China’s economic growth is fake. The economy is not growing at 9% per year. It is contracting by 10%. So said a prominent Hong Kong economist in a lecture he did not know was being recorded. (Guys, it’s a cell phone world!)
The growth figures are fake. They are being pumped up by government spending on infrastructure projects that are the equivalent of bridges to nowhere.
Professor Larry Lang said that every province is Greece.
He warned that Chinese government censorship of the media is concealing reality. This censorship is comprehensive.
In other words, Communist bureaucrats are acting just like Communist bureaucrats.
The real rate of price inflation is not 65%. It is 16%. (But how can he be so precise?)
The total debt of all levels of government is worth about $7 trillion. But the government is paying $2 trillion in interest a year. (This seems way too high.)
There is too much excess capacity. Private consumption is only 30% of total economic activity. The PMI (purchasing manager’s index fell to under 51 in July. 50 means neutral. Anything lower means recession.
China taxes heavily. Taxes on business are at 70% of profits. Individual tax fates are over 80%.
He forecasts an economic tsunami.
The main fact here is not the precision of the statistics. They are way too precise. But when a major economist in Hong Kong issues a warning, it should be taken seriously.
When China crashes, the so-called Chinese model will be discredited.
Let us not forget how long a government can use monetary inflation and censorship to sustain the illusion of prosperity. But a bubble always pops.
Several commentators have expressed broad agreement with Lang’s analysis.
Cheng Xiaonong, an economist and former aide to ousted Party leader Zhao Ziyang, said that high praise of the “China model” is often made on the basis of the high-visibility construction projects, a big GDP, and much money in foreign reserves. “They pay little attention to things such as whether people’s basic rights are guaranteed, or their living standard has improved or not,” he said.
Behind the fiat control of the economy, which can have the appearance of being efficient, there is enormous waste and corruption, Cheng said. . . .
Cheng says that for the last decade the Chinese regime has accumulated its wealth primarily by promoting real estate development, buying urban and suburban residential properties at low prices (or simply taking them), and selling them to developers at high prices.