- Aug 6, 2012
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I didn't doubt this for a minute. I know how socialist states work.
Lawrence Solomon: Remember Trump’s supposedly ‘lose-lose’ trade war? He’s winning. China’s losing.
Not that long ago, China’s economy was seen as a juggernaut that would soon overtake America’s to become the world’s largest. “Made in China 2025,” the Chinese government’s blueprint to take over manufacturing, was seen as an existential threat to U.S. technological leadership. Speculation had the Chinese yuan replacing the United States dollar as the world’s reserve currency.
What a difference a trade war makes. No one marvels at the Chinese economy today.
Car sales in China, the world’s largest car market, plummeted by 19 per cent in December, capping a six-per-cent decline in sales for the 2018 year, the industry’s first fall in 20 years. Goldman Sachs predicts the decline will steepen to seven per cent in 2019. More broadly, China’s private and public manufacturing sectors both contracted in December.
China’s mainland stock markets, which declined 25 per cent in 2018, aren’t doing well either. Neither is growth in consumer spending, which is at a 15-year low. The government is backpedalling on its targets for “Made in China 2025,” and its other high-profile initiatives — the much-ballyhooed Asian Infrastructure Investment Bank and the Belt and Road Initiative — are falling short.
In fact, the entire Chinese economy may not only be falling short, it may never have performed as well as claimed. Many believe that China’s official economic growth rate, a fabulous 6.5 per cent, is more a fable. A World Bank estimate for 2016 put China’s economic growth at 1.1 per cent, with other estimates showing low or even negative growth. Also worrying is the potentially catastrophic hidden debt that fuelled China’s growth — as much as US$6 trillion by China’s local governments alone, according to S&P Global Ratings, which called it “a debt iceberg with titanic credit risks.”
Lawrence Solomon: Remember Trump’s supposedly ‘lose-lose’ trade war? He’s winning. China’s losing.
Not that long ago, China’s economy was seen as a juggernaut that would soon overtake America’s to become the world’s largest. “Made in China 2025,” the Chinese government’s blueprint to take over manufacturing, was seen as an existential threat to U.S. technological leadership. Speculation had the Chinese yuan replacing the United States dollar as the world’s reserve currency.
What a difference a trade war makes. No one marvels at the Chinese economy today.
Car sales in China, the world’s largest car market, plummeted by 19 per cent in December, capping a six-per-cent decline in sales for the 2018 year, the industry’s first fall in 20 years. Goldman Sachs predicts the decline will steepen to seven per cent in 2019. More broadly, China’s private and public manufacturing sectors both contracted in December.
China’s mainland stock markets, which declined 25 per cent in 2018, aren’t doing well either. Neither is growth in consumer spending, which is at a 15-year low. The government is backpedalling on its targets for “Made in China 2025,” and its other high-profile initiatives — the much-ballyhooed Asian Infrastructure Investment Bank and the Belt and Road Initiative — are falling short.
In fact, the entire Chinese economy may not only be falling short, it may never have performed as well as claimed. Many believe that China’s official economic growth rate, a fabulous 6.5 per cent, is more a fable. A World Bank estimate for 2016 put China’s economic growth at 1.1 per cent, with other estimates showing low or even negative growth. Also worrying is the potentially catastrophic hidden debt that fuelled China’s growth — as much as US$6 trillion by China’s local governments alone, according to S&P Global Ratings, which called it “a debt iceberg with titanic credit risks.”
