China Continues To Rush To Be Just Like Rest Of US!!!!! …… More Suyts Victory Tour!!!!

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. 

 

http://cdn.tradingeconomics.com/embed/?s=cngdpyoy&v=201602111259n&d1=20110101&d2=20161231&h=300&w=600
source: tradingeconomics.com

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. 

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37 Responses to China Continues To Rush To Be Just Like Rest Of US!!!!! …… More Suyts Victory Tour!!!!

  1. They may be able to fake it longer than we think, thru military expansion and our continued decline in influence.

  2. Latitude says:

    China is already in trouble with their population aging….Too many people left the farms to try and find work in the cities…leaving their parents behind….traditionally it has been the kids that kept, worked, and inherited the farms….now the government is taking the farms back because no one is claiming them….that migration is considered the largest internal migration in history
    ..but they are not just leaving the elders behind…they are leaving their children behind with their parents….a second big problem China has is orphans…when the grandparents pass away and the parents can’t take the kids to the cities where they live…because they could not get in schools, health care, day care, assistance, etc
    China has been importing labor forever…..but their hukou also stops them from becoming permanent citizens…

    Hukou is the communist government’s way of getting out of paying benefits, etc

  3. leftinflagstaff says:

    I think you’d still have to consider them, and maybe the Russians, most likely to at least attempt to find solutions favorable to themselves. Certainly don’t see the Western players doing that.

    • suyts says:

      The Russians before the Chinese. China has already thrown the dice. Once you start down this road, there’s no going back. The people and businesses become dependent upon the governmental largess. So, the question for the persons in power becomes ‘social unrest or another government bond issued?’ …….. They’ll always pick the bond route.

      • leftinflagstaff says:

        Well, yes… That pesky thing about a free market requiring freedom.

      • Lars P. says:

        Well, is it not that with the fractional reserve banking the deficit is the way to create new money? So the 3% target deficit actually means 3% new money created? Of course on top of it the system creates more as this is a cascading process.
        China is already the first world economy according to the CIA factbook?:
        https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html
        1 China $19,510,000,000,000 2015 est.
        2 European Union $19,180,000,000,000 2015 est.
        3 United States $17,970,000,000,000 2015 est.
        4 India $ 8,027,000,000,000 2015 est.
        5 Japan $ 4,658,000,000,000 2015 est.
        6 Germany $ 3,842,000,000,000 2015 est.
        7 Russia $ 3,471,000,000,000 2015 est.
        8 Brazil $ 3,166,000,000,000 2015 est.
        9 Indonesia $ 2,839,000,000,000 2015 est.
        10 United Kingdom $ 2,660,000,000,000 2015 est.
        11 France $ 2,647,000,000,000 2015 est.
        12 Mexico $ 2,220,000,000,000 2015 est.
        13 Italy $ 2,174,000,000,000 2015 est.
        14 Korea, South $ 1,849,000,000,000 2015 est.
        15 Saudi Arabia $ 1,681,000,000,000 2015 est.

        • DirkH says:

          Lars P. says:
          March 8, 2016 at 3:25 am
          “Well, is it not that with the fractional reserve banking the deficit is the way to create new money? ”

          Any debt creates new money, and when the private economy refuses to go further into debt, as happens around the world, the state must become the debtor of last resort to maintain money creation; to prevent a shrinking -well, a collapse- of the money supply.

          “So the 3% target deficit actually means 3% new money created?”

          yes it does

          ” Of course on top of it the system creates more as this is a cascading process.”

          Well, debt repayment constantly extinguishes more than interest adds. And, interest does not magically add debt without also adding money. The system stays balanced.

          So as this debt repayment / money extinguishing goes on except for the failed credits, you constantly need to issue new credit, and find takers for it, to maintain your money supply.

          In this way, the total central planning welfare state is a monster birthed by debt money. The ghost cities in China in turn , or the wind turbines and solar panels in Germany, are in turn the product of the Total State. (Wind turbines and solar panels in Germany are WORSE than ghost cities in China – as they consume 28 bn EUR a year in subsidies)

        • DirkH says:

          And if I recall correctly, the annual 28 bn EUR a year subsidies is twice as much as the TOTAL that the entire lifetime of the ITER fusion project has devoured.

        • suyts says:

          Well, Lars, that’s Purchasing Power Parity, which probably isn’t appropriate for comparing sizes of the respective economy. This is because for most things, the prices in the US are significantly higher than what they are in China.

        • Lars P. says:

          DirkH says: March 8, 2016 at 2:12 pm
          And if I recall correctly, the annual 28 bn EUR a year subsidies is twice as much as the TOTAL that the entire lifetime of the ITER fusion project has devoured.

          Exactly. Only the thought when you compare what could be realized with that amount of money and what is achieved with it, it really pains.
          Unfortunately it does not buy any energy independence as one cannot rely on it to be available when needed => you cannot develop an industry on this basis, the loses in a case of a blackout would wipe many industries out. As we are running out of free beers it will be interesting to watch how all this will unwind in the future.

  4. Latitude says:

    same dog…different collar

    Republicans and liberals secretly meeting to ban Trump

    http://www.thewrap.com/gop-and-tech-leaders-hold-secret-meeting-to-stop-trump/

    • leftinflagstaff says:

      “The key task now … is less to understand Trump than to stop him,” Kristol continued. “In general, there’s a little too much hand-wringing, brow-furrowing, and fatalism out there and not quite enough resolving to save the party from nominating or the country electing someone who simply shouldn’t be president.”

      Well, then at least pretend to be patriotic and try to to stop him the patriotic way: vote against him. Anything else is gross arrogance.

      “But the meeting’s highlight was Rove presenting focus group findings about Trump, which indicated that the frontrunner’s biggest weakness is that voters have difficulty envisioning him as “presidential” or a role model for children.”

      Sigh. Sure, we’re serious about solving our problems.

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