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Before freaking out about CHINA IS DOOMED, look at the historic record. From 1957 to 2017, per capita GDP in China grew from $68.24 to $8830.17. That's over a
by beat 8y ago
Before freaking out about CHINA IS DOOMED, look at the historic record.
From 1957 to 2017, per capita GDP in China grew from $68.24 to $8830.17. That's over a thousand times more productive. You can angst about faked numbers or whatever all you like, but the trends are plainly obvious here. China's economy has grown consistently at an extraordinary rate for a long time now, and there's no obvious evidence that a collapse is just around the corner.
- taurath 8y agoIn case anyone was wondering, $68 in 1957 is equivilent to $607 in 2018.
- AnimalMuppet 8y agoAnd it was over a hundred times more productive (rather than a thousand), even with the original numbers. With the inflation-adjusted numbers, it's over ten times more productive. (Still nothing to sneeze at...)
- beat 8y agoThe numbers were already inflation-adjusted. Even given my percent-vs-times goof (my bad), the Chinese economy is 130 times more productive than it was 60 years ago. People are assuming the numbers weren't inflation-adjusted because it's so hard to believe. But it's true.
- doctorpangloss 8y agoAt what real economic cost? GDP, we’ve discovered, is an accounting method that doesn’t account for climate change, for example. Maybe that doesn’t agree with your politics. How about all the people harmed by China’s wars? What about its own victims, like victims of the Great Leap Forward? The latter happened within its borders, but that reduces the denominator. A one child policy reduces the denominator too. What would China’s population be today, its per capita GDP, if the denominator was larger? Fine, don’t angst about faked numbers. But do you seriously believe that the GDP per capita isn’t massively hacked to the benefit of the CPC? And even then, is the average Chinese still being below the American poverty line something to celebrate? Just because the number has grown doesn’t mean it would not have been higher in a free society.
- ep103 8y agoyou're arguing a different argument. China today is better than China yesterday is a fact. Their economy is growing, rapidly, and life is improving for the average Chinese person. This is also true. Your last statement, that China would have improved under a different (better) organizational system might also be true (its one I happen to agree with). But that does not, in any way, mean the previous paragraph of this response is any less true.
- joefranklinsrs 8y agoWhat an odd comment to make :) It's true you can ignore all economic reality and focus on growth (fake or real). But history time and time again has shown that NOBODY escapes economic reality. Nothing goes up forever. "Debt, we've learned, is the match that lights the fire of every crisis. Every crisis has its own set of villains - pick your favorite: bankers, regulators, central bankers, politicians, overzealous consumers, credit rating agencies - but all require one similar ingredient to create a true crisis: too much leverage."
- berbec 8y agoWho's that quote attributable to, with a link if you have one? It's brilliant.
- tim333 8y agoI'm not sure it's that odd a comment - I've seen arguments that China is going to run into problems with too much debt, poor infrastructure projects and the like for 30 years or so and it so far hasn't really happened. There are a number of reasons why: Firstly as mentioned there has been a lot of real economic growth. I was there around 1983 when GDP per capita was about $300, there were almost no cars and hardly enough food. Now they are the worlds largest economy by PPP GDP with 4WDs, air pollution and the like. Secondly the debt is mostly in Yuan which the government can print. 3rd world countries typically go bust when they borrow in foreign currency. With China I believe it's the other way around - they hold a lot of US bonds so the US effectively owes dollars to China, not the other way around. Thirdly the socialist system for better or worse means the government can just delay paying debt. In the west if developers borrow billions to build empty flats them and or the banks that lent to them go bust, in China they just give them another decade to pay. This can lead to misallocation of capital - all the resources going to useless empty flats rather than productive stuff but seeing the first point about GDP it can't be too bad. The above is economic reality. Some stuff does keep going up - entropy, US GDP per capita with occasional blips and maybe Chinese GDP with blips also.
- seanmcdirmid 8y agoNo one significant is predicting a doom/collapse (which parent didn’t mention either, so I guess you are just putting out a red herring), but China is definitely due for a crash/financial crisis to wash out all of the economic bad blood/distortions that has accumulated from its rise. There is plenty of evidence that the real estate market will go bust in the next few years. China could get stronger after a crash as it’s economy gets dosed with realism, or depending on how the government manages it, it could be in for a Japan-style lost decade or two.
- A2017U1 8y ago>No one significant is predicting a doom/collapse No one significant predicted the biggest economic collapse since the great depression either.
- seanmcdirmid 8y agoThe Great Recession was nowhere near a collapse, it was a crash/recession, even the depression wasn’t really a collapse, the USA clearly recovered from it within a decade. A collapse is like Venezuela ATM and Zimbabwe before. Collapse precludes a recovery in the near term, and means some sort of government or dynastic change. Collapse language is used in contrast to a much normal crash.
- fspeech 8y agoAnd crashes do happen a lot in China. Just recently there was the P2P lending crash.
- seanmcdirmid 8y agoYa, and obviously the stock market. But none of these have been big enough to cause a full blown financial crisis. China hasn’t had one of those since the 90s.
- fspeech 8y agoThey do some bloodletting to let off some pressure from time to time. This pushes the full blown crisis further down the road. However this time they are in an obvious bind over the real estate price boom and there is no easy way out.
- tasty_freeze 8y ago> From 1957 to 2017, per capita GDP in China grew from $68.24 to $8830.17. That's over a thousand times more productive. 8830/68 = 130, not 1000. And is that $68 in 2018 dollars or 1957 dollars?
- michaelmrose 8y agoGoing on the likely answer that its in 1957 dollars that is $595 in 2017 dollars. Instead of being 1000x more productive its 15x more productive in 60 years. In the same time frame the US increased per capita GDP by 6x for reference.
- beat 8y agoY'know, instead of "likely answer", you could fact-check it.
- beat 8y ago2018 dollars. The vast majority of China in the 1950s and earlier lived in extreme poverty. Also, I realize I meant a thousand percent, not a thousand times. My bad on that one. China is merely 130 times more productive (in 2018 dollars) than they were 60 years ago. Which I don't think disproves my point.
- sonnyblarney 8y agoIt doesn't matter if they have been growing. What matters is 'do they have more to grow'. And even if that answer is 'yes' (and I think it is), the next question is 'how level will that be'? Because the bag will change hands many times. There can be pops and bubbles. There could definitely be crashes where some lose their shirts - and the system is broken enough that they are unable to actually achieve all of that growth that we know they can do. Maybe other countries ramp up on manufacturing quicker than we thought. Maybe factory automation outpaces china. Maybe there's a conflict that pops a bubble, or internal unrest. Heck - maybe Trump's trade war really pulls the rug out. All possible.
- candiodari 8y agoOkay, let's look at history. Since about 3800 B.C. there have been something like 500 economic cycles. 499 of them have ended in a financial crisis. Most in minor debt crises, a few in larger events (like 1929 or 2008). This one will end just like all others. There will be a financial crisis to end it. I mean, this has been happening for so long the Bible talks about it. Trust me, trust economists, or trust the lord: it will happen. There is another pattern. Crises, from one to the next, tend to get worse and worse until they cause really large scale collapses. The Roman Empire encountered worse and worse financial crises until finally the republic was destroyed by the empire, and eventually because the provinces broke away. The 1929 crisis ... perhaps this is a bit simplifying, but not really ... caused WWII. On the other hand, the 1979-1982 crisis was pretty severe and yes was followed by a large expansion and a mild, at worst, crisis ended that one. But this is not a stretch at all: 1) economic expansion (in China, the US, and elsewhere) WILL end (100% chance). And it will end soon (China, and the world for that matter, are in one of the longest continuous economic expansions in the history of the world. Meaning right now it's already very exceptionally long, if not THE longest) 2) it will restart. Maybe it'll take a war, maybe (1 in 100 chance at worst) even collapse. But it will restart. Now that's easy to see, but 1 year into the crisis that will inevitably occur that's not going to be so easy to see.