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The Chinese economy — 17 Comments

  1. They are also changing the composition of their military, reducing land Army for more Navy and Air Force (which includes space). Also upping cyber units. They still have way too many young men vs women. Their demographic curve is also not good.

  2. This is going to play heck in countries that are heavily dependent on selling raw materials to the Chinese gov’t. (see Australia) They’ve slowed their buying…as their production economy contracts toward a consumer economy.

    Have you sent a “Thank you” email to President Trump today?
    He rightly foresaw that economic leverage was the best weapon.
    Where this all plays out…I don’t think anyone knows, but the comprehensive re-direct in China is interesting to say the least.

  3. “China is rapidly becoming the next US”.
    That is true, and applies to much more than the growth of China’s domestic consumerism.
    China will be the world’s Superpower fairly soon. They have gobbled up large chunks of sub-Saharan Africa for essential and critical metals, have seized and militarized the South China Sea ( a critical world trade waterway), have infiltrated US academia with their gov’t-funded Confucius Institutes, and enjoy the fruits of our nation of Walmart shoppers. They engage in spying and the looting of industrial secrets on a scale never before seen. Huawei is a prime example.

    I was in Hobby Lobby today looking for a cheap picture frame, found a lot; every product I scrutinized, not just frames, was “made in China”.

    A China Superpower obviously will be bad, and it will endure, especially if Democrats again seize the Presidency.

    As to Chinese demographics, China has about 30 million excess young men to use as cannon fodder. If they just link arms and fix their bayonets, they can march all the way to Moscow like a plague of locusts.

    Tell your kids to learn Mandarin!

  4. In fact, China’s population collapse will have a very negative effect on its economy. The number of persons reaching age 21 this year will be about 15 million. Ten years ago it was 22 million.

    Most population experts anticipated that China’s population will go down starting in the 2050s (see Jonathan Last’s “What to expect when no one’s expecting” for example). But it appears that China actually LOST population in 2018: https://www.japantimes.co.jp/news/2019/01/04/asia-pacific/social-issues-asia-pacific/chinas-population-shrinks-first-time-70-years-despite-two-child-policy-experts/#.XEj7-PZFw6S

    And it is not likely to recover: “The number of women of child-bearing age is expected to fall by more than 39 percent over the next decade, and China’s two-child policy isn’t enough to shore up declining birth rates” (from that article).

  5. Cicero,

    Advances in Artificial Intelligence (much closer than most imagine) robotics and 3D printing are in the not so distant future, a mortal threat to China’s cheap labor. That will cut off China’s export market. There is no substitute for a large, fiscally strong middle class, nor societal suport for individual inventiveness and entreprenuerial incentives.

  6. I knew that China was hoping that their consumer spending would gradually increase as a fraction of GDP, but had no idea it had exploded so. While I don’t think their GDP has shrunk, it certainly isn’t growing as fast as it was a few years ago. So the numerator, consumer spending, has been growing much faster than the denominator, GDP.

    There are some interesting charts in the ZeroHedge piece. Chinese holdings of US Treasury debt has declined slightly from its peak, but not much. Interestingly, those debt holdings showed a sharp decline in the lead-up to the 2016 election, and then jumped way back up after Trump was elected.

    The total foreign investment into China has jumped up greatly in the last 3 years. I’m guessing this is stock buying, and maybe corp. debt? But the chart of foreign purchases of China gov. debt is way down.

    I’d guess that a real concern of wealthy Chinese individuals is saving even more cash and putting it in gov. debt, then having the gov. stiff them when the economy turns south. There’s not a chart of that, but clearly if consumer spending is way up, citizens aren’t saving as much.

    Those are some big positives and negatives. It could be a positive maturing of the Chinese economy, or it could be indicative of some shakiness or a mixure.

  7. Roland:

    One of the consequences of the two child policy and the selective abortion of females (cultural pressure for male heirs) which has skewed the male/female ratio is that there are fewer women to have children now and in the future. A demographic death spiral?

  8. It isn’t just China with a major doughnut hole approaching in its population. Most of the Asian nations, especially S. Korea and Japan, show a similar pattern. Growth in the workforce is a big piece in the formula for economic development, and none of these countries will have any; their workforces will be shrinking. This will be true for at least two, and maybe more decades to come. A very different picture than we are used to.

  9. China’s two-child policy isn’t enough to shore up declining birth rates” (from that article).

    Another trend I have noticed from personal experience is that Han Chinese women are marrying non-Chinese men. Several of my daughter’s friends and several medical students all showed that this is happening. This was unheard of until yesterday, historically. Han Chinese were a clan and did not marry out of the clan. I wonder if it is rebellion by these women who resent the emphasis on male children?

    A friend of my daughter’s was teaching English in China and began a relationship with one of his students. She followed him to the US when he came back for grad school and they got married. My Chinese medical student was married to a man from Chile, I think. She told me she had come to the US for medical school so she could care for her parents when they got old. She said there was no reliable system for care of the elderly in China. That was ten years ago.

    Chinese men are having trouble finding Chinese wives and the women are marrying foreigners.

  10. The Chinese leadership is certainly taking steps to methodically expand outward, to gain footholds in other countries and on vital sea lanes, to expand it’s military and Navy, to create the conditions and infrastructure to take over as the number one superpower, and is implementing its decade’s long “One Belt,One Road” program to do so.

    From what I have read, though, my impression is that China ‘s former one child policy has created a major problem, tens of millions of fighting age males–many of them without mates, without jobs, or prospects.

    There have been a few stories over the last few years reporting that many of these young, out of work men have come from the countryside to congregate in cities, looking for work, and that they have sometimes been causing a lot of disturbance, and that the authorities have had to try to disburse them.

    And that’s just one of China’s problems.

    It seems to me that China has many different–and serious–problems that make the prediction that China will overtake the U.S. and become the dominant superpower far from guaranteed.

  11. Mike K
    Another trend I have noticed from personal experience is that Han Chinese women are marrying non-Chinese men. Several of my daughter’s friends and several medical students all showed that this is happening. This was unheard of until yesterday, historically. Han Chinese were a clan and did not marry out of the clan.

    That depends. In grad school I had some Chinese roommates. Very clannish- only socialized with other Chinese. On the other hand, an elementary and high school classmate of mine had a Chinese mother. A US Navy officer stationed in Taiwan married his translator.

    In high school I worked the counter at a greasy spoon that three Chinese-American brothers owned. One of the brothers had a white wife.

    I can understand the Chinese women not wanting to marry a Chinese man, as many of the male children in China in the mandated one-child families have been raised as “little kings.” That would be hard to take for their wives, I would think.

  12. Stratfor has had several pieces on the unrest in western China. The prosperity is along other coast.

    here is one of their articles about China and debt.

    On Aug. 15, the Sixth Division of State-Owned Asset Management, a military-affiliated company in western China’s Xinjiang region, said that it had made up the repayment of bonds worth 500 million yuan ($73 million), two days after it missed the deadline to repay the loan that could have left the company in default. According to a statement, the local government financing vehicle (LGFV) made the overdue principal and interest payment on the morning of Aug. 15, narrowly escaping the fate of being the first government-linked financing vehicle to default in a decade.

    Everything is owned by the PLA.

  13. If I remember correctly, its been reported that there are PLA owned/controlled businesses here in the U.S., and that some of them have been suspected in engaging in electronic industrial and/or military espionage.

    The Chinese have been stealing us blind for decades, helped along, in some cases, by corrupt kleptocrats like the Clintons.

    You might remember that, back when Clinton was President, in 1999, Clinton OKed China launching one of our communications satellites, thus giving the Chinese the opportunity to inspect/gain access to some of our technology.

    Prior to that, Clinton and the Democrats got large campaign contributions, funneled through middle men, from the Chinese and, in return, Cljnton relaxed the restrictions that had been placed on all sorts of U.S. technology transfers that had military applications.

    One such new transfer during the Clinton Administration was of supercomputers, which obviously had all sorts of military applications.

    See , for instance https://capitalresearch.org/article/flashback-bill-clinton-gave-china-missile-technology/ or https://dailycaller.com/2016/09/02/flashback-bill-clinton-collected-donations-then-us-missile-tech-shipped-to-china/ or http://eagleforum.org/psr/1998/june98/psrjune98.html

  14. If I remember correctly, its been reported that there are PLA owned/controlled businesses here in the U.S., and that some of them have been suspected of engaging in electronic industrial and/or military espionage.

    The Chinese have been stealing us blind for decades, helped along, in some cases, by corrupt kleptocrats like the Clintons.

    You might remember that, back when Clinton was President, in 1999, Clinton OKed China launching one of our communications satellites, thus giving the Chinese the opportunity to inspect/gain access to some of our technology.

    Prior to that, Clinton, their Foundation, and the Democrats got large “campaign” contributions, funneled through middle men, from the Chinese and, in return, Cljnton relaxed the restrictions that had formerly been placed on all sorts of U.S. technology transfers that had military applications.

    One such new transfer during the Clinton Administration was of supercomputers, which obviously had all sorts of military applications.

    In another instance during the Clinton Administration, a defense contractor with strong Democrat connections reportedly had its scientists explain to the Chinese why their missiles were blowing up on the pad, this transfer of U.S. missile technology helping the Chinese improve their ICBM force, that directly threatens the U.S.

    And on and on.

    See , for instance https://capitalresearch.org/article/flashback-bill-clinton-gave-china-missile-technology/ or https://dailycaller.com/2016/09/02/flashback-bill-clinton-collected-donations-then-us-missile-tech-shipped-to-china/ or http://eagleforum.org/psr/1998/june98/psrjune98.html or https://fas.org/sgp/crs/nuke/98-485.pdf

  15. Cicero said

    “As to Chinese demographics, China has about 30 million excess young men to use as cannon fodder. If they just link arms and fix their bayonets, they can march all the way to Moscow like a plague of locusts.”

    Just so. This may explain why China is suddenly becoming more and more belligerent.

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