China’s domestic consumption – a myth?

There are some wildly divergent schools of thought on China’s economy, as you can see in this new post by my friend Dror (with whom I disagree on a lot of things). He blasts the rosy scenarios in some Western media claiming China will “1.) decouple” from the US and other countries it has depended on for exports and 2.) continue its growth by domestic consumption instead. His conclusion:

[I]n the real world, China’s economy is becoming increasingly dependent on investment in fixed-assets (by government, or via government-induced loans), and depends less, not more, on local consumption. China’s development trend and growth in real manufacturing income is very different from that of other “Asian Tigers” and seems to offer a very limited benefit to those working at the lowest paying jobs – which means they are not going to become the world’s new consumers any time soon.

It looks like the only decoupling we have been experiencing over the past 12 months is a decoupling from reality – a growing gap between what we read in the papers and what really happens in the global economy. There is a lot of growth in China, and while some people are making more money, there are even more people who don’t, and a few people who make more than everyone else combined. And while there is an increase in retail spending, local consumption is not likely to become China’s main growth engine any time soon.

No matter what the CIA World Fact Book or The Economist says, I’d have to agree that China is not ready to decouple from the US, just as we aren’t ready to decouple from them. I’m not as pessimistic as Dror is about China’s prospects, but the points he raises are definitely worth considering. Decoupling, I believe, is a long way off, as much as the propaganda wants you to think otherwise.

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Richard Burger is the author of Behind the Red Door: Sex in China, an exploration of China's sexual revolution and its clash with traditional Chinese values.

The Discussion: 98 Comments

As usual his post is well-written but a bit flawed- it is based off of information grounded in a lot of outdated beliefs. This doesn’t specifically refer to Dror, but any group or individual that uses the term “Asia” and tries to come up with some kind of coherent and meaningful macro-analysis is bound to fail.

Is “Other Asia” Japan, where the economy is indeed heavily export dependent? Or is it India, where hundreds of millions of subsistence farmers do indeed “domestically consume” their $1 a day per capita GDP?

China was never coupled to America. This is purely the American national ego speaking. i.e they need us, if we cut off market access they are doomed- is that what people want to hear? It’s not true. The fact is that all holders of the dollar are of course in some way tied to America’s economic future- it doesn’t mean that Japan, China, the Middle East, Russia, etc will instantly be ruined by misfortune in America.

This is the narrative that Fox News and CNN want you to believe- they are trying to assuage a near-hysterical American public through schadenfreude. Essentially by whispering sweet nothings about how those “evil foreigners” who “brought this mess about in the first place” will “get what they deserve” if they dare to “offend great America”. It’s an illusion of control, I guess.

To be clear China gets next to nothing in terms of profit from exports to Europe and America. Most of the money goes to foreign designers and managers. The workers get a pittance and the environment gets trashed. What they do get is leverage.

With that in mind China is hardly export dependent, in the sense that hardly even 1 out of 20 Chinese is even involved with the export sector. That’s not to say China is like America where the economy is in part run by the average person buying consumer goods. The average Chinese adult commands around $19,000 in net wealth- less than 1/10th of the average American adult. So of course, much of the “domestic consumption” will be investment- by the government or private citizens.

To suggest that China is desperately tied to the American markets and thus their only choice is to buy their way to wealth by splurging on Starbucks, Coca-Cola, and watching terrible (and racist, anti-Chinese) Hollywood movies or face impending economic doom is nonsense. It would be a recipe for permanent serfdom. Anyone who suggests this is obviously not a trustworthy economist or financial expert.

I still don’t where Dror is coming from.

December 3, 2009 @ 8:57 am | Comment

To counter specific points, that Dror highlighted-

Private consumption as a share of China’s GDP has been going down consistently since the early 1960s, including a dramatic drop following China’s “Reform and Opening Up” policy at the end of the 1970s.

Since GDP grew exponentially, and % of GDP from private consumption did not decline in such a manner, this is of course a given. The graph looks much more “dramatic” because of the limits set, and of course the addition of “Other Asia” makes it practically worthless.

The average wage of a Chinese manufacturing worker in comparison to his American counterpart remained constant over the past 30 years, hovering around 2%. This means that despite the massive increase in Chinese exports to the US, a Chinese factory worker still earns a 50th of his American counterpart

Yet China’s manufacturing base expanded meteorically, while America’s continues to shrink. If you have 100 workers all earning $30,000 a year and fire 95 of them, the average wage is still $30,000 a year. This is also not counting America’s immense and growing ‘illegal’ workforce, whose wages are often not properly calculated (and would, of course, depress the average). Meanwhile, living costs in America have steadily risen in terms of inflation adjusted dollars the average (legal) American has seen no net increase in his financial position since a decade ago. Wage costs may not have fluctuated in China, but for better or worse living standards may have changed (generally improving) as well as benefits and social welfare.

dependent on investment in fixed-assets (by government, or via government-induced loans),

A bold claim that needs a source. Dror has a habit of taking sourced statements (though from biased sources) and then injecting unsupported claims in places where he pleases- to disguise them with some kind of pretense to authority. I don’t understand how he can claim to be unbiased or disinterested and then continually resort to such blatant intellectual dishonesty.

and seems to offer a very limited benefit to those working at the lowest paying jobs – which means they are not going to become the world’s new consumers any time soon.

See above. This statement implies that the entire 800 million strong Chinese workforce is working in exports, which is yet another Western fantasy. It’s no more than 40-50 million, and relevant to this post, only about 40% of them ship to the West (the rest go to HK, SK, Japan, developing world).

There is a lot of growth in China, and while some people are making more money, there are even more people who don’t, and a few people who make more than everyone else combined.

This is a gross oversimplification. I know he is beaten the dead horse of “income inequality”, but in truth income inequality means next to nothing when the Communist government does a lot of “redistribution” and there is in general much less “wealth destruction” going on in China.

And while there is an increase in retail spending, local consumption is not likely to become China’s main growth engine any time soon.

I don’t know what Dror means by “local consumption”. Yes, China is not going to spend its way into “wealth” by buying Hummers, Hennessy, and other “essentials”.

December 3, 2009 @ 9:13 am | Comment

@merp

In that case, you wouldn’t mind some stiff import tariffs in EU and US to China imports.

December 3, 2009 @ 3:58 pm | Comment

If China isn’t export dependent,

1. Why don’t they allow the RMB to appreciate bringing in more imports and expanding domestic consumption as the Chinese spending power grows?
2. Why did they need an enormous stimulus for their economy? The only rational reason would be because they were negatively affected by the world economy and the only way they could feel this would be through their exports.

December 3, 2009 @ 6:57 pm | Comment

In that case, you wouldn’t mind some stiff import tariffs in EU and US to China imports.

If you don’t mind China dumping $1 trillion USD. The US doesn’t get to break trade rules just because they “feel like it”. Even though Europe and America count for little in terms of GDP, it’s still an illegal economic attack, which will of course will elicit consequences.

Before you whine about the RMB, please remember that the peg was put in place to stabilize the region after Western speculators and the IMF destroyed the Thai Baht. Nearly all developing economies have an undervalued currency- and many developed ones an overvalued currency, if America, Britain and Iceland are evidence of anything.

The simple fact is, demanding that China inflate the value of the RMB is demanding that the US dollar goes down in value. Of course, since the US pursued a criminal policy of forcing oil exporters to use the dollar, this is not possible in the short term.

1. Why don’t they allow the RMB to appreciate bringing in more imports and expanding domestic consumption as the Chinese spending power grows?

1. Because America refuses to sell China the things it wants to buy, and encourages the “international community” to restrict exports of technology to China. There are specific types of semiconductor, for example, that are included in the so-called post-Tiananmen arms embargo. I’ll look up the specifics if no one else knows them.

Raising the value of the RMB would increase China’s ability to buy raw materials (somewhat restricted by Aus/US and other Western countries) and food. That’s it. It’d be of no benefit to the Chinese side, and would only open the country up to the unscrupulous corporate monopolies of the West.

2. They were negatively affected, but not nearly as badly as you were hoping. They had a stimulus because they have always needed better infrastructure and social welfare, and the economic crisis simply jolted them into action.

December 4, 2009 @ 5:32 am | Comment

@merp
“If you don’t mind China dumping $1 trillion USD.”
I really don’t mind. If the dollar crashes I just take the plane to NY for a shopping spree.
In the meantime a lot of savings from hardworking Chinese would go in a puff of air. Don’t think most of them will like that.

“demanding that China inflate the value of the RMB”
Demanding China stop deflating the RMB.

“is demanding that the US dollar goes down in value”
Is demanding that the RMB goes up in value.

“since the US pursued a criminal policy of forcing oil exporters to use the dollar,”
If you want, you can pay in Euros. Be my guest

December 4, 2009 @ 6:28 am | Comment

“those “evil foreigners” who “brought this mess about in the first place” will “get what they deserve” if they dare to “offend great America””

A satirical masterclass from feromerp. Change ‘America’ to ‘China’ in that sentence and you’ve essentially arrived at Chinese foreign policy.

“There are specific types of semiconductor, for example, that are included in the so-called post-Tiananmen arms embargo.”

Quite right, too. There’s nothing that the Chinese government have done yet to demonstrate they deserve a lifting of the embargo – particularly with respect to ’89. Besides, they steal technology at a faster rate than they could buy it.

“If you don’t mind China dumping $1 trillion USD.”

Tilting at windmills, dear boy. China would implode if they even thought about it.

“China gets next to nothing in terms of profit from exports to Europe and America…I still don’t where Dror is coming from.”

Evidently.

“…splurging on Starbucks, Coca-Cola, and watching terrible (and racist, anti-Chinese) Hollywood movies…”

Why do you hate America? Because you do, don’t you?

December 4, 2009 @ 7:28 am | Comment

In the meantime a lot of savings from hardworking Chinese would go in a puff of air. Don’t think most of them will like that.

Dollar reserves are not the “savings” of “hardworking Chinese”. They never saw the money in the first place. If the dollar collapses and takes the RMB up with it, their living standards will improve to some degree. However, it will take quite a lot of political maneuvering for China to avoid a new wave of economic imperialism from the West.

Demanding China stop deflating the RMB.

The RMB is not deflated. It’s pegged. The only reason why it’s “deflated” is because they resist foreign speculators with an illegal embargo on them.

If you want, you can pay in Euros. Be my guest

Iraq tried that, look what happened to them.

@stuart
A satirical masterclass from feromerp. Change ‘America’ to ‘China’ in that sentence and you’ve essentially arrived at Chinese foreign policy.

If that were China’s policy, they would have destroyed the dollar already. But they don’t want to be responsible for any more American angst.

Quite right, too. There’s nothing that the Chinese government have done yet to demonstrate they deserve a lifting of the embargo – particularly with respect to ‘89. Besides, they steal technology at a faster rate than they could buy it.

It’s demonstrated that it kills less people in the last few decades than America did in Iraq, in which case China is more responsible as a global stakeholder than Britain, Australia, and America. So I’m assuming all of these nations should be embargoed as well.

As for China “stealing” technology, they pay for it in currency or labor. If they steal it, well it’s not even 1/100,000,000th the value of gunpowder, so get over it.

Tilting at windmills, dear boy. China would implode if they even thought about it.

China would lose around 5% of GDP. America would collapse and never get up again.

December 4, 2009 @ 8:08 am | Comment

‘Nearly all developing economies have an undervalued currency- and many developed ones an overvalued currency, if America, Britain and Iceland are evidence of anything’

Well put. All my family members have already dumped the USD and the British pounds, for the long term we are looking at the Asia Pacific market but avoid anything Japanese.We do not feel confident in developed economies.

December 4, 2009 @ 8:28 am | Comment

Why do you hate America? Good question!
Here’s the answer: http://www.youtube.com/watch?v=lPmH_d7A9-g

December 4, 2009 @ 8:53 am | Comment

‘Nearly all developing economies have an undervalued currency- and many developed ones an overvalued currency, if America, Britain and Iceland are evidence of anything’

Well put. All my family members have already dumped the USD and the British pounds, for the long term we are looking at the Asia Pacific market but avoid anything Japanese.We do not feel confident in developed economies.

December 4, 2009 @ 8:58 am | Comment

Excellent video Keele.

Some people like stuart still think Saddam was behind global terrorism, 9-11, and possessed weapons of mass destruction. That’s why stuart and his ilk firmly believe 1.3 million Iraqis deserved to be brutally killed in their own countries, while 5 million more were made refugees.

December 4, 2009 @ 9:08 am | Comment

Keele, that’s not why people hate America, it’s why they hate Bush. Don’t equate the two.

Tingfong/Cheesecake – posting under different names? What’s up with that?

Merp, America’s legacy isn’t just killing people in Iraq. Under your way of thinking, we can constantly blast China for the TSM or the CR. There’s more to China than that. There’s more to the US then the aberrant Bush war that most Americans despise.

December 4, 2009 @ 9:10 am | Comment

Merp/Ferin, you are going too far. Stuart never said any such thing, and you know it. You are going to be out if you don’t grow up.

December 4, 2009 @ 9:19 am | Comment

Yes, he did. When he accused China of being a worse human rights abuser than America, he dismissed the pain and suffering of 1.3 million dead in Iraq.

That’s like saying the bombing of Dresden was the worst crime of World War 2- either stuart is deliberately trolling, or he fails at logic.

December 4, 2009 @ 9:39 am | Comment

Merp, America’s legacy isn’t just killing people in Iraq.

Right, but that WASN’T the point. He, as usual, was whining about Tiananmen Square (not that he actually cares about the victims) as a jab at China- as if the 1,500 dead in Tiananmen compare to the millions dead in Iraq and Vietnam.

December 4, 2009 @ 9:40 am | Comment

Merp,

What’s the meaning of life?

You have a quick ready-made answer for absolutely everything, so I’m expecting a good one for this question.

December 4, 2009 @ 9:45 am | Comment

Uhh, 42?

December 4, 2009 @ 10:01 am | Comment

Yes, he did. When he accused China of being a worse human rights abuser than America, he dismissed the pain and suffering of 1.3 million dead in Iraq.

Sorry, but if numbers constitute your criteria you’re liable to lose this argument. Over the course of their respective histories, I’d say China caused more pain and suffering for more people than the US ever did. (But this is another Ferin distraction, moving us even further off topic to the familiar, tired argument that the US is the root of all evil.

December 4, 2009 @ 10:38 am | Comment

@Merp: Thanks for the thoughtful comments. With your permission, I will ignore the assumption you (and Richard) make about “where I am coming from” and what I am trying to “imply” about the future, and address the specific issues you raised:

1. Private consumption is shown as a proportion of GDP. The fact that GDP has grown exponentially does not change the fact that private consumption is becoming an increasingly smaller part of it. So, I don’t see your point. Let me know if I am missing anything.

2. You must admit that the data concerning average wages is astounding. Since Japan, Korea, and Taiwan are also on that graph, your point about illegal immigrants in the US has little impact. All four Asian countries are compared to the same America. In the other three countries relative manufacturing wages went up dramatically. In China, they didn’t. This is, indeed, a rough comparison, but the trend is marked and clear.

3. As for the claim concerning government-induced investment in fixed assets: Chinese government data shows clearly that investment in fixed assets has grown dramatically, much faster than any type of investment, during the last two decades. There is nothing new about this, and you are welcome to verify it with your own sources. The fact that this investment is government-induced is also not exactly a secret either: The Chinese government takes great pride in its ability to encourage state-owned banks to increase lending to infrastructure and real estate projects, at will. I would be proud to be the first one to make this claim, even at the cost of being called “intellectually dishonest”, but in this case, I do not think I published anything that is not already well known. I just put the pieces together to show that the mainstream story does not make sense.

4. As for the summary being an “oversimplification” – you are absolutely right! :) This is what summaries are for, and I am, after all, writing with the purpose of making people thing.

5. Your last point about Hummers and Hennessy is populistic, and you know it. The Koreans and Japanese did not become rich by buying Hummers and Hennessy. If anything, it is the Chinese of today who spend money on exactly these type of goods while neglecting the development of a broader social class that can enjoy the simpler goods that prosperity brings with it.

December 4, 2009 @ 11:30 am | Comment

“…either stuart is deliberately trolling, or he fails at logic.”

Classic Chinese rationale. When you’re confronted with an uncomfortable truth, misrepresent the source with negative spin or denial. This is your only recourse with me, old sport. Because I see right through you and you know it.

But I’ll give you another chance, benevolent commenter that I am:

“China would lose around 5% of GDP. America would collapse and never get up again.”

Really!? If that were true, merpingtroyd, I guarantee China would dump their dollars tomorrow. Then they’d throw a party in the name of zero sum economics.

What say you to that, old sport?

December 4, 2009 @ 11:36 am | Comment

@Richard
Sorry, but if numbers constitute your criteria you’re liable to lose this argument. Over the course of their respective histories, I’d say China caused more pain and suffering for more people than the US ever did.

I guess you don’t consider Native Americans human, like many Americans who argue that China is some how a worse human rights abuser. But lets not get too off topic. If you ever want to wade into the territory of Chinese history esp with regards to border changes, be my guest. And enough with the “you’re derailing threads” thing, as you can see it was once again your friend stuart who did the derailing- unless you think the rabid China-bashers should be able to say their piece and no one can counter their arguments.

@Dror
1. Private consumption is shown as a proportion of GDP. The fact that GDP has grown exponentially does not change the fact that private consumption is becoming an increasingly smaller part of it. So, I don’t see your point. Let me know if I am missing anything.

That’s the problem. Private consumption as a proportion of GDP is totally worthless as an indicator.

In the other three countries relative manufacturing wages went up dramatically.

At equivalent periods of development? Really? China keeps adding more and more migrant workers to the manufacturing sector which of course depress average wages.

The Chinese government takes great pride in its ability to encourage state-owned banks to increase lending to infrastructure and real estate projects

That wasn’t what I was getting at. Unless you have proof that it’s overwhelmingly state directed, you should not imply it is. Private Chinese investors are also involved. Regardless, unless you don’t think Chinese people need roads or houses I don’t see how your “state = evil” argument applies here.

If anything, it is the Chinese of today who spend money on exactly these type of goods while neglecting the development of a broader social class that can enjoy the simpler goods that prosperity brings with it.

Is this yet another “wealth disparity” thing? China has a lower wealth disparity than any of the other “BRICS” as well as the US… income disparity is another thing.

@stuart
Classic Chinese rationale. When you’re confronted with an uncomfortable truth, misrepresent the source with negative spin or denial.

Classic white rationale. Try to shout and scream over your opponent, pre-emptively deflect criticism by drawing attention to others, project your own problems at random countries.

Really!? If that were true, merpingtroyd, I guarantee China would dump their dollars tomorrow. Then they’d throw a party in the name of zero sum economics.

That’s if you think America is totally useless to China. It isn’t. To the Chinese, 2% GDP is better than -5%. If China were ruled by Americans, they would have dumped the dollar for sure out of arrogance and spite. The Chinese are far less irrational and spiteful.

You’re just getting hot and bothered because you know, deep down inside, that Hu Jintao could make a few phone calls or perhaps enter a few words in twitter and the next morning the economy of the West would be in total ruins. How many times have you woken up screaming from that scenario? ;)

Learn to deal with it before it gives you a heart attack.

December 4, 2009 @ 12:18 pm | Comment

I have refrained from saying this for a long time except in private for fear of being seen as someone who simply chooses the most doom-and-gloom filled predictions out of wish fullfilment, but current Chinese economic growth statistics do not make sense. Why is it that statistics show high growth in manufacturing without growth in energy consumption? Why is it that we see an 80% growth in car sales without a corresponding growth in fuel consuption? Why does the sum of provincial GDP growth statistics greatly exceed the national figure? The current narrative is that domestic consumption has picked up the slack that was dropped by the fall-of in exports, but how much of this domestic consumption consists of government spending and, if so, how much longer can this spending go on? The stimulus was huge – as much as 20% of GDP to be spent in one year, but even the government statistics only show the same 8% growth which was – strangely enough – the growth target for this year. Can we therefore infer that, without the stimulus, the Chinese economy would have collapsed by as much as 12%? I am afraid that the above may seem like the amateurish ramblings of the faux economist, so can anyone out there help dispell my concern?

December 4, 2009 @ 1:55 pm | Comment

@foarp
“Why is it that statistics show high growth in manufacturing without growth in energy consumption? Why is it that we see an 80% growth in car sales without a corresponding growth in fuel consuption? ”

Either the CCP just made some breakthroughs in energy and car consumption efficiency, or they are making it all up for “harmonizing” reasons.

Peek your choice.

A truer indicator would be to know where the CCP princelings are punting their money.
Like with CEOs of well known tanking companies, if they are shedding their shares, something really bad is going on, no matter what they say in shareholders meeting in the meantime.

December 4, 2009 @ 2:52 pm | Comment

@merp
“Dollar reserves are not the “savings” of “hardworking Chinese”. They never saw the money in the first place”

They do are. It was won with their hard working, sweat and sometimes blood. That they do not have direct access to it is different question.

The government has prevented that money to flow back to directly the people, the reason given is that his management of it will be better for the country, but if they blew it…

And yes, they I think they should diversify its reserve currencies, but that will go against their current policy to depreciate against the dollar.

December 4, 2009 @ 3:13 pm | Comment

I have a conspiracy theory.

Does the CCP consider raising the living standards of the Chinese beyond a given level and beyond a given % of the population a menance to his grab to power?

What we have now? A 10% to 15% of the population with “acceptable” living standards? That is about 200 millions. A sizable amount but still a small fraction of total population.

The ones in the right side of the % know that they live now in a bigger jail, but they should not push the border beyond some limits, or they can find themselves soon on the wrong % side.
The majority on the wrong side of the % divide are held as hostages to be used/manipulated against the other side if needed. They are also a pool of cheap labor to continue with current development strategies, and as cannon fodder for nationalistic campaigns against any perceived enemy, internal or external.

May be that reasons that prevents implementation of policies to increase inner consumption? It can only come by improving living standards to a greater % or the population.

It is a conspiracy theory, just don’t take it too seriously…

December 4, 2009 @ 3:31 pm | Comment

@foarp

Well put. I’d wager Merp will not respond because he cannot

@merp

Because America refuses to sell China the things it wants to buy, and encourages the “international community” to restrict exports of technology to China. There are specific types of semiconductor, for example, that are included in the so-called post-Tiananmen arms embargo. I’ll look up the specifics if no one else knows them.

I see. We don’t sell China weapons. Boo fucking hoo.


Raising the value of the RMB would increase China’s ability to buy raw materials (somewhat restricted by Aus/US and other Western countries) and food. That’s it. It’d be of no benefit to the Chinese side, and would only open the country up to the unscrupulous corporate monopolies of the West.

Good point. Who wants to buy food and raw materials? Totally worthless! Why would it open up to the West? Not the same thing at all.


They were negatively affected, but not nearly as badly as you were hoping.

Yawn. You don’t know me, so don’t pretend you do. You don’t know what I was thinking. Play the ball not the player. Absence of any evidence noted.


They had a stimulus because they have always needed better infrastructure and social welfare, and the economic crisis simply jolted them into action.

The stimulus has gone into fixed investment as you well know. It has not gone into social welfare in any meaningful fashion. China already has plenty of infrastructure.

As you responded I replied. You don’t need to reply to me however. I have no further interest in engaging with you as you have clearly demonstrated your inability to engage with the argument without ad hominims or allusions to superior knowledge which you don’t demonstrate.

Back to your cave, you boring little man.

December 4, 2009 @ 5:38 pm | Comment

FOARP

Good questions. I’d especially like to know how the stimulus performed -maybe much of the waste went on 1,000 yuan lightbulbs. But many people will buy into the dream of the ever-growing Chinese economy regardless right up until something (inevitably, one day) goes wrong.

Why is it that we see an 80% growth in car sales without a corresponding growth in fuel consuption?

One line of thinking is that the cars are being bought up in bulk to generate sales by the State and stockpiled in car parks. Of course it could also be true that the numbers are just made up, as are many in China.

December 4, 2009 @ 9:30 pm | Comment

@FOARP
Why is it that statistics show high growth in manufacturing without growth in energy consumption?

Because it’s the most energy intensive sectors that took the biggest hit.

Why is it that we see an 80% growth in car sales without a corresponding growth in fuel consuption?

Who knows about that. It could be that many of these cars are just replacing older cars in government fleets.

@Ecodelta
The government has prevented that money to flow back to directly the people, the reason given is that his management of it will be better for the country, but if they blew it…

They don’t seem to have… unless you’re suggesting America is going to collapse tomorrow.

Does the CCP consider raising the living standards of the Chinese beyond a given level and beyond a given % of the population a menance to his grab to power?

Conspiracy theory indeed.

@Si

I see. We don’t sell China weapons. Boo fucking hoo.

China doesn’t let you speculate in their currency and destroy economic stability in Asia. Boo fucking hoo.

Good point. Who wants to buy food and raw materials? Totally worthless! Why would it open up to the West? Not the same thing at all.

Because then Westerners will more easily be able to flood China with overpriced but well-marketed products, which the princelings will gobble up, hollowing out China’s economy.

The stimulus has gone into fixed investment as you well know. It has not gone into social welfare in any meaningful fashion.

Some of it.

China already has plenty of infrastructure.

What a joke. For its size, China’s transport infrastructure is lacking.

your inability to engage with the argument without ad hominims or allusions to superior knowledge which you don’t demonstrate

Now you want me to google for you?

@Raj
as are many in China.

At least they’re not finding WMD in Kazakhstan.

December 4, 2009 @ 10:27 pm | Comment

I missed this tired old piece of claptrap:

But many people will buy into the dream of the ever-growing Chinese economy regardless right up until something (inevitably, one day) goes wrong.

Well aren’t you a bitter little Princess! Yes, China’s growth will slow. No, it will not suddenly slow down to nothing in the next few years. Simply by moving a subsistence farmer into a city, you produce GDP growth.

December 4, 2009 @ 10:34 pm | Comment

@merp

“Because then Westerners will more easily be able to flood China with overpriced but well-marketed products, which the princelings will gobble up, hollowing out China’s economy.”

I see. The Chinese need saving from themselves! Surely they are so smart they would see through it all? But I suppose you can go there and guide them then.

“Now you want me to google for you?”

Uh no, I want you to supply links to where you get your info from.

December 4, 2009 @ 11:06 pm | Comment

hello merp

At least they’re not finding WMD in Kazakhstan

How does that relate to the point about the reliability of Chinese economic statistics?

Well aren’t you a bitter little Princess! Yes, China’s growth will slow. No, it will not suddenly slow down to nothing in the next few years. Simply by moving a subsistence farmer into a city, you produce GDP growth.

Hmm, you sound rather bitter yourself. :)

My point is only that some people will continue to invest in China due to the hype, regardless of whether or not they have actually taken a considered opinion of the risks. One day China will go into recession, the only question is whether it will be as a developed or developing nation.

December 5, 2009 @ 12:31 am | Comment

@merp: I have nothing else to add to what I already said. Fell free to read my comment again until it makes sense.

December 5, 2009 @ 12:38 am | Comment

@Si
I see. The Chinese need saving from themselves! Surely they are so smart they would see through it all? But I suppose you can go there and guide them then.

America’s princelings already swarm around overpriced garbage like maggots on a waterlogged corpse. If even a tiny portion of China’s population starts wasting their money on iTurds, $tarbuck$ like the typical overleveraged American brat, it will create problems.

@Raj
How does that relate to the point about the reliability of Chinese economic statistics?

They’re about as reliable as anything.

My point is only that some people will continue to invest in China due to the hype, regardless of whether or not they have actually taken a considered opinion of the risks. One day China will go into recession, the only question is whether it will be as a developed or developing nation.

Well those some people just don’t think for themselves then… then again, what more do you expect from brain-dead idiots who were raised on the teat of mass media? If they can believe Saddam had anything to do with 9-11 they can believe anything.

As for a recession in China, it will probably not happen any time soon. Right now its GDP is simply too low for one.

December 5, 2009 @ 3:15 am | Comment

“China doesn’t let you speculate in their currency …”

I did precisely that … worked out very nicely. George Soros, too.

That’s gotta hurt. Sorry about that, old sport.

December 5, 2009 @ 7:47 am | Comment

It is highly unlikely for China’s domestic consumption to ever match that of the US.

A prerequisite for high consumption is a sense of security and optimism. Culturally, the Chinese tend to be more conservative. They worry about the rainy days and hence have a propensity to save. They have learned from history that they cannot trust the government to look after their welfare. The current political and social environment in China is certainly not providing the sense of security and unqualified optimism for the average Chinese to go on a spending binge. Also, Chinese consumers tend to be ‘value’ oriented, i.e. they like good bargains and wouldn’t mind doing extra leg work to find them. They almost always think things are overpriced, except when they deliberately overpay to flaunt their wealth. The average Chinese would have a hard time understanding why an American would gleefully overpay for pieces of junk sold at Wal-Mart that are, ironically, made in China.

Since WW II, the American populace has been living a romanticized life. Times were good. The future was bright. The Chinese were busily handicapping themselves with the Communist experiment conducted by Mao. While true wealth was created in the US, more was squandered unwisely on living a dream life and keeping up appearances. In that regard, the housing boom was the perfect storm. Everyone got to be the King and Queen they fantasize to be in their McCastle, when they return every day from their all so important and productive Royal duties of paper pushing. Thus, a Ponzi economy emerged, the same one the US government has been desperately trying to perpetuate. To be fair, the Brits were no better, followed by monkey-see-monkey-do Icelanders, Spaniards and Greecians … oops, I mean Greeks. Boy, I so miss that Bush guy.

Like it or not, the Chinese will never be the spendthrifts Americans want them to be.

December 5, 2009 @ 3:54 pm | Comment

Well,we can hand over the historical mission of beefing up domestic consumption to our newly emerged upstarts and “red nobles”,if they ever bother to bestow a friction of their hard-exploited money on the domestic market,besides supporting their overseas relatives and buying fancy imported luxuries.

December 5, 2009 @ 4:28 pm | Comment

@stuart
I did precisely that … worked out very nicely. George Soros, too.

We’re not talking about England here, old chap.

@ATP
A prerequisite for high consumption is a sense of security and optimism. Culturally, the Chinese tend to be more conservative.

I wouldn’t put it down to culture. It’s predominantly a wealth disparity. A lack of financial security stems from China’s low net worth per capita.

The Chinese were busily handicapping themselves with the Communist experiment conducted by Mao.

To be fair Mao was pushed onto the Chinese by the Soviets, and aided by Japan and other foreign powers who did everything within their ability to impoverish the average Chinese.

Like it or not, the Chinese will never be the spendthrifts Americans want them to be.

I’d say China is capable of spending quite a lot… just not on overpriced crap.

December 6, 2009 @ 4:20 am | Comment

Hhhmmm…. Could the Chinese gov use the increase of % consumption related to GDP to escape from its self induced 8% growth at all costs strategy trap?

December 6, 2009 @ 6:31 am | Comment

FOARP, that was an excellent comment. Really freakin’ good.

One question I’d like answered is tech transfer/skills transfer. There was quite a lot of it here in Taiwan from both US and Japanese firms. To what extent is that happening in China?

Also, shouldn’t we be seeing price deflation in China as overproduction of goods for the “stimulus” implies dumping of them on the market? Or are they getting shipped elsewhere? Assuming that was is really going on is overproduction.

December 6, 2009 @ 6:58 pm | Comment

Agree on Foarp’s comment, and Merp evaded most of it, of course. And good link, Eco. Something definitely does not compute.

To be fair Mao was pushed onto the Chinese by the Soviets, and aided by Japan and other foreign powers who did everything within their ability to impoverish the average Chinese.

Oy vey. Same script, different moniker (Merp/Ferin).

December 6, 2009 @ 11:05 pm | Comment

@Merp
Before you whine about the RMB, please remember that the peg was put in place to stabilize the region after Western speculators and the IMF destroyed the Thai Baht.

Factual error. The peg was already there way before the Asian Financial Crisis occurred in 1997. Since 1995, the exchange rate of the RMB against the USD was fixed at 8.28 yuan to one US$.

China doesn’t let you speculate in their currency and destroy economic stability in Asia.

If merp has passed his basic economics, he/she/it would not have assume that a fixed exgange rate regime does not automatically guard against speculators. Fixed exchange rate regime need to have a huge amount of foreign reserves to have credibility and deter speculators. It’s China’s huge foreign reserves together with capital control which prevented speculation, not because of merely pegging of RMB to USD. If pegging alone can deter speculation, the Thai baht would not have collapsed in July 1997. (That fateful year, the Thai baht was pegged to the USD at 25 baht to the dollar)

Merp, enroll yourself into Elementary Economics class before you embarrass yourself further.

December 7, 2009 @ 3:18 am | Comment

@merp
To be fair Mao was pushed onto the Chinese by the Soviets

Hell, merp can even rewrite history to suit his purpose. The Soviets were always lukewarm towards Mao. The Soviets thought so lowly of Mao (underestimate his ability to defeat Chiang) such that up till 1945, they concluded a treaty of friendship and alliance with the Republic of China’s Kuomintang (KMT) government in August that year, granting it economic concessions and defense facilities. In fact, the Soviets advised Mao to make peace with Chiang at least at the early stage of the Chinese Civil War, which actually irritated Mao himself.

Mao’s idea of a peasant-led communist revolution appeared almost like heresy to the Kremlin because a revolution is supposed to be led by the urban working class (proletariat), not peasants.

When Mao finally got himself Soviet Aid in 1950 (literally beg for it in Moscow), he was so “flattered” to have gotten 300 million dollars of credit from the Soviets. Not even a dollar for each Chinese person. That was how “highly” Stalin thought of Mao!

Merp, please buy yourself a decent elementary history textbook.

December 7, 2009 @ 3:38 am | Comment

@merp
I’d say China is capable of spending quite a lot… just not on overpriced crap

I think the sentence should read “I’d say the CCP’s apparatchiks are capable of spending quite a lot… ,all on overpriced crap.”

With this correction of the sentence, it reflects the reality better.

December 7, 2009 @ 3:48 am | Comment

http://www.chinadaily.com.cn/bizchina/2009-08/02/content_8507072.htm

According to the Chinadaily’s article, the energy consumption fell by 3.35% in first half of 2009 and 70% of the consumption is by the industrial sector.

http://www.chinadaily.com.cn/china/2009-02/11/content_7467126.htm

There’s another article which says that export is down by 19% so naturally it would affect the energy consumption by the industrial sector. The energy use due to increase of domestic consumption can be less than the decrease of energy use due exports.

December 7, 2009 @ 4:03 am | Comment

@eco

Informative article.

@Michael
FOARP, that was an excellent comment. Really freakin’ good.

No need for that, FOARP’s comment is extracted straight from Gordon G. Chang. He’s the real genius behind those words.

@sp
It’s China’s huge foreign reserves together with capital control which prevented speculation

And how were said “huge foreign reserves” accrued? Try to think, instead of parroting pro-Western propaganda.

When Mao finally got himself Soviet Aid in 1950 (literally beg for it in Moscow), he was so “flattered” to have gotten 300 million dollars of credit from the Soviets. Not even a dollar for each Chinese person. That was how “highly” Stalin thought of Mao!

Because we all know that the Soviets essentially handing Manchuria over to the Communists was ultimately inconsequential, right? After they took the entire industrial base that is. The Soviets of course did not think highly of the Nationalists either, but that would detract from your deranged, petulant rant.

“I’d say the CCP’s apparatchiks are capable of spending quite a lot… ,all on overpriced crap.”

Oh look, unsourced claims from Westerners thinking that repetition is fact, broad slurs against the CCP, this is of course the pekingduck I have always known and loved.

The simple fact is that while the CCP is grossly incompetent, downright evil, and sometimes just stupid, they are still miles ahead of the government of India in terms of providing for the population, and ahead of America in terms of, well, not killing innocent people in the last 40 years.

December 7, 2009 @ 4:20 am | Comment

or last 30 years, that is.

December 7, 2009 @ 4:21 am | Comment

and dror

China’s development trend and growth in real manufacturing income is very different from that of other “Asian Tigers” and seems to offer a very limited benefit to those working at the lowest paying jobs – which means they are not going to become the world’s new consumers any time soon.

Again, this is where your post ultimately turns into a grisly train wreck. Minor point, no one has assumed that China’s development trend was similar to the Tigers or to Japan. This is because China is not export dependent. An all-American myth, that. As you have stated, much of their GDP growth is from investment; private as well as government. As far as “decoupling” goes, from the US as many imply, they were never “coupled” in the first place. That’s a gross oversimplification, mass marketed to dilettantish would-be American economics trolls on China blogs.

China’s export sector employs around 50 million out of 800 million people. Wages remain flat because the export sector generally unskilled labor, and they are kept low via a steady flow of subsistence farmers (i.e migrant workers) moving into cities to take the jobs that are slowly being vacated by earlier migrant workers. It’s one of China’s “competitive advantages” in the global market for manufactured goods, of course.

The way you stated it, of course with deliberate intent to mislead, makes it sound as if though the entirety of China is employed in manufacturing- which it is not. The truth is, rural Chinese aren’t going to be big spenders either. It would have been easier to say that instead of going through the trouble of drawing irrelevant comparisons and employing a slew dubious metrics.

December 7, 2009 @ 4:36 am | Comment

@merp
Because we all know that the Soviets essentially handing Manchuria over to the Communists was ultimately inconsequential, right?

The Soviets handed Manchuria over to Mao because they wanted China to be divided between Chiang and Mao. Therefore they handed Manchuria to the “weaker” Mao to balance it against Chiang. Numbskulls talking about history when they claimed that “Mao was pushed to China by the Soviets”. The Soviets never wanted a united China, not under Mao, not under Chiang.

December 7, 2009 @ 5:02 am | Comment

@merp
And how were said “huge foreign reserves” accrued? Try to think, instead of parroting pro-Western propaganda.

Through trade surpluses? Because China has comparative advantage at labour intensive industries and the rest of the world is buying its exports.

Back to the topic: How does pegging ALONE prevent speculation? That’s your claim, not mine.

December 7, 2009 @ 5:04 am | Comment

@merp
they are still miles ahead of the government of India in terms of providing for the population, and ahead of America in terms of, well, not killing innocent people in the last 40 years.

Yea, why don’t you say they are still miles ahead of all the governments in the world in terms of:

1) Allowing tainted milk to poison the population
2) Harassing AIDs activists
3) Flimsy school structures in earthquake zones
4) Covering up the true extent of pandemic like SARS
5) Corrupt provincial authorities usrping the peasants land
6) Turn a blind eye to lead poisoning

Let all the governments in the world to kowtow in the dircetion of Zhongnanhai for all these unprecedented achievements!

December 7, 2009 @ 5:11 am | Comment

@merp
or last 30 years, that is

Well well, as if shipping arms to Sudan, Zimbabwe and Myanmar have not consequences on innocent lives. Well done merp. Now we know how your moral reasoning and logic work.

December 7, 2009 @ 5:25 am | Comment

@merp
China is not export dependent. An all-American myth

Then try tell China to close its doors, stops all its exports and cut off all trade with the world and see how it will be like. I wonder whether its economy will look better than North Korea’s if that happens.

December 7, 2009 @ 5:49 am | Comment

The Soviets handed Manchuria over to Mao because they wanted China to be divided between Chiang and Mao.

Thank you, you finally admit that the Soviets were a bane to the Nationalists and China in general, and increased Mao’s position specifically to undermine China.

Back to the topic: How does pegging ALONE prevent speculation? That’s your claim, not mine.

… the pegging helps with the reserves

Yea, why don’t you say they are still miles ahead of all the governments in the world in terms of:

Allowing tainted milk to poison the population

Sadly, six infants died. I love how the Western media blew the melamine scandal up into international hysteria when just about as many people have died in Toyotas due to floor mats riding up into accelerators.

Flimsy school structures in earthquake zones

I guess all of New Orleans should have been “hurricane proofed” as well.

Covering up the true extent of pandemic like SARS

Failing to take proper measures for Swine Flu.

Corrupt provincial authorities usrping the peasants land

And yet Americans continue to steal the land of Native Americans, renege on treaties. Currently, the Lakota are facing problems because of oil discovered near their land and another tribe is now suing to have lands (sold illicitly by “private owners” amongst their own) returned to them.

Turn a blind eye to lead poisoning

As opposed to America’s depleted uranium and agent orange- but those are brown non-Christians, it doesn’t count!

Yes, China does some bad things. But China is not all about melamine scandals and lead poisoning! /Chinese Richard

In truth all of those are problems that need to be dealt with- at least with lead poisoning the Chinese government is at least recognizing that it’s a problem.

It’s not like America dropping millions of tons of bombs on Laos, polluting their environment and crippling all sorts of people even up until this day, or agent orange leading to mutations and disease, or now depleted uranium disfiguring and crippling Iraqi men, women, children and babies.

sp is clever troll like all anti-Chinese trolls, looking to distract everyone else from their own countries’ overwhelmingly evil behavior by much lesser (still atrocious) transgressions from China. What an underhanded and loathsome agenda.

December 7, 2009 @ 6:06 am | Comment

@Merp – Yeah, a friend of mine sent me the Chang piece and that’s where the stat on fuel/car sales comes from. My first reaction was to tell my friend that after the total failure of China’s banks to collapse due to non-performing loans back in 2002, Chang was tainted, but his stats check out. Energy/power consumption, as you can see above, comes from a different source, but I am not claiming any of this as my own – I’m certainly no expert, nor am I counting on you personally to come up with answers.

December 7, 2009 @ 6:24 am | Comment

I’m still guessing that the CCP may have just replaced a lot of old cars in government fleets. Cash for clunkers for princelings and overlords.

December 7, 2009 @ 6:34 am | Comment

@merp
Thank you, you finally admit that the Soviets were a bane to the Nationalists and China in general, and increased Mao’s position specifically to undermine China.

Haha..Nobody denies that. Stop your self-congratulation by knocking down a strawman. Merp seems to have selective amnesia when he forgot his statement “Soviets pushed Mao onto Chinese people”. The Soviets certainly did not orchestrate a plot to put Mao in charge of China nor were the Soviet action over Manchuria the only factor that resulted in Mao’s victory in 1949. If your statement is valid, i think Chiang, more than anyone else, actually pushed Mao onto the Chinese people through his incompetence and corruption. Stop self-cong

Sadly, six infants died. I love how the Western media blew the melamine scandal up into international hysteria when just about as many people have died in Toyotas due to floor mats riding up into accelerators.

Flimsy school structures in earthquake zones

I guess all of New Orleans should have been “hurricane proofed.. yada yada yada

Can’t be bothered with this kind of tu quoque arguments. Merp, grow up. Two wrongs doesn’t make a right. Didn’t your parents taught you this simple rule of behavior? Your diatribes only provides me comic relief after a day’s hard work

sp is clever troll like all anti-Chinese trolls
Yawns… the old and outdated CCP tactic of equating criticism of the communist ruling class with being “anti-Chinese”. I have to concede that Marx was brilliant when he claimed that the ruling class always attempt to create false consciousness and manufactures “public opinion” among the masses. Thats what the CCP as a bourgeois ruling class is doing now: Labeling all its critics as “anti-Chinese”. A party (ruling class) sycophant like merp is expected to obediently toe the line.

December 7, 2009 @ 8:37 am | Comment

@Merp

… the pegging helps with the reserves

Then why didn’t pegging help Argentina with reserves in 2002 when there is a BOP crisis? Why didn’t pegging help Thailand with the reserves in July 1997 when there is a run on the baht? Why didn’t the European Exchange Rate Mechanism which the pound was part of,(characterized by pegging) helped Britain with reserves on Black Wednesday in 1992?

Stop trying so desperately to masquerade like an economist, i have just kicked your ass when i corrected you on the fact that the RMB peg was already in place in 1995, not after the 1997 Asian Financial Crisis as you have blundered. You got no credibility in economics at all, zilch.

Merp, it’s no shame to be uneducated in economics. I can quote some cheap and good economics textbook if you want to get one. Great deals.

December 7, 2009 @ 8:59 am | Comment

@Merp

Yes, China does some bad things

For the reputation of 1.3 billion innocent ordinary Chinese people, the above sentence should instead be “Yes, CCP does some bad things”.

Merp, CCP is not = Chinese people. Which part of this do you not understand?

December 7, 2009 @ 9:19 am | Comment

@Michael Turton – I guess we “CCP trolls” do manage to come up with the occasional good point in between taking orders from Zhongnanhai.

December 7, 2009 @ 10:42 am | Comment

Did I call you a CCP troll? AFAIK you’re just a concern troll, whose responses always justify whatever anti-Taiwan action is going on.

December 7, 2009 @ 11:13 am | Comment

@sp
“Soviets pushed Mao onto Chinese people”. The Soviets certainly did not orchestrate a plot to put Mao in charge of China

Learn how to read, please. The Soviets did indeed push Mao onto China, which generally rejected Communism, by elevating his position. It doesn’t matter what their goals were.

Can’t be bothered with this kind of tu quoque arguments.

Can’t be bothered with your “hey look what that guy is doing” arguments. Grow up.

A party (ruling class) sycophant like merp is expected to obediently toe the line.

Argumentum ad youre-a-communist-um, grow up.

Then why didn’t pegging help Argentina with reserves in 2002 when there is a BOP crisis? Why didn’t pegging help Thailand with the reserves in July 1997 when there is a run on the baht? Why didn’t the European Exchange Rate Mechanism which the pound was part of,(characterized by pegging) helped Britain with reserves on Black Wednesday in 1992?

Now you’re making things up, like a good little troll. All I said is that the peg is in place to deter speculators. Obviously, the currency reserves are a part of it.

December 7, 2009 @ 11:30 am | Comment

For the reputation of 1.3 billion innocent ordinary Chinese people, the above sentence should instead be “Yes, CCP does some bad things”.

That’s something Chinese Richard would have said ;)

December 7, 2009 @ 11:31 am | Comment

@merp: Remind me again, in the end of 2008, there was a dramatic decline in US private consumption. Did this have any effect on China’s Q1/09 GDP?
Based on your theory, it didn’t.

December 7, 2009 @ 12:21 pm | Comment

@merp

No need for that, FOARP’s comment is extracted straight from Gordon G. Chang. He’s the real genius behind those words.

Well spotted. And your rebuttal is……..?

December 7, 2009 @ 5:35 pm | Comment

@Michael Turton – Yeah, I guess anyone who doesn’t support excluding mainlanders from restaurants in Taiwan, who disagrees with describing mainland Chinese as ‘perps’, who asks for actual evidence of a KMT/CCP conspiracy to reunify Taiwan with the mainland behind the backs of the Taiwanese people before he believes that such a conspiracy, you know, exists – anyone who does any of these things must be a pro-China CCP troll. Anything backing up your assertion that a guy like me might support the CCP/pro-China camp? Well, I guess you don’t need to produce any evidence for that either.

December 7, 2009 @ 11:00 pm | Comment

@merp
Learn how to read, please. The Soviets did indeed push Mao onto China, which generally rejected Communism, by elevating his position.

Oh no.. apparaently merp has been reading the Martian version of history. Mao didn’t own it to Stalin for his victory, Mao actually need to thank Chiang’s incompetence for his success. Most Chinese were lured by the promises of offered by communism vis-a-vis KMT’s corruption and the chaos of warlordism. If foreign power intervention was really decisive in the outcome of the Chinese Civil War, Chiang would have won hands down with the huge US support he had been receiving. In the end, faced with the KMT’s corruption and incompetence, the majority of Chinese were deceived by the promises of communism and throw in their lot with Mao. Even Madame Sun Yat-sen, Chiang’s sister-in-law, chose to side with the communists then.

December 7, 2009 @ 11:59 pm | Comment

@merp

“All I said is that the peg is in place to deter speculators. Obviously, the currency reserves are a part of it.”

The peg alone does not deter speculation, it is how credible the peg appeared. Huge foreign reserves deter speculation, not the peg itself. I didn’t make up the crises in Argentina, Thailand or Britain, but i bet you know nuts about what happened in those crises ansd accusing me of making them up is a easy way for you to wriggle your way out.

You haven’t even explain how the peg help with the reserves, and now when your reasoning is going no where, you back-pedalled and said reserves is part of the peg. How hilarious.

The peg is the form, the reserves is the substance. The reserves is NOT part but the WHOLE of the peg.

To put it simply, if you are the monetary authorities, you can peg your currency to the USD at whatever rate you want, even at 1 RMB to 1 Billion USD. But if you do not have the required foreign reserves to support that rate, you essentially inviting speculators to fuck you upside down.

December 8, 2009 @ 12:11 am | Comment

@merp

Can’t be bothered with your “hey look what that guy is doing” arguments. Grow up.

Gees, i am not even the stereotyped lao wai you think i am. I am a true Blue Chinese criticizing the ruling class. Don’t be too presumptous.

Argumentum ad youre-a-communist-um, grow up

Don’t flatter yourself. You are not even a communist. In Marxist-Leninist terms, you are an agent of the bourgeois ruling class who hangs on to the name of “communist”.

December 8, 2009 @ 12:17 am | Comment

@merp
That’s something Chinese Richard would have said

Call me whatever you want, “Chinese Richard”, “Chinese Khrushchev”, “revisionists sponsored by the Brezhnev-Kosygin clique” etc whatever.

When i criticize the Communist ruling class, i am not criticizng the people of China. The two are not Siamese twins.

You just have no balls to engage in meaningul debate beside indisriminate labeling because you can’t even get your reasoning and facts right. remember your Chinese peg put in place post Asian Financial Crisis blunder? What a joke. Don’t shame your fellow Chinese. Do you even know the writing strokes of the Chinese character of “耻”?

December 8, 2009 @ 12:40 am | Comment

@Dror
consumption. Did this have any effect on China’s Q1/09 GDP?
Based on your theory, it didn’t.

It wasn’t just the US that ran into problems. Likewise, China had a real estate bubble then, and the government put forth policies to slow appreciation.

@Si
Well spotted. And your rebuttal is……..?

Gordon G Chang is an idiot and is wrong about everything.

@sp
Mao actually need to thank Chiang’s incompetence for his success.

Mao actually thanked Japan, no Chiang.

Chiang would have won hands down with the huge US support he had been receiving.

LOL. You actually believe the myth of real US aid to China. If anything, the US ruined the Nationalists by trying to play diplomat for the Communists.

You haven’t even explain how the peg help with the reserves, and now when your reasoning is going no where, you back-pedalled and said reserves is part of the peg. How hilarious.

Stop trying to dodge the point. The peg helped China accrue foreign reserves, which has been explained to you several times.

Call me whatever you want, “Chinese Richard”, “Chinese Khrushchev”, “revisionists sponsored by the Brezhnev-Kosygin clique” etc whatever.

I’m not talking about you here. Just using Richard’s “style” in dismissing American atrocities.

When i criticize the Communist ruling class, i am not criticizng the people of China. The two are not Siamese twins.

You can’t blame me for not believing you before- most foreigners want to destabilize China to hurt the people- i.e attacking the government to kill the nation, and I assumed you were a typical laowai troll who thinks the West is holy.

December 8, 2009 @ 1:06 am | Comment

@Michael Turton – Yeah, I guess anyone who doesn’t support excluding mainlanders from restaurants in Taiwan, who disagrees with describing mainland Chinese as ‘perps’, who asks for actual evidence of a KMT/CCP conspiracy to reunify Taiwan with the mainland behind the backs of the Taiwanese people before he believes that such a conspiracy, you know, exists – anyone who does any of these things must be a pro-China CCP troll. Anything backing up your assertion that a guy like me might support the CCP/pro-China camp? Well, I guess you don’t need to produce any evidence for that either.

What do you expect from a shameless DPP troll who would probably give his kidney to sniff Chen Shui-bians dirty underwear? It’s the typical obnoxious foreigner Pan-Green supporter in Taiwan, who surrounds himself with adoring rednecks, and thinks he’s some kind of authority despite being a total alien to the Taiwanese and Chinese cultures.

December 8, 2009 @ 1:09 am | Comment

@Merp
Mao actually thanked Japan, no Chiang.

So are you saying that Chiang and the KMT’s massive corruption and incompetence, especially how they created hyperinflation, had no part in to play in the masses’ switch to Mao’s side? Yes? No?

believe the myth of real US aid to China. If anything, the US ruined the Nationalists by trying to play diplomat for the Communists

Without the US, KMT would have collapsed even faster. Harry Truman knew that he was sustaining a sinking ship in the form of the corrupt KMT. When he received reports on the extent of corruption within the KMT and how the KMT leaders used US aid to line their pockets, he was reported to have said,“They’re (The KMT) all a bunch of damn thieves!”

Knowing that Chiang would lose at the rate the KMT was wasting itself away, Marshall was sent by Truman to try to negotiate a deal in the hope that China would not fall completely under communism. Mao knew that he had the upper hand by then but he played along in appearance. Chiang, the ever fervent anti-communist, was pressured to play along but he would settle for nothing other than destroying the CCP completely. In sum, US diplomacy was a desperate attempt to save Chiang, their incompetent son of the bitch knowing that he would be defeated. It did not help the communist at all because Mao’s military strength could match Chiang’s by then.

The peg helped China accrue foreign reserves, which has been explained to you several times.

Nope, it was China’s export competitiveness that accumulated reserves, not the peg. But since merp claimed that the peg accrues China foreign reserves, i assumed that a “patriot” like him/her/it will support US pressure on China to revalue the RMB because he/she/it claimed that the peg accumulates reserves for China, in other words, merp implies that China had engaged in manipulating its currency to gain unfair trade advantage. Wow, merp, i suppose this is the first time you have sth in common with the hypocritical US of A. Woo hoo!

Just using Richard’s “style” in dismissing American atrocities.

As far as i have read his blog, Richard has been very critical of US atrocities. He never dismissed them, especially those committed under GWB.

most foreigners want to destabilize China

You know what? You just reminded me of our Dear Empress Dowager Cixi. When China was rotting under her rule, she never looked into the mirror. She only knew how to blame the yang gui zi, wokou, never blaming herself.

December 8, 2009 @ 5:03 am | Comment

@merp
So again you are trying to hijack the Chinese people as human shields to defend CCP.
These tricks had already took their share of abuse here inside the GFW.You really need to find some new stunt.

December 8, 2009 @ 5:24 am | Comment

So are you saying that Chiang and the KMT’s massive corruption and incompetence, especially how they created hyperinflation, had no part in to play in the masses’ switch to Mao’s side? Yes? No?

So are you saying that the Soviets, with their assistance to the Communist, had no part to play in his rise to power? Yes? No?

Without the US, KMT would have collapsed even faster.

The US hardly did anything at all to aid the KMT. Corrupt as they were, I guess they regret it now.

merp implies that China had engaged in manipulating its currency to gain unfair trade advantage.

Rather, it simply makes sense given several factors including embargoes on China led by the US.

You know what? You just reminded me of our Dear Empress Dowager Cixi. When China was rotting under her rule, she never looked into the mirror. She only knew how to blame the yang gui zi, wokou, never blaming herself.

Oh yes the fact that I dismiss the asinine claims of some foreigners means I’m unable to spot the CCP’s flaws.

December 8, 2009 @ 8:49 am | Comment

@merp: ” China had a real estate bubble then, and the government put forth policies to slow appreciation”

You mean the CCP decided to close tens of thousands of factories and fire 20 million migrant workers in order to stop the bubble in the Real Estate market?!

Now it all makes sense. And there I was… thinking that all those closed factories has something to do with declining demand in the US. I should have know… it’s all part of the CCPs plan.

By the way: did it work?
Last time I checked, Chinese housing prices are at an all time high.

December 8, 2009 @ 2:08 pm | Comment

There are a lot of controversial things about the Chinese Civil War, but some facts are no longer in the slightest doubt. Except, evidently, by merp, who appears intent on rehashing the tired old “Who lost China?” arguments of the McCarthy era.

Fact: The Communist armies were primarily armed with American weapons, down to the rifles.

George C. Marshall said that Chiang Kai-shek was “the worst advised military commander in history,” that he was losing “40 percent of his supplies to his enemy,” and that “If the percentage should reach 50 percent he will have to decide whether it is wise to continue to supply his troops.” Mao called CKS “our supply officer.” US military advisor David Barr said: “The Communists had more of our equipment than the Nationalists did.” (All quotes from Halberstam, The Coldest Winter, p. 235)

Conclusion: If the US had sent even more supplies to Chiang Kai-shek, this would only have increased the strength of the CCP.

Other inconvenient facts for the “China Lobby” viewpoint: The USSR was happy with the KMT in charge of China. Soviet military aid to the CCP was minimal. KMT armies outnumbered CCP armies by 4-1 in 1945. More KMT troops surrendered without a fight than after being defeated in combat. Many of the CCP troops conquering south China were actually former KMT troops who’d surrendered in north China.

December 8, 2009 @ 3:57 pm | Comment

@merp

Gordon G Chang is an idiot and is wrong about everything.

A brilliant and incisive rebuttal. Congratulations. Twonk

December 8, 2009 @ 4:41 pm | Comment

@merp
I’m unable to spot the CCP’s flaws.

You are not only able to spot the CCP’s flaws, but you also conveniently whitewash and trivialize them.

the fact that I dismiss the asinine claims of some foreigners

C’mon, what makes you different from the xenophobic feudal rulers of the Manchu imperial court? The old tag line is always “咱们的乱子都是洋人搞出来的!” yawns…

You should take the old Chinese advice in self-reflection, “史以铜为镜”

Rather, it (currency manipulation) simply makes sense given ..

Gosh, when did merp sound more and more like Faux News? Geez..

So are you saying that the Soviets, with their assistance to the Communist, had no part to play in his rise to power? Yes? No?

The US hardly did anything at all to aid the KMT. Corrupt as they were, I guess they regret it now

Hmm, i think the Yūshūkan should be headed by our dear merp.

December 8, 2009 @ 6:03 pm | Comment

@merp
So are you saying that the Soviets, with their assistance to the Communist, had no part to play in his rise to power? Yes? No?

If your claim is true, Mao would have been another Rakosi or Ulbricht, but the truth is he was not. The communist victory, was caused by many factors, but one major factor that cannot be overlooked is: Chiang and his KMT simply fucked themselves up. Any form of Soviet assistance wouldn’t be as decisive as Chiang’s self-checkmating. Why? Because Chiang’s blunders caused the masses to switch sides, any amount of Soviet assistance, no matter how great, would not cause massive defection from KMT to the CCP.

December 8, 2009 @ 6:23 pm | Comment

@Dror
You mean the CCP decided to close tens of thousands of factories and fire 20 million migrant workers in order to stop the bubble in the Real Estate market?!

Tens of thousands of factories! 20 MILLIONS workers! 400,000,000 MILLION ARMY RESERVISTS! 1,300,000,000 CONSUMERS! THE TEEMING YELLOW HORDES ARE COMING!!!!!

I suppose a time machine was invented and we have a visitor from the 19th century… or perhaps you work for CNN, or the CCP, or both at the same time?

Superlative histrionics aside, 20 million represents, aside from wishful thinking and exaggeration, 2.5% of the Chinese workforce. Their wages are low and they earn next to no profit.

It would be like saying America is going to collapse because half of the country’s 7-11 and McDonald’s workers lost their jobs. And I mean that with the least offense possible. Then again, I’m not the one gloating about 20 million of the world’s hardest working and poorest people losing their jobs. Maybe if a meteor falls on planet Earth, killing 90% of the world’s population, and as a result 48 million Chinese migrant workers lose their jobs, you can break out your most expensive drink and have a fucking party with 100 of your best friends!

@Si
A brilliant and incisive rebuttal. Congratulations. Twonk

Get over yourself, Princess. I don’t owe it to you to spoon feed you anything, especially when many authors and articles all over the net have debunked Gordon G. Chang’s bitter, whiny tirades already. It’s simply masturbation material for American jingoists- you’re beginning to sound like you might need one or two of his books to ease your tension.

@sp
You are not only able to spot the CCP’s flaws, but you also conveniently whitewash and trivialize them.

Example? You’re the one doing the whitewashing and trivializing by denying, diminishing and dismissing American atrocities- using the “blame China” card as a proxy for everything.

C’mon, what makes you different from the xenophobic feudal rulers of the Manchu imperial court? The old tag line is always “咱们的乱子都是洋人搞出来的!” yawns…

Because aside from having a realistic view of foreigners, I also of course despise corrupt local officials. I also blame the KMT, and I also blame those Overseas Chinese that are callous to the many humanitarian emergencies in China. That doesn’t mean I’m a deranged West-loving “liberal” that will ignore their disgusting abuses of human rights all around the world.

Why? Because Chiang’s blunders caused the masses to switch sides, any amount of Soviet assistance, no matter how great, would not cause massive defection from KMT to the CCP.

That’s true enough. You’re also forgetting that, according to many international accounts, Japanese soldiers would often dress themselves as Nationalists and commit atrocities in the countryside. The Comintern in America consistently undermined aid to the Nationalists during the war. Aid to China period was next to nothing compared to that given to America’s “racial brothers” in Europe during and after the war.

Not to be omitted from the list are hanjian who worked for the Japanese, a corrupt Qing Court, Opium Dealers (foreign and domestic), warlords, etc. Are you satisfied now or do you insist on going further off topic? Last I checked Manchurian nobles are not the world’s leading human right’s abusers- America and its cronies are.

December 9, 2009 @ 5:44 am | Comment

“…using the “blame China” card as a proxy for everything.”

The malady afflicting you, merpington, is advanced malignant scapula chiponoma. I recommend lots of honey tea to alleviate the bitterness. Oh yes, and rest. Lots of rest, old sport.

December 9, 2009 @ 2:50 pm | Comment

@merp

Example?

Equating the swine flu episode with the CCP’s covering up of SARs? Nobody covered up swine flu but the CCP DID cover up the death toll and seriousness of SARs in the initial stage. Jiang Yanyong, a PLA doctor, then whistle-blew on the cover up and got “disciplined” later by the Party.

Merp, you really have selective amnesia. Better consult a psychiatrist before it’s too late.

By the way, i dare you to name an instance where i am “whitewashing and trivializing by denying, diminishing and dismissing American atrocities”

If not, that’s actually blatant libel.

December 9, 2009 @ 5:43 pm | Comment

@merp

I don’t owe it to you to spoon feed you anything, especially when many authors and articles all over the net have debunked Gordon G. Chang’s bitter, whiny tirades already.

The immature insult aside, if there are so many articles and authors all over the internet debunking Chang it should not take you very long to haul them out. English or Chinese language, both are fine. If you cannot do it, I will have to assume you cannot and that you therefore concede the point.

December 9, 2009 @ 5:47 pm | Comment

@merp

deranged West-loving “liberal”

I supposed you would say that the May 4th Movement in 1919 was organised by a group “deranged West-loving” liberals.

But what can be worse than a deranged “patriot” who can’t even differentiate and see the Chinese people and the CCP as two different entities?

By the way, after reading your economics textbook, can you explain how pegging accrues reserves? Please also explain your blunder of not knowing that the RMB peg was already in place in 1995. Thanks.

December 9, 2009 @ 5:50 pm | Comment

@merp: The numbers are quoted are factual, and have even been confirmed by your CCP overlords. Let me know when you have anything meaningful to contribute to the discussion.

December 9, 2009 @ 7:27 pm | Comment

@merp
Last I checked Manchurian nobles are not the world’s leading human right’s abusers

Merp is not only wanting in his/her/its economic knowledge. Read some Chinese history and you will know that the Manchus are quite capable of butchering– the infamous Yangzhou massacre in 1645, also known in Chinese as “楊州十日”. The gruesome slaughtering details were as disturbing as those committed in Nanking by the Japanese.

December 9, 2009 @ 10:51 pm | Comment

@Si
The immature insult aside, if there are so many articles and authors all over the internet debunking Chang it should not take you very long to haul them out. English or Chinese language, both are fine. If you cannot do it, I will have to assume you cannot and that you therefore concede the point.

http://www.google.com/search?hl=en&q=gordon+g+chang+idiot&sourceid=navclient-ff&rlz=1B2DVFA_enUS224US224&ie=UTF-8

@sp
But what can be worse than a deranged “patriot” who can’t even differentiate and see the Chinese people and the CCP as two different entities?

By the way, i dare you to name an instance where i “can’t even differentiate and see the Chinese people and the CCP as two different entities?”

If not, that’s actually blatant libel.

@Dror Poleg
The numbers are quoted are factual, and have even been confirmed by your CCP overlords. Let me know when you have anything meaningful to contribute to the discussion.

The numbers quoted where? I wasn’t talking about how “factual” they are. I’m talking about how useless they are- not even your CIA/Mossad overlords are using them.

December 10, 2009 @ 8:40 am | Comment

@Merp

i dare you to name an instance where i “can’t even differentiate and see the Chinese people and the CCP as two different entities”..

Please kindly recall at what you SAID on December 7, 2009 @ 6:06 am when i was merely critizing the CCP regime and not the Chinese people:“sp is clever troll like all anti-Chinese trolls..”

What does it say about someone who calls a Party critic “anti-Chinese”?

Given that you are probably suffering from advance dementia with your poor memory of what you said, i don’t think you will have the balls to own up to what you have uttered.

Seriously, if Pekingduck really disgusts you so much, don’t read it. Nobody point a gun to your head to come here. If America irks you so much, set up another blog and rant about the atrocities of America all you want. Nobody is stopping you from doing that. Get a life.

December 11, 2009 @ 3:01 am | Comment

@Merp

And i am still waiting for you to name one instance of me “whitewashing and trivializing by denying, diminishing and dismissing American atrocities”. If i don’t get any examples from you of me doing the above, i will assume that you are just another ball-less name-calling coward.

December 11, 2009 @ 3:05 am | Comment

@merp: “even your CIA/Mossad overlords are using them”

I am a freelancer. You can ask the CCP to give me a call. Always happy to help.

December 11, 2009 @ 1:35 pm | Comment

Sp, for Merp to call you a troll is amusing. No one meets the dictionary definition like Merp, who hijacks threads, constantly disrupts, hurls barbed comments at anyone who tries to interact and is generally rude and obnoxious (nothing personal, of course).

December 11, 2009 @ 11:11 pm | Comment

http://www.chinadaily.com.cn/bizchina/2009-12/11/content_9161775.htm

Electricity use up 26.9% in November. So, I wouldn’t be surprised that the factories are firing up again.

December 12, 2009 @ 4:59 am | Comment

You might want to read that Richard, and understand what the “brown” people of this world are trying to say to America. There are lessons to be learned on a daily basis, and your blog is no exception. Do not dismiss so easily what you first perceive as noise, or dissonant voices in the cyberspace. We are all here for the same reason, looking for some king of truth in this crazy world. Be tolerant Richard, being dismissive and narrow minded will lead you nowhere.

Land of the Puppet People (scroll down for this post)

http://www.valenzuelasveritas.blogspot.com/

December 12, 2009 @ 5:09 am | Comment

Now that you are half-way reading it, notice that it was written in 2006, not in 2009. Do you recognize any familiar pattern, happening right now in our world?

December 12, 2009 @ 5:23 am | Comment

“None of the above will matter, for all has been forgotten and disregarded, for we live in the United States of Amnesia.”

Now think about what Merp is saying. He is right. He’s absolutely right. And it’s time for us to recognize it, once and for all.

December 12, 2009 @ 5:28 am | Comment

Bao, are you enjoying talking to yourself? Again?

I am extremely critical of America and have been attacked mercilessly by right-wingers who think I am a far-left anti-American socialist. Then I get attacked for not being anti-American enough. I think I’ve struck a pretty good balance.

Bao, have you considered starting your own blog? I’m not sure anyone would read it, based on the fact that virtually all of your comments are ignored, but it would at least keep you busy. Or what about macrame?

December 12, 2009 @ 6:36 am | Comment

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