[Epoch Times October 24, 2021]Compared with a few years ago, the inherent problems of China’s economy remain the same, but after the start of the Sino-US trade war, China’s international environment has undergone major changes. What’s interesting is that three years ago, the perception of China’s economy was “cold inside and hot outside.” Foreign media predicted brightly that China itself displayed many “gray rhinos” and “black swans”. Nowadays, the Chinese authorities strictly control speech, and there is no quality discussion in the country. Foreign media all believe that the prospects are not good. The “China-US decoupling theory” commented by the opposition is very high-pitched, but Dai Qi, the American business representative who decides whether to decouple But he told Liu He that he wanted to hook up again.
Rather than discussing the crisis factors that have existed a few years ago, such as the real estate crash, it is better to delve into why China has survived until now, and whether those factors that have supported China’s economy can continue to work.
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Observe the Chinese economy,GDP growth cannot be taken seriously
I won’t talk about the crisis theory of other media. The highly professional “Wall Street Journal” published an article on October 18th by the editor and columnist Nathaniel Taplin who specializes in the Chinese economy, claiming to push the Chinese economy forward. The three pillars of real estate investment, consumption and export are all unstable and uncertain; if the Chinese government cannot introduce a stronger easing policy in the near future, then the negative factors supporting the three pillars of China’s economy will be superimposed, and by the middle of next year It may cause the risk of economic downturn.
Taplin cites several facts that prove that the Chinese economy has fallen into embarrassment on all sides: electricity shortages, real estate debt crisis, unsuccessful shipping lanes, and the emergence of a short-term but not low-endangering Delta mutant strain that caused an epidemic rebound. He believes that it is not surprising that these factors made China’s GDP growth of 4.9% in the third quarter of this year have been lower than expected and fell below 5%.
I have never regarded China’s GDP growth rate as an important indicator, mainly because China’s GDP growth rate is too controllable. So, the forecast data of the World Bank and IMF on China’s economy should be authoritative enough, right? In fact, I have always been skeptical, because the basic data is delivered by China itself, not to mention the fact that the current IMF President Georgieva has been exposed to World Bank staff when she was the CEO of the World Bank in 2017. Improper pressure is required to modify the content of the economic environment report to be beneficial to China. The crisis factors listed by Taplin are discussed below.
The four major unfavorable factors of China’s economy have their own reasons
The four major unfavorable factors of China’s economy now, the real estate debt crisis has actually appeared long ago. The real estate “one brother” Evergrande crisis was predicted last year. I wrote an article specifically, but the authorities just didn’t press the “don’t save” button. , The external creditors are lucky. In fact, even if you press “rescue”, it will only move the real estate jump point from the 80th floor to the 90th and 100th floors, and the bubble will eventually burst.
The impact of the Delta virus on the world is not limited to China, Australia and other countries are also worried about the epidemic.
The power shortage is related to the phone call from Biden to Xi Jinping on September 10th. The moment the United States regards climate change as its top national policy and even the most important international issue, China needs to cooperate. Soon after that phone call, China announced a power cut (not a lack of power), and Ms. Dai Qi, the US commercial representative, formally announced the implementation of “retention-exemption” of Chinese tariffs. It can be expected that once the tariff issue is settled, China The power supply will gradually be restored.
The problem of poor shipping affects not only China, but also the United States. The United States is currently in a rare supply chain crisis. Ports are severely congested, hundreds of thousands of containers are overstocked at sea, and some stores are even experiencing shortages of goods and increasingly empty shelves. Some American professionals who can face the reality finally discovered that China and the United States share an international commodity supply chain. The supplier is China and the demander is the United States. The two sides have long been interdependent.
The above analysis shows that, in addition to the fact that real estate can no longer become the leader of the Chinese economy, it is American demand that really keeps the Chinese economy at the source, because China and the United States share an international commodity supply chain: you are here, I am there On the one hand, no matter how you analyze it, you have to admit the reality: American consumer demand is the source of “Made in China”.
Living Water at the Source of China’s Economy: U.S. Demand
China Customs import and export data show:
According to China Customs statistics, in the first eight months of this year, China’s total import and export value was RMB 24.78 trillion, an increase of 23.7% over the same period last year, and the trade surplus was US$58.34 billion, an increase of 2.2% over the same period last year. ASEAN, the European Union, the United States, and Japan are the first, second, third, and four largest trading partners in that order. Among them, China has a trade surplus with the top three trading partners: a trade surplus with ASEAN is 366.02 billion yuan, an increase of 8%. The trade surplus with the EU was 751.96 billion yuan, an increase of 21.2%. The trade deficit with Japan was 182.25 billion yuan, an increase of 47.8%.
I will enumerate the US data here in detail: The total value of Sino-US trade is 3.05 trillion yuan, an increase of 25.8%, accounting for 12.3%. Among them, exports to the United States were 2.29 trillion yuan, an increase of 22.7%; imports from the United States were 752.42 billion yuan, an increase of 36.5%. The data worthy of attention is: China’s trade surplus with the US is 1.54 trillion yuan, an increase of 16.9%-this figure is higher than ASEAN’s 366.02 billion, and also higher than the EU’s 751.9 billion. Based on exchange rates, the US has a trade deficit with China before this year. About 117 billion U.S. dollars in 8 months, ranking first.
The U.S. data on this is slightly different, but the difference is not big. Like the Chinese customs data, it proves that China’s exports to the U.S. have grown strongly.
US-China Trade Relations: Is Capital and Demand Determined or Politically Determined?
The U.S.’s trade relationship with China is actually facing the decision of capital or politics.
From the perspective of history and reality, Western countries are all capitalist market economies. In the relationship between countries, trade relations are the decisive factor. The cause of the Opium War between China and Britain was that Britain sold opium in order to resolve the trade deficit with the Qing Dynasty. .
In the relations between China and the United States since the 1990s, capital has actually played a leading role, but the United States is a world power after all, and President Clinton has human rights diplomacy in order to fulfill its responsibilities as a major power. There are political conflicts between China and the United States, but the economic ties are getting closer and closer. Under the guidance of “comparative costs”, the domestic manufacturing industry in the United States has hollowed out. After 30 years, the relationship between China and the United States has long been formed. A stable international commodity supply chain has been established.
The current supply chain crisis in the United States stems from the industrial chain’s heavy dependence on China.
The United States now has a belated understanding of this. Sridhar Kota, a professor at the University of Michigan, and Thomas C. Mahoney, an expert from the industry think tank MForesight, published a joint study “Invented Here, Made There” in June 2018. The conclusion is that the United States’ external dependence is not limited to low-cost goods, it extends up the value chain, and China is the key to most of them. Offshore production in advanced manufacturing has reached a critical point, and the strategy of “invent here, make there” has become “invent there, make there.”
The United States must take bold measures to stop this development and use transformational technology to rebuild the strength of domestic manufacturing in order to achieve the growth of national wealth and ensure economic security. They proposed that these bold steps require a central agency with a comprehensive strategy, as well as large and continuous public and private investment, to focus these investments on translational research and manufacturing innovation, encourage domestic pilot production and large-scale production, and authorize small and medium-sized enterprises. Manufacturers deploy advanced technologies and, more importantly, cultivate domestic engineering and technical personnel in the United States. The report said that if the United States does not make this choice, it will face “continuous degradation of innovation and manufacturing capabilities, resulting in the United States becoming a second-rate economy unable to support the top military.”
The above research is based on reality and considers the long-term. However, both business and political circles in the United States are increasingly short-sighted. The strategic layout of more than three years has hardly been considered. In the words of Democratic leader Nancy Porosi, it cannot bring voters’ motions. She leads The lower House of Representatives did not consider it at all. At present, the so-called “bringing voters” motions of the Biden administration are almost all motions on how to divide the cake. No one considers where the ingredients for making the cake come from and how to continue.
Over the years, I have seen many articles about the hope that China’s economy will prosper or collapse. As I have always stated, the Chinese economy has never been as prosperous as predicted by Western investment banks. Because the choice of development methods and roads is very short-sighted, it will surely plant various hidden dangers, such as real estate, when it promotes short-term prosperity; but The Chinese economy will never collapse in an instant like the other pole predicted by the outside world. At least the current status of Sino-US commerce shows that Chinese manufacturing needs a US market, and the US cannot find a Chinese substitute for a while. This strong demand has injected fresh water into the Chinese economy.
When capital is most concerned about profit, the American business community has never intended to abandon the Chinese market. This is an important factor in the Chinese economy that has survived the present (including for a period of time) despite the crises of the Chinese economy.
If you still don’t believe this, please see the shocking news published in the Wall Street Journal on October 22: US Department of Commerce data shows that Huawei suppliers have obtained 113 export licenses with a total value of approximately US$61 billion; SMIC’s suppliers have obtained 188 Export licenses with a total value of US$42 billion-it should be noted that Huawei and SMIC were included in the trade blacklist and the so-called “entity list” by the United States in May 2019 and December 2020, respectively. These export permits were issued between November 9, 2020 and April 20, 2021.
The Epoch Times
Editor in charge: Zhu Ying#
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