STAFF NEWS & ANALYSIS
China’s Landing Will Not End Softly
By Daily Bell Staff - May 11, 2016

Why China Is Prone to Bubbles  … The only sure way for China to prevent new bubbles is to tighten credit, slow money growth and allow risk to price assets properly. If the government keeps stepping in to prevent falling prices and to bail out banks or other investors, the possibility of loss is discounted.  The probability of an asset crunch like the ones Japan experienced in the 1990s and the U.S. in 2009 remains low for now, in part because of all that liquidity. But the risks are rising every day. – Bloomberg

This Bloomberg opinion piece repeats the propaganda that China’s leaders have created a rational economy. The second-largest economy in the world can therefore be manipulated into prosperity with the right moves.

You can see from the excerpt above that the “sure way” for China to avoid an “asset crunch” involves a decision on the part of government officials not to support bankrupt facilities.

And this is where the article descends into full-fledged wackiness. This is the same government that some 70 years ago starved and otherwise murdered some 40 million Chinese (at least) during Mao’s Great Leap Forward.

This is the same Chinese government that attempted to run protestors over with tanks during the Tiananmen Square protests.

This is the same Chinese government that has denuded Tibet of Tibetians in order to make sure the “country” remains part of China.

Most importantly, this is the same Chinese government that embarked on unrestrained central bank money printing some 20 years ago to set China’s economy on fire.

This it has done. China is massively overbuilt and its economy is structured around an unsustainable amount of global consumerism.

The overbuilding in China is so bad that whole empty cities have been constructed.

For years, deniers have claimed that these cities are part of a much larger and cleverer ChiCom plan to move farmers en masse into urban areas.

If that’s the case, it’s one slow plan. The cities are still empty. The farmers are still cultivating their modest patches of land and fertilizing their crops with “night soil” as they have done for thousands of years.

The Chinese communists are unusual in the modern day because they have survived so many miscalculations and participated in so many bloody deeds without disintegrating.

Granted, other countries large and mall have similar unfortunate histories to China. But usually a party in power that does as many bad things as the communist party has done usually leaves the stage.

And we’re on record in numerous articles going back more than a half-a-decade as suggesting that the current ongoing Chinese hard landing will be the ChiComs last.

The communists kept control after both the Great Leap Forward and the Tiananmen Square crisis.

In order to do so, they made a kind of unspoken deal with the Chinese people. The idea was to introduce Western-style consumerism. In return the ChiComs would maintain political power.

But another failure – especially one like a hard landing that affects the entire Chinese economy and wipes out everybody’s savings – will be the last disaster the party is allowed.

That’s our perspective. A hard landing will likely wipe out the ChiComs as we know them.

And that’s why they keep printing more and more money and building more and more empty skyscrapers – more in a single city than are to be found in the whole of the United States. They are on an easy money treadmill and can’t get off.

Those who believe that China’s leaders are in control of the country’s current unwinding and can cushion the inevitable descent with plenty of depreciating yuans may wish to rethink as the Chinese crisis grows worse.

The economy has been eroding since 2008, despite every palliative measure undertaken to reignited the previous era of supposed 10 percent growth. It is not likely that current measures to increase domestic Chinese consumerism are going to work.

In fact, it is not admitted but China is probably in the throes of a deep recession of depression right now. As this state of affairs grows worse it retards the stabilization and expansion of other countries around the world, especially Western economies.

Conclusion: Just because you aren’t being told the truth about the Chinese situation doesn’t mean it’s not happening. And neither the European Union or the US are in much better shape. Don’t be fooled by mainstream media pronouncements of recovery. Nothing is getting much better and as China continues to descend, things generally could get much worse for the world’s economy as a whole. This is much more likely than some sort of magical recovery or “soft landing” engineered by the ChiComs for their failing state.

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  • Chuck

    The Chinese Communist Party is an important part of the East/West and Authority/Liberty dialectics. I think we’re still in the middle of these dialectics, so the CCP will probably be around for a while longer.

    Regarding control; our rulers don’t force our every action, but rather restrict our choices to what is acceptable to them. Like how a rancher erects fences to keep his livestock penned up. The fences are both physical (police/prison) and mental (conspiracy theory meme).

    • Not sure about that. The ChiComs have a pretty bad reputation domestically. A “new” leadership may be preferable … (See the USSR, etc.)

  • gordon

    Agree absolutely.

  • Bruce C.

    To me China is like another Japan. China may have a “crash” but they also could have a soft landing like Japan did (and they’re still landing) because so much of their debt is internal, like Japan’s was and still is.

    Here’s an article from the Economist that explains that possibility:

    http://www.economist.com/news/leaders/21625785-its-debt-will-not-drag-down-world-economy-it-risks-zombifying-countrys-financial

    I’m not saying the “ChiComs” are so brilliant just that culturally their problems are internal and thus contained like Japan’s. They will probably end up being another also-ran tangled, sorry tale of super power wannabes.

    • “Beijing’s officials vow they will not repeat Japan’s malaise. To do that they must hold their nerve and let firms fail: a culture of bankruptcy should replace the lifelines and “evergreening” of useless loans. As long as investors think the state will cover their losses, they will plough money into dodgy schemes—and the problem will grow. Not only will that be a huge waste of money; even mighty China cannot cover losses for ever.”

      This is the Economist’s conclusion. We agree with it.

      • Bruce C.

        So do I IF Chinese firms are allowed to go bankrupt. So far that hasn’t happened, or so we are told.

  • Praetor

    Recession/Depression. Everything is in contraction. How much stuff do people need, sorry want!
    On the other hand how many people in the world have nothing, do we really know.

    With every down turn, the government expand. And, that is the reason they engineer down turns. To expand, more government control of ‘We The People’. They have the solution to the problem, always a solution.

    Those that wish to rule the world will not succeed. What makes them think, they will succeed now. The control of this world is impossible mission or is it!!!

  • Pilgrim

    Free market forces are thwarted by short-sighted government policies. When politicians are in charge of economic decisions, wealth-creation takes a backseat to wealth redistribution.

    When the market distributes wealth, Mr. Quid Pro Quo is in the driver’s seat. When politicians distribute wealth, Quid Pro Quo’s evil twin does the driving, and it’s usually into a ditch.

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