCs including Berkeley, U of Michigan, Ann Arbor.

The "scholarship" then as now included reading between the lines the People's Daily, Global Times, and all of the English "China literatures, magazines, newspapers" and yes, absolutely, speculate on the line-ups and how officials from Zhongnanhai are positioned and alligned during public sightings, including Oct. 1 National Day, the convening of the National People's Congress, etc. etc.

The scholarship also speculate on body language, body demeanors of Chinese officials, and reading profusely the South China Morning Post, the Economist, and lately the "China-Watching pundits" in the Anglo-British publications. Then, there are "incestuous, self-echoing" chat groups and so-called study groups such as that convened by the late Prof. Richard Baum. And yes, among the Western-Anglo-American mainstream news media "ratpacks" who are parachuted into Beijing and Shanghai, as their bureau correspondents, with their "Chinese-speaking-literate " translators and flunkies, you end up with a whole slew of these "China experts."

Prof. David Shambaugh, who has hitched his star and obtained a "iron rice bowl" sinecure at the power beltway of Pax Americana at the George University in Washington D.C., and is a non-resident fellow of Brookings Institution, a right-wing neo-con think-tank, and a self-proclaimed "PLA expert," is allegedly a well-respected "China Expert" in the alleged "first-tier" of American "China Watching" scholars in the Anglo-British-American network.

And like many of America's "punditocracy" along the tradition of pontificating and divining China from their perches. He has followed the footsteps of many "naysayers" about China. And predicts "China's Collapse."

Whoa........ this is American "China Watching" at its most rabid, most mad-dogged, and "foaming at the mouth." Is recreational marijuana legal in Washington D.C.? If so, it may explain somewhat David Shambaugh's "freak out" from Sinophile to Sinophobe."
 
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sorry cant link article, this might probably addressed most the rebuttals I had in my mind when I read the Shambaugh piece.

Sorry, America: China Is NOT Going to Collapse


The American fantasy that refuses to die...


Chen Dingding
March 10, 2015

In a recent piece published in the Wall Street Journal, The Coming Chinese Crackup , China scholar and George Washington University professor David Shambaugh boldly predicts that the Communist Party of China (CCP)’s endgame has begun. Although, in the past, such brave predictions of the CCP’s collapse have been proven wrong, the fact that such a prediction has come from Shambaugh, a leading China expert, makes it all the more interesting. In a report from China’s Foreign Affairs University, Shambaugh was named the second most influential China expert in the United States. As such, Chinese scholars and officials will take his opinions seriously.

Professor Shambaugh listed five indicators that point to China’s coming collapse. However, a closer analysis of these five points reveals that Shambaugh’s conclusion is based on incorrect facts and flawed interpretations of China’s recent socioeconomic and political developments.

First, he asserts that wealthy Chinese are fleeing China. Actually, this is only half true. While a large number of wealthy Chinese have migrated to countries like Canada, most of them still do business in China, meaning that they are still have a positive outlook on China’s future. In any case, a good number of these wealthy people move their assets out of China to avoid corruption charges, which has nothing to do with China’s future development. Moreover, in recent years an increasing number of overseas students have chosen to come back to China because they have confidence in China’s future.

Doomsday: Preparing for China's Collapse

The second indicator is increasing political repression and CCP insecurity. Actually, not much has changed in this area, compared to the Hu Jintao presidency. The party insecurity thesis is an old argument and one can say that the CCP has always been insecure, especially since 1989. So what is so special about the present that signals the Party’s endgame? Indeed, one can argue that the Party’s endgame is soon, no matter what it does. If the Party opens up, then civil society will rise up and overthrow the regime; if the Party continues to be repressive, it will breed insecurity, which will cause its collapse.

Third, Shambaugh argues that Chinese officials come across as wooden and bored. But many Chinese officials were always like that, so there is nothing new in this observation. It is definitely not something that can support Shambaugh’s “China collapsing” argument.

Fourth, Shambaugh points out there is massive corruption in China. Shambaugh is right about the seriousness of the corruption issue in China. But he neglects to mention that the anti-corruption campaign has been very successful so far, and the main reason for this is because it has the public's support. Corrupt officials know this too, which is why they are unable to fight back.

The American People Aren't Ready for China

Shambaugh’s final argument is that the Chinese economy is slowing. Arguably, this fifth factor is the only new point in Shambaugh’s argument, as the previous four factors have been features of China’s political culture for quite some time. As such, this argument deserves serious consideration.

Shambaugh seems to believe that a slowing economy will lead to widespread grievances, which in turn will lead to civil unrest. This will lead to the collapse of the regime. Arguably, this is what fueled the Arab Spring and may be applied to China today.

However, there are several problems with this argument.

First, China’s economic slowdown is not an economic meltdown. It is true that compared to China’s past sensational growth rate, a six to seven percent growth rate is a slowdown. But which other major economy can grow at this rate? China’s economic growth must be viewed in a relative sense.

Can China Rise Peacefully?

Second, would a slowdown, or even a massive financial meltdown lead to widespread disruption in Chinese society? The answer actually depends on how the effects of the slowdown are distributed throughout society. As Confucius pointed out long ago, Chinese people tend to get riled up more about inequality than scarcity(患均不患寡), which is just as true today. Most ordinary Chinese hate a high level of inequality, especially if such inequality is a result of corruption rather than legitimate hard work. While a severe crisis would lead to a massive loss of jobs and lower incomes, if the U.S. economy survived the 2008 global financial crisis, there is no reason to believe the Chinese economy cannot overcome a similar one.

Third, even if a severe economic crisis hits China and causes greater social grievances, why does this mean that social unrest will automatically lead to an uprising against the regime? In other words,, this claim is premised on the belief that the Chinese government’s legitimacy relies solely on economic performance.

Unfortunately this assumption, though widely held among scholars, is no longer true. Economic growth is certainly important for most Chinese people, but education, the environment, corruption, and legal justice matter just as much as growth. As long as the Chinese government seriously tackles problems in those areas, support for the CCP will remain high. This explains why the Xi administration has initiated bold reforms in all these areas.

Finally, even if there is political unrest will it necessarily topple the regime? This depends on the balance of power between the government and the dissenters. Where is the political opposition in China today? Does the political opposition enjoy the widespread support of ordinary Chinese people? Is there any leader who might want to play the role of Gorbachev? None of these factors exist in China.

In sum, in order to make the argument that an economic slowdown would lead to regime change, one would have to make the argument that all of the above factors would come into play. Yet, Shambaugh’s argument does not demonstrate this. Indeed, a slowing economy is actually bringing several benefits to China. A slower but stable growth rate would mean less pollution, fewer land-grabbing incidents, less corruption, less energy consumption, and lower socioeconomic expectations, all of which lead to reduced social tensions in China, decreasing the possibility of a regime collapse.

Implicit in Shambaugh's argument is the claim that China and the CCP will collapse unless they adopt Western-style liberal democracy. But he never attempts to answer a simple question: is Western-style liberal democracy what most ordinary Chinese people want?

As Orville Schell and John Delury point out, wealth and power are the two things that most Chinese people have pursued throughout the last century. Today, with China’s rising power and influence, international respect can be added to this duo.

Do the Chinese also desire liberty, democracy, human rights, and so on? Of course they do. My own research, which will be presented in a forthcoming article based on survey data, shows that even among the most liberal Chinese, the desire for liberty and democracy quickly weakens as long as the Chinese government does a good job of tackling corruption, environmental pollution, and inequality. Democracy is seen as a means, rather than as an end.

Research done by late professor Shi Tianjian also shows that Chinese culture still favors authoritarianism even as people also desire democracy. Through this context, we can understand that Xi Jinping has become so popular among the Chinese masses because of his bold reform measures, which range from soccer-reform to overhauling state-owned enterprises. Even in the area of political reform, Xi is proceeding steadily as consultative democratic mechanisms will soon be implemented at various governmental levels. Thus, it is no exaggeration to say that Xi has been the most creative leader in the last three decades. If anything, the level of support for the CCP is higher now than it was in the last decade. Ignoring this reality seriously misreads Chinese politics today.

Then, why do so many Western analysts not see this reality? What do Shambaugh’s article and similar writings reflect about the mentality of some Western thinkers and analysts?

Perhaps implicit in such arguments is the collective worry or fear that China will continue to become stronger, more prosperous, and more assertive in international affairs. The West has not prepared for a possibility where it is no longer the dominant force in the world. After the Cold War, many Western democracies have adopted the triumphal “End of History” thesis.

However, now that a strong and authoritarian China has emerged, one not compliant with the standard “liberal democracy model” advocated by the West, it is seen as a threat. The “China threat” narrative is understandable, as people tend to fear something they do not understand or that looks different. And China today is a great “other,” but because it is strong, it is more threatening than a weak “other.” A strong China causes cognitive dissonance among many Western analysts because according to their theories, an authoritarian China should be weak. This explains the selective reading by Western scholars of China’s political reality.

Therefore, Shambaugh’s argument is seriously flawed due to its problematic logic. However, this does not mean that there is no merit at all in his piece.

For one, Shambaugh rightly reminds us that China’s political system can be quite unstable despite the appearance of stability on the surface and efforts at reform. China’s political system does need to be more open, more inclusive, and more democratic; and it will someday. The ultimate outcome of Xi’s ongoing reforms remains to be seen. Nonetheless, all existing indicators point to the development of a stronger and more effective system of governance within China. Instead of a quick collapse, a mighty, confident, assertive, and authoritarian China will be around for quite a while. As such, discussion about China should take this reality into account, rather than imagining the victory of the West’s vision for China, however uncomfortable this may be.

Dingding Chen is an assistant professor of Government and Public Administration at the University of Macau and Non-Resident Fellow at the Global Public Policy Institute (GPPi) Berlin, Germany. His research interests include: Chinese foreign policy, Asian security, Chinese politics, and human rights. He can be found on Twitter at @ChenDingding.
 
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David Shambaugh's China collapse theory
By Heiko Khoo
Last week the Wall Street Journal published an article predicting the collapse of China. There's nothing new about that. What stands out is the author, David Shambaugh. He is one of the world's leading sinologists and, until recently, he regarded China as stable.

His 2008 book "China's Communist Party, Atrophy and Adaption" is the best Western study of the contemporary party. The book compares Chinese and Western research on the causes for the collapse of the Soviet Union. Whereas Western scholarship focused on specific political actors and events, Chinese research concentrated on fundamental and systemic problems rooted in Soviet history, particularly the distortion of Leninism during the Stalin era. The CPC's assessment of this question enhanced its adaptive and governing capacities.

Shambaugh openly mocked scholars like Gordon Chang who spent his career predicting China's collapse. Now Shambaugh suffers from the same sense of impending doom and is keen to make up for lost time. So, as he wades into this murky battleground, he loudly proclaims the omens of millenarian change. The "endgame of Chinese communist rule has now begun," the system is close to "breaking point" and we are "witnessing the final phase."

Shambaugh cites five reasons for his theory of collapse:

The first is increasing discontent among the economic elite. He cites surveys that show that most of China's super rich would like to emigrate. Actually this has been the case for years. Many of them emigrate for personal reasons but others do so because they worry about the security of their wealth. China's Communist Party is not controlled by a private economic elite; its purpose is to serve the mass of workers and peasants. In the USA private economic interests dominate politics and society – something Shambaugh evidently sees as right and proper.

The second reason that Shambaugh cites is defence of socialist ideology and the state against Western constitutionalism. He describes the idea that the United States is working to "subvert Communist Party rule" as a conspiracy theory. But recent events in Hong Kong illustrate that such conspiracy theories can actually have a solid foundation. Most Western politicians and media outlets supported calls for a "democratic revolution" and leaders of the Hong Kong movement were backed by front organisations of the U.S. state. The idea that the Chinese people are kept in ignorance is risible. Since the 1980s Chinese citizens have had access to a vast and diverse range of ideas and publications. In the last 10 years global travel and the Internet have generated a flourishing intellectual and cultural life.

In third place on Shambaugh's list is formalism in official circles. The problem here is that the only evidence he offers is anecdotal and subjective. He says he attended an academic conference that he found boring and, apparently, the bookshop of the Central Party School holds too many copies of Lenin's selected works. Xi Jinping's promotion of the "mass line" to ensure the party serves the people and shares in their hardship is dismissed out of hand. But let us remember that Shambaugh thinks that the party should not be serving the masses but rather the private economic elite.

Fourth on the list is the campaign against corruption. Shambaugh accepts that the campaign initiated by Xi Jinping "is more sustained and severe than any previous one" but he claims that corruption in China is endemic to the system. So in order to stamp out corruption China needs to adopt Western democracy, a privately dominated economy, private media and create a legal system that serves private interests. The scale of corporate corruption in U.S. politics, banking and business is naturally beyond the remit of Shambaugh's article.

It is quite clear that the anti-corruption campaign in China boosts the popularity of the CPC and of Xi Jinping. It is also clear that the mass of Chinese people stand fully behind this campaign. Shambaugh's begrudging acceptance that the campaign is substantial can be ascertained by remembering his first love – concern for the fate of super rich economic elites.

Finally, Shambaugh claims China's economy is stuck in "systemic" traps. Naturally, this fits into his overall complaints that state owned industry is to be blamed for holding China back – from "systemic" change to capitalism!

Some years ago Shambaugh bemoaned the fact that modern sinology tends to be more and more about less and less rather than addressing grand problems and questions. But his latest attempt to generalize and universalize has produced a rather poor result. He looks at China's politics without considering society as a whole. However, the mass of urban and rural workers and peasants need to be part of any objective assessment of China's political life. Shambaugh's work excludes the masses from anything more than a bit-part role.

Communist Party rule is based on its capacity to conquer and sustain support from the masses. This necessarily entails using public property in the form of state-owned enterprises to serve the needs of the people and recognizing that fighting corruption also involves stamping on the feet of corrupt tigers in elite circles.

China's economic planning is based on state investment in infrastructure. This has focused on urbanization, to bring general improvements to new urban inhabitants. Real and palpable progress in the living standards and life expectations of hundreds of millions of people must take priority over the interests of private economic elites. The battle against corruption is central to the campaign to ensure that cadres and party members serve the people.
 
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'New normal', new world
March 16, 2015

China's cooling growth prospects are expected to shift the economic agenda away from the eurozone, although Greece remains firmly in the spotlight because of its precarious funding outlook.

China is expected to provide further hints of the challenges it faces after the world's No 2 economy depicted its "new normal" during this month's annual meeting of the National People's Congress-a growth target of 7 percent for this year, the lowest for quarter of a century.

Retail sales rose 10.7 percent year-on-year in January-February, the lowest pace in a decade, said the National Bureau of Statistics. Fixed-asset investment, a crucial driver of the Chinese economy, rose 13.9 percent, and the industrial output grew 6.8 percent, the weakest expansion since late 2008.

As Chinese leaders are developing a more balanced longterm growth model, keeping the breakneck economic expansion of recent decades in check, all eyes will be on the reforms they are expected to outline further this year.

"Asia will be firmly in focus," Standard Chartered analyst Madhur Jha said. "The (Chinese) government is likely to emphasize the need for deeper structural reforms to ensure more sustainable growth, even if it is likely to be softer in the near term."

As markets digest China's warning shots, the eurozone's ups and downs will not be far from investors' minds.

A four-month respite for Athens after it extended a bailout program has done little to ease concerns that Greece may face a cash crunch before then.

Its funding options took center-stage at a March 2 meeting of eurozone finance ministers, who discussed the economic reforms that Athens hoped would help it unlock some financial aid from international lenders.

The government sent an updated list of reforms to Brussels on March 6 and said it wanted to start talks with lenders immediately on concluding its bailout and a possible follow-up deal. It also repaid part of an International Monetary Fund loan that falls due this month.

With Greece insisting it has breathing space, the Eurogroup session is unlikely to prompt any key decisions on Athens' next steps. Worries about the country's prospects beyond June are adding to tensions, however, as European officials wrangle over the chances of a third rescue package.

Greece's travails come against a rosier backdrop for the eurozone, after the European Central Bank, which kicked off its $1 trillion government bond-buying plan last Monday, raised growth forecasts.

Industrial production figures for the single currency area are also expected to support this encouraging picture, rising slightly after a year-on-year fall in December, and echoing a strong start to the year for German output.

Firmer United States consumer spending would further support expectations the Federal Reserve is braced for a rate hike as early as June, following a sluggish start to the year even after a drop in fuel prices.

Retail sales excluding automobiles, gasoline, building materials and food services-"core" retail sales, considered to the best gauge of households' spending patterns-edged up only 0.1 percent in January.

The United States employment accelerated in February, with non-farm payrolls rising a higher-than-expected 295,000. "Such a blockbusting rate of job creation will encourage the Fed to be more aggressive," said David Lamb, senior dealer at foreign exchange brokerage FEXCO.
 
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