On this episode of China Uncensored,
5 signs China's economy is weaker than you think.
Hello and welcome to China Uncensored.
I'm your host, Chris Chappell.
China's economy.
Growth so fast it makes Jack's beanstalk jealous.
And like Jack's beanstalk,
China's economic growth is sort of magical
in that it's kind of hard to believe.
I mean, sure China has beans,
and stocks,
and people named Jack.
But could China's economy really be growing so much, so fast?
So here are 5 signs China's economy is weaker than you think.
Number 5:
China's stock market is unstable.
Very unstable, in fact.
In just the past year,
it more than doubled,
then crashed almost as far as it rose.
And since then it's been up, and down, and up again.
Hedge fund investor Jim Chanos put it more eloquently when he said China's stock market
is "like a pig on LSD.
You don't know which way it's going to run."
I don't think having a pig on LSD is a good sign.
Not for your country's stock market, at least.
If you own a ranch, though,
it might be kind of entertaining.
Number 4:
China's GDP growth is much lower than reported
The Chinese government loves to brag that its GDP is so much bigger than everybody else's.
The problem is,
it's full of hot air.
Kind of like the Hindenberg.
In recent years,
the officially reported figure has been around 7 percent.
But Li Keqiang,
China's current premier and the person more or less in charge of China's economic policy,
once said that even he doesn't trust the official GDP figures.
He didn't say that publicly, of course.
We learned that from a Wikileaked cable.
Back in 2007,
Li was head of the Communist Party in Liaoning province.
He told the US ambassador that China's GDP figures are "man-made".
Li said he looked at electricity production, rail-freight cargo, and bank lending to get
a more accurate picture of GDP in Liaoning.
And going by that measurement,
China's overall GDP growth isn't 7 percent.
It's closer to 3 percent.
China bear Gordon Chang estimates growth could even be as low as 1 or 2 percent.
But whether it's 1 percent or 7 percent,
there's still another problem.
A lot of it is empty growth.
A simple way to look at GDP is how much money is spent each year.
GDP is supposed to tell you how healthy the economy is.
But in China, the government spends a lot of money on worthless things.
Like building ghost cities that no one lives in.
Or bridges that collapse.
It's like the quote from that movie.
"If you build it…they won't come…but it's still GDP."
Number 3:
China is cutting interest rates...again
So what does a government do when it sees its economy slowing down,
and wants to jump start it?
It cuts interest rates.
Low interest rates mean businesses can more easily borrow money to invest.
In theory, this helps the economy grow.
What's weird is that China is supposed to have one of the world's fastest-growing economies.
So why would they need to cut interest rates?
But in fact their central bank has lowered interest rates six times this year.
It's almost as if the guy in charge of China's economic policy doesn't believe China's GDP
data.
Oh, and here's the problem with low interest rates.
Although it helps in some ways, it also encourages companies to invest in things that aren't
necessarily good investments.
Like building cities that no one's going to live in.
Number 2
China has an unemployment problem
You know how I said electricity production is supposed to help measure GDP growth?
Well one of China's biggest coal companies just fired 100,000 employees.
Because China's electricity growth is the weakest it's been in 30 years.
You know who else can't find jobs?
Millions of people.
But don't worry,
because if you look at the Chinese government's officially reported urban unemployment data,
it's quite stable.
Freakishly stable, actually.
It's so stable that even Japan
Japan, where it's almost impossibly to lay off employees
has more fluctuation in unemployment.
I mean, it's as if Japan, like every other country,
is affected by the global economy...
...and China magically is not.
But it's not so magical for the millions of Chinese college graduates who can't find jobs.
That's why so many live in squalid conditions, sometimes literally underground, in what are
called yi-zu
or "ant tribes."
Speaking of young people...
Number 1
China doesn't have enough of them
Yes, even though many educated young people can't find jobs,
China has an overall problem of too many old people and not enough young people.
In the 70s,
the government created the One-Child Policy to slow down population growth.
But that policy was kind of a disaster.
It's like no one actually did the math.
Because people get old,
and need to be taken care of.
After two generations,
an only child today whose parents are also only children will have to take care of two
parents and four elderly grandparents.
And how can you do that if you can barely afford to live in an underground ant tribe?
The imbalance is so bad that even China's new Two-Child Policy won't able to fix it
anytime soon.
Without a young healthy workforce,
good luck keeping up that economic growth.
So perhaps China's economy is not all unicorns and ponies.
Though it might have some pigs on LSD.
So what do you think?
Leave your comments below.
And if you're wondering what life is like after a serious economic crisis,
check out this video from our friends at Seeker Daily.
"Greece is grappling with one of the worst economic crises in history.
At the center of this crisis is Athens,
where people are starting to panic."
Once again I'm Chris Chappell.
See
you next time.