Top Story – Economy in Communist China may hit actual recession: The economy in Communist China always had to grow at a much higher rate than most democratic nations just to keep up with population. Now, Ambrose Evans-Pritchard (Telegraph, UK) hears from an analyst who wonders if the CCP will see any growth at all.
‘It is too late to avoid a hard-landing,’ said Patrick Chovanec from Silvercrest Asset Management and a former professor at Beijing’s Tsinghua University. ‘To keep growth going they have to push extremely high levels of investment to even more extreme levels, and that is becoming very hard to do and very hard to finance.’
‘The economic return on credit is rapidly declining. They increased loans by $1 trillion in the first quarter, but growth slid anyway and is now below levels seen in early 2009 after the Lehman crisis. It is no longer out of the question that GDP will actually fall,’ he said.
In fact, according to another analyst Evans-Pritchard interviewed, it’s already happened.
Diana Choyleva, from Lombard Street, said the official Chinese figures show that the economy contracted by 0.2pc in the second quarter, rather than growing 1.7pc (7.5pc year-on-year) as claimed by the government.
The discrepancy comes from the inflation assumptions used by Beijing. The government relies on a fixed basket of prices that can flatter the true health of the economy.
A better benchmark is the ‘GDP deflator’, which uses an evolving measure of prices that better reflect the reality of China’s fast-changing economy. ‘If you measure it that way, China is much closer to deflation than people realise,’ she said.
Evans-Pritchard then goes into detail about the problems with CCP statistics on the economy – namely, that they are often spectacularly fudged.
A Wikileaks cable reported premier Li Keqiang during his days as a regional party chief telling a US diplomat that China’s data were ‘mad-made and for reference only’. Mr Li said he looked at electricity use, rail freight and credit growth to discern the truth.
Chinese analysts have put together a ‘Li Keqiang Index’ using these three sets of data. It shows that China’s annual growth rate has collapsed to less than 2pc, below the worst levels after the Lehman crisis.
Folks, that’s a very hard landing for the Communists.
While the regime shifted from economic prosperity to radical nationalism as its raison d’etre in the aftermath of the Tiananmen massacre, the growth engine still fed the corruption-riddled parasite that is the Chinese Communist Party. The regime is in serious trouble.
Meanwhile, Chovanec also talked to Brad Plumer of the Washington Post on this, while a slew of bankruptcies catches the attention of the Epoch Times.
Other Internal News: A disabled man frustrated at his treatment by the regime (whose police force disabled him in the first place with a 2005 beating) set off a bomb in Beijing International Airport. His efforts to warn passengers of his plans prevented any of them from being injured in the blast, and earned him quite a bit of sympathy from the “netizens” (Taipei Times).
Anti-Communist Japanese PM wins majority in upper house: Yesterday’s House of Councillors election gives Shinzo Abe a majority in both houses (Washington Post). This gives Abe a free hand to implement economic reforms as well as strengthen Japan’s international profile – in other words, resist the encroachments of the Chinese Communist Party. The CCP’s antics were a major factor in Abe’s victory (National Post).
Communist China could soon hit U.S. with nuclear weapons from submarines across the Pacific: The Communist Navy is preparing to deploy the JL-2 in their submarines. Said JL-2 “will for the first time enable Chinese submarines to strike parts of the United States from China’s coastal waters” (Washington Times). As a result, the number of ballistic missiles that the CCP can aim at the United States could pass 100 by 2028. Meanwhile, their is increasing concern on this side of the Pacific regarding the current strength of the American Navy (Washington Times).
Falun Gong persecution anniversary marked by protests: Practitioners held a vigil in front of the CCP Embassy in Washington, DC, on Saturday – the fourteenth anniversary that the Communists’ crackdown against the movement began (Epoch Times). There was also a march held in Taipei (Taipei Times).
Ma Ying-jeou re-elected leader of the Kuomintang Party: The president of the island democracy was unopposed in his bid to remain party leader (Taipei Times, which noted the disconnect between the Ma-Loving KMT and the rest of the country). It should be noted that every president of Taiwan has also been the leader of his party – including the only Democratic Progressive to hold the post, Chen Shui-bian.
What is an occupation? That is setting off a major argument in Taiwan, particular regarding the fifty-year period when Japan governed the island amid concerns that referring to the period as “occupation” is itself a “Sinicization” of Taiwanese history. As one would expect, the usual political arguments between soft-of-Communist “unification” folks and clear-eyed sovereigntists are just beneath the surface here. Report: Taipei Times
Anonymous cadre publishes history of Communist oppression in Tibet: While the six-decade-plus persecution of Tibet by the CCP is no secret, the admission by the unnamed CCP member – to a foreign news source, no less – is more of a surprise. The cadre has put together a manuscript on it, according to Der Spiegel (via Epoch Times).
Democratic Korea trying a fifth round of talks with CCP colony regarding Kaesong: The elected government in Korea has been unable to reach a deal with the colony (a.k.a., “North Korea”) regarding the industrial complex on the colonial side that was supposed to be a sign of inter-Korean cooperation (Agence France Presse via Telegraph, UK).