China's economy is slowing down.
What does this mean for China's future?
This is China Uncensored.
I'm Chris Chappell.
It looks like China's economic miracle...
may be slowing...way...down.
Even China's official GDP figures
confirm the situation is bleak.
On Monday, Chinese Officials released data
for the fourth quarter of 2018.
They claimed GDP growth was just 6.4%.
That's the lowest reported figure in 28 years.
And that's the *reported* figure.
It's been clear for a long time that Chinese GDP data
is basically man-made.
China's current premier Li Keqiang admitted that,
way back in 2007.
He didn't say it publicly,
but, you know, Wikileaks.
At any rate, things aren't looking good in China right now.
"The numbers show exports fell the most in two years last month,
with demand in most of its major markets weakening.
Imports also saw a shock drop,
falling over seven percent in their biggest decline since 2016
with Chinese consumers holding back on buying
everything from iPhones to cars."
Although, to be fair, the new iPhone
is just a more expensive version of the old iPhone.
And who wants to buy a car
when Chinese traffic jams look like this?
Even I've never seen 30 lanes of stopped traffic before,
and I'm from LA.
Anyway, across China,
factories are cutting prices and laying off workers.
Especially factories whose products
are directly affected by US tariffs.
Foreign direct investment is also taking a beating.
Companies are getting more hesitant about doing business in China.
"That is more because it is becoming
increasingly complicated to do business there,
with the forced technology transfer,
with the lack of transparency,
discrimination as compared to Chinese companies,
with the massive subsidies of state-owned companies."
The big question is,
will what happens in China stay in China?
Or will the slowdown spill over
and become a global problem?
Well, the World Bank released its economic report this month and...
... It's called "Darkening Skies"?!
It's not a good sign when your economic report
sounds like the name of a new show
from the makers of Stranger Things.
But ok, "Darkening Skies" says, spoiler alert,
that the slowdown in China
means more risk of a global slowdown.
The good news—at least for America—is,
since China doesn't import a lot of manufactured goods,
the impact on workers in the United States
will be pretty limited.
But developing countries that export
raw materials like iron ore
could be in for a bumpy ride.
The Chinese authorities are already taking action
to lessen the potential blow to their own economy.
They've slashed the bank reserve requirement ratio.
That's the amount of money that banks
are required to physically keep.
Lowering the ratio frees up more money,
which in theory will push banks to lend that money,
which spurs business growth.
The problem with that, though,
is that it fuels growth by creating more debt.
And China already has 34 trillion dollars
of public and private debt.
A sort of "Debt Bomb" if you will.
In fact, China's debt problem
has "been called a mountain,
a horror movie,
a bomb
and a treadmill to hell."
Of course, Treadmill to Hell
is also the name of AC/DC's little-known workout album,
which includes such hits as
"You Shook My Shake Weight All Night Long"
and "Back in Black Yoga Pants."
But anyway, so far,
Chinese officials' solution to the economic growth problem
is to make the debt problem bigger.
That doesn't sound great.
Well, I suppose they could reduce their debt
by creating inflation...
but I don't think they want to be like Venezuela,
where people have to go shopping
with massive piles of bills.
Actually, the craziest thing about China's slowing economy
isn't that there is ballooning debt,
or a manufacturing slowdown,
or risky government stimulus.
The craziest thing is that no one quite knows
how much China's economy is really slowing down.
Yeah, everyone knows China's GDP numbers are inflated,
but no one knows how much they're inflated.
Maybe the top leadership gets "real" data from somewhere,
but even that is unlikely,
since lower-level officials are highly incentivized
to report "better" numbers up the chain,
so they don't get in trouble.
And sure, officials can look at other data
to make an educated guess.
Like Li Keqiang looked at "electricity consumption,
rail cargo volume, and bank lending."
But that's not ideal.
And if officials don't know how much the economy is slowing,
well, it makes fixing the problem that much harder.
So what's your proposal to fix China's slowing economy?
Leave your comments below.
And before we go,
it's time to pull out the ol' hat
and answer a question from a fan
who supports China Uncensored
with a dollar or more per episode
through the crowdfunding website Patreon.
Jordan Laramore asks: "China officially has like 9 political parties
but they vote in line with the CCP,
what are the chances that one day
they decide to form an opposition party?"
Well, Jordan,
it's interesting you should mention the political parties.
A lot of people think the People's Republic of China
is a one-party state.
But they'd like you to know,
that couldn't be further from the truth!
China has 8 other political parties.
A lot of them even have "democratic" in their names!
If you say it over and over,
it must be true.
Just like the Democratic People's Republic of Korea.
There's just one small catch.
Those 8 political parties
are directly controlled by the Communist Party.
It's literally written into the constitution
that the multi-party system
is officially under the Communist Party's leadership.
After all, it's the "People's Democratic Dictatorship."
These 8 other parties combined make up
less than 30% of the votes in the National People's Congress.
So if they wanted to form a bloc and vote a different way,
they couldn't pass any laws.
Not because of the lack of votes though.
Because the National People's Congress
has no real power.
Its job is to give the appearance of law
to a country where policy
is actually decided by the Communist Party.
So if the other parties did try to oppose it,
the Communist Party would just declare them
illegal organizations and crush them.
Not that they ever would try to oppose the Communist Party,
since all 8 parties are also directly controlled
by the Communist Party's United Front organization.
So the chance that these 8 parties
would one day decide to form an opposition party...
is zero.
There have been people in China
who have tried to start real opposition parties,
that aren't controlled by the Communist Party.
Let's just say, it hasn't ended well for them.
Thanks for your question, Jordan.
And thank you to all my fans
who contribute a dollar or more per episode.
We rely mainly on your support
to keep China Uncensored going.
Go to Patreon.com/ChinaUncensored to learn more.
Once again, I'm Chris Chappell. 176 00:07:25,640 --> 00:00:00,000 See you next time.
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