The collapse of 'the coming collapse of China' theory

[Feng Leng]

This is an accurate and objective appraisal of China's present economic situation (ignore the sensational title):

http://amp.timeinc.net/fortune/2019/01/24/china-slowdown-private-equity-shan

 

[CHN Bamboo]

It's a situation when a country reaches a middle income status, the growth slows down and by then cheap labor will not be available any more and manufacturing starts shifting to other places. Then they will have to innovate, find new ways to generate more revenue through exports, manufacture high end goods and move forward.

Countries like Brazil, Argentina, Mexico are in what's called the middle income trap. China just reached middle income status and the growth starts showing signs of slowing. Not sure how the situation is, given no data is available and they have to rely one consumption. The local government data cannot be trusted given they have fudged data to meet targets. There may or may not be a slow down, but only time will tell. The lack of enough data makes it difficult to put an exact marker.

China will not be a middle-income country after three years.

 

[Chhatrapati]

China will not be a middle-income country after three years.

If there is actually a double digit growth.

 

[CHN Bamboo]

If there is actually a double digit growth.

China's per capita GDP has increased $870 from 2017 to 2018.

 

[lcloo]

If there is actually a double digit growth.

China has passed the threshold of middle income trap. Though the economy is no longer growing at double digit, it is not un-expected, as all advance economies went through the same trend. And Chinese economist themselves have predicted current and future growth will be in single digit rates.

All advance economies like US, Japan, Singapore, Germany and all other EU nations have not have any double digit growth for many decades.

Though China still called herself a developing middle income nation, The sign of advance economy is everywhere. Outward bound Chinese tourists, Chinese retails, E-commence, Telecommunications, Transportations, Automobiles, Aircraft industries, Energy and power generation etc have surpassed many so-called advance economies.

Just book a flight to any large cities in China and see it yourself. Calling world's second largest economy a middle income nation is out-dated.

 

[Mista]

Outward bound Chinese tourists, Chinese retails, E-commence, Telecommunications, Transportations, Automobiles, Aircraft industries, Energy and power generation etc have surpassed many so-called advance economies.

Just book a flight to any large cities in China and see it yourself. Calling world's second largest economy a middle income nation is out-dated.

Nope. Russia and India has space programs, nukes, telecommunications etc but it doesn't mean that they are high-income. On the other hand Canada, Australia or Norway doesn't have this programs but no one doubts that they are high-income.

Ultimately the measure is by average income, and China is indeed still a middle-income nation.

 

[oprih]

Butthurt muricans are shouting and cheering about China's supposedly slowing economy when China's economic growth rate is twice as fast as that of america. These muricans truly are dumb.

 

[lcloo]

Nope. Russia and India has space programs, nukes, telecommunications etc but it doesn't mean that they are high-income. On the other hand Canada, Australia or Norway doesn't have this programs but no one doubts that they are high-income.

Ultimately the measure is by average income, and China is indeed still a middle-income nation.

You are right that China is a Upper Middle Income nation. And being a upper middle income nation, the danger of middle income trap has ceased to be a problem.

Space programs and nukes do not contribute much to a country's economy, Russia and India are facing middle income trap.

The Eastern side of China along the coastal areas painted a different picture though, in these regions of China, the age of high income life style has already arrived, in many areas they are more advance than countries like Singapore, especially in e-commerce and 5G telcom, transportation (all these are contributing to the economy).

In short, Western China is still in lower middle to middle income category, and Eastern China can be categorised as High income. Thus there is no dispute on you saying in average China is a middle income nation. However, once the less developed western areas improved their economies in 3 or 4 years time, overall, China will be high income nation.

 

[Dungeness]

Opinion: The collapse of 'the coming collapse of China' theory

Updated 21:56, 24-Jan-2019
John Gong

Editor's note: Dr. John Gong is a research fellow at Charhar Institute and professor at the University of International Business and Economics. The article reflects the author's opinion, and not necessarily the views of CGTN.


About 20 years ago, there was a lawyer from Los Angles by the name of Gordon Chang, who wrote a book, “The coming collapse of China.” Chang's main theme in the book is that the hidden nonperforming loans of the Chinese state-owned banks would likely bring down China's financial system and the governing regime.

The People's Bank of China headquarters in Beijing, China, January 7, 2019. /VCG Photo

He then repeatedly called the same lunatic shot in 2006, 2011, 2012, 2016 and 2017, and they were so painfully wrong that the humiliation in public has already dwarfed the credibility he still had left.

With the official 2018 GDP figure in China released just a few days ago, I guess Chang got one more shot in the arm. Aside from him, there are plenty of pundits around to carry on his baton. The business of the coming collapse of China is far from over, and is certainly not collapsing any time soon.

Many Western media outlets have called the 6.6-percent GDP growth rate the slowest growth in China in the past 20 years. And there are plenty of risks in China's financial markets, as the government economics conference official document openly admitted a few weeks ago.

'Stop freaking out about our economy!'

That is the headline CNN ran this week about Vice President Wang Qishan's speech at the World Economic Forum, which is a resounding rebuttal to those naysayers. He said that growth remains substantial, and that it's important for China to focus on the long term.

Let me further put things into perspective. A 6.6-percent growth rate in 2018 puts China in the 12th fastest economy in the world, only after India and Vietnam, if excluding the rest of the world's minor economies. China's economic size this year stands at about 13 trillion U.S. dollars, making it the second largest economy in the world in nominal terms, and the largest economy in terms of purchasing power parity.

VCG Photo‍


At 6.6-percent growth, China essentially created a new economy the size of the Netherlands last year, which is the world's 17th largest economy. And to defy the naysayers' dubious wishes, let's suppose we are so creative and business is so great here that we can keep growing at this pace for another five years. That would be like creating another five-trillion-U.S.-dollar economy in just over five years, which is the size of Japan, the third largest economy in the world!

As we grow bigger and bigger, the old adage that the sky is the limit eventually applies. Slowed growth is simply inevitable. This is basically due to the law of diminishing returns.

That is why economists have developed the beta-convergence theory to postulate that poor economies growing faster than rich ones will eventually they all converge to some steady state where growth is going to be very moderate, like two to three percent, currently the rate in Europe and the U.S.

I for one believe that we are very close to the five-percent growth territory. We would be lucky to keep growing above six percent for another two more years. Within a decade, China's economy would be very much like America's developed country status where three-to-four percent growth a year is considered an exceptionally good year.

Now I do concede the economy is slowing down aside from the larger historic trend delineated above. The GDP growth figures in the last four quarters declined consecutively. But this is mostly against the backdrop of the global macro environment and the trade war imposed on China by Washington. But recession or not, China's economy is not going to slide down into a disastrous collapsing scenario purveyed by Chang and the like.

And besides not all GDP are created equal. China is now focused on quality growth, which emphasizes more on efficient, balanced, equitable, and sustainable growth in the future. Keep your fingers crossed that China and the U.S. will reach a trade agreement by March 1, and the reform and opening-up process will continue to accelerate.

(If you want to contribute and have specific expertise, please contact us at opinions@cgtn.com.)

VCG Photo‍

https://news.cgtn.com/news/3d3d414e79516a4d32457a6333566d54/index.html

Gordon Chang was once suspected by many to be an undercover agent working for CNS's "Strategic Deceiving Department" or "Strategic Fool-you department". Thanks to him and many naysayers like him, US governments were sidetracked and expecting China to collapse on its own weight. If this doesn't happen, they can always work with the internal force of "XX flower revolution" to "Take China Down".

Neither has happened, and now they are suffering a severe anxiety attack. Everything they are trying to do right now to contain China, including some dirty tricks, will be proved too little, too late.

 

[sinait]

Gordon Chang was once suspected by many to be an undercover agent working for CNS's "Strategic Deceiving Department" or "Strategic Fool-you department". Thanks to him and many naysayers like him, US governments were sidetracked and expecting China to collapse on its own weight. If this doesn't happen, they can always work with the internal force of "XX flower revolution" to "Take China Down".

Neither has happened, and now they are suffering a severe anxiety attack. Everything they are trying to do right now to contain China, including some dirty tricks, will be proved too little, too late.

Have to agree with you.
Imagine the dire consequences for China if Trade War happened in 2001.
China also have the 9/11 to thank for.
.

 

[Jlaw]

Have to agree with you.
Imagine the dire consequences for China if Trade War happened in 2001.
China also have the 9/11 to thank for.
.

Allah bless those freedom fighters

 

[antonius123]

China should thanks to Gordon Chang, because of him chinese government has tried so many years to manage her economy in order to avoid the root causes of the dooms mentioned in the Gordon's prediction while west became careless and lulled.

 

[Mista]

Russia and India are facing middle income trap.

It's premature to say that India is facing the trap when she just entered the band and is currently one of the fastest growing economies.

The Eastern side of China along the coastal areas painted a different picture though, in these regions of China, the age of high income life style has already arrived, in many areas they are more advance than countries like Singapore, especially in e-commerce and 5G telcom, transportation (all these are contributing to the economy).

Like I said, what ultimately matters is still average income. There are plenty of Chinese migrating to countries like Australia not because e-commerce or transportation is more advance in Australia, but because on average Australia has higher income.

And yes, the coastal provinces are in the high-income band if we go by the World Bank's definition of $12K GNI per capita.

Thus there is no dispute on you saying in average China is a middle income nation.

No one in this thread (not even the Chinese) is claiming otherwise, except you:

Calling world's second largest economy a middle income nation is out-dated.

 

[TaiShang]

Have to agree with you.
Imagine the dire consequences for China if Trade War happened in 2001.
China also have the 9/11 to thank for.
.

Yes, first 9/11, and then Obama. But, Bush's eight year presidency was the most significant.

As @Jlaw says, indeed, bless those Mujahedeen, meaning, oil tycoons and their close relations with the US neocons.

Funnily enough, a similar breed of neocons (more commercialized form of it, unlike Bush-era's idealized neocons) are now in power in the US and they are also doing their fair share of undermining US credentials on the ideational level.

Otherwise, we would not have the privilege of the US regime being mocked at the UNGA by the rest of the world.

Bush did material harm. Obama (perhaps thanks to Hillary) survived it. Trump is doing ideational harm.

Gordon Chang was once suspected by many to be an undercover agent working for CNS's "Strategic Deceiving Department" or "Strategic Fool-you department". Thanks to him and many naysayers like him, US governments were sidetracked and expecting China to collapse on its own weight. If this doesn't happen, they can always work with the internal force of "XX flower revolution" to "Take China Down".

Neither has happened, and now they are suffering a severe anxiety attack. Everything they are trying to do right now to contain China, including some dirty tricks, will be proved too little, too late.

The hysteria, I think, comes from such realization. They should have tried in the 1990s, at the latest. From 2001 onwards, I think it was too late already.