As China’s Economic Picture Turns Uglier, Beijing Applies Airbrush

With troubles threatening to undermine confidence in the Communist Party, leaders are tightening the flow of information.

Comments: 123

  1. Arguably, an economy under a corrupt totalitarian regime cannot thrive; it has never happened before. The more totalitarian the corrupt Chinese regime becomes, the farther away they move from being able to achieve sustainable economic growth.

  2. The corollary being that we may expect to see more - and more severe - repression, since the paramount position of the Party and the Party Leaders trumps all.

  3. The concept is quite appealing but I am not sure this is the case. Think about all the 'oil kingdoms' on the middle east or Nazi Germany: it doesn't get more totalitarian than that.
    Hopefully the downturn in China will reverse and everybody will benefit.

  4. The situation with Nazi Germany - they were cooking the books. Their economy was on a far less firm setting than Dr. Schacht let out. By 1938 they had eliminated unemployment (except for Jews, of course), but at the cost of introducing peacetime food, fuel, and clothing rationing (not to mention wage and price controls). Also, Germany's national debt was enormous and growing rapidly - their entire rearmament program was "paid" for with government IOUs.

  5. China has been the "giant sucking sound" that Ross Perot warned Mexico would be during the debate about Nafta in 1994. Not only have American jobs gone there by the millions, naive, greedy American CEOs have invested trillions there in what's now proving to be one of the greatest cons of all time.

    The big unwind is upon us. China's dictators are a greater threat to America than Isis will ever be. It's time to wake up and realize this.

  6. Can't imagine why that huge but poor market was so attractive when corporate 'partners' in China keep 3 sets of books. And a child could figure out in about 3 interactions that the Chinese way of life is to tell people the sweet lies they want to hear, and then never deliver on them.

  7. The world is chaotic and hard to understand. We must not look for scape-goats to take our minds away from core causes of our problems. We blamed the Japanese for our economic problems, now we blame the Chinese. It makes the world simpler to understand when it is a comic book of good and evil. The Chinese tend to blame the Japanese and the West for their problems instead of dealing with home-grown causes. We must all see ourselves clearly before we can see others clearly. We need to see clearly to solve problems. We are on this planet together.
    Comparing China to Isis is not helpful. It is not even close to true. China is complex and much more reasonable than the popular press leads us to believe. It is authoritarian with totalitarian tendencies. It gave its idealist children Tiananmen Square. We must not Romantisize or demonize ourselves or China. When we think of the South China Sea we must remember the Caribbean Sea and the Monroe Doctrine. When we think of China today...it is helpful to think of the US back in 1900 with our chauvinism. When we think of Tibet we should remember our American Indians and the Mexican War, the taking of the Philippines, Cuba, Puerto Rico. When we think of the rights of Tibetans and other minorities in China...perhaps we can do better with Guam, American Samoa. If we can not help the oppressed in China we can help the oppressed within our legal jurisdictions. We can control Wall Street and preserve our middle class. Bless us both! -Rudy

  8. Amen, brother amen. The problem is two fold- it takes too long to see the consequences so they are not tied to the action unless you are really paying attention, and the people making the money bought the people making the laws. Trump and Sanders are a reaction to it all.

    If we don't get real change it will be pitchforks. Cruz, Rubio and Trump should be happy they don't have a chance, they are babes in the woods. Clinton, don't expect much more than the same old denial of reality, she is the establishment that got us here.

    China? Gonna be rocky there, but they are much better off than just ten years ago.

  9. This is the age of transparency. The Chinese government has to come to terms with that sooner or later. And when it does, it will be gone, sooner or later.

  10. "This is the age of transparency"?

    Perhaps in Canada, but certainly not in the USA, nor in many other places.

  11. It's the age of transparency in the sense that people are used to getting the back story sooner or later. It's difficult to run and hide on the internet. Our laws allow demands for freedom of information, whistleblowers can speak out, you can tweet and film in the middle of a war zone. People today expect to know things, want to know them, will try to find things out. McLuhan said we are all spies now.

  12. Pretending the elephant is not in the room is a great way to solve the problems that its presence generates. And an even better way to make it go away. Not.

  13. What is curious and sad is that everyone would deny the Party is still an authoritarian regime with unprecedented contempt for the rights we take for granted. Their reckless embrace of capitalism makes them no less like democracies than Nigeria's does.

    So no, lying to your people, poisoning their water and air, stealing their money for self-enrichment, and severely restricting their ability to gather and speak are not an "alternative order" opposed to "Western hegemony." They are violations of fundamental human rights.

  14. "lying to your people, poisoning their water and air, stealing their money for self enrichment, and severly limiting their ability to speak" You are talking about the USA, are you not?

  15. I was just reading this and thinking the same as you Nillissen - but, I would also add, that as a student attending Columbia in the 60s I remember far worse air and water in the U.S. Part of this involved exporting manufacturing, and the other part was the Clean Air and Clean Water Acts.

  16. Of course he is. If he were saying it in China about China you would have never seen it and he would never be heard from again. Lucky you....

  17. China's actions toward journalist mirror their leaders ethical decisions to never admit weakness and by controlling the media or Xinhua News Agency they control the message.

  18. We could learn something from "Communist" China, folks. It provides us a very good example of what can happen when the richest folks run the nation.
    What an upside-down cake of a revolution that was! Eh?
    The People won!
    Problem? Just who do we see in the high-gloss, finest leather shoes worn by the Chinese Rich of today?
    “The People”?
    These are the scions of the post revolutionary gods who “earned” their wealth by, literally, murdering off the old rich, then pocketing what the dead couldn't carry off to Heaven.
    So. Who do we have filling those shoes of wealth today?
    The kids whose moms and dads were party members and knew how to amass trillions by theft and murder and fear.
    So, their skills are?…
    How to drive a Ferrari at 200 km/hr and the ability to recall said mommas’ and daddies’ phone numbers at the drop of a hat.
    Say, who taught them economics and management and finance in “college”?
    The same guys who never heard of Keynesian economics but were darn good at the back-stab in the good ol’ days.
    It's hard to add two and two and get four if you've never had to so without someone else doing the data entry.
    So, what do they really know?
    Money talks and everyone and everything else better get out of the way.

  19. @flak catcher - Mao's China may have murdered and driven out most of the previous regime. But, China's economy was floated by the Soviet Union throughout most of that bloodshed. Little wealth was preserved or appropriated as you represent. In fact, most of it had been looted or destroyed by the Japanese during WWII- so your whole narrative is a fact-less rant.

    Deng's China is what created industrial robustness and lay the foundation of the centrally controlled China of today. Whatever it is, it's not what Marx foresaw.

  20. The global economy is a sham, just like the American economy. My savings account is useless, I've intelligently invested 50K in the market 3 years ago and have seen only marginal returns and I'm in a well-paid dual-income household.

    What am I supposed to do with my money these days other than spend it away? Clearly the options available to me are not in my best interest.

  21. 2 words

    canned food

    esp cling peaches, in heavy syrup

    youd be surprised what one of those can buy you given th right circumstances

  22. Really, you have no options but to spend it away?

    You are thinking of the market place in very short term, 3 years is nothing. Think long term like 20-40-100 years instead and than you can see investing in SP500 still make sense.

  23. Your government wants you to spend. At all costs to you.

  24. Not to worry - The Donald will fix it and all will be fine!

  25. I think the world would be a better place were Putin and The Donald become best buds. They do look at the world the same way:
    "What's in it for me?"

  26. Withholding financial information to build confidence.

    War is peace.

    Freedom is Slavery....

    When the USA decided to trade (not fair trade) with China early in the Bush administration, we hitched our star to a totalitarian system that had historically proven that it would not hesitate to slaughter its own if/when they publicly disagreed with their policies.

    Our industry is a shadow of what it once was or could be at this point as is the middle class it used to partner with.

    The elite of both paries did this (Yes, the republicans were more united, but both nonetheless.)

  27. AS said by" Fact fiction" the government is the " business " and as China should be treated as a corrupt, deceitful enterprise ...invest in a gamble, not really more like the Mafia.

  28. I hear House of Cards is popular in China. After reading this article I can understand why.

  29. Emperor Xi will rule for ten thousand years!

    Now that the dictatorship of the proletariat has evolved into the Sacred emperor Xi--for if North Korea can do it, can China do less?--will be dissolved and Xi's descendents shall rule the earth in the name of the Han forever!

    IT IS THEIR TURN AND RIGHTFUL DESTINY! Why? Because! Or so I read in comments.

    Isn't this the plan? Same old Same old Ozymandias nonsense, but, an ever popular plan with megalomaniacs of all times nonetheless. Turkey has Erdogan, thr U.S., Trump etc. etc etc.

    Now we will learn how upset--if at all--the commie gang of feudal power holders is with one time comrade Xi confusing the objective reality with his subjective desires.

  30. Having followed and researched Chinese political economy for three decades, I have great respect for some of the country's accomplishments, such as lifting over half of the population out of poverty. Yet, as China has turned more capitalist and allowed rampant income inequality to emerge, the much vaunted Beijing consensus has lost much of its luster. The regime is scrambling to control public commentary over its current disarray. It would be a supreme irony for the most successful of communist party rulers to fall over a collapsing stock market.

  31. Your blaming china's woes on income inequality? The only thing that brought China any success at all was capitalism. How do you think people in China were lifted out of poverty in the first place?

  32. So China is learning that capitalism is hard. Seems like it may take your own Great Depression to wake up to the realities of a market economy. Censorship may turns things in your favor in politics, but in the economy, covering up the facts only hurts you.

  33. Who is surprised? The picture here is only different by degree. US government figures like unemployment, jobs and cost of living are cooked to hide the downward trend of the American Way of Life. China should look to the US as a model, stop locking people up and instead just let the media do its job of hiding the real stories under a deluge of distraction, omission and misinformation. Pay no attention to Detroit and Flint, etc! China is communist! Russia is run by a ruthless dictator!

  34. Factually there are many measures of unemployment. It is left to the knowledgeable individual to decipher what all the measurements mean. To simply complain about the collection of data, and deepen the charge through an accusation of deceit is beyond the pale.

    The internet provides a rich milieu of data. Nothing, I repeat, absolutely nothing is being hidden as to the facts of the American economy.

  35. Really? How are unemployment, jobs, and cost of living figures "cooked" exactly?

  36. I wish you could spend one week in China to see first hand how misguided your comparison really is.

  37. Remember Bernie Madoff?

  38. He just took the money he received, and put it in a checking account. That may turn out to be a better idea than spending the money the way China has spent it.

  39. There are social and political consequences to 15-20% asset bubbles bursting felt as devaluation and stalled growth in economies a fraction of China's size. With a global GDP that was threatening to eclipse that of the United States this year before the Shanghai index blew as hole in the side of their float, China is a major player in the world market.

    The impact of their government's attempt to induce the Chinese investor to borrow at margin rates in lieu of paying an income tax was to create a false market. False markets collapse. They are not limited historically to totalitarian regimes. The United States economy in the 1920s was a chimera founded on margin and worse, bucket shops, which were licensed brokerages that dealt in stolen securities and false margin trades that were never backed by CUSIPs.

    The ''wall'' started going down in China last Spring as trade in the new market were shut down in all but the 20% of government backed stocks. What we have seen since then is outflow and foreign reserve shrinkage. The Bank of China has been betting big on foreign real estate construction. Chinese capital has been using a variety of ruses to emigrate funded by their domestic incomes. An additional painful adjustment will reverberate throughout world markets, most likely by the beginning of summer this year.

    No one can predict the future's exact shape. But, the risk China runs in its opacity is a world overreaction when reality surfaces becoming visible to all.

  40. China and the U.S. are more similar in certain ways than many posting comments would like to acknowledge. The G20 and the CEOs running the major corporations run the world economy more than do the politicians. But this comment makes good point that can't be denied. People having to guess what's going on tend to over reach in their guessing. Foreign markets will think things are better than they may bee in China and then make a bad reality by guessing they are far worse. But, by coming down on its media the Chinese government may magnify this reaction.

  41. Don't China's leaders realize that in the economic arena suppressed news items are going to be conservatively assumed to be bad, and perhaps even really bad?

  42. in asia, image and face are everything

    reality doesnt matter

    what others perceive as reality matters

  43. This is why so many economic miracles in totalitarian countries come apart - they fudge the books. They cheat so much that the leadership loses track of what is really going on until the law of gravity kicks back in. China had had to take the capitalist path to feed its rural masses but the dictators don't do capitalism very well - as evidenced by their miserable efforts to control their stock market.

  44. When I visited China I was told the burning toxic air which made my eyes burn and throat raw was harmless "fog". When I visited Tibet and found empty monasteries devoud of young novice monks and sad eyed elder monks who shared stories of abuse during the cultural revolution that continues to this day, I was told the Tibtans are happy and thriving now that the Dalai Lama is gone and they have been liberated by China. When you hear the Chinese economy is doing fine, growing at 6.9% and everyone loves the government, you had better start wondering just how dire the Chinese economy must really be.

  45. Look, I imagine the Chinese are much better off today than they were 50 years ago. Talk about a hard ship to turn toward capitalism without running aground on really tough seas. Going toe to toe with the best in the world and being green. Some of you in the peanut gallery here should try it. And NYT try writing something good about what's happening there - how about trying to managing the cooling of a red hot economy without it breaking apart? Count the number of good v pessimistic stories you have published on china and the stacks are not balanced. Some write about corruption and excessive control by their government... have you been paying attention at home - we just put lipstick on it. Strange the way you want to call the kettle black so badly. Give em a break.

  46. "Government that is big enough to give everything you need and want is also strong enough to take it away." TJ

    Fear big government.

  47. What does a Unification cult founded by a North Korean using the alias Sun Myung Moon, and the Communists running China, have in common?

  48. Chris Balding's latest blog suggests (in convincing detail) that the huge trade surplus with the US is a fantasy and is actually a small deficit.

    If confirmed the problem the Chinese have with their economy is far more serious than previously understood. A must read.

  49. How about a reference link. .....

  50. So, the question becomes: What will happen to the world's economy when the Chinese Ponzi scheme finally collapses? This seems a greater threat than subprime housing in 2007. The smart money is already parked in safe havens such as U.S. Treasuries and highly rated munis. It seems obvious that the oil market collapse is the leading edge of the China collapse. How bad is this going to be? I know that some theoreticians must have run the numbers already.

  51. This hiding bad news should not be a surprise. Several years ago makers of infant formula were found to have used ground up melamine to get the calorie count up cheaply.

    Problem - the melamine destroyed the infants kidneys and killed many of them. Since middle and upper class Chinese now have money, they demand for infant formula caused a world wide shortage.

    How can we trust a society that condones this type of behavior - killing infants.

  52. In the early stages of development, growth rates can be, and often are, very high. Once a place becomes pretty well developed, these rates cannot be maintained. If they could, the globe would have been consumed many times over long ago.

  53. China purports to be a major power on the rise, but how strong is the leadership's grip on power when it must suppress currency flow data? While its physical size and population do make a China an influential nation, China's manifestly evident economic problems and the heavy-handed response from Xi Jinping show a remarkable degree of political weakness, and suggests both the internal belief that the Chinese economy is highly fragile and that the accurate portrayal of the situation could lead to uncontainable domestic unrest.

  54. President Xi has been attempting to curb the excessiveness and corruption that has engulfed Chinese society for the past 30 years. Deep in his heart he will forever be a disciple of Mao. However, in his quest for purity he has castigated & infuriated many people who have made their fortunes during this period of reckless growth.
    His crackdown on the media is his latest attempt to put a lid on the opposition.
    The battle lines are now tightly drawn. Will China successfully manage its way through it's 1st economic decline in the post Mao era and eventually emerge as a solid economic engine of stable growth? Or will the entrenched oligarchic forces wage a pitched battle against Xi and his ideologically driven agenda and throw China into chaos?
    One thing is for sure..........whatever happens in the long run it is going to be a very bumpy ride for both the Chinese and the rest of the world as well.

  55. The attitude that it is a problem only if others know about whats happening is growing in the world and America. When the information does become available in America its called scandal for those who hid it. Now in China it is prison for those who reveal it. When the truth ceases to be a bomb proof defense against slander, others' fraud, or determinate in a contract law case, we will be less free and more afraid. Examples: North Carolina : Bill Crosby, drugs, Michigan failures of transparency, .........

  56. Here in New Jersey we call this putting lipstick on a pig which in this case is demeaning to the pig. Red China's special flavor of Communism seems to be failing and with a dissatisfied population in the Billions, Chinas leaders are getting scared!

    Remember last time it was Tiananmen Square.......

  57. Chinese history is replete with examples of an otherwise omnipotent dynasty losing the "mandate of heaven," after which chaos ensues, followed eventually by a new dynasty taking power. That process seems to be happening again, this time with the current Communist dynasty.

  58. Gee, surprise, surprise. Not. For those of us who remember the hype about Japan's economy in the 80's, and the way that bubble very dramatically popped in the 90's, China's economic slowdown is entirely expected. As in Japan, government manipulation has masked serious underlying weaknesses for a long time, and now the cracks are starting to show. They will try to hide it but the truth is that without serious reform the slowdown will last a long time, just as it has in Japan.

  59. There is no such thing as 'planned capitalism'. It is the 5-year-plan mentallity combined with endemic corruption and the suppression of individual freedom that is undermining the Chinese economy. The sooner America unhitches its economy from the rickety Chinese economic wagon, the better.

  60. trapped in their ideology

  61. With all due respect to Mr Carnes, I believe he may be doing the same thing as the CCP; putting a positive spin on things in order to protect his position and investment.

    It seems absurd to try and hide from the Chinese people something they already know.

    Maybe the end result of all this will be to drive home the downside of suppressing information and dissenting opinions.

  62. Of course influential people in the government and business still have access to all this data and can trade on it accordingly, freely making money while the "little" people suffer.

    Remind me again why we decided it was a good idea to make our entire economy dependent on such a corrupt, totalitarian regime?

  63. Sounds a little like the RNC establishment today with Trump.

  64. "Beijing Applies Airbrush"? Just in case any of this sounds familiar I would humbly suggest we remember the Greenspan days of assuring us everything was just great, this of course as his masters at Goldman Sachs and their ilk are pedaling toxic "dog s--- wrapped in chickens----" to the rest of the world while simultaneously placing bets that these financial instruments would be worth less than the metaphoric toilet paper they were written on and worse still guareenting that the vast majority of the American and European people would suffer for decades to satisfy their greed. I would also suggest that China's current leaders as the sons of the privileged learned their art of obfuscation sitting at the feet of those learned Professors at our hallowed bastions of "Freedom" and "Capitalism " Harvard, MIT and the Stanford School of Business with its attendent Hoover Institute. To suggest that any of this is a "Commie" plot reeks of the hypocrisy that America has come to signify in the days since Nixon and Kissinger opened up dialogue with China and the Pandoras Box of Uber Capitalism sprang free allowing the long intricate charade of good versus evil to capture all the wealth while keeping the unwashed masses under control.

  65. Most countries, specially CHINA does not realize the simple truth..

    economic freedom and political freedom are one and same. They feel different based on perspective. but fundamental exact same.

  66. Now in English...

  67. The politics of China and the US are closer than we think. They seek tighter government control to cover up corruption and we want less. Either way it's the 1% that control.

  68. Without real numbers, and with other options around the world....why would I invest in China?

  69. I've been saying for a few years now: China is going to explode (revolution) or implode (propped up economy and lies collapsing) in the next several years. It's not an economic threat in the middle to long run. China will do what it does best: tank itself.

  70. It is like rain dance. Keep dancing and one day the rain
    will come and dance becomes the cause. You have been forecasting Chinese recession for the last few years. Keep
    repeating it and one day it will happen. Tell everyone
    when finally it happens.

  71. Western investment in China may seem great at first...until they steal any intellectual property from your company possible, reverse engineer your product and cut you out of profits.
    No matter how great the financial gain may seem China is going to be the death of western companies and a decline in our societies in general. ...invest and manufacture your product in western countries

  72. And we never do this? Paper, porcelain, silk.

  73. Hmmm, what have we stolen from them lately?

  74. Cheap labor used to leverage and cut back the power of national labor union, principally. But, you'd be surprised how many, "made in America" products are comprised of components from China as well as several other nations. It's called the 'global economy.' And, while people love to rail about it, the only times that tendency is cut back tends to be during periods of the worst economic and political regression, as during world-wide wars, plague, or depression.

  75. China has been hurt by lies it has forced itself to believe before. Institutions are forced to send in information that pleases the boss at the top. Thousands of bits of little lies add up. Information is impossible to check in real time...and a disaster after a five year plan destroys the dreams, the security of many. This government allows no real questioning. Xi Jinping will be surrounded by puppy dogs unable to tell him the truth. China for him will exist for him only in his deeply growing narcissism. Chinese people will suffer the result. Others, the Americans, the Japanese, the dissenters will all be blamed. Power may not always corrupt...but Xi Jinping appears very prone to corruption of the perception of reality. This is a very human fault. Can he and dear China overcome this? Truth tellers are punished. Freedom can be chaotic and unnerving...but facts can be discerned by honest effort. It is by staying in touch with reality that a government can flourish and survive. Xi Jinping is playing with the Mandate of Heaven. The Mandate of Heaven demands facts. Great narcissism does not make a great leader. For a while it can make a powerful leader. Reality remains reality and consequences of ignoring reality...? Dear China, snap out of it! -Rudy

  76. It's not reality that perplexes China, but, rather, how to deal with it.

    In response to the economic crises of 2008, China initiated a massive domestic capital expenditure program. It was not badly intended. They were investing in the national transportation infrastructure, and creating more living space. The problem lay in how this all was funded, which was from the regional economies spending money with no bonding capitalization plan to fund it going forward with anticipated toll and usage revenue - see our interstate and thruway system.

    Thus a massive inflationary stimulus was injected into China's economy, which in turn stoked the secondary co-dependent economies providing raw materials.

    China realized its error very late in the game. The most obvious solution was to initiate a national asset or income tax. But, the central government's assessment apparently was that this would be avoided, and circumvented, so they sought to 'trick out' assets by having margin accounts paying interest into yet another stimulative set of equity markets. That blew up. Now they are trying to figure out what to do.

  77. when things go wrong
    eliminate the siren's song
    the sooner, better
    there's absolutely no reason why we should let her.

  78. Tell me again why we're so enthralled with the good Commies in China and we allow trillions of dollars in their imports to flood our shores and put Americans out of work, but all those Cubans are bad Commies that we're scared of?

  79. Do a little investigative research on who has been telling you this, and you will have your answer.

  80. Falsifying and manipulating economic data is only going to make China's place in the world market more precarious. No one overseas is going to want to do business with Chinese companies and industries if they can't provide reliable data. Thus the cycle will continue of China covering up bad domestic market conditions in a vain hope of attracting outside capital.

  81. Companies have their own data. They have sales,
    expense, capital expenditure and profit data to know
    the real performance of their business and
    make plans accordingly. There is a large private sector
    in China. They don't rely on data on the government.
    These journalists should have talked to private companies
    like Huwei, Haire, Alibaba, Tencent and others to
    balance the picture rather than talking to Govt. cement
    company and the economists. What do economists know?
    After all they didn't know the deep recession of 2008
    coming.

  82. I) Perfect information existing between buyers and sellers is fundamental to perfectly competitive market conditions. Unrestricted and almost perfect info flows between traders, partly created by public information exchanged by the traders themselves, similarly underlies the Efficient Market Hypothesis, which leads to almost perfect valuations in equity markets. Robust information flows quickly neutralize the unique value of "insider" information advantages.
    II) China's restrictions on market data will result in misleading market valuations. Errors in allocating financial capital to its most productive ROI entities will occur in such markets, with censored economic data. As the efficiency of Chinese markets in allocating capital wanes, GDP growth should be negatively impacted; reinforcing a slower-growth economic cycle.
    III) The Fed, under recent chair Dr Ben Bernanke, as the Fed had to counter the economic disruptions caused by the Great Recession, with a QE monetary policy, seems to have also sacrificed transparency for a unified policy. Times financial columnist Neil Irwin, in a piece entitled "Ben Bernanke, Anti-Populist," (10/06/2015) writes: "A recurring theme in the book is Mr.Bernanke's frustration with dissenters--colleagues at the Fed who disagreed with central bank interventionism, especially when that disagreement was logged publicly." He expressed "disdain for those who fight their policy battles in a more strident, ideological, public way."
    2/25 Th 12:59p

  83. Another case of the 'smartest guys in the room'. This time starring Xi.

  84. China's economy is looking more and more like Japans in 1990 , only worse, much, much worse.

    Businesses and investors need quality data to formulate strategies and make sound decisions. By shutting off the free flow of information, China's leaders only create more turmoil and if investors can't get reliable information they would rather pull their money out. And they have - over $1 Trillion has left China in just the past year alone and its only going to increase.

    China has accumulated more debt in the past 8+ years (over $21 Trillion with total debt over $30 trillion , which is ~300% of GDP) than the the US in over 200 years of our existence ($19 Trillion and ~100% of GDP).

    For Pres. Xi, no amount of CCP applied lipstick can pretty up that pig...

  85. This is a real test for the Chinese system. Can a totalitarian state be successfully merged with a free market business sector? It is no problem at all when things are on the upside - everyone is willing to look the other way. Nor is it necessarily a problem that the breakneck growth of the past 15 years might undergo a correction.
    But when the going gets rough, the free market of ideas and criticism is an essential component of returning the economic system to equilibrium. We will see from this episode whether they can play capitalists on the upside and switch back to economic dictators on the downswing.

  86. I have studied our government data for decades and I find common cause with this statement from the article...

    “When you go around and meet state-owned industry people, everybody laughs at the national statistics, so I don’t know why foreigners believe them,” Ms. Stevenson-Yang said."

    I'm absolutely shocked to arrive here but honestly now have begun to feel that the old saying, "You can't believe anything they are telling you..." may in fact be more true than not.

    Take for example the employment figures. If if you believe the data sets...the reporting is wholly focused on the wrong numbers to 'report' what the 'unemployment rate' really is. Result is that nearly all citizens have no idea if 'we' are working or not. How could any casual citizen have command of what is really happening in their country?

  87. Economic trends are always cyclical. Good times don't last forever. Xi Jin Ping trying to manage the downturn by tightening his grip will only be counter-productive. If anything, the lack of transparency will only create more fear and uncertainty.

    But perhaps Xi is, for all his apparent sophistication, still an old school party apparatchik at heart. As a hammer will see every problem as a nail, so an apparatchik will see every problem as a state secret.

  88. If the subject was not so serious, the Chinese attempts to manipulate their currency, their indebtedness and their stock market values would be hilarious.

    Those awed by China's growth over the past decade or so seem to always forget that China is ruled by Communist dictatorship which can brook no alternatives (read reality) to their cooked books and statistics.

    Almost as hilarious were the comments by San Francisco Fed member John C. Williams back in May of 2015, in which he stated that all was hunky dory with the Chinese economy because the academics and government officials he met with told him so when he visited Beijing at that time.

    Then came the market debacles of May and August 2015.

    If a Fed governor can be so totally fooled by the puppets in China, is there any wonder why the Fed has lost most of its credibility since Janet Yellen took over? And is there any wonder why there are market and economic upheavals all over the world which are primarily caused by the fictions emanating from Beijing?

  89. In a capitalist country like the US, where God only knows how an economy works, people don't have such high expectations of government's role in it.

  90. Hmm, isn't this basically what happened during the Great Leap Forward? Stifle the flow of information and the problem goes away.

    Come to think of it, isn't this also what happens in many businesses? Or political parties, or news organizations? Or religions?

  91. In the Great Leap Forward, though the directive for progress and modernization was top down, the misinformation flow was bottom up.

  92. That's the official line. But I'm certain that the misinformation flow from the bottom up was generated by a clear understanding of what the top actually desired to hear.

  93. They can just do what our flat earthers, the Republican Party, does- if I say it's true it is, don't let science or reality stand in the way.

  94. That may be true, but I lean in favor of the Chinese as I do not think they believe in Creationism or that Climate Change is a liberal conspiracy theory.

  95. I don't know why I trust less, the Chinese government or Edward Wong. Both have a history of misinformation except one is nation building and the other is waiting for retirement.

    So there you go. I don't know if China is collapsing but I do know someone has been screaming it for the last decade and he have been wrong every time. It is hard to trust a journalist when he have a reputation. I'll check WSJ, FT and The Economist to see if they are reporting the same thing.

  96. I don't know who I trust less, the Chinese government or Edward Wong. Both have a history of misinformation except one is nation building and the other is waiting for retirement.

    So there you go. I don't know if China is collapsing but I do know someone has been screaming it for the last decade and he have been wrong every time. It is hard to trust a journalist when he have a reputation. I'll check WSJ, FT and The Economist to see if they are reporting the same thing.

  97. For you maybe Xinhua would be the best source of news to rely on.

  98. Try The Global Times or China Daily if you prefer sanitized, CCP approved news.

  99. The party can do no wrong. The party can do no wong. The patrty cn do no wg. The party, the party, the party..............

  100. I hate to say this, but the news that China's economy is on the rocks makes me really happy. I am not one to celebrate others misery and the unfortunate, so I wonder why I secretly smile and rub my hands in glee. Is it the fact that the CCP is an absolute evil that has oppressed and murdered millions? Is it because of the invasion and murder of Tibet or the way the CCP leaders lie while looking you straight in the eye, as Xi did with the armament denial of the artificial islands in the seas south of China? I really do not know for sure. Perhaps it is the fact that they have stolen so much intellectual property from the USA and the continuing cyber attacks. Whatever it is, it makes me happy to hear of their demise. I only hope that things will get worse over time, only then maybe the people of China will rise up to discard this blanket of oppression that lies across that ancient land.

  101. China's picture is getting mighty ugly even beyond economics, what with raising pollution standard warnings, using melamine as a protein supplement, letting N. Korea run wild, building military islands and on and on. But then, what must China (and the rest of the world) think about Republican politics? Makes you want to take a stiff drink, pull the blanket over your head...at least until we get Hillary elected.

  102. ''Last June, Liu Qintao, a journalist for a newspaper in Shandong Province, posted in an online forum a message he had seen about Dongguan Securities, a Chinese brokerage firm. The post said Dongguan Securities had warned “V.I.P. investors” about coming risks and had urged them to sell.
    On Jan. 8, more than six months after he posted the message, officials fined Mr. Liu $23,000 on a charge of having spread fabricated information. ''

    They should also fine the original poster in the forum. Why didn't they? Probably he was one of those elites who cannot be touched. Very likely those VIPs include Xi and families.

  103. And as the Chinese economy begins to fall apart their military is in a desperate frenzy to grab as much real estate in the South China Sea and optimize their anti-carrier capability. When domestic unrest ensues they will galvanize the people against the external threat to their "sovereignty" just like the Argentinians with the Malvinas. But the stakes will be greater.

  104. With today's communication technology, a small localized incident can turn into catastrophe...we cannot afford to take too liberal an approach to information regulation, in an age when genocides and riots are incited by radio and twitter.

  105. Go back to Shanghai.

  106. Both Russia and China say that they have, what they call, a ”managed democracy.”

    It also appears that China has now ”managed market oriented economy.” Economic data is managed to suit Party’s official line.

    However, if one keeps sweeping the trash under the rug, pretty soon the pile is too big to hide.

  107. Yes, good point. But, how different than junk bonds, derivatives, and a million deferral schemes that are kick the can down the road in all but name?

  108. Yes! Akin to the sub-prime melt-down of 2008...

  109. Besides broad GDP, other indicators like consumer
    spending, investment, retail sales and employment
    rate will shed more light. It is well known that the
    manufacturing has overcapacity and not expanding.
    What about services sector which is slightly more
    than half the economy. No expert on China mentions
    it because it doesn't fit their narrative. An export
    driven economy like China's is experiencing slow down
    because the world economy has slowed down as IMF
    keep issuing its forecast revising it downward. Who
    would China export to if demand in Europe, USA,
    Japan and the emerging markets is low. US GDP
    grew .7% annualized in 4th quarter which includes
    holiday period of high spending.It is bewildering how
    almost no growth in 4th quarter created 700k jobs.

  110. The politics of China and the US are closer than we think. They seek tighter government control to cover up corruption and we want less. Either way it's the 1% in both countries that will control the rest of us. That is, unless Trump reclaims those menial jobs that were lost to China, then we will just exchange places and provide cheap consumer good to them.

  111. The report is extremely biased. On the one hand it
    quotes an economist from the bank who put GDP growth
    at 4.3% and then spin a narrative that the economy
    is falling apart. Why the growth rate of 4.3% is terrible
    is mind boggling. I have been reading NYT for 15 years
    and never seen a report on China that is not negative.
    As far as NYT is concerned nothing good ever happens in
    China.

  112. The common sense, the Communist has never given up the ambition and also wanted to live with the enemy, they call the capitalism stuck with title" counter-revolution". from 1949to 1972, Mao Ste Tung led the country to poverty, the consequence of 65 million people killed by the socialism, among there were ten million died by famine. The US president Richard Nixon opened the door for China escapes the fallen economy then Deng Xiao Ping who used the enemy weapons of currently, technology and the others, now China becomes the second largest economy.
    the communist and democratic country are quite different, but the hardship, communist pretends to co-operate, they apply an ugly economic pattern:" THE FREE MARKET LEADS BY SOCIALISM". It modern temporarily helps China could survive into the low tide of revolution's stage, but long term it turns ugly and harmful because the dictatorial and democratic economy management contradicted likely the fire couldn't remain by water flows. After many decades succeeded by using the enemy economy facility, now the socialism shows off its negative face....if Chinese wants their country escapes the big problem, the better way must turn the freedom.

  113. Let them implode. Who cares ?

  114. China is notin a position to lead the world there is a lot behind the democratic process is the only way to govern a free and just society New China takes economic and sustainable growth

  115. China will only achieve sustainable growth in a genuine capitalist economy when its emerging middle class can enjoy the freedoms that are prevalent in a democracy. Until it grants those rights to Chinese people, will it become an economic superpower approaching that of the United States.

  116. Capitol is running out of China because of the corruption crack down. If you have no assets they can't be seized, and you can't be accused of corruption.

  117. Thanks to the US Fourth Estate....the winds of change for China must be
    revealed....but I believe gently journalists....because when change evolves
    we should welcome the change...and help it along....gently...gently...let
    it blow...across this great and ancient land.

  118. The extent of capital flight is the clearest indication of lack of confidence in the economy and its economic management. Suppression of information is the next clearest indicator that much is amiss in China. Quite apart from slowing GDP growth, according to James Rickards in "The Death of Money", there is a massive financial meltdown in the works due to malinvestment in commercial construction and infrastructure that will never pay its way - some three trillion dollars worth (2013 estimate) in specious financial instruments somewhat akin to what almost brought down the US financial system in 2008. Capital flight happens when the people who profited massively from this bubble anticipate that like all bubbles it will burst at some time, hence they are protecting themselves. According to Rickards, millions of people own these to-become worthless financial instruments. If Rickards is correct, one wonders about the extent to which a major financial event would put the whole political system and the economy at more fundamental risk than mentioned in this article.

  119. The Chinese government in Beijing has been in practical with the methods of open market reforming done more than three decades earlier by the late Chairman Deng Xiao Ping who had seen the days the system in which the Chinese Communists Party put in force by the late Chairman Moa Zedong , came into power will make further deeper into poverty.With the realization & reality , the open market reforming initiated by Deng Xiao Ping , had successfully shaped the China's modernization & economic powerhouse in the world only behind the United States as the number two in economic powerhouse & prosperity to this day . If in-effect Mr.Tze Jing Ping decided to continued cracked down of his opponents who were more of the democratic & liberalized activists in the country , China will become going backward with closed door policy of the past since the Moa Zedong's era . With the closed door policy of the current President of China : Mr . Tze Jing Ping's trying to hide his failures behind him with the tactics , it will go downfall in the history of his failures and legacy as one of the most backward closed door policy initiated by him will make China , which has seen the progress done and started by his previous mentor & leader of the late Chinese Chairman : Deng Xiao Ping will come to an end . It will create with more unstable economic certainty & will further drives down the stock market & it will create chaos throughout the world .

  120. Is not China still growing much faster than the USA is?

    How much should we trust US BLS statistics?

  121. There is an offset to the long-recognized fact that Chinese statistics are not reliable. The offset is to read trends. Trends are harder to fudge because of the longer view. There is no doubt that the Chinese export economy is slowing, but as some of these comments have pointed out there is the service economy and the domestic consumer economy that tend to be overlooked; often for lack of reliable statistics.
    Those who seem to cheer the Chinese economic troubles do not seem to realize they are using the same unreliable statistics as others to make their case.
    We know less than we would like to and less than we need has been the refrain in the economic analysis of China from the beginning.
    The Chinese stock market gets a lock of attention because of world market gyrations. What is less understood is that a tiny fraction of Chinese own and deal in stocks, and the Chinese stock market plays a different role in the Chinese economy than markets outside China. Comparisons do not hold up when the conditions are as different as they are. The frustration of Messrs Wong and Gough shines through their report that is stymied by the refusal of Chinese individuals and institutions to comment or make themselves available for interviews.
    What we do know is the Chinese economy continues to grow. We are not sure of the % of growth but it is likely a good deal larger than the US or the EU.

  122. China is a big country with a very large population. No surprise that foreign investors have raced to the mainland over the last two decades. But, investors might want to think twice.

    China steals proprietary information from companies around the world and feels no need to apologize or even attempt to halt illegal espionage. The communist party is nothing more than elitist thugs trying to control, manipulate, and beat down its citizens.

    Astounding that Europe recognized their currency and 'world' bank.

  123. The Chineese leaders are riding a HUGE, POWERFUL & UNperdictable
    Dragon - Of Needs and Expectations.
    The reality is:
    What happens to Our Planet if China, India and many other places Attempt to live like Americans ?