Hard Landing and the China Paradox

It’s not possible to look over Nouriel “Dr. Doom” Roubini’s new report on China’s economy [PDF; must use proxy in China] without feeling kind of sick. This is the doomsayer who correctly predicted the current global mess more than two years ago. He is predicting a very rough road for China moving forward, with no real end in sight.

Despite it’s being completely depressing, the report is well worth a read. It reinforces an observation I’ve been making recently, that everywhere you look there’s a dogged, cult-like insistence that the Chinese economy is safe and will grow by 8 percent in 2009, no matter what kind of statistical evidence you put in front of the “experts” explaining this is simply impossible based mainly on the catastrophic world demand for exports.

To achieve 8 percent growth, China would need to step up domestic consumption exponentially. Widespread poverty combined with a tendency to save at least 30 percent of earned income — mindsets and situations that will take years if not generations to change — makes this literally impossible.

Referring to this insistent denial of reality as “the 8 percent mantra,” Roubini says some private-sector analysts (which I suspect includes himself) see growth of less than 6 percent, and some as low as 4 percent.

For a country that has been growing at an average of 10% for the last decade (and as high as 13% in 2007 down to 9% in 2008) and that needs a growth close to 10% to move millions of poor rural farmers to the modern urban manufacturing sector every year, a growth rate of 5% would be the equivalent of a hard landing, and even 6% would be extremely weak. And the deceleration of growth in the last six months has been severe.

We’re pretty much there, in a hard landing. The big question, for me at least, is, What does that mean? What are the ramifications? About six months ago, Roubini predicted China would be hit so hard it would literally “fall apart.” As far as I can tell, it hasn’t happened and won’t happen anytime soon. The economy has been battered here for a long time now, and through a skillful blend of propaganda and a lowering of expectations, the government has managed to hold things pretty well together. I do expect things to get uglier and uglier, but not to fall apart. I’m still not certain how we measure how hard we’re landing.

This reflexive recitation of The 8 Percent Mantra, this official denial of reality, verges on the surreal. On the one hand, China is making louder and more aggressive claims that its economy is doing far better than that of the US, Europe and Japan. This is now stated as a given in the Chinese media, where the notion of “the US-originated global financial crisis” is being drummed into everyone’s heads, along with the notion that China is about to bounce back. Not only bounce back, but soon to stand head and shoulders with the other three (Europe, the US and Japan), and thus deserves a larger say in the affairs of the world. And I’m watching this insistence become ever more aggressive, bordering on provocative.

That may be deserved; if China is indeed this rich and successful, it does deserve more of a global say. But then the other reality butts in, dramatized in an excellent story a few days ago that had the China twittersphere all abuzz, and rightly so. The article is aptly titled Rich China, Poor China (and I wish I had blogged it earlier, but excuse, excuse, excuse). In a nutshell:

China the new power holds $2 trillion in foreign reserves, including about $1 trillion in U.S. debt, and increasingly lectures rich nations on economic management. Developing China has tens of millions of rural poor among its 1.3 billion people and falls in the same World Bank per capita income rankings as Cameroon and Guatemala.

The emergence of China as a heavyweight economic player with a relatively poor population has economists scrambling for new definitions, perplexes policymakers in other countries and has some competitors crying foul.

…China has raised eyebrows when it appeared to be demanding more rights as an unquestioned economic power while pleading poverty when asked to shoulder greater obligations.

Most powerful, superpower, Where is China’s reality? How is it possible for one country to be gripped with such wildly divergent contradictions? I’ve been wondering about this for years, and probably always will, and can’t write my thesis about it now. Meanwhile, another blogger has addressed the same issue pretty well and I suggest you check out his conclusions. I loved the quote he pulled up:

Travel to China for a week, and you’ll be able to write a book. Travel to China for a month, and you’ll be able to write an article. Travel to China for a year, and you won’t be able to write anything at all.

As a friend of mine put it recently, “The longer you stay here, the less you know.”

This was going to be a brief post about Roubini’s report, slipped in during a break at work. Don’t ask me how it morphed into the current meandering mess. Bottom-line points: Huge disconnect between what China sees vs. the world’s financial gurus (the ones who had it right about the global crash). Huge disconnect between claims of greatness and claims of poverty. Huge disconnect between where China actually stands today and where the government is telling us it stands (see the Roubini report for numerous detailed examples).

Meanwhile let’s hope for as soft and gentle a landing as possible,and pray that the government is more right than Roubini.


Ten hours

That seems to be the average time I’m spending behind the desk each day with my new job. Needless to say, it doesn’t give me much time to blog. I’ll try soon, but if the past few days are any indication, I’ll have to cut it way down. I thought I’d be able to sneak in at least one post a day, but lately that’s been simply impossible.

Most painful is the realization this week that I’f have to give up my Chinese classes after making decent progress over the past six months. I really don’t feel like going to class after a long day of work.

On a brighter note, winter finally seems to have ended here in Beijing and the past couple days have been spectacularly beautiful. And work isn’t bad, it’s just tiring. I look at my situation and that of some of my friends and relatives back home, and I have to say I’ve got it pretty easy.


Who were the children who died in the Sichuan quake?

We may never know.

Update: Some great photos, “lest we forget.”

Update 2: While I’m putting up links, this story on the kidnapping of baby boys in rural China is absolutely a must-read.


Hussein Obama bowed too low – surely code for Jihad!

The American right has truly and totally lost its marbles. With the world in shambles and people worrying about how to feed their families, the most pressing and terrible thing in their eyes is Obama’s bowing to Saudi King Abdullah.

These comments from the blog with the deliciously ironic title American Thinker may take the cake:

Posted by: FulghumInk
Apr 02, 07:44 PM
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Well good people, Hussein Obama could be politically neutered in 2010. It is up to the American voter. This Marxist socialist miscreant needs to be politically neutered big time. I’m with Alan Keyes-Hussein Obama is not my President.

This citizen loves his country. This citizen hates this government, and the rogue racketeers that occupy it. They are pure unadulterated evil.


Posted by: Cincinnatius
Apr 02, 04:47 PM
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When I think of all the servicemen, some of them personal friends, have died before bowing to ANYONE because they were AMERICANS! To see the POTUS, the very symbol of America bowing to a fat piece of excrement. However, I think we have all witnessed the man to whom Obama pays fidelity.

Posted by: ujay
Apr 02, 04:46 PM
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Whether it’s ignorance or his true colors, it shows that America matters little to him…from Indonesia to the Oval Office, always has, always will

Posted by: Nitram
Apr 02, 04:43 PM
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Aye, treason – and in time of war as well. That’s not just impeachable, that’s executable. As the commander in Chief of US Forces…. utterly reprehensible.

No American, regardless of station, should bow to any foreign leader. We are a sovereign people, which is to say that the poorest Citizen of America stands on an equal footing with every leader of every country in the world. That our supposed president would do so is utterly disgusting.

Posted by: Johnny Appleseed
Apr 02, 04:28 PM
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No impeachment = end of the American Republic. I don’t care to suffer or die for my country, land where my fathers died; but what about our children and grandchildren and great-grandchildren? If we don’t rid ourselves of this Marxist-Islamist usurper, our posterity will either curse us; or worse yet, they will not know what it means to speak freely and live under freedom. Our fathers, grandfathers, great-grandfathers and founding fathers were willing to struggle, suffer and if necessary to die for their own freedom and so that all later generations could live free. Where are the leaders of the opposing political party? Why aren’t we hearing damning words and calls for impeachment from Republican and third party leaders? Without intense vocal opposition leadership, or massive protests by tens of millions, American freedom appears ready to die; and government of the people, by the people, for the people will perish from the earth.

Posted by: Kathy
Apr 02, 04:23 PM
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Does this really surprise anyone? He is and has always been a Muslim, just because it was not PC to say it out loud does not change the fact that he is and that is where his loyalties lie. The only question is what are we going to do about it?

Just a quick reminder:


Why don’t they get that the days when you could get millions of citizens hysterical over a flag pin or the feeding tube of a brain-dead woman or an an utterly insignificant breach of protocol (if that’s what this “bow” even constituted) are over. Faux outrage used to distract a nervous public from what really matters, like food and healthcare and keeping their homes, are doomed to irrelevancy. They may look like rock stars within their echo chambers, but those chambers are getting smaller and smaller as they go out of their way to marginalize themselves.

If this is the very best tactic they have to slime a president with a high approval (deserved or not) and a mission ahead of him that most Americans see as life or death, then Greater Wingnuttopia is in serious trouble. Which is wonderful news.


China stepping up or slacking?

Gady Epstein, Forbes’ man in Beijing (and a renowned Scrabble player), takes a look at the G20 talks and the seemingly universal notion that all the tough work lies on the shoulders of the US and China, a country that, as all fashionable pundits know, has failed to provide leadership and avoided sitting down to work out serious solutions. Which, Epstein says, is pure nonsense. Europe, he says, is the real slacker.

China in particular has stepped up to take an active leadership role after years of calls by Western nations to do so. Aside from its domestic efforts, China is pushing for IMF reforms that, while seeking to elevate China’s role in financing poorer nations, should also result in a more robust and better-funded IMF, which the developing world badly needs.

China has spoken up on the dominant position of the U.S. dollar in global reserves and trade payments and has made several deals with trading partner nations to provide export financing in its own currency. This is potentially helpful in an economy where trade financing has become scarce. And it would be misreading things to say that the Chinese are seeking to undermine the dollar, which, after all, they have bought so heavily to hold down the value of its own currency (and so make its exports cheaper).

No, China is, quite literally, invested in the global financial system as it is and, seeing that system in trouble is weighing in with real leadership. Many will disagree with some of the positions China takes from here forward, but now is the time to turn attention elsewhere. Now is the time for countries that have long wanted bold steps from China, the countries of Old Europe, to take some bold steps of their own.

The gist of the argument is the US and China’s stimulus plans, for all their faults, are big steps in the right direction. France and Germany’s plans are relatively toothless, and their commitment to serious stimulus simply too small.

I couldn’t help but notice how this assertion of China’s commitment and involvement contrasted with a recent column by Paul Krugman:

The bottom line is that China hasn’t yet faced up to the wrenching changes that will be needed to deal with this global crisis. The same could, of course, be said of the Japanese, the Europeans — and us.

And that failure to face up to new realities is the main reason that, despite some glimmers of good news — the G-20 summit accomplished more than I thought it would — this crisis probably still has years to run.

Krugman’s main beef with China is that their strategy of amassing dollars was unstrategic, counter-productive, self-defeating and dumb. What Epstein is claiming – and what Krugman either doesn’t see or doesn’t agree with – is that China is actually facing up to the present realities better than most, and certainly better than “Old Europe.” Looking at Krugman’s column, I think he’s caught up in what China did in the past with its dollar strategy and unimpressed with its stimulus plan – which parallels the way he sees the US. Krugman says it’s all much too little much too late. Epstein is saying both the US and China, despite the sins and stupidities that led us here, are at least taking serious steps to turn the calamity around and should be applauded for that.

I know there’s some “apples and oranges” in comparing the two columns. Krugman’s is more historical (and extremely critical of China’s role in the meltdown), Epstein’s is more about what needs to happen next. It was the diametrically opposed conclusion each drew about China’s stepping up to the plate that stood out for me.


Just a short note on unhappy China

Too wiped out to put up anything new, and know I’ve been delinquent the past couple of days. In the meantime, two worthwhile links:

Unhappy China – a translation of one of the best critiques of the much-discussed book. (Via Danwei.)

An Unsure China Steps Upon the World Stage – a good read after the Unhappy China link above.

Aside from that, let me just make one brief observation: This week I’ve been reading scores of articles on the financial crisis from a wide array of Chinese media, some written in English and others translated into English. One thing I suddenly realized today: Nearly every single one of them begins by stating matter-of-factly, in more or less these words, “The global recession, which was caused by America’s financial irresponsibility….” At a point later on in each article, with uncanny regularity, appears another matter-of-fact reference, this time to the certainty that China’s situation is now improving, the worst is over and it’s now just a matter of putting the finishing touches on a successful stimulus plan.

Now, I am the first to admit this disaster was to a very large extent caused by American fiscal irresponsibility. However, I also know that the exact same message planted in the opening sentences of one article after another after another after another is no coincidence and is part of a propaganda campaign that has two clear intentions:

1. To make it clear that it was America’s malfeasance that spoiled the party, and
2. To make it clear that China is bouncing back rapidly and was better prepared for catastrophe (through its savings) and better prepared for the arrival of new world order to come.

Keep your eyes opened for similar memes. They don’t just appear in a vacuum, and they are clearly choreographed. And for the record (yes, another mandatory disclaimer), I am not necessarily disagreeing with either of those two items – there’s some truth to both, though how much is impossible to say yet. I’m simply pointing out that we’re witnessing a campaign to engineer the way Chinese people look at this disaster – as entirely America’s fault, without question, and China’s opportunity. China was blameless, a victim, but thanks to its wisdom it will ultimately benefit from America’s blight on the world.

Both of the two links above offer insight into this mentality and how it relates to the present mood in the country. The popularity of Unhappy China makes perfect sense.


April Fool’s at China Smack

Heh – several Ducksters (myself included) are included in the joke.

(It’s in Chinese. I can now read enough to at least appreciate the translation.)


Ads, links, thread, etc.

I can’t see any of the google ads on the left-hand sidebar, just a big empty space. A friend in America sent me a screenshot, and they look quite naughty. Would China actually bother blocking them as part of its wholesomeness campaign?

While I am here, some quick links:

In China, tall is all and beauty is more than skin-deep. (Great post.)

Sinosplice interviews translator titan Brendan O’Kane on the joys and sorrows of performing his trade in China.

Chinageeks continues to impress with their translation of a remarkable story of another American Chinabounder-type. Only worse.

Yet another article on the mess in Tibet , this one quite level-headed and even-handed.

I’m still at my new job and living in Beijing, where winter never seems to end. Still, I wouldn’t want to be anywhere else. Except maybe Kunming….

Site has been busy this week, not sure an open thread is needed, but here’s one just in case.

Update: Had to add this as strangest headline and story of the day:

“Md. mom pleads guilty to starving son to death in unusual deal.”

I saw that and said to myself, yes, it is most unusual to make a deal with your son to starve him to death. Turns out it’s a different kind of deal, and perhaps the strangest ever.

A former religious cult member pleaded guilty Monday to starving her 1-year-old son to death after making an unusual deal with prosecutors: If the child is resurrected, her plea will be withdrawn. Ria Ramkissoon, 22, also agreed to testify against four other members of the now-defunct religious group known as 1 Mind Ministries. All four are charged with first-degree murder in the death of Javon Thompson.

According to a statement of facts, the cult members stopped feeding the boy when he refused to say “Amen” after a meal. After Javon died, Ramkissoon sat next to his decomposing body and prayed for his resurrection.

I somehow doubt this story will have a happy ending. I keep hearing John Lennon’s line from Imagine, “and no religion, too….” I at least give China credit for getting that issue right.


“Abstract Numbers” of the Nanjing Massacre, Wenchuan earthquake victims

A translation of a moving article that contends the large numbers with lots of zeroes — but no specific final number and no actual names of victims — robs these two tragedies of the emotional impact they deserve.

It’s a pity that the promulgation of Lu Chuan’s art [the new film Nanjing!] still won’t overcome the enveloping inertia of reality. Jewish Sinologist Vera Schwarcz published an essay in 1995 called “World War II: Beyond the Museum Lights” that discussed how today we often say Nazis killed six million Jews, the Japanese killed 300,000 in Nanjing, but actually using these numbers and terminology makes massacres into abstractions. “Abstraction is the most fanatical enemy of memory. It murders memory because it advocates distance and, moreover, aloofness. We must remind ourselves: what was massacred was not the number six million, it was a person, then another, then another…only in this way can we understand the meaning of ‘massacre’.”*

A similar argument for the earthquake victims, whom the writer fears will be reduced to a numbing abstract number, with no memory of who they actually were. Sometimes I think we in America over-do it, but there is no denying that actual memories of the names and faces and lives of the victims will be infinitely more powerful than a number followed by some zeroes.

As I’ve said before, this site is quickly becoming one of my daily must-reads.