BRICS Built on Faked Economic Numbers

For 20 years, benefiting from very low income levels and a huge labour market combing with a willingness to embrace Western investment, China has sustained double-digit growth. Now, as the labour pool dries up and labour costs rise that growth has slowed from 12 percent, to 10 percent and now 7 percent, and probably in reality only 4 percent. Lower Chinese growth does not just mean that the day of clearly overtaking the United States is postponed. It also means that the three BRICs—Russia, Brazil, and South Africa—who trail in China’s wake and depend upon selling their commodities and raw materials to the Chinese market, have begun to shrink as well. __ Beastly Tails


Since 2008, the “BRICS Miracle” has been based on ginned up demand from China, based upon a frenzied credit expansion and shifty economic numbers.

In the case of overstated Chinese GDP figures, we now got confirmation from the CCP’s mouthpiece Xinhua that they have been made up for a long period of time, at least on the regional level…

… “The Chinese economy clearly is not growing at anything like 7 percent. We have felt for a couple of years that those figures were very, very generous. If you look at physical indicators—electricity consumption, natural gas consumption, oil consumption, cement consumption, steel consumption, telecom consumption, retails sales—if you look at all those indicators, none of them were growing at a rate that was equal to 7 percent and neither were the exports.” __ http://www.theepochtimes.com/n3/1919006-its-official-china-fakes-economic-numbers/

Closer to 2% in reality.

China’s Time Bombs Waiting to Explode

Top Chinese leaders continue to emphasize the need to clean up “zombie enterprises,” large, unproductive, debt-laden, state-owned enterprises that suck up resources and drag down the economy…

… we have been combating overcapacity in steel, cement, and aluminum for years. Not only did production in these industries not decline, but it increased.

Once the economy starts a downturn and investment slows, the debt burden will cause a range of knock-on problems. We need to realize that these “zombie enterprises” are like landmines that can cause a lot of damage to China’s economy. In the present economic downturn, China’s economy has already entered into a risk cycle…

… With the government trying to sustain inefficient “zombie enterprises,” competitiveness breaks down. Enterprises take advantage of the government’s obsession with GDP and abuse policies to benefit themselves. Hence China’s economy pursues low-end manufacturing and quick returns. This has created huge obstacles to upgrading the economy. __ Zombie Nation Full of Ghosts

China’s Ghost Cities Getting Spookier

The deadly spiral of overcapacity, ghost cities in the periphery, and accelerating decay and collapse in China’s central cities, will add to the credit balloon and demographic transition to spell doom to the CCPs long range ambitions. The other BRICS don’t have a chance.

A striking example of China corruption from top to bottom. When will the gullible outsiders learn?

False Hope for India, Alone Among the BRICS?

Among the BRICs, only one market seems to be living up to its potential, India. Sales have been among the world’s fastest-growing this year, but even so, demand has been somewhat erratic in recent months, adding to the industry’s overall concern, analysts note. And sales have been largely dominated by just a small number of makers, such as Maruti Suzuki, leaving the rest of the industry to fight over the scraps. __ http://www.thedetroitbureau.com/2015/12/automakers-worry-as-brics-start-to-crumble/

There is no reason to expect India to do particularly well in the wake of the China-led Asian economic doldrums. In fact, it may be time for all of China’s neighbors to go to elevated war alert. When politically tyrannical and economically incompetent nations like China (or Russia) run into big problems due to their own mismanagement, they often turn to big military spending and outright war as an alternative to internal overthrow.

Information about China’s long-running bubble economy has been freely available to all, for over a decade. Industrial overcapacity, real estate bubble, industrial bond bubble, local government bond bubble, stock market bubble, an Africa investment bubble, a military infrastructure bubble, and other bubbles within bubbles.

If China’s linked economic booby-traps start to detonate, the outcome is unpredictable — but not likely to be good for Asia or fellow BRICS. Energy and commodities markets could easily drop even further than at present.

It is important that a smarter, more pro-growth US leadership take over for the inept Obama administration soon. Even in the west, most funds putatively spent on research in science and technology are misallocated. Western economies need to maintain enough economic and R & D output to drive a broad enough future so that some surviving threads can reach the next level.

2012 prediction based upon a “wagging the dog” model: We predicted that under Obama and the then current EU leadership, the tail (BRICS) had no chance to successfully wag the dog (EU and Anglosphere).

Postscript:

The sorry state of Brasil and South Africa deserve no comment here. India, with its abject corruption and all-pervading primitiveness, had best try to maintain as good relations with the larger economic players as possible. Eventually, either China, Pakistan, or both are likely to go to war against India. That part of Asia may take a long time to clean up after the deluge.

Russia is attached to China now, at the hip, waist, shoulders, and head. When the Siberian twins fight it out, all others had best stand back.

More: Russia and China talk the “partner” talk. But they are failing to walk the walk. Why? Because the two nations have conflicting long term agendas, which cannot ultimate coexist in the same place at the same time.

China has greater staying power, so the dragon will wrestle control of massive parts of Siberia and Central Asia away from the bear. The world of the future will require far greater technological expertise than an ageing and shrinking Russia can provide.

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