The Great Fall of China?
China’s economy faces more than just a quarter or two of lost performance
Of course, despite the pandemic, Beijing has insisted that it will meet its economic growth goals for 2020. But that’s not realistic. It’s not even clear that China is actually over the pandemic. People can still be seen lining up at hospitals and recent cellphone rolls on China Mobile show up to 21 million fewer users compared to three months ago near the start of the pandemic.
The Near Future Could Be Disastrous
Of course, no economy was prepared for a global pandemic, and all nations will continue to be severely challenged by the CCP (Chinese Communist Party) virus outbreak and its aftermath. But the inherent weakness in China’s economy makes it exceptionally vulnerable to both the pandemic downturn and the shift in global trade patterns away from China that’s underway. This dependency is made worse by cratering domestic demand.
What’s more, the Chinese Communist Party’s comprehensive oppression stifles efficiency and innovation in the economy. This will make it more difficult for the economy to adapt quickly to the challenges posed by this pandemic and the evolving global economy.
As a consequence, the pillars of China’s economy—consumer spending and real estate, as well as exports and direct foreign investment—are shaking, even crumbling, before Beijing’s eyes. The highly profitable pharmaceutical and medical supply industries, for example, will be repatriated to the United States as soon as possible.
Consumer Spending Plunges in 2020
The key pillar in China’s economy is domestic demand, which was 57.8 percent of the country’s economic growth in 2019. In the first quarter of 2019, consumer spending made up two thirds of China’s GDP growth.
But it’s not going to be the case going forward.
The epidemic lockdown and factory closures due to supply chain movement out of China will depress incomes. Consumer spending has been hit hard. It’s no wonder that 64.4 percent of Chinese are saying that they would be more “restrained” in spending in the long term, while another 12.6 percent said they would cut spending.
Combined, that’s 77 percent of consumers adopting more conservative spending patterns. These figures are likely to worsen with the expected higher food prices due to pork shortages from African swine fever (ASF).
Real Estate Prices and Profits Collapsing
Consumer spending and real estate development were the two biggest drivers of the economy for the last five years. Both are in hot water.
Consumer spending declines directly impact China’s real estate market. One of China’s biggest property development firm, Evergrande Group, announced its annual earnings to fall by 50 percent. That’s due to having to radically cut prices on residential properties to stimulate consumer purchases.
But Evergrande isn’t the only development giant scrambling for sales. Sunac China Holdings, Sinic Holdings, and Country Garden are also having to offer buyers special incentives, such as 30-day cancellation on purchases in order to entice consumers to make a deal.
The challenge is that presale revenues of residential apartments fuel the building of new developments. That fuel is diminishing quickly, as a rising number of developers are either in danger of defaulting on their U.S. dollar-denominated debt or are already insolvent.
In February, Bloomberg reported that among 30 property developers, sales dropped by 33 percent year-over-year.
That’s the steepest decline in six years.
For Exports, ‘Worst Is Yet to Come’
Even though net exports were only 11 percent of China’s economic growth in 2019, a $7.1 billion trade deficit in January and February of this year may be just a short-term result of the pandemic, and it’s unlikely for exports to return to its prior robust levels.
Although Beijing hopes to ramp up exports to help juice the economy, falling global demand, makes that doubtful. “The worst is yet to come for exports and supply chains,” warned Larry Hu, chief China economist at Macquarie Capital.
A drop in the trade surplus suggests trade will provide less support for economic growth and that the impact could be larger than thought. The worst will come later, as other countries’ demand for Chinese exports sags.
Foreign Investments Declining
In the first two months of 2020, foreign direct investment (FDI) into China fell 8.6 percent year-over-year, down to $19.26 billion. This dramatic fall is due almost entirely to the pandemic.
Although event driven, prior FDI may not return to their former levels for other reasons. If anything, the manufacturing shift away from China has sped up with the CCP virus outbreak. Those supply chain factories and jobs won’t be back in China anytime soon.
Furthermore, the world is becoming a lot less trusting of China, as its culpability in the pandemic becomes more well-known and understood. Beijing knows that it isn’t seen as favorably as it was in the pre-pandemic era, which explains the CCP’s desperate propaganda campaign to deflect blame.
A Reckoning at Hand
Understandably, Beijing’s response is to pump hundreds of billions of dollars in stimulus to the economy. From the Party’s perspective, there isn’t really another option. It can’t afford to relax its grip on the economy or its citizens.
But more stimulus may not be as effective as it has in the past, as falling prices reflect weak consumer demand that reflects a lack of confidence in Beijing. It may well be facing a future of two percent GDP growth or even less.
The pandemic has revealed the multiple weaknesses of China’s cannibal capitalist economy that can no longer be glossed over by fake statistics, hidden by massive stimulus, primed by unproductive real estate projects or patched up by triangular debt, foreign investment, and technology theft.
The “China Miracle” is over. Beijing can either save the CCP or save the economy.
Now, that reckoning begins.
The Epoch Times refers to the novel coronavirus, which causes the disease COVID-19, as the CCP virus because the Chinese Communist Party’s coverup and mismanagement allowed the virus to spread throughout China and create a global pandemic.
James Gorrie is a writer and speaker based in Southern California. He is the author of “The China Crisis.”
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.
“All in all, it was an incredible victory for the Chinese government. Feinstein has done more for Red China than other any serving U.S. politician. “ Trevor Loudon
“All in all, it was an incredible victory for the Chinese government. Feinstein has done more for Red China than other any serving U.S. politician. “ Trevor Loudon
China Uses Coronavirus
Crisis to Bulldoze Churches
and Temples
4:14
Religious freedom watchdog groups are accusing the Chinese Communist Party (CCP) of using the Wuhan coronavirus epidemic as an opportunity to intensify their crackdown on religion, bulldozing some churches and placing others under heavy surveillance.
“China is now holding itself up as a model for fighting the coronavirus. But fighting the pandemic hasn’t stopped communist officials from persecuting Christians,” Todd Nettleton, a spokesman for the nonprofit group Voice of the Martyrs (VOM), told Fox News on Tuesday.
Another prominent activist, Bob Fu of China Aid, shared a video of Chinese officials demolishing a church in the city of Yixing:
Religious persecution continues even in the midst of #WuhanVirus March 11 Xiangbaishu Church in Yixing city, Jiangsu province was destroyed by #CCP govt. Cross is our Glory大疫当前,江苏宜兴香柏树教会,于3.11日遭到强拆.举国上下深感人民的苦难,但谁知道在十字架上那位上帝之子的苦难?
Other churches have reportedly been vandalized by Chinese officials and orders have been given that effectively ban “unregistered” religious services on the grounds of public health. On the bright side, VOM saw the prevalence of medical masks due to the coronavirus as an opportunity to evade China’s pervasive facial-recognition systems and proselytize with less fear of being identified and persecuted.
Buddhists and Taoists also reported the suppression and demolition of their temples, a process that appeared to be intensifying just as the coronavirus exploded out of Wuhan. Worshipers bitterly noted that local officials have a habit of abruptly deciding that temples built with their approval failed to meet some obscure building code and must be demolished immediately. Not even hoisting Communist flags and papering temples with posters of China’s authoritarian ruler Xi Jinping was enough to save the targeted temples.
“Unconditional cooperation with the government means that no photos of the demolition can be taken, no negotiations initiated, and no compensation demanded. This is typical behavior of the CCP government,” one Buddhist complained to the Bitter Winter human rights website.
“The Communist Party is as evil as a mafia. Under the tyranny of those modern bandits, even sacred Buddhist temples cannot enjoy peace,” said another.
Churches that do not get knocked flat are encrusted with surveillance cameras to terrorize the congregations, and perhaps build up “evidence” of incorrect speech that can be used as an excuse to wipe out the church, as detailed in another Bitter Winter post:
According to a Three-Self preacher from Lankao county in Henan’s Kaifeng city, powerful cameras, over 10,000 RMB (about $ 1,400) each, have been installed in at least eight Three-Self churches, images from which are displayed on a large screen in the hall of the county’s Two Chinese Christian Councils. Who leads Sunday services, what sermons are about, and how many congregation members are present—everything is under the government’s close surveillance.“The surveillance equipment is powerful; it can catch every single word in the church,” a Three-Self church director in Lankao county explained. “We can get into trouble for making an incautious remark. Believers don’t dare to even chitchat with each other under such surveillance.” He once received a phone call from a local official less than one hour after he complained about the government.In August 2019, over 100 cameras were installed in several Three-Self churches in Yi’nan county in Linyi, a prefecture-level city in the eastern province of Shandong. A local government insider revealed to Bitter Winter that the Religious Affairs Bureau and United Front Work Department use the cameras to monitor activities in churches, and those refusing to have cameras installed would be shut down.
As some preachers and church directors learned to their cost, unplugging the security cameras is treated as a crime and swiftly punished by arrest, interrogation, confiscation of church property, and possibly destruction of the church, or even the personal residence of the preacher. According to several sources in China, the CCP now grades churches on a 100-point scale of obedience, deducts points for offenses such as improperly-displayed Communist flags and slogans, and shuts houses of worship down if their score falls under 60.
Reps. Jim Banks, Seth Moulton Introduce Bipartisan Bill Condemning China
3:07
Reps. Jim Banks (R-IN) and Seth Moulton (D-MA) introduced a bill condemning the Chinese government for its handling of the coronavirus outbreak, in a sign of bipartisan anger against China.
The bill expresses the sense of the House of Representatives that the “Governmentof the People’s Republic of China made multiple, serious mistakes in the early stages of the COVID–19 outbreak that heightened the severity and spread of the ongoing COVID–19 pandemic.”
The text said those mistakes:
…include the Chinese Government’s intentional spread of misinformation to downplay the risks of the virus, a refusal to cooperate with international health authorities, internal censorship of doctors and journalists, and malicious disregard for the health of ethnic minorities.
Banks, a U.S. Navy reservist, said in a statement:
As the Chinese Communist Party pushes propaganda and lies to try and blame the United States for coronavirus, we need to make the case to the world that China is ultimately responsible for this outbreak. They tried to cover-up news of the virus, jailed doctors warning of a possible pandemic, and prevented the CDC from coming to study the disease. In all, they cost the globe two months in time to prepare for this virus. I hope this begins a conversation about how China can be held accountable for their negligent coronavirus response.
Moulton, a Marine veteran, said in a statement:
The Chinese Communist Party’s leaders responded to the coronavirus outbreak first with disinformation and misdirection. China’s leaders kicked out American journalists who were covering the virus’ spread and the lives it claimed. China’s leaders silenced doctors, some of whom died sounding the alarm to the world. And while the clock was ticking, China’s leaders were focused on spreading propaganda that said the American military caused the virus, downplaying its severity.
He continued, criticizing Trump, but said, “The American people should hold our leaders accountable, and their representatives should hold China accountable for its part in this pandemic.”
GOP Reps. Kevin Hern (OK), Austin Scott (GA), Trent Kelly (MS), Brian Babin (TX), Barry Loudermilk (GA), Adam Kinzinger (IL), Greg Steube (FL), Larry Bucshon (IN), Mike Rogers (AL), Dan Crenshaw (TX), Mike Gallagher (WI), Kelly Armstrong (ND), Guy Reschenthaler (PA), Michael Waltz (FL), and Jason Smith (MO), Anthony Gonzalez (OH), Denver Riggleman (VA), Jim Hagerdorn (MN), Ralph Norman (SC), Rick Crawford (AR), Bill Johnson (OH), Elise Stefanik (NY), Randy Weber (TX) have co-sponsored the bill.
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