Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Dow Stock Market Trend Forecast Into Mid 2022 - 4th Dec 21
INVESTING LESSON - Give your Portfolio Some Breathing Space - 4th Dec 21
Don’t Get Yourself Into a Bull Trap With Gold - 4th Dec 21
GOLD HAS LOTS OF POTENTIAL DOWNSIDE - 4th Dec 21
4 Tips To Help You Take Better Care Of Your Personal Finances- 4th Dec 21
What Is A Golden Cross Pattern In Trading? - 4th Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

China is Lying About Its Economy

Economics / China Economy Aug 12, 2015 - 06:55 PM GMT

By: Harry_Dent

Economics I and a few brave experts such as Jim Chanos, Gordon Chang, and David Stockman (speaking at our upcoming IES conference) have been arguing for years that China has the greatest investment and overbuilding bubble in all of modern history.

We’ve also warned that its economic statistics are not real – they are purposefully overstated and then revised later, if at all.


I don’t see how this top-down dinosaur of a centrally planned government can continue in power. I don’t even know how it can exist in a free market/democracy-driven age that already saw the centrally planned economy of the Soviet Union fail miserably.

This is their current strategy to stay in power: Hiring low-skill workers to build more infrastructure and real estate than is actually needed, and keep moving unskilled immigrants from rural to urban areas on a scale never before seen in history…

The demand isn’t even there! They’re just building things no one’s going to use just to keep these people employed and happy. It can’t continue. And when it doesn’t, I don’t see how China will be able to stop these people from revolting.

Since 1983, over half a billion Chinese have moved to the city. 220 million of those just since 2002!

And there are now over 220 million urban residents that are not legal citizens where they live – like illegal aliens from Mexico here in the U.S.

Do you see a problem if this overbuilding and debt-fueled strategy of over-expanding finally ends?

There will be hundreds of millions of unskilled workers stuck in cities. And they won’t even be able to go back to their rice paddies. By now they’re probably paved over with empty condos!

China’s government thinks if it keeps the people employed then they won’t question the corrupt, crony capitalist system in place. So it continues to push its top-down planning through local communist governments that almost totally drive infrastructure and business investment – with no regard whatsoever for free markets!

Sound like a success strategy?

Economists call this an “economic miracle.” The new “state-driven” capitalist model.

I call it absolute BS! Pardon my French.

Adam Smith and the founding fathers of American democracy would have a conniption fit if they heard this!

So let me just add a few charts to the conversation. You might have seen them in other pieces I’ve written. They suggest China’s economy is already failing beyond its recent 35% stock crash – which, by the way, would have been more like 50% if the all-controlling bureaucrats had not totally stepped in and manipulated the markets for their best interest, once again.

Oh… the Mafia would have worshipped the Communist party of China. What’s not to love? Total top-down control and power. Crony wealth in a closed economy. Secrecy. Piracy. I could go on forever. This is heaven for crooks!

Here’s the first chart from Macquarie Research via businessinsider.com, one of our very favorite websites:

After the downturn of 2008, growth in railway freight surged to 20% into early 2010. Why? Massive government stimulus in China! But since, it’s faltered back into negative growth between mid-2012 and mid-2013 and back again since early 2014 – now down 12%! That doesn’t bode well at all for manufacturing and exports.

A growing economy?

Not by my watch!

Then take a look at this one:

This is another statistic that is hard to manipulate. By that I mean hide! Kind of like the statistic that showed how many buildings weren’t using electricity that revealed how many urban condos were empty. Something like 27%!

This one shows that power consumption also surged 28% into early 2010 but has declined systematically ever since. It went negative in July 2014 and again in March of 2015. Now it boasts a mere 1.8% growth.

Does this sound like an economy that is growing at 7%?

Finally, my favorite. One that is so fundamental to middle- and upper-class growth. Not to mention major exporters from the U.S. to Germany to Italy to Japan – even South Korea.

Auto sales.

Again, a surge into early 2010.

And surprise surprise, much slower since. As you can see, auto sales have steadily declined in 2015, currently down 3.4%.

China’s economic model is one of the most unsustainable things in the global economy today. Worse, it’s heavily contributed to a massive real estate bubble that will burst with global consequences.

Do you think this economic model will sustain its mega bubble and the world’s bubble?

I didn’t think so.

Harry

http://economyandmarkets.com

Follow me on Twitter @HarryDentjr

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.

Copyright © 2015 Harry Dent- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Harry Dent Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in