Nathaniel Taplin, an economic and financial columnist for The Wall Street Journal, in an article titled “China’s Economy Rests on Three Shaky Legs,” analyzed China’s economic troubles.
Taplin said that the Chinese economy is suffering on all sides: power outages, heavy debt, challenging transportation routes, and the outbreak of Delta variant in the country. As a result, growth is expected to be weaker for the last quarter at 4.9% year-over-year, and the next quarter is bound to be worse.
So far, Beijing has managed to avoid significant headwinds from the asset downturn, but it’s still early days. Suppose more significant policy easing doesn’t come soon. In that case, there is a severe risk that most of China’s key growth drivers—real estate investment, consumption, and exports—will decrease simultaneously in mid-2022.
China’s National Bureau of Statistics (NBS) on Oct. 18 released data on the country’s economy in the third quarter showing China’s gross domestic product (GDP) increased by 4.9% in the third quarter. However, compared to the GDP growth of the previous two quarters, this is a decline.
Analysts at Barclays cut their China Q4 forecast to 3.5% based on disappointing data. Likewise, analysts at ANZ have cut their 2021 GDP growth forecast for China from 8.3% to 8.0%.
According to He Qinglian, a famous Chinese economist, China’s GDP growth rate is unreliable, mainly because the CCP has manipulated this number.
Ha said that she did not trust the authenticity of any reports from the World Bank or the IMF on the Chinese economy because their China reports are often generated from data coming directly from Beijing.
A typical case is a recent scandal involving IMF Managing Director Kristalina Georgieva, who allegedly pressured World Bank staff to improve China’s ranking in the “Doing Business” report, which is a case in point.
Despite facing such difficulties, China’s economy in general still survives. People wonder why, though, as it seems about to collapse under the pressure of so many economic scandals.
According to many analysts, the Chinese Communist Party’s (CCP) economy is sustained by the United States.
The CCP’s economy rose after being admitted to the World Trade Organization (WTO) by the US
In a commentary published in the Sept. 13 Vision Times newspaper entitled: “The Chinese Communist Party used 11th September incident to rise, and fortune will no longer be ruined after 20 years”, Hong Kong capitalist Yuan Gongyi (Elmer Yuen) pointed out that the events of Sept. 11, 2001, allowed the CCP to rise after being admitted to the World Trade Organization (WTO) by the United States. But today, after 20 years, that friendly relationship is no more.
Yuan Gongyi said that the Sept. 11 incident “brings great opportunities for the CCP,” at that time, [CCP Ambassador to the U.S.] Yang Jiechi had a close relationship with President George W. Bush’s family. After the Sept. 11 incident, Yang immediately expressed China’s goodwill and wanted to do its best to help the U.S. hunt down terrorists. Beijing has intelligence in this area and has an informant in the Middle East.
That made Bush very happy, and since then, the CCP has earned his trust. President Bush also allowed people from the CCP Defense Department to live in Washington, even entering the State Department and the Pentagon. When Bush took office, he promised to deal with the axis of evil, including the CCP, Iran, North Korea, and two countries in the Middle East. When Yang expressed his willingness to help in such a significant matter as Sept. 11, the U.S. no longer viewed the CCP as an enemy but as a friend.
After Sept. 11, all the bad things the CCP used to do were ignored, and China joined the WTO. At that time, Yuan Gongyi was an adviser to the U.S. Government, while Prime Minister Zhu Rongji himself negotiated for the CCP. The U.S. offered many conditions such as fair trade and most-favored-nation treatment, all of which were accepted by Zhou. Although at that time, there were voices within the CCP who questioned that if everything were to meet the requirements of the U.S., China’s economy would be challenging. In this regard, Zhu Rongji said that “rule is dead, people are alive,” implying that China may not comply with the WTO agreement.
In December 2001, three months after the U.S. terrorist disaster, China officially joined the WTO. Since then, many American companies have invested in China, businesses from around Hong Kong and Japan have also entered China. CCP-backed Chinese companies are also publicly listed in the U.S., and the U.S. has also purchased many products made in China.
Trade-in goods between China and the United States increased more than 30-fold, from less than $8 billion in 1986 to more than $578 billion in 2016. China’s economy in 2009 was eight times larger in comparison with 2001.
Since China joined the WTO, the number of jobs in the U.S. manufacturing industry has been decreasing. The Economic Policy Institute estimates that the trade deficit with China cost about 2.7 million jobs between 2001 and 2011, including manufacturing and other industries.
Yuan Gongyi said that if the Sept. 11 incident did not happen, the U.S. would focus all its efforts on the axis of evil countries, including China. But the Sept. 11 incident caused the U.S. to shift its focus to terrorist attacks, thereby relaxing vigilance towards the CCP, which is the seed of today’s danger.
Yuan estimates that about $20 trillion of foreign exchange that China has acquired in the past 20 years is in the hands of the CCP, which is a condition that allows the CCP to commit crimes. For example, the CCP uses the money to buy U.S. treasury bonds. When the money is paid into the U.S., the U.S. is reassured and no longer confronts the CCP regime; when there is foreign exchange, the whole of Wall Street is ready to cooperate with the CCP.
The U.S. is too dependent on Chinese goods
In the United States, the pandemic has disrupted the global supply chain of the pharmaceutical industry due to its heavy reliance on China. China is the leading supplier of thousands of drugs circulating in U.S. households and hospitals and holds an overwhelming market share in personal protective equipment. This situation makes the United States pay attention to the dangerous degree of dependence on the CCP.
In the context of difficulties from many sides, the statistical data from China still shows growth. According to data from China’s customs authority, from January to August, China’s total import and export value was $3.83 trillion, up 34.2% over the same period last year; trade surplus was $362.49 billion, up 28.9% over the same period the previous year.
In an article entitled “Why China’s Economy Continues to Survive,” published in The Epoch Times on Nov. 8, He Qinglian said that the Chinese economy exists due to the dependence of the United States on China.
It is a fact that American consumers today still need “Made in China” products continually driving the Chinese economy.
According to the report, China’s imports and exports to the United States are still increasing steadily. This year, the U.S. is China’s third-largest trading partner; the total value of China-U.S. trade is $477.67 billion, up 25.8%, accounting for 12.3%. Exports to the U.S. were $358.64 billion, up 22.7%; imports from the U.S. were $117.84 billion, up 36.5%; trade surplus with the United States was $241.18 billion, up 16.9%.
Despite the trade tariffs, China enjoys the largest trade surplus with the United States—much more significant than it receives from all other trade blocs and countries combined.
The U.S. data is slightly different but shows the same trend: China’s exports to the U.S. stay strong, even as tensions rise between the two nations.
The CCP builds an illusion so the U.S. thinks China will eventually change to ‘democracy’
Clyde Prestowitz, in his book “The World Turned Upside Down: America, China, and the Struggle for Global Leadership,” details how U.S. corporations have become supporters of China. Prestowitz served as a trade official in the Reagan administration and is now president of the Economic Strategy Institute, a U.S.-based think tank.
The book also recounts the tumultuous history of nearly four decades of American cooperation with the regime, since President Richard Nixon opened the way for relations between the two nations in the 1970s.
Successive governments have encouraged U.S. trade and investment in China, hoping that globalization will make the communist country more democratic.
A month after the 1989 Tiananmen Square massacre occurred, President George H. W. Bush sent his national security adviser to visit Beijing secretly, to send a message to the CCP leaders that he would do his best to restore relations between the two countries and thwart Congressional efforts to cut trade. His rationale for continuing to trade with the country was that over time, as people gradually became commercially motivated, whether it was China or other authoritarian systems, the transition to democracy was inevitable. This action is like President Bush throwing a lifeline to the CCP.
In 2000, when promoting China’s WTO accession agreement to the American public, President Bill Clinton said the move meant that the CCP regime would have to import one of America’s most cherished values: “economic freedom-democracy,” which will have a profound impact on human rights and freedoms in China.
None of this came true
When President Ronald Reagan visited Beijing in 1984, his speech criticizing the Soviet Union and praising capitalism, democracy, and religious freedom was not broadcast on Chinese state television.
Since then, the CCP has expanded its human rights abuses targeting religious and ethnic groups, suppressed critics across Mainland China and Hong Kong, and tightened controls on Chinese citizens by deploying the world’s most extensive technology surveillance system.
Fueled by the influx of foreign investment, while employing many unfair trade practices, the CCP promoted the development of domestic industries while wiping out U.S. exports from manufacturing industries. As a result, China is now seeking to lead the world in high-tech manufacturing and has developed its autocratic model with the help of technology to export globally.
The United States has a misconception of communism.
Michael Pillsbury, a former government official who served in the Department of Defense and is now the director of the Center for China Strategy, Hudson Institute. He analyzed the U.S.-China relationship in his 2015 book titled “The Hundred-Year Marathon, China’s Secret Strategy to Replace America as the Global Superpower.”
Like many other U.S. officials, Pillsbury once believed that U.S. aid would help China move towards a peaceful, democratic country without regional or global domination ambitions. But according to a Wall Street Journal commentary on the book, Pillsbury was shocked to discover that China’s ambitions for world domination were inherent and that the CCP did not hide those ambitions.
Over the years, He Qinglian has seen numerous articles attempting to foretell the Chinese economy’s boom or bust. However, she said that the Chinese economy has never been as prosperous as many Western investment bankers have predicted because Chinese authorities often make very short-sighted decisions to accelerate development. Therefore, potential dangers are sure to emerge after a brief period of prosperity, as we see the current debt crisis playing out in China’s real estate industry.
However, China’s economy won’t collapse overnight. As the current U.S.-China trade situation shows, China’s manufacturing industry needs the U.S. market and vice versa. This strong U.S. demand has provided much-needed strength to the Chinese economy. Capital flows have always followed profits, and the U.S. business community has no intention of giving up on the lucrative Chinese market anytime soon. This is why the Chinese economy has survived and will continue to do so for a while, despite all the crises that China has faced.
A Chinese defector also revealed that since the Tiananmen massacre, all Chinese textbooks have been rewritten to depict the U.S. as hegemony, restraining China’s rise and destroying the “soul of Chinese civilization.” This training program is known as the “National Patriotic Education Program.” The CCP also uses Confucius Institutes located at American universities to promote positive views of China and discourage discussion about Taiwan, Tibet, and the Tiananmen Square massacre.