Hello to my Chinese friends. I have some experience of interacting with the Chinese on economic matters, both on PDF and other for a. Here is my experience in this regard.
This is the Chinese playbook:
- First, they will narrate how the Great Middle Kingdom has such high GDP. To which, the obvious reply is “but your numbers are all a sham, so how do we know what your real GDP is?” This will make them see red. Then they will quote statistics showing how super-duper fast their country has grown in the past thirty years. This will be liberally sprinkled with benign comments like “in the past 30 years China has lifted 500 million people out of poverty” and “In the past 20 years China has added as many people as the population of the United States to its middle class” and so on, along with a liberal helping of official stats. To which the reply is “but hardly any foreign visitors have been beyond the eastern coast cities, so how do we take your word for it?” This will beckon a furious denial, including statistics for tourist inflow, and more official statistics showing how well-off the inland provinces are.
- Then, we move on to quasi-anecdotal nonsense. Having met a cold response to their call for accepting Chinese suzerainty on the basis of GDP numbers, they will initiate phase two. Here, they will inundate you with images and statistics of poverty and underdevelopment in your own country. If you are not from India, then they will tell you that the Western Capitalist System has failed and they are coming over here to take it over and cleanse it. Of course, if you are an American you simply laugh it off and continue to badger them about their concocted stats. Indians, of course, may be put on the back foot a bit. They will pause to address the allegations and may even lose the initiative a bit. But here’s the funny part. The Chinese do not stop answering the initial allegations. They keep bombarding you with graphs and pie charts to show growth. Why do they do that? I will get back to that later.
- Phase three has two distinct aspects. On one hand, the facts and figures to prove destitution and failure in your country will be intensified. Figures for malnutrition will be quoted, photos of poor people will be shown. Indian cities are filthy and dirty – that’s the bottomline. The other initiative will be to highlight the achievements of Chinese companies in exports and trade. Special mention will be made of the foreign exchange reserves and trade surplus. So the obvious counter to that is “China has over-invested in legacy, export-driven industry that will face an inevitable downturn as demand contracts and low-end manufacturing moves to even cheaper (lower labor cost) destinations. Plus the self-evident fact that they have made so many industries loss-making by over-production (steel, cement, solar panels, chemicals) that many of these export oriented companies are only kept alive due to lending by Chinese banks. They are in a race to over-produce and make no profits. If left to market forces, these companies (mostly SOEs), will go belly up in six months.”
- The personal attacks would be well underway by now. If you are Indian, you must be a Vedic/Hindu nationalist, and if American, then you are a redneck Neo-con. Then comes my personal favorite, which I call “China build road and China build rail.” Part of the Chinese Ponzi includes extensive infrastructure building. Circa 2008, when the world economy was contracting, China did its own version of the New Deal – the government hiked up spending on infrastructure projects. So the Chinese now have spanking-new infrastructure all ready to meet the demands of an economy which is claiming to do a u-turn from export to consumption. So they will spout statements like “In the past 30 years, tens of thousands of miles of expressway and 18 thousand KM high speed rail ways have been built across China , and this achievement is cherished by Chinese people cross all walks of life, and is the envy of entire civilized world”. The high speed railway (which they stole from Siemens and ThyssenKrupp) they are particularly proud of. One could counter this by saying, “firstly, the over-investment in infrastructure was done with certain growth projections in view. Considering that these growth projections are now increasingly proving to be false, what’s all the infrastructure for? Secondly, with the pivoting away of emphasis from export-driven manufacturing to domestic consumption, much of this infrastructure (which was geared towards meeting manufacturing needs) stands useless. And since almost all of it was financed through debt, how exactly will it now be repaid?” This will bring forth invariable attack in the form of claims that one is ignorant, etc. etc. etc.
- There is a final phase of the economic debate with Chinese propagandists. Lately, they have taken note that high-end technology is of essence. Earlier, they used to believe that they can steal their way around all the IP restrictions, but of late, they understand that developing new technology and R&D is more important than delivering jobs in infrastructure and sweatshops. So they have taken to advertising their advances in technology. These are usually in four areas – telecom equipment, internet companies, high speed rail and supercomputers. In the first, they have made undoubted progress. Chinese companies are world leaders in the telecom industry. But here again, thanks to their inevitable over-supply, profit margins are abysmal. As far as internet companies go, they have hits and misses. Sina Weibo is good, I don’t know much about Baidu, Alibaba is overhyped and the stock price has underperformed majorly. The rest are a motley collection of malware proliferating start-ups that have no credibility outside China. The high speed rail is a promising area, no doubt. Regardless of the fact that they stole it from German companies, they may develop a decent market in countries looking for cheaper alternatives to that offered by the Europeans and Japanese. As regards supercomputers, adding together lots of processors is fine, but not the cutting edge of technology. The cutting edge of technology lies in the latest advances in genetics, nano-technology and robotics. Chinese companies are nowhere in the picture in these areas. The collapse of labor-intensive manufacturing due to the increased IT component in manufacturing, as well as use of robotics, is going to hit the Chinese particularly hard.
- The last point I would like to mention is that why do the Chinese defend their economic performance so vigorously? Why don’t people from liberal democracies get so riled up while speaking about their economic achievements (or lack thereof)? Part of the reason, of course, is that they have become jittery with all the bad news about the economy. Last month’s Shanghai stock market purge didn’t help their confidence either. Those who use proxy-servers to scale Baidu’s firewall see the internet littered with speculation about the impending fiasco in their economy on a daily basis. But there is a deeper reason for this mindset. They have been emotionally scarred by their brutal experience under the CPC dictatorship. They have foregone political freedom, freedom of expression and democracy. They watched Mao and his henchmen conduct genocide in the name of the Great Leap. They witnessed their ancient heritage being dismantled as part of the Cultural Revolution. The price, in the form of human suffering, brutal suppression of dissent, environmental damage, rural displacement, etc., that they have paid in the name of economic development has surpassed anything in human history. So, at the end of the day, they hope that all of it better be worth it. If you take away their economic achievements, what are they left with? They threw away freedom, democracy, history, human rights, all in the hope that it will lift them out of poverty and propel them forward as a great power. If you assail that hope, you attack their sense of identity like nothing could.
How about I give you another source to look at:
China’s Total Debt Load Equals 282% of GDP, Raising Economic Risks - Real Time Economics - WSJ
Clearly states that China's total debt at 282% of GDP is more than that of the US. Cherry-pick info all you want.
In the first half of this year alone, the Chinese regime has swapped high-interest debt owed by local governments with low-interest bonds. This is the first step towards a write-off. You are an ignorant lout who knows little, and talks much. The guy is right, and you are wrong.
