China Preparing for Next Great Leap Forward?

Can China Reverse its Present Stall?

China is experiencing an unexpected slowdown in its global ambitions. The very nature of economic growth in China has changed in an ominous way. A closer look at the fixed causes behind China’s unhealthy economic shift suggests that China’s current stall could easily turn into a dangerous spin.

The root cause of China’s global stall is this continued inability to let markets be markets. Meddling in the allocation of finance has ensured that much-needed capital gets gobbled up by the politically connected, not the competitive. Then the government tries to rectify the damage with more government. In an effort to rejuvenate exports, China has unleashed a subsidy-rich industrial program to upgrade its manufacturing called “Made in China 2025.” To help companies expand around the region, the government has cooked up the Belt and Road Initiative, an infrastructure-building scheme that looks to many like a boondoggle…

In fact, the entire Chinese export machine is sputtering. Between 2006 and 2011, China’s total merchandise exports nearly doubled, powering the country through the Great Recession. Since then, they’ve increased less than 11 percent, according to World Trade Organization data.

The same trend holds for China’s currency. In late 2014, the renminbi broke into the top five most-used currencies for global payments, reaching an almost 2.2 percent share. China seemed well on the way to achieving its long-stated goal of turning the yuan into a true rival to the dollar. But that progress has reversed. In June, the renminbi chalked up only a 2 percent share, according to Swift, slipping behind the Canadian dollar. __ China’s Ascent Stalling?

China runs a great public relations campaign. In Australia, for example, Chinese Communist Party influence in politics, news outlets, universities, and commercial enterprises is becoming a looming scandal. This covert invasion of Australia by the long arms of Chinese communism would be largely illegal in countries such as the US, but so far seems to be mostly legal in Australia. “Using these inroads… the CCP’s “main purpose” is to “reduce or even eradicate the ‘bias’ and ‘prejudices’ against China that are seen as pervasive in Western media.””

But if China’s economic rockets are losing their “wunderthrust,” bribes and public relations spending will only get it so far.

What’s at play are the operations of the CCP’s overt spy departments, which are mainly run under its United Front Work Department and its Overseas Chinese Affairs Office. These two departments, in turn, run operations through the CCP’s overseas embassies and work to create a “united front” for the CCP by subverting and influencing elements in foreign societies to work on behalf of the Chinese regime’s interests—often unknowingly. __

Everyone Remembers China’s Last Great Leap Forward

It was the deadliest act of genocide in history, resulting in almost 50 million Chinese deaths.

It is not merely the extent of the catastrophe that dwarfs earlier estimates, but also the manner in which many people died: between two and three million victims were tortured to death or summarily killed, often for the slightest infraction. When a boy stole a handful of grain in a Hunan village, local boss Xiong Dechang forced his father to bury him alive. The father died of grief a few days later. The case of Wang Ziyou was reported to the central leadership: one of his ears was chopped off, his legs were tied with iron wire, a ten kilogram stone was dropped on his back and then he was branded with a sizzling tool – punishment for digging up a potato.

Economic Stall + Debt Mountain + Multiple Bubbles and Pyramids

It has come to the point where one must wonder if anything in China is not a bubble. From real estate to the stock markets to bonds to the shadow banking industry to the Chinese currency itself, the communist party state is built on shifting economic sands — and each grain of sand is a hollow bubble.

Virtually all of China’s GDP growth is illusory, based upon debt and bubbles. State owned enterprises must often take out new loans to pay the interest on old loans, to avoid default. Wasteful overproduction is the order of the day, and even in a dictatorial economy, someone must pay the piper. Local and regional government officials base much of their wealth on the rotting carcasses of rigid state ownership, and debt has erupted to dangerous levels for those government entities.

China’s People are Bright, Energetic, and Ambitious

But they have been hobbled by an obsolete party-driven system of government which no amount of surface level economic liberalisation can overcome. As a result, China’s leadership rightly see their own people as the greatest threat to their continued rule — just as that leadership is the greatest threat to the future prosperity of the Chinese people.

When you read all the “happy-happy” stories about China’s ascendancy and the inevitability of Chinese domination of the future, can you be sure that the writers of such articles have looked at all the facts? Can you even be sure that they are not receiving some sort of under the table compensation for their glowing reports on China’s present and future? Of course not. Knowing how the CCP works, one can never be sure.

Keep Your Eyes Open and Your Mind Your Own

Authority is easily corrupted in virtually any field. Best to give most authority the same respect you would give to the stuff that comes out of the hind end of a cow.

Always collect your own evidence as best you can, and make up your own mind.

A few of China’s problems, not even its greatest ones:

  1. Rising Wages Remove Advantages of Location
  2. Poor Quality Products
  3. Housing Bubble
  4. Explosion of Debt
  5. Loss of popular trust in the party
  6. Demographic trap
  7. Markets are not free to self-correct
  8. Regional insurgencies threaten breakout
  9. Threat of energy bottlenecks
  10. Competition from younger neighbors

China is caught in multiple traps, only some of which were created by the CCP.

When the bubble bursts, the consequences will likely be catastrophic from its epicentre outward.

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3 Responses to China Preparing for Next Great Leap Forward?

  1. Matt Musson says:

    This fall the people’s Congress meets to pick Xi’s successor. Look for Xi to be reelected by the party. I expect the Chinese to begin admitting economic weakness soon after.

    • gabe says:

      Any particular piece of information that makes you think they will start admitting this?
      And if so, why would they do this?

  2. Pingback: This Week In Reaction (2017/08/13) - Social Matter

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