If Scott Kennedy’s analysis at RealClearWorld is to be believed, China’s economic revival may be nearing the end of its rope. Here’s the kernel of his piece:
From the late 1970s until 2010 China averaged more than nine percent real growth, but growth has fallen considerably since, coming in at 6.7 percent for all of 2016. More troubling than the country’s dive in growth is its collapse in productivity. All of China’s growth now is achieved through mobilizing more money and labor, not improvements in human capital or technology. It now takes three times as much capital to generate a single unit of economic growth as it did in 2008. The result is an explosion of debt that now accounts for at least 280 percent of GDP, and could break through the 300 percent mark by year’s end.
and that’s if official statistics can be believed. Unofficial direct measurements (things like electricity usage or number of container ships) suggest the real figures could be much worse.
It’s not as though this is a surprise. Nearly 20 years ago I pointed out that China was doing exactly what the Soviets had done before them: moving relatively unproductive labor resources from agriculture to manufacturing. To their credit the Chinese were able to do that without reducing agricultural production as befell the Soviets but that process has just about reached the end of the trail.
Not sure if you read the Scholar’s Stage (it’s not on your blogroll), but the author now lives in China and recently posted this:
The Scholar's Stage: Everything is Worse in China
I’ll read the article. I have long thought that T. Greer would be a good candidate for my blogroll but he (?) posts so infrequently that I’m never really sure whether the site is active or not. I’ve already got a lot of inactive sites on my blogroll I try to avoid adding more.
Read it. It’s a good post and I may link to it, time allowing.
Note should be taken of this paragraph:
The difference is that at a certain level that’s inherent in Chinese culture. it’s a perversion of ours. It does explain the esteem in which our elite holds their elite. They envy them.
I should post more, you are right.
Took a job this year that cut deep into my free time.
Hopefully I will post a few more time this month thought. We will see.
A nice allusion to President Xi’s slogan.
This article dovetails with what Michael Pettit said in April http://carnegieendowment.org/chinafinancialmarkets/68708.
What caught my eye was Pettis in the comments opined China has only a year or two before the country has so much debt they will need to monetize it (aka Japan).
It’s certainly much shorter timeframe then I thought (5-10 years)
As to what’s inherit in Chinese culture, I think Taiwan is a pretty good datapoint that the pathologies identified are due to one party and increasingly one man rule/misrule.