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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 rebal

• onlyrealcuzzo 8y 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.
  • seanmcdirmid 8y ago
    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.
    • gscott 8y ago
      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.
      • seanmcdirmid 8y ago
        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.
        • reaperducer 8y ago
          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/index.html https://www.cnn.com/2018/12/10/tech/gopro-china-tariffs/inde...
          • seanmcdirmid 8y ago
            So what? Does one data point make the case for a sustained long term trend?
            • reaperducer 8y ago
              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.
              • seanmcdirmid 8y ago
                Yes, nor am I going to do your research either. The fallacy of the data point is still a thing. https://en.m.wikipedia.org/wiki/Faulty_generalization https://en.m.wikipedia.org/wiki/Faulty_generalization
            • cc439 8y ago
              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.
  • discordance 8y ago
    Fyi Australia's economy has also been without a recession in 30 odd years
• NicoJuicy 8y ago
  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
  • echevil 8y ago
    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.
    • tonyedgecombe 8y ago
      If China did have "much better control of the macro-economy compared to free markets" the they wouldn't have the debt problem.
• friedman23 8y ago
  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.
  • echevil 8y ago
    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.
    • friedman23 8y ago
      >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.
  • zachguo 8y ago
    They would rather have a slowdown than run into a crisis.....
• seanmcdirmid 8y ago
  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.
• defertoreptar 8y ago
  Why would they want a economic slowdown?
  • amelius 8y ago
    I guess sudden economic growth can disrupt a lot of things, including potentially the structure of power.
  • Matticus_Rex 8y ago
    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.
  • yesforwhat 8y ago
    They dont, they are saying they want something they can't control happening . Old trick
• malloryerik 8y ago
  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-building/seeds-unrest-taiping-movement 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.
  • tanilama 8y ago
    Then they shouldn't hype up the real estate price so much, it is draining the domestic consumers dry.
    • sokoloff 8y ago
      Well, some of them. Others are presumably finding it a path to future wealth, while others are cashing in on realized appreciation.
      • deleted 8y ago
        [deleted]
      • 8y ago
• exabrial 8y ago
  To your first point, seems like they'd say anything to try to save face.
• ubtual 8y ago
  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
  • smnrchrds 8y 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?
    • pram 8y ago
      China literally has forced labor camps.
      • withhighprod 8y ago
        “forced” in what way? You don’t have to work and you’ll starve. In China if you quit the “camp” thousands are lined up outside to replace you. Actually I don’t think any existing political system can do a much better job in this case.
    • hueving 8y ago
      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.
• nihonde 8y ago
  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: https://mobile.twitter.com/carlquintanilla/status/1073234887761641475 https://mobile.twitter.com/carlquintanilla/status/1073234887...
  • adventured 8y ago
    > 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-paying-for-most-of-trump-s-trade-war-research-says https://www.bloomberg.com/news/articles/2018-11-19/china-is-...
    • fspeech 8y ago
      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. https://www.ceicdata.com/en/indicator/china/total-imports-growth https://www.ceicdata.com/en/indicator/china/total-imports-gr...
      • adventured 8y ago
        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.
• joering2 8y ago
  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.
• sfcguyus 8y ago
  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.
• m3kw9 8y ago
  90% of the population isn’t gonna care about such drop. The chinese govt isnt gonna let the media color it bad.