Hacker News Reader

Comment by tim333 | Hacker News Reader

>China's economic growth simply isn't sustainable, and that's even if it was true growth

People have been naysaying China for a while but it's kept merrily growing. Mostly it's because the Chinese tend culturally to be pro education and hard working but in China were reduced to very low incomes by Mao's communism and have since been recovering and getting back towards the kind of economy they have in Taiwan, Hong Kong, Singapore and the like.

GDP per capita in China is $6,800 (up from $951 in 2000) against $32k in Taiwan and $55k in Singapore so there's a way to go. A housing crash will probably just be a blip for a while. They'd have to turn back to Mao to really muck things up.

View on HN

Yup China grew......by borrowing 32Trillion http://www.businessinsider.com/china-debt-to-gdp-statistics-... in order to support dead state companies http://www.dailymail.co.uk/news/peoplesdaily/article-3422491... and build empty cities and buildings http://www.chinatopix.com/articles/75493/20160126/shanghais-... http://www.citymetric.com/skylines/enough-empty-floor-space-.... Now they have to layoff tons of steel/cement/coal workers, around 400,000 to start http://www.bloomberg.com/news/articles/2016-01-26/china-stee..., and 300,000 soldiers.

Ironically, these unemployed million of disgruntled workers will not move into the empty buildings in the city; They'll most likely move back to the countryside. They will, however, be back in the city for protesting.

It's bizarre that you're getting downvoted. The sole reason China's economy kept - supposedly - growing so quickly after the great recession was due to the extreme amount of debt they took on.

China took on the greatest pile of debt in world history in the shortest amount of time. Nothing like it has ever been seen before. They're now arguably the most indebted nation when you combine public + private debt, and it continues to expand. They have no way to reduce that debt, as the moment they take their foot off the debt gas their economy will crash, and yet their new debt is generating almost no growth return. They're bleeding reserves, they're overflowing with zombie corporations, their asset classes keep trying to implode and require constant large bailouts, and they still have nearly a billion poor people to deal with and half a billion pretend farmers without jobs. How could they be more of a disaster?

> People have been naysaying China for a while but it's kept merrily growing.

That's characteristic of both bubbles and genuine exceptional performance, and in many situations in addition to national economies. Look at rapidly growing startups, for example.

I think China has both bubbles and genuine exceptional performance. The property market there is pretty bubbly. And I don't know if you'd even call the stock market thing a bubble when it was deliberate government hyping.

China recently and Japan from 1960-1990 took very similar paths to prosperity:

Click on the max timeframe for the first charts below to see the similar growth curves:

http://www.tradingeconomics.com/japan/gdp

http://www.tradingeconomics.com/china/gdp

I think Japan stopped growing rapidly partly because they'd caught up with the west and couldn't keep transforming by copying more developed countries. I don't think China's there yet. Maybe if their gdp/capita goes from $6.8k (China) to $39k (Japan) that will be the case but there's a way to go.

Indeed, China's GDP per capita in 2013 is comparable to Japan's in the late 1970s, well before the Japanese "bubble".

http://www.indexmundi.com/facts/indicators/NY.GDP.PCAP.CD/co...

Also, although China's been quickly urbanizing, China's % of urban population (about 51%) is still lower than Japan's in the 1960s (about 62%):

http://www.indexmundi.com/facts/indicators/SP.URB.TOTL.IN.ZS...

That said, plain old GDP also matters depending who you are. If your country's economy heavily relies on Chinese imports/exports (see my other comment), your government doesn't care much about the average Chinese citizen's living standards.

The problem is more that the rest of the world cannot absorb more chinese exports, which force the chinese to have to do consumption based growth. Changing direction of growth like that is not simple.

Not only is changing direction extremely difficult, service based growth is far slower compared to manufacturing based export growth when you're coming up from nothing as China did, starting from $300 GDP per capita in 1990. They were able to tap into virgin (to them) export markets in the US and Europe. As you noted, there are no more well-off consumers to provide for their export growth, that party ended in 2009 or so.

The problem here is China has seriously miscalculated and focused too heavily on exports. The rest of the world doesn't want more Chinese exports than they did in 2007. Export lead growth only gets you so far.

Japan [with a population of ~128 million] could run its economy into exports and scale to catching up with the West in that manner because of the smaller population.

China simply can't do that with 1 billion people.

http://www.cnbc.com/2015/10/12/china-exports-imports-continu...

China's exports have stopped growing and that is a very, very serious problem with debt fueled growth focused on exports. They'll have to print money [to bring export growth back and avoid a private debt bubble bursting] which is why everyone is betting against their currency. Or they'll go into a recession and they'll need to print money.

It wasn't Mao, it was a civil war coupled with a foreign occupation. Ever since then, their wealth has grown (including during Mao)

Reply on news.ycombinator.com