Hundreds of millions are under lockdown in China
The pressure is mounting not just on the people
But on China’s entire economy
Welcome to China Uncensored, I’m Shelley Zhang, filling in for Chris Chappell,
who’s busy calculating China’s real Gross Domestic Product.
China’s economy is in serious trouble.
The Chinese government just released economic data for the first quarter and it is not looking good.
China's economy is... sputtering?
Now keep in mind, you can’t trust what the Chinese Communist Party says about its economy,
and that’s according to top Communist officials.
Yup. The only time you can trust something they say is when they say
you can’t trust anything they say. Think about it.
A leaked US embassy cable quoted now Chinese premier Li Keqiang
as saying “That China’s GDP is not reliable.”
Because it’s “man-made.”
Li Keqiang is never going to live that down.
Now I’m not saying that China’s GDP is completely made up.
But they will goose the statistics to get the GDP result they need.
For example, for the first quarter of this year,
China’s reported GDP actually beat expectations. Imagine that!
So the trick here is setting lower expectations,
and then getting a bunch of praise when you beat them. If only that worked on my parents.
“First-quarter GDP rose by 4.8%, topping expectations of a 4.4% increase from a year ago.”
Now that sounds good. But if you take a closer look, things are not looking nearly as rosy.
As the New York Times says, “That pace was barely faster than the final three months of last year,
and it also obscured a looming problem.”
You see, most of that growth happened in January and February.
While most of the world was still under harsh Covid lockdowns, China was surviving off exports.
“Chinese factories have grabbed a considerably larger share of world markets during the pandemic.
“Many multinational companies continue to depend on large
networks of components suppliers in China.”
Proving once again that we’ve learned absolutely nothing.
But all that is at risk following a wave of harsh Covid lockdowns in China
in March and April. Nearly 400 million people across 45 cities in China are
under full or partial lockdown right now. That’s according to an estimate from Nomura Holdings.
“Together they represent 40%, or $7.2 trillion, of annual gross domestic product [for China].”
And now, a perfect storm of economic catastrophe is brewing. More after the break.
Welcome back.
The war in Ukraine has obviously captured a lot of the world’s attention.
But as Axios says, “Many are focusing on inflation and the war in Ukraine,
but the path of the world economy and global financial markets this year
largely hinges on China’s economic and public health.”
And China’s economic health is not looking too good right now.
I mentioned earlier the new economic data coming out of China. While official statistics show
the GDP grew more than expected, other official data does not look so good.
Retail sales dropped 3.5% compared to last year, the worst annual drop since the pandemic began.
Industrial production sharply dipped in March.
And unemployment rose to 5.8%, the worst it's been since May 2020.
Now again, keep in mind these are official statistics.
Which are about as accurate as Stevie Wonder playing darts.
We know the Chinese Communist Party are chronic liars. So if
they say the numbers are bad, you know they’re actually even worse.
Draconian Covid lockdowns, like the ones happening in Shanghai, are largely to blame.
The Port of Shanghai is the busiest in the world.
At least normally. Now, it’s “essentially at a standstill”.
While the port is still open , many factories are closed or are running
at a fraction of their capacity. Truckers are stuck on highways, or in quarantine.
So very little is getting to and from the port.
“The number of container vessels waiting off Shanghai…has more than
doubled since the start of April, nearly three times the number a year ago.”
“Cargo airlines have canceled all flights in and out of the city,
and more than 90% of trucks supporting import and export deliveries are currently out of action.”
Keep in mind, Shanghai produces 6% of all China’s exports. And as I said earlier,
the only reason China’s GDP numbers are better than anticipated is because of exports.
This is like a coach seeing one of their runners win a race, and saying,
“Great job! Now let’s see what happens if we cut off one of your toes.”
This isn’t just bad news for China. This will have major trade ramifications globally.
More than 15% of US imports come from China.
Things are already looking pretty bad in the US. Inflation is at a 40 year high.
That was already the case before the double whammy of Russia’s invasion of Ukraine,
and the Shanghai lockdowns.
Well, at least it can’t get any worse.
What’s that, me?
Oh, it got worse.
Now, the International Monetary Fund has slashed its world growth forecast
by the most since the early days of the pandemic.
And guess what? It predicts even more inflation!
Global Economic Growth was 6.1% in 2021. The IMF predicts 2022 will be 4.4%. And 2023 would be 3.8%
But after the war in Ukraine and the renewed lockdowns in China,
that was lowered to 3.6% for this year and next.
And things could get worse as the war and lockdowns drag on.
So my advice? Buy local.
Locally grown food.
Products made in your own country.
Speaking of making things, we can’t make this show without your support.
So as a thank you to everyone who contributes on either the crowd funding platform Patreon
or our exclusive social media community on Locals, we’ll answer one of your questions.
Today’s question comes from SR Hadden on Patreon. Hey Chris, fellow NYU alumni here.
Why did the US intervene to save Korea from China but not Tibet? Seems like western
interests would be more concerned about domino theory having aggressive communist China on the
doorstep of billion population India rather than a backwater peninsula (which Korea was back then.)
That’s a very interesting question, SR Hadden. By the way, go Violets!
The US made its first diplomatic contact with Tibet back in 1942 when FDR was president.
And things were very different back then. China was ruled by the Republic of China,
and was suffering from the Japanese invasion of World War 2.
FDR wanted access to Tibet to build roads and airstrips that could be used against the Axis
powers. However, even though Tibet was an independent country at the time,
the US “in a 1943 policy statement about Tibet, had very clearly acknowledged Chinese
suzerainty over Tibet, a fact which was not made known to the Lhasa government.”
Basically, the US considered Tibet a tributary state to China.
But after the war ended, and it looked like Mao Zedong’s Communist forces
might successfully take over China,
the US Embassy in New Delhi suggested the US should be
prepared to treat Tibet as an independent country.
However, when Mao did invade and the government of Tibet reached out to the US for help,
help did not come.
It’s hard to say exactly why.
It could be that by the time it happened, the US was already involved in the Korean War
It could be the US saw the Soviet-backed North Korea as a bigger threat,
particularly because of its proximity to the recently defeated Japan.
Or it could be because the US got a new phone and didn’t recognize Tibet’s number.
It could also be that it was simply easier to get troops into South Korea.
Tibet was not easy to access, surrounded by the Himalayas on one side,
and the Chinese Communist Party on the other.
But here’s something a lot of people don’t know.
In 1956, a series of revolts broke out in areas with ethnic Tibetans.
And so the CIA, “started helping the rebels by providing training and weapons”.
Forget Seven Years in Tibet, why didn’t Brad Pitt make this movie?
Though eventually all that only led to the exile of the Dalai Lama
and complete Communist control of Tibet. Not exactly a happy ending.
Since then, the US has shown support for Tibet,
but pressured the Tibetan government in exile “to make Tibet’s case a
matter of human right violations rather than a matter of ‘independence’ and ‘sovereignty.’”
Probably because of how the US government wanted to use China against the Soviet
Union. And then later because the US had become so economically dependent on China.
And as I talked about today, the US becoming economically dependent on China was a great idea!
And the US was never dependent on North Korea for anything.
Well, except for gifs of Kim Jong-un’s slow-mo Top Gun impression. It’s the gif that keeps on giving.
Thanks for your question SR Hadden. I hope you’re having an easier time
with your NYU student loans than Chris. Thanks for your support.
If you want to help us continue to fight the Chinese Communist Party,
all it takes is a dollar an episode. Visit pateron.com/Chinauncensored.
Or chinauncensored.locals.com for more.
Once again I’m Shelley Zhang, thanks for watching China Uncensored.
And don’t worry, Chris will be back soon.