Well, I thought a post on something other than US politics would be welcomed, here. So, I went to find something to write about. China has, once again, provided me with some material.
One of the many things I’ve consistently written about was to try to interject some reality with what many saw/see as the inevitability of China surpassing the US as the greatest economic powerhouse in the world. They have so many fundamental problems, it would be next to impossible for them to do so, at least in the next couple of decades, if ever.
One of their biggest problems is that they’ve embraced the current economic thoughts of the West in an attempt to replicate their economic success. But, everyone, from the US, to Germany, to Great Britain, everyone knows, or should know, the economics we embrace today isn’t what made us great. Indeed, what we do today is leading to our economic troubles we have now.
Even today, many people still see China as the inevitable successor as the world’s most dominant economy.
As most of us who care to know, knows, China’s official economic statistics are over-inflated, with the probable exception of their inflation rate. So, the actual reported rate of GDP growth isn’t really all that high. But, it doesn’t really matter, as long as one sees it relative to what it was in the past.
China has recently announced that they’ve lowered their GDP growth rate target. Last year they disappointed with an official 6.9% growth rate, and now, they’re targeting a 6.5-6.7% growth rate.
Here is the decline in their growth rate over the last 5 years.
And, now it’s going to decline some more. Worse, it’s going to continue to decline throughout the foreseeable future. How do I know this? Because they’re doing exactly the same things we’re doing ………. mortgaging our future for today.
Chinese finance minister: Deficit widening to support growth
BEIJING (AP) — Seeking to douse fears about China’s economy, the finance minister said Monday that Beijing can manage its rising debt load as it steps up deficit spending to prevent a slide in growth.
The deficit target of 3 percent of gross domestic product announced Saturday, up from last year’s 2.3 percent, is in line with the ruling Communist Party’s long-term reforms, Lou Jiwei said. He spoke at a news conference during the annual meeting of China’s legislature. …….
…. “We are increasing the debt-to-GDP ratio to support achieving a medium- to high-speed rate of economic growth,” said Lou. “Why do we do that? Because we don’t want to see a decrease in economic growth and because we want to give strong support to structural reform.”
The Chinese leadership has lowered this year’s economic growth target, also announced Saturday at the opening of the legislature, to 6.5 to 7 percent from last year’s “about 7 percent.” Growth fell last year to a 25-year low of 6.9 percent, though that still was among the world’s highest.
On Sunday, the chairman of the Cabinet’s planning agency said there was no danger of a “hard landing,” or dangerously sharp drop in growth.
Lou, the finance minister, acknowledged China’s overall debt load has risen, partly due to stimulus spending in response to the 2008 global crisis. But he said the government still can afford to finance its deficits.
Government debts are “not very high” at 11 trillion yuan ($1.7 trillion) or the equivalent of 40 percent of GDP, Lou said. That compares with over 230 percent of GDP for Japan, which is struggling to restore balance as its population swiftly ages, driving costs for health and elder care higher.
“The central government has room to continue to issue bonds,” he said.
Lou said Beijing needs to do more to control debts owed by local governments. A rapid run-up in such debt has raised concern about possible defaults and the impact on the state-owned banking system.
Last week, Moody’s Investors Service cut its outlook on China’s government credit rating from stable to negative, citing rising debt, capital outflows and “uncertainty about the authorities’ capacity to implement reforms.”
A Chinese deputy finance minister retorted that Moody’s was wrong and shortsighted in comments Friday reported by the government’s Xinhua News Agency.
Yeh, China’s population, (with their generation of a “one child policy”) will never age like Japan’s, amirite?
The dumbasses are like a Western nation on steroids! ……. And, they’ve passed their peak.
As noted in the article, the local governments are the ones who carried the debts, but, now, their central government is taking on more debt at an increasing rate. In spite of the deficit spending, the GDP growth rate is still declining. At this rate, and probably will happen, in five years we’ll be discussion China’s 3% growth rate ….. and then, they’re done. It will remain to be seen if they see an import of a foreign population as the answer to their dire economic future, or not.