I saw this comment on Reddit by an expat living in China that had me a little worried. I know a few points are BS, such as the comment about the size of Russia’s economy, but how about the overall trajectory of China’s economy?
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Anyone who tells you that the economic situation in China is “doing fine, especially when compared to country X” is either a troll, a paid troll, a bot, or has been drinking the CPC Kool-Aid.
It’s difficult to summarize it in one cohesive post, but I’ll give it a try.
In essence, China’s growth model has been unsustainable for at least 20 years, and evidence suggests they plateaued 15 years ago. Any development after that has been at the cost of increasingly expensive malinvestments than the actual ROI.
Part of the issue has been the obsession with maintaining a high GDP, often for no reason other than allowing the responsible officials a fast track for promotions. The use of Local Government Financing Vehicles to shore up cash for civil services worked only so long as property developers were willing to pay for land-use rights, which was only possible so long as there was cheap capital available to borrow, and people willing to pay for apartments that might be finished six years down the road.
This made up 30% of China’s total GDP. And all of it is gone now.
The housing sector itself is in a permanent state of decline that simply cannot recover. Ever. There are many reasons for this (as mentioned in the paragraph above), but also because of China’s current and future irreversible population decline. There are simply not enough people to actually move into these overpriced bricks of concrete, and there never will be.
Covid didn’t cause the collapse to happen, but it accelerated the inevitable.
It’s quite telling just how bad the situation is when realtors aren’t even allowed to lower the prices of apartments they can’t sell, because if they do, people will begin to realize that the value of the apartment they poured their life savings into is much lower in reality.
Anyway, I digress.
The property sector’s ails are not the failure of Xi Jinping himself. The issues stopped being manageable at least 15-20 years ago, but no one had the foresight or political clout to do anything about it. What Xi has done, however, is bring politics back into the fold in China.
Much like Mao in the mid-60s—fearing that the CPC was losing its grip on the population—decided to fuck things up with the Cultural Revolution.
Granted, in Xi’s case it hasn’t been quite as bad (yet), but the censorship, the oppression, and the propaganda, have been ramped up during his tenure. Anything that doesn’t adhere to the traditional values of communism has been scrubbed at an increasingly fast rate.
The crackdowns in China’s tech sector have been ideologically driven, and it has been incredibly disruptive for China’s most agile and competent privately-driven sector, far more than the tech war with the US. Wolf warrior diplomacy siding with Russia and creating an ‘alternative’ global order are all based on a very absurd and quite unrealistic idea of China’s power, or at least the power they think they have.
People who have lost their jobs during and after covid have a hard fucking time finding a new one. We’re seeing salaries being pushed down HARD, especially for new graduates, and the number of unemployed youths is so bad, that they simply stopped releasing the data.
Just like we can be sure something isn’t true until the Kremlin has denied it, so can we be sure something isn’t bad in China until they scrub the existence of it.
Talk to anyone on the streets of Beijing, and they will tell you things are tough right now. And people in Beijing are the ones who are the lucky ones.
I mean, sure, we will still see new fancy stores opening up, office building being built, and fancy G63 AMG’s on the road. But that doesn’t mean things are well for the 1.4 billion people in this country.
Whenever we look at broad questions like this, we tend to view our own (highly anecdotal) bubble as proof that something is either good or bad. The overall prognosis for China is bad, really bad.
But that doesn’t mean it will “collapse.” Not even Russia has collapsed after having the toughest sanctions in history slapped on their Italian-sized economy.
It just means we’ll see years, perhaps decades, of negative growth in China, increasingly authoritative measures taken by the government, more protests, more suppressed protests, more people with opinions disappearing, more brain drain, more kindergarten stabbings, more music with revolutionary themes removed. Year by year, things will be a little worse off than the year before. More people will give up and lie flat. The only movies in the cinemas will be about the Korean War, and the only things on TV will be anti-Japanese shows or wuxia palace dramas.
It will be a descent into authoritarian conformity. In a sense, this is also a collapse.
There’s nothing to debunk this person is just making shit up using buzzwords that prove their knowledge is just repeating what other Redditor NPCs say.
That’s probably not very satisfying though, so I’ll just poke one hole. They say a bunch of nonsense about real estate and tech as if it’s bad that China is reigning them in. This person clearly knows nothing about economics, as the trouble with both is financialization and a failure to de-risk by reigning them in is a huge part of why many Western countries’ real economies are fucked. Can’t buy a house because it’s an “investment”. Huge tech companies built on houses of cards and leveraging monopoly to get what they want, which is often just destroying other industries.
“Has been unsustainable for 20 years” is a self refuting statement.
That’s a generation of growth and even now they are growing the economy at almost 5% whole population growth is essentially 0.
I mean, sure, we will still see new fancy stores opening up, office building being built, and fancy G63 AMG’s on the road. But that doesn’t mean things are well for the 1.4 billion people in this country.
Don’t believe your lying eyes
It just means we’ll see years, perhaps decades, of negative growth in China
Sure it’s been going great for decades and sure there are outwardly visible signs of growing wealth but in my imagination it’s about to get really bad and you cannot refute that.
Any white expat in Asia’s opinion can be immediately refuted by asking them which English school they teach at.
A couple of things
The third paragraph doesn’t make sense. The op is just trying to sound smart. If you want to complain, you’d say ROI’s have been negative for the past 15 years, which is not only false but it’s irrelevant.
If you want to look at how effective gov spending is, you’d look at debt to gdp ratio, and China isn’t even close to being the worst off, meaning gov spending is yielding pretty good returns, comparatively.
Housing. Still upwards trend. Recently housing has been overheated, and covid actually overheated the housing market more rather than cool it. It’s a bit normal now, but still on an upwards trend.
I don’t know why the comment didn’t talk about the gov banning after school classes, and completely abolishing an industry. And China is making domestic new tech. So they really can’t see the actual effects that western sanctions are having.
Youth unemployment is pretty bad. But keep in mind home ownership is something like 90% in China. So it’s not as bad as if those figures were present in a country where home ownership is something like 60%.
Pure cope. If China has “negative growth” then what do the US let alone Europe have? Also, lol at them calling Russia an “Italian-sized economy”. Yet more complete ignorance of what a real economy is. If Italy got slapped with the same kind of sanctions Russia did they would collapse. Because actually in real terms Russia has a bigger economy than Germany and the gap is only going to increase as Europe follows the US off a cliff. Further, the obsessive focus on the housing market is another pathological indication of liberal brain worms. A fall in the price of housing is a good thing, housing is supposed to be affordable, as Xi Jinping said homes are for living in not for speculating on. The bit prophecizing a “descent into authoritarian conformity” is projection, it is namely what is happening to the West - just look at how many countries in Europe have made protesting in favor of Russia or Palestine illegal.
I don’t know shit about China’s economy but every fucking word that dude wrote is absolutely true about America’s economy so I’m going to guess this is just once again, blatant projection by China haters.
Actually it is worse here because the commercial and residential real estate bubbles are out of control and overdue to explode, so if China just has one of those issues they are way ahead of us.
Also lol imagine thinking modern western economics outside of Marx is real, what a loser
Edit: also, haven’t these morons been saying China’s economy is crashing any day now for the past four years? Something about Evergreen? Why would anyone still be listening to them after four years of being wrong every day?
the commercial and residential real estate bubbles are out of control and overdue to explode, so if China just has one of those issues
It’s the opposite actually, the clown is complaining that China does not have such a bubble anymore, that they’ve been deliberately deflating it over the past few years and allowing housing prices to come down. The idea of liberal China critics is that housing prices are supposed to constantly inflate because people in the West use housing as an investment asset and if their price were to collapse it would be bad. This is the height of liberal idiocy, not a thought given to the enormous problem that exists in the West of housing having become essentially unaffordable for young people due to this toxic speculative economic relationship to housing that their societies have.
I’m glad someone knowledgeable came around, thanks for explaining it.
Yes. Housing prices coming down in a controlled and steady manner that doesn’t outright collapse the economy is actually the ideal situation but that’s only possible with planning and government involvement. When supply is adequate for demand prices will decrease to what people can afford. This is part of why you don’t see many homeless people in China. That’s basic economics innit?
When supply is adequate for demand prices will decrease to what people can afford.
True. But in my opinion (and this is just a personal opinion, not necessarily an informed policy recommendation) the ideal would be for supply not to be merely adequate to demand but always just slightly higher than demand. That way you will have a safety margin and room for growth (in fact building housing first arguably could incentivize growth, just like building infrastructure - as the old saying goes: “if you build it, they will come”).
And i would apply this principle to other things too, not just housing. For instance the pandemic has shown us that it is a good idea for countries to have stockpiles of certain supplies for unforeseen emergencies. This is of course antithetical to the entire logic of capitalism where redundancy and stockpiling are highly disincentivized (“just-in-time” supply chains) and supply always trails demand to keep prices and profits high.
It’s quite rich to project a forecast of collapse on an economy that hasn’t collapsed in 20 years from an economy that can’t go more than a few years without collapsing.
For at least 20 years there’s been dipshits saying China is going to collapse at any moment
Of course China looks like it’s about to collapse when (1) you want it to, (2) you only consume media that says it will, and (3) you’re a liberal who can’t but project liberal thought on to every problem.
I can’t find the article at the moment but I read one recently discussing the capital investments necessary to grow GDP, and how the PRC has led the world in that metric for much of its history, either outright or when compared to nations of similar levels of development. Even now it’s maybe a third of the cost compared to the west, and the article explains why. The potential for further growth in China is also much better than in the west, even if we put the cost of investment to the side for a moment. An economy based on providing for people’s material needs is inherently more robust than an economy based on making line go up.
Edit: here is the article
In the meantime here’s an article from the Global Times debunking various anti-China rhetorical methods:
Besides what others have said, this expat.clearly has a. no more nuanced understanding than your average western armchair expert.
The point that China only cares about GDP growth is false and misinformed. China, in particular with Xi, has made a large shift to quality development. If you follow China this is clear as the official position and policy goal. This includes green development. In doing so they have thus far been quite successful.
All thr points on real estate are superficial conjecture on a complex issue. Just consider that GDP is effectively a mesure of transactions/investments/consumption. High GDP in the US coming from healthcare prices being inflated does not translate to growth or development. Likewise, a hot real estate market might be good for GDP, but it does not necessarily translate to development. We should recognize this, as does the Chinese government.
Not to say real estate in China is irrelevant, land sales is a major source of funds for local government. It has importamce and implications, none of which where reflected upon in the comment you quoted.
It just means we’ll see years, perhaps decades, of negative growth in China, increasingly authoritative measures taken by the government, more protests, more suppressed protests, more people with opinions disappearing, more brain drain, more kindergarten stabbings, more music with revolutionary themes removed. Year by year, things will be a little worse off than the year before. More people will give up and lie flat. The only movies in the cinemas will be about the Korean War, and the only things on TV will be anti-Japanese shows or wuxia palace dramas.
All of this is false and misleading. I cant go point by point, dont have the time. Just consider it is the US and EU with negative growth. (western) International organizations and financial companies project solid growth in China. There is increasing diversity and quality in Chinese cinema, even socially critical movies. There was one commenting on the challenges of rasing a kid these days, touching on house prices, education, and more. I could go on.
I would cite sources, but most of this is easy to find. If you are reading this I encourage you to read more about China.
I am not knowledgeable enough to give a proper refutation as an expert–and I hope someone else steps in–but I will say this. No matter what good thing a socialist country does, or how good it is doing, some smug liberal will come along and pull out the ol’ hurricane hands and longpost decrying it using logic that only works in think tanks full of capitalist ghouls.
Half of war is confidence game, and leftists are particularly susceptible to doubting themselves and their team. Our enemies know this and take advantage.
I only skimmed but the majority of this BS seems like posturing based off of (likely fabricated) anecdotes and a narrative where China is the most incoherent and wicked amalgamation of grey palette 1984 nightmares imaginable, which itself to me betrays the writer as unworthy of listening to. Not matter how much half baked analysis and jargon is thrown around, people like this fundamentally base their opinions off of Western capitalist pundits whose sole purpose as part of a war machine is to paint China as either evil or failing or both.
This joker says China plateaued 15 years ago, and yet 15 years ago marked a new period of fortune resulting from the persistence of Dengism, fortune for China’s working peoples , its technology, its world power and influence…what plateau? Oh, yes, conveniently every sign China is doing bad has been “scrubbed away” by the CPC, go figure. “Anonymous sources said so” and all that.
China is not invulnerable, it has, continues to have and will have challenges. Perhaps maybe even one of these anecdotes actually has some meat to it! But I can tell you with certainty that if any of these are actual issues, the CPC is working on it. They have illustrated time and time again that they are perhaps the most conscientious, strategic, effective, clear minded and determined major government on the Earth. This faith is not blind, it is well earned. I am not impressed by whatever new petty and horrifyingly dishonest cope of the week liberals pull out to explain why a country with nothing but positive inertia and achievements right now is somehow the most evil/failing country on earth.
Brandolini law bait.
This is just redditor drivel lmao
You copy this kind of shit here again and I’ll call the CPC to harvest your organs!
Just agree with this expat, clearly he knows what he is saying.
Tell me you get all your info about China from /r/China without telling me you get all your information from /r/China. Guys a goof.
Also talk to anyone in rural China and they will tell you things are getting better, material conditions are improving dramatically, China has some issue to work out with age drain from rural to cities, but things are constantly improving. There are high rates of approval, both anecdotally and through polling.
Maybe just reiterating what others have said, but this brainless critique is nothing more than projection, utilizing the logic of neoliberal, market-speculative economics to explain how China, despite overwhelming evidence to the contrary, is going to collapse any second now.
The PRC is a dictatorship of the proletariat with a socialist market economy. If the market fails in some regard, the peoples’ state will step in and rectify the issues they are facing.
Confusing, maybe, to someone who refuses to stop getting wanked by the all-mighty invisible hand.
We see this occur in China with targeted nationalizations towards burgeoning monopolies, for one example. Whenever similar economic crises have hit the States, there are no nationalizations. No reorganization of power. The state simply bails out failing industries, allowing the ghouls at the top another 10 or so years to tighten their stranglehold on the people.
The PRC has its faults. These faults are being rectified. The U.S. has its faults. These faults are simply celebrated as successes and allowed to fester.
Why don’t you believe I’m Qin Shi Huang?
信它不如信我是秦始皇，v我50至少还会收到一声谢谢！
