China’s ‘Bad Debt’ Problem: Why Its Not Learning From Japan (Grant Newsham, 2/21/24, Japan Forward)

I had a front-row seat to the cleanup effort. There are lessons, but I doubt Xi Jinping is interested.

The first lesson the Chinese Communist Party (CCP) might learn from Japan is the need for an honest, impartial legal system that’s free of official influence.

Then there’s the simple ability to enforce a contract.

Next, you need guaranteed property rights.

And all of these flow from a system of consensual government.

Japan had all of these. The People’s Republic of China does not – and appears intent on keeping things that way. Otherwise, Party control is threatened.

There is only one hand guiding the Chinese economy and it is the hand of the CCP.

There is no viable alternative to the End of History.


China needs bold, open-door policies for economic resurgence (NIGEL GREEN, FEBRUARY 6, 2024, Asia Times)

The cumulative effect of three years of economic downturn, erasing a staggering US$7 trillion of value, demands a departure from the smaller measures.

It’s time for Beijing to adopt bolder, “open-door,” internationally minded, and transparent steps to reignite growth and restore confidence in the world’s second-largest economy.

At the core of Beijing’s revival strategy must be a commitment to openness and international collaboration.

China’s economic might has flourished through global engagement, and a renewed emphasis on an open-door policy will not only attract foreign investment but also facilitate the exchange of ideas and technologies.

There is no viable alternative to the End of History.


Shocking Yet Normal? China’s 2023 GDP Growth Is -4.9% or -9.5% (Jennifer Zeng, 1/30/24, Japan Today)

From 2008 to 2012, the actual figures were lower than the official figures, but the differences weren’t too big, from 5 trillion to 0.1 trillion.

From 2013 to 2017, the actual GDP figures calculated using the expenditure method were even greater than the official numbers.

This shows that the GDP calculated using the expenditure method is not always smaller than the official figures. In 2014, it was even more than ¥17 trillion RMB ($2.37 billion USD) higher than the official figure.

Therefore, the expenditure method does not have a so-called “systematic bias” that will underestimate GDP.

In the six years from 2018 to 2023, the gap between the actual figures and the official figures grew wider and wider. Then in 2023, it was more than ¥33 trillion RMB, or about $4.79 trillion USD.

What does this indicate?

It shows that the actual economic situation in China is rapidly declining. Therefore, the scale of fraud also has to be rapidly increased to maintain the so-called 5% growth target.

By the way, the decline in China’s GDP in 2023, if it is denominated in US dollars, is minus 9.5%, not minus 4.9%. That is due to the changes in the ratio of the renminbi to the US dollar.

Lastly, the United States’ GDP in 2023 is estimated to be around $26.85 trillion USD. So if China’s actual GDP is $13.09 trillion, then China’s GDP is only about 49% of the United States, which makes it lower than anything anyone has ever talked about before.


China’s population time bomb is about to explode (Matthew Henderson, 1/21/24, The Telegraph)

China’s workforce is shrinking and its population aging. There are now 280 million CCP citizens aged 60 or over. Rather than Xi’s vaunted glorious rejuvenation, a massive demographic time bomb in China is ticking.

How did this develop, and will Xi be able to defuse it? Around 1980, the CCP decided that the rate of population growth was harmful and launched mandatory birth planning measures known as the ‘One Child Policy’. Negative incentives and coercive force were then used to drive down birth rates for more than 30 years. By degrees it became clear that things had gone very wrong. Traditional patriarchal bias resulted in widespread selective female abortion, infanticide and abandonment. In China there are now 110 males for every 100 females, amounting to some 34 million ‘excess’ males. The productive labour and taxes of one young worker now have to boost the state pensions of 4 retired relatives. The number of retired CCP citizens will increase more than 30% in the next decade. The current pension system simply cannot handle this.


China’s Long March Back to Stagnation (DEBIN MA, 1/12/24, Project Syndicate)

As the world grapples with the implications of ominous shifts within China, MIT economist Yasheng Huang, an astute long-term observer of the Chinese economy, has produced a well-timed book. In The Rise and Fall of the EAST: How Exams, Autocracy, Stability, and Technology Brought China Success, and Why They Might Lead to Its Decline, he combines a close examination of contemporary China with an ambitious (sometimes overly so) assessment of the country’s recent and distant past.

Like Huang’s other writings, The Rise and Fall of the EAST has a crisp, punchy, and occasionally satirical tone. Unflinching in his criticism of the current Chinese regime’s failings, Huang champions China’s great reformers, including politically fallen ones.

Given the current political climate in China, it is a courageous book. Huang shows, with great conviction, that China owes its economic miracle to its embrace of market forces and the private sector, which formed the core of the “reform and opening-up” that began four decades ago, following the death of Mao Zedong. By retreating from those earlier policies and commitments, Chinese leaders created the conditions for the setbacks and stagnation that we are seeing today.

It’s remarkable how much damage a regime can do by rejecting the End of History.


China Is Pressing Women to Have More Babies. Many Are Saying No. (Liyan Qi and Shen Lu, Jan. 2, 2024, WSJ)

Fed up with government harassment and wary of the sacrifices of child-rearing, many young women are putting themselves ahead of what Beijing and their families want. Their refusal has set off a crisis for the Communist Party, which desperately needs more babies to rejuvenate China’s aging population.

With the number of babies in free fall—fewer than 10 million were born in 2022, compared with around 16 million in 2012—China is headed toward a demographic collapse. China’s population, now around 1.4 billion, is likely to drop to just around half a billion by 2100, according to some projections.


China Confronts a New Political Reality in Taiwan: No Friends (Josh Chin and Joyu Wang, Dec. 29, 2023, WSJ)

A drawing of Taiwan at the presidential campaign headquarters of the island’s ruling party shows strikingly little concern for north and south. Instead, the island is shown turned on its side, with China and the Taiwan Strait conspicuously absent.

The drawing reflects the worldview of the Democratic Progressive Party, which over the past eight years has sought to carve out an identity for the self-ruled island that is separate from mainland China. But it also represents a broader change in Taiwan that sits uneasily with Communist Party leaders 1,000 miles to the northwest in Beijing.

With voters set to cast their ballots for a new leader in a volatile three-way election next month, Taiwanese politics has shifted decisively, and perhaps irrevocably, away from China. The change in mood is evident in public-opinion polls—and even in the campaign of the opposition Nationalist Party, or Kuomintang.


Chinese military purge exposes weakness, could widen (Yew Lun Tian and Laurie Chen, December 31, 2023, Reuters)

Beijing did not explain why the generals were removed. Some analysts say the evidence points towards corruption over equipment procurement by the PLA Rocket Force.

“More heads will roll. The purge that centred around the Rocket Force is not over,” said Alfred Wu, associate professor, Lee Kuan Yew School of Public Policy in Singapore.

Wei Fenghe, a former defence minister who used to head the Rocket Force, has also vanished. When asked about his whereabouts, a defence ministry spokesman said in August that the military has zero tolerance for corruption.

His successor, Li Shangfu, was abruptly removed as defence minister in October without explanation after also disappearing for months. He had previously headed the equipment department. One of his then deputies was removed from parliament on Friday.

On the same day, Dong Jun, a Chinese ex-Navy chief, with a South China Sea background, was named Li’s replacement as defence minister.

Analysts say that while the Chinese military has long been known for corruption, the extent of the latest crackdown and the involvement of the PLA’s Rocket Force is shocking.

“This part of the PLA would have the most rigorous vetting process for senior officers, given the importance of having highly trusted men in charge of China’s nuclear weapons,” said Dennis Wilder, senior fellow for the Initiative for U.S.-China Dialogue on Global Issues at Georgetown University.

“Moreover, it seems to have involved several senior men rather than one ‘bad apple’.”


China’s Economic Engine Is Running Out of Fuel (YI FUXIAN, 12/22/23, Project Syndicate)

[H]owever appealing to China’s leaders Lin’s economic forecasts may be, they have proved wildly wrong, not least because they fail to account for China’s bleak demographic outlook. Both a higher median age and a higher proportion of people over 64 are negatively correlated with growth, and on both points, China is doing far worse than the three countries to which Lin compares it.

When Germany’s GDP per capita was equivalent to 22.6% that of the US, its median age was 34. In Japan and South Korea, the median age was just 24. After those 16 subsequent years of strong growth, the median age in the three countries stood at 35, 30, and 32, respectively. Contrast that with China, where the median age was 41 in 2019, and will reach 49 in 2035.

Likewise, at the beginning of the 16-year period to which Lin refers, the proportion of people over 64 in Germany, Japan, and South Korea was 8%, 5%, and 4%, respectively; at the end, it stood at 12%, 7%, and 7%. In China, that proportion was 13% in 2019 and will be 25% in 2035. In the 16 years after the proportion of people over 64 reached 13% in Germany (in 1966) and Japan (in 1991), these economies’ average annual growth was only 2.9% and 1.1%, respectively.

Moreover, in Germany, Japan, and South Korea, the labor force (aged 15-59) began to decline in the 12th, 38th, and 31st years after their per capita GDP equaled 22.6% that of the US. China’s began to decline in 2012.

If one imagines China’s economy as an airplane, the 1978 launch of the policy of reform and opening up would have been what ignited the fuel – the young workers – that enabled the economy to take off and fly at high speeds for three decades. But, in 2012, the fuel began to run low, causing the plane to decelerate.

Instead of adjusting to their new reality, the Chinese authorities – heeding the advice of economists like Lin – continued to lean on the throttle by investing heavily in real estate, thereby creating a massive property bubble.


Why are so many young Chinese depressed? (Nancy Qian, 12/21/23, the Strategist)

China’s high youth unemployment rate and increasingly disillusioned young people—many of whom are ‘giving up’ on work—have attracted much attention from global media outlets and Chinese policymakers. The standard narrative is to associate the problem with the country’s recent growth slowdown. In fact, the issue goes much deeper.

The rise of youth depression has been decades in the making, and owes much to China’s rigid education system, past fertility policies and tight migration restrictions.