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[Yoda]

A lot of people in international-finance (where I work) haven't bought the official GDP numbers for a long time. No one says this officially because everyone is scared of the CCP, despite the company(s) being American based multinationals. If government fueled public works programs could indefinably hold up an economy, another civilization would have figured it out long before the late 2000s.

One thing that I see the media getting wrong more often than not is that China employs "more" Capitalism than Communism and that the country is Communist in name only. This simply is not true, nearly all large state-run enterprises have a government controlling stake:

https://en.wikipedia.org/wiki/List_of_government-owned_companies_of_China

For China to truly shift to a service-based, modern economy, the CCP will have to end the pretend-we-don't-have-command-economy they're currently employing, and let the markets have real freedom; otherwise investors will never trust the country for real investment (service based companies) in the same magnitude which they were willing to invest for cheap labor.

 

[AbortedWalrusFetus]

How does protectionism increase internal demand? The last time the world tried that, we caused the Great Depression.

Why is Chinese purchases of US securities a bad thing?

Why do you think a free trade deal with advanced economies like Japan and South Korea won't increase US export potential?

You act like that's evidence that all protectionism in all forms ends negatively. Protectionist policies that put domestic manufacturing on equal footing with imports on a cost basis can increase demand for internally produced goods. That can be bad, but it's not always. We already do it with agricultural subsidies.

Free trade with Japan and south Korea could increase export potential, but remember they benefit from reduced cost if goods from other SE Asia countries like Vietnam and could instead look to those countries. There's nothing keeping US companies from basing manufacturing out of those countries to take advantage of that.

Chinese purchase of US securities isn't bad, but if the Chinese economy collapses those ripple effects don't get prevented by TTP, so it has no effect on that part of the danger of Chinese recession. TTP could reduce Chinese growth, accelerating Chinese decline however.

 

[LUFTRAUSER]

The Chinese fertility rate is 1.6 and has been tending upwards for the last fifteen years. That's about the same as Canada and more than most of Western Europe.

Yeah, and for a country like China that is still developing, that's way too low. They need a growing population to transition to a service economy and continue economic expansion; once they are fully developed, then the fertility rate should be low.

 

[Piecake]

The Chinese fertility rate is 1.6 and has been tending upwards for the last fifteen years. That's about the same as Canada and more than most of Western Europe.

Key difference is that China is not one of the top economies. They need all the help they can get to push their economy into the advanced economy realm and a sustainable or even growing population would have helped. A declining population is a drag on the economy, which is the last thing that China wants.

China is or will experience problems associated with advanced economies when they aren't one yet, and that was all caused by their own policies.

 

[Dice//]

Work together oddly nicely

 

[Mr Swine]

So how far away is China from the looming economic collapse?

 

[Talonz]

Vice did a good piece on China's Ghost Towns: China's Ghost Towns: Strolling the Thames (VICE on HBO Ep. #6 Extended)

Pretty interesting stuff.

 

[Blackpanther25]

Vice did a good piece on China's Ghost Towns: China's Ghost Towns: Strolling the Thames (VICE on HBO Ep. #6 Extended)

Pretty interesting stuff.

Saw that as well. All in a attempt to keep that GDP up.

 

[Yoda]

So how far away is China from the looming economic collapse?

Collapse is very unlikely, permanent economic malaise (see Japan) is the fear, and the longer they keep up their whack-o-mole economic fixes the harder it's going to be to transition the economy off government stimulus.

 

[Zaptruder]

Debt debt everywhere. China in debt. America in debt. Australia in debt.

A financial collapse will happen. All measures taken so far only amount to "kicking the can down the road".

When this collapse occurs, and if it's China first, it's going to be huge and almost no one will be spared. The GFC was just a taste.

I'm kinda impressed by how far down the road they've kicked that can.

But fuck if it's not going to make for one hell of a crash when we finally catch up to it.

 

[PhantomX1313]

thats sh*tiest article ever man's obssession with china, they are like minions.

 

[Dalek]

Vice did a good piece on China's Ghost Towns: China's Ghost Towns: Strolling the Thames (VICE on HBO Ep. #6 Extended)

Pretty interesting stuff.

Yeah I saw this-fascinating stuff. Totally surreal.

 

[Rookje]

Please crash so the housing prices in SoCal go down.

 

[Hypnotoad]

Vice did a good piece on China's Ghost Towns: China's Ghost Towns: Strolling the Thames (VICE on HBO Ep. #6 Extended)

Pretty interesting stuff.

Ghost Towns in China are a real thing, as are overinflated housing prices and shoddy construction to boost GDP, but as always VICE sensationalizes, this time with another stupid example, since Thames Town has become a hot spot for couples taking their wedding pictures and is actually prospering because of tourism. Last time I went, despite bad weather, it was full of visitors. Their reporters should really visit some inland provinces for unnecessary projects such as oversized highways and high-rises in the middle of nowhere.

 

[Mumei]

Yeah, and for a country like China that is still developing, that's way too low. They need a growing population to transition to a service economy and continue economic expansion; once they are fully developed, then the fertility rate should be low.

Something illustrative from the NYTimes article in the OP. Not a good look.

 

[Snwaters]

Collapse is very unlikely, permanent economic malaise (see Japan) is the fear, and the longer they keep up their whack-o-mole economic fixes the harder it's going to be to transition the economy off government stimulus.

People are throwing the 'collapse' word around not so much because of the inevitable economic problems, but because of what that will lead to based on past behavior of the Chinese people and the CCP. The CCP gets it's legitimacy to be so authoritarian based on economic prosperity. That goes away, so too does it's legitimacy. (As a side note, it kind of reminds one of the Mandate)

So if even if they enter a malaise like Japan, the problem is was that Japan was a democracy with people willing to respect a change in government leadership dictated by the people. If people in China demand in change in leadership (ie CCP has to go), it's going to end in strife. Evidence for this can be seen in the T Square incident. The CCP will NOT go quietly, especially the government headed by Jinping. Any kind of severe economic slowdown in China will lead to mass people complaining, which leads to the military cracking down.

That's why some people are worried about 'collapse'. Whether that is how it will play out is another matter.

 

[Ishan]

Are there any equivalent studies about India I know were a service industry and a free market but we've had insane inflation too so any articles towards it would be appreciated

 

[Shiggy]

Small cities are borrowing to build futuristic museums, aquatic centers and apartment blocks that exceed local demand and are often as empty as ghost town

Chinese have a different view on these ghost towns. From a city planning perspective, they believe building and planning the entire infrastructure and city is more effective than the patchwork planning in already existing cities, where it's difficult to plan for increasing traffic or demand for water and electricity. In fact, with a vast share of the population living in rural areas still, I have little doubt that these ghost towns will remain ghost towns for long.

 

[Jimrpg]

China's slowing economy I believe one aspect has to do with the fact that as a manufacturer and producer of goods, they are not a very innovative country. You sell people a bunch of red buckets, there's only so many red buckets people are going to buy, before the price reduces to zero. At some point, you gotta upgrade that red bucket into a swiss army knife of buckets that does everything. Now they're making phones and tablets and tech, but where to next?

But whether by culture or by education, the Chinese manufacturers strength comes from copying a successful product and reducing costs where possible. Safety? Labour costs? Materials? Economies of scale? They all help to reduce costs and allow China to win on the global market. But like I said, only so long you can keep selling the same stuff before people stop buying.

Despite the Govenment throwing huge amounts of money into the economy to boost it again, what they really need are people that innovate themselves to kickstart the boom again. That's what they really need and you can't tell me there's no decent ideas from a country of 1.3 billion people. More than anything, I hope this period of slow growth sees a clear shift from China from a country that makes cheap knockoffs of everything to one that produces great products and gets people's interest.

 

[Neo C.]

I thought that's known for a while now. The world need to find another engine to drive global growth because China isn't going to keep it up.

It was known for a long time, but it's very difficult to time the collapse, it's long overdue and still doesn't happen right now. The government has somehow managed to keep the growth steady, and even now the growth is still respectable despite knowing the fact that the real GDP should be lower (the government is manipulating it too).

 

[Jimrpg]

Please crash so the housing prices in SoCal go down.

Last time there was a crash, people all around the world lost jobs, unless you're banking on the fact there's no way you'll lose your job.

 

[Renekton]

Shadow banking seems to be a big culprit this time, according to Economist.

Time to wikipedia what shadow banks are...

Last time there was a crash, people all around the world lost jobs, unless you're banking on the fact there's no way you'll lose your job.

He doesn't live in China. Just that Chinese 1% are buying assets in America/Aus driving prices up.

 

[bigmit3737]

China's slowing economy I believe one aspect has to do with the fact that as a manufacturer and producer of goods, they are not a very innovative country. You sell people a bunch of red buckets, there's only so many red buckets people are going to buy, before the price reduces to zero. At some point, you gotta upgrade that red bucket into a swiss army knife of buckets that does everything. Now they're making phones and tablets and tech, but where to next?

But whether by culture or by education, the Chinese manufacturers strength comes from copying a successful product and reducing costs where possible. Safety? Labour costs? Materials? Economies of scale? They all help to reduce costs and allow China to win on the global market. But like I said, only so long you can keep selling the same stuff before people stop buying.

Despite the Govenment throwing huge amounts of money into the economy to boost it again, what they really need are people that innovate themselves to kickstart the boom again. That's what they really need and you can't tell me there's no decent ideas from a country of 1.3 billion people. More than anything, I hope this period of slow growth sees a clear shift from China from a country that makes cheap knockoffs of everything to one that produces great products and gets people's interest.

There seems to be a lot of innovation in China from the tech and biotech companies.

Gene modification research ,
Driverless cars (besides baidu I think there are a couple more working on this)and the tech companies want to compete with the big tech companes of America (Chinese über company and a few other tech companies)


I found this which sheds light onto government 's increase r n d spending in the tech industry.

http://www.marketwatch.com/story/chinas-tech-companies-gaining-on-us-peers-2015-09-24

 

[Nikodemos]

There seems to be a lot of innovation in China from the tech and biotech companies.

Worth noting that a Chinese chemtech engineer invented the modern e-cig.

 

[Quixzlizx]

You act like that's evidence that all protectionism in all forms ends negatively. Protectionist policies that put domestic manufacturing on equal footing with imports on a cost basis can increase demand for internally produced goods. That can be bad, but it's not always. We already do it with agricultural subsidies.

Free trade with Japan and south Korea could increase export potential, but remember they benefit from reduced cost if goods from other SE Asia countries like Vietnam and could instead look to those countries. There's nothing keeping US companies from basing manufacturing out of those countries to take advantage of that.

Chinese purchase of US securities isn't bad, but if the Chinese economy collapses those ripple effects don't get prevented by TTP, so it has no effect on that part of the danger of Chinese recession. TTP could reduce Chinese growth, accelerating Chinese decline however.

This is the tilting at windmills way of attempting to deal with global economic changes. You're also decreasing internal demand by making everything more expensive, including for people who won't be getting one of these supposed new manufacturing jobs. It's like putting a tax on cars to keep horse and buggy drivers in business and expecting that to increase net growth.

 

[bangbang i'm a timpani]

I can't read an article when the author rights weird teenager-y stuff like "But that narrative is so last decade. "

 

[iamblades]

You act like that's evidence that all protectionism in all forms ends negatively. Protectionist policies that put domestic manufacturing on equal footing with imports on a cost basis can increase demand for internally produced goods. That can be bad, but it's not always. We already do it with agricultural subsidies.

Free trade with Japan and south Korea could increase export potential, but remember they benefit from reduced cost if goods from other SE Asia countries like Vietnam and could instead look to those countries. There's nothing keeping US companies from basing manufacturing out of those countries to take advantage of that.

Chinese purchase of US securities isn't bad, but if the Chinese economy collapses those ripple effects don't get prevented by TTP, so it has no effect on that part of the danger of Chinese recession. TTP could reduce Chinese growth, accelerating Chinese decline however.

All that does it artificially inflate costs for businesses and people over here, ie. everyone gets less production from more money. This clearly does not create more wealth, so regardless of whether it may temporarily increase tax revenues on one side of some arbitrary line on a map, it is a bad policy.

In almost all cases for an economy the size of the US economy the best trade policy is no trade policy, unilateral 0 tariffs.

There are some cases where protectionism is justified, but these cases are almost always tied into national security concerns. If a smaller nation is heavily dependent on a larger neighbor and wants to ensure that it has a stable domestic industrial base in the event of diplomatic or military conflict with the larger neighbor, it may make some sense. If it is just an question of economics though, free trade is always better even when the domestic industry loses out.

This is one of the most conclusively settled questions in economics, the mathematics of it are fairly simple, stated by Adam Smith back in 1776:

It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.... If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.

As for the OP. This was an inevitability, there are no such things as miracles. China was an economy that was artificially depressed by a terrible communist system then was artificially pumped up by Keynesian economics, rapid growth was the natural outcome of this, and it was clearly not sustainable. The question was always when the bottom would drop out and how sudden and violent the stop at the bottom will be.

 

[Pixieking]

Interesting reading... Especially when viewed in parallel to this piece from the Washington Post, Along the new Silk Road, a city built on sand is a monument to China’s problems.

LANZHOU NEW AREA, China —This city is supposed to be the “diamond” on China’s Silk Road Economic Belt — a new metropolis carved out of the mountains in the country’s arid northwest.

But it is shaping up to be fool’s gold, a ghost city in the making.

[...]

Yet the eagerness to support Xi’s hallmark Silk Road initiative — an economic belt running through Central Asia to Europe and a “Maritime Silk Road” hugging Asia’s southern coastline — seems to trump economic sense.

“It’s just another example of government priorities being at odds with each other,” Polk said. “There is a desire to do the belt and road program, and there is also a desire to de-leverage. You can’t do both at the same time, but we have seen time and time again in China which tends to win out.”