Another China Collapse?

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Much has been said of the slowdown in the global economy and for sure, there have been reductions by the US, European, UK and even the Australian markets as they collectively fight massive inflation, stave off recessions and experience interest rate hikes that haven’t been seen in a generation. All while Europe has spent a winter embroiled in a war, not just for territory in Ukraine but for limited supplies of natural gas.

Indicators of how bad it is around the world do resonate in China, there’s no doubt Europe’s recently posted “down to 10%” inflation rate, USA’s avoidance of a recession by redefining the meaning the heightening interest rates increases, which just went up for the 7th time in a year all combine to cause concern for China’s economy but the real truth is not what Western media want us to believe.

Despite all those problems it’s the supposed collapse in China that makes most of the financial media’s headlines. Contrary to the wish lists of financial analysts for Western mainstream media, China showed incredible resilience and growth in every sector. But, western media, as usual would love to give the bad news.

Investment Monitor asked the question in its mid-February headline: “Why are foreign companies decreasing their dependence on Asian Giant?” And then goes on to quote incomplete statistics provided by a British organisation called GlobalData which admits the data for 2022 is incomplete and mysteriously shows a graph with only 4 years of data, three of which were during the global pandemic. It also states in a lower paragraph that tourism was down by 78% during the period, again, failing to remind its readers that tourism was down 74% globally in the same period.

According to Trading Economics, which, instead of asking analysts in London for their opinions, sources its information from China’s Ministry of Commerce. the real situation with Foreign Direct Investment into China was that it grew to almost $2 Trillion, to be specific, it was a record 1,891.3 billion in 2022 and in January this year to $190.2 billion which was a record

In a classic example of lies, damned lies and statistics, here’s another example from the Business Standard (which I’ll shorten to BS): “China’s exports fell further in December as global demand continued to drop off”.

There was definitely a slump in productivity in China as Covid-19 restrictions were eased and, for a while, it seemed that everyone here got sick. Estimates vary but 82% of the country getting covid in the space of a couple of weeks was definitely not an outrageous estimate. It did seem like everyone went down, all within a few days.

So, dismal figures were to be expected, drivers were sick, factory workers didn’t go to work, portside/dock workers were away from their posts and even shops were closed due to staffing problems. If Western media are to be believed, the downturn in the economy was so swift and so brutal that factories were closing two weeks early for the New Year holidays. But that was January. The real truth was that some did indeed close early but many people in the West just didn’t realise that this was a very early Chinese New Year and, despite warnings from shippers, failed to prepare for a two-week closedown starting mid-January, just a fortnight after their own Christmas and New Year holidays.

It all sounds quite dismal until we go a little further and we read the fine print of these articles and they tell us a different story:

In December, China finished the year with trade growth of over 7% YoY to a record $3.6 trillion, a record surplus of 78 billion for the month of December, the same month BS reported that slump, and there was a full year trade surplus of $878 billion which, by the way, was another record. BS also forgot to mention that the previous media forecasts for December were all worse than the reality, in other words, China exceeded all expectations.

One very interesting statistic is that medical imports dropped by 4.3% in value but increased by 29% in shipments. How can that be we might ask and the answer isn’t about fake, or even falling trade figures it’s a much simpler and, for the vast majority of Chinese people, it’s very easy to explain that phenomenon.

The Chinese government encourages big pharma importers to shave their prices — if they shave them far enough, the value goes down but they sell a lot more. If you live in the West you might want to lobby your representatives to do the same but your chances don’t look good: in the first three months of 2021, the pharmaceutical industry spent $92 billion lobbying federal government to keep pharma prices high.

that would seem funny if this was the end of the matter but media keep going along the same lines — they really want people to believe that China is collapsing and keep on going with this rhetoric:

The Nikkei Asia reported that Hong Kong is struggling with the biggest plunge in exports in 70 years and this may be true but they again, blame the “early arrival of Lunar New Year” as if people didn’t know it was coming!

In an abundance of balance, quite unusual, it also mentions is that this isn’t an issue with China, it’s an issue of “slower global growth” and goes on to state there is weak global demand due to high interest rates and downturn in the tech cycle”. It doesn’t mention that China is one of the few countries in the world with an economy so strong that it is reducing interest rates nor does it mention the real reason.

The amount of shipping that has grown through the opening of Ports such as Nansha, which is in the Greater Bay Area and is of great benefit to Hong Kong as highlighted by HK’s Chief Executive John Lee KA in a December Press Release. In other words, while HK shipping is down, its overall business isn’t, Nansha Port moved over 24 million TEUs in 2022 alone accounted for an increase of 23% to the United States, and imports and exports in HK may be lower than Nikkei would like us to believe, they are balanced enough to mention that the overall economy has grown 3.5% and is expected to top this year at 5.5%.

This is partly because many HK businesses are relocating to Nansha and Qianhai, both of which are in the Greater Bay Area and are Special Economic Zones, Qianhai alone has seen $5.6 billion in investments from Hong Kong while China incentivises and attracts international investors to both regions.

To learn what’s happening in China, we need to stop listening to the “experts” and the media analysts, we need to take a look at China’s Ministry of Commerce has to say.

Foreign Trade is up 7.7%

Exports rose 10.5%

Foreign trade by private firms in China rose by 12.9% and, for the first time, exceeded 50% of the total and China has led the world in foreign trade for 14 consecutive years, including three of pandemic.

Inside of China, fixed asset investment was up, industrial output rose and online trading increased to record levels.

For the record, China’s inflation was just 2.06% and China’s interest rates, didn’t go up in 2022, they went down, twice! And, when they did, they caught the “experts” at CNN by surprise.

We don’t need to be economists to know that these indicators don’t lead to a coming, or even a current collapse. Western media appears once more to comprise of wishful thinking, works of fiction and even fantasy style games designed to entertain, rather than inform.