Forget Greece: China's economic slowdown is the biggest story of the year

There’s hardly an industry or a part of the world that isn’t counting on China to keep growing strongly. Soon, that could be a big problem

15 August 2015

9:00 AM

15 August 2015

9:00 AM

I stood alongside the chairman of the board of a state-owned enterprise in eastern China. The factory floor, partially open to the elements, stretched out far in front of us, littered with towers and blades designed for some of the world’s largest wind turbines. It was an impressive sight, one to which regular visitors to mainland factories are accustomed: China as the workshop of the world.

But something was missing: workers. ‘They’ve been given the day off,’ the chairman said with a slight cough, as we stared out over the vast compound. On a Wednesday? It was hot but not searing, and workers get the day off only once the mercury tops 40°C. ‘It’s a local holiday,’ he said. But there are no such things in the People’s Republic, and national holidays only occur in May, October and around Chinese New Year.

I didn’t push it, but a later conversation with the firm’s senior engineer, a stocky chap in blue overalls clutching a pipe wrench, revealed the real problem. His cheery demeanour vanished when we started discussing the future. The factory, he admitted, hadn’t run at close to full capacity for a year. Experienced workers had been put on unpaid leave; migrant labourers from the countryside — lacking a local work permit, or hukou — had been told to hop it.

The company’s woes are a microcosm of the daunting challenges that face China’s stuttering economy, the world’s second largest after the United States. This week China devalued its currency by 3.6 per cent in a dramatic bid to encourage exports — a clear sign that Beijing is panicking. Forget Greece. This could be the biggest financial story of the year. Even the threat of a significant slowdown in China’s economy could be enough to send the rest of the world tumbling back into recession. It’s certainly a source of concern for Britain’s still-fragile recovery. When the Bank of England Monetary Policy Committee met last week, they dwelt on the subject of China far longer than usual.

The picture isn’t pretty. From the polluted central metropolis of Zhengzhou, to Shenyang in the rustbelt northeast, the overwhelming sense is one of pessimism and urban decay. Idle cranes and vacant building sites dot the landscape. The ghost towns of legend — such as Ordos City in Inner Mongolia — are all too real, and remain a silent, cautionary reminder of the perils of engineered growth. In early 2009, at the height of the financial crisis, I travelled to the western suburbs of Shanghai, taking photographs of boarded-up factories. I returned last month to find many of the units still locked, their windows smashed, the paintwork peeling.

Signs of stockpiling and overproduction are everywhere, while central and local authorities strive to outdo one another not through innovation but by replication. Hangzhou is building an entire financial hub larger than Canary Wharf, despite being less than 100 miles from the big banks of Shanghai. Even the chairman of the wind-turbine maker admitted to branching out into renewable energy not because he’d spotted a gap in the market, but because ‘local party officials told us to’. That aspirational industrial logic — if you build it, the customers will come — once served China well. No longer.

Over the past year, every key indicator has begun pointing to bad times ahead. Electricity consumption, usually the most reliable single gauge of economic health in the mainland, expanded at the slowest rate in three decades in the year to June. Because of falling Chinese industrial demand, global commodity prices have slumped, threatening growth in producer countries from Australia to Zambia. Chinese house prices have stagnated, while the last time rail-freight volumes were higher than the year before was last September. Last week brought yet more bad news, with exports sliding 8.3 per cent in July from last year’s figures, imports falling for the ninth month in a row, and data pointing to further weakness in industrial output, capital investment and retail spending.

Predicting a serious slowdown in the mainland has long been a losing bet. Ask the Sino-American author Gordon Chang, whose book The Coming Collapse of China was released at the turn of the century, just as the mainland began its inexorable rise. Since then, China has dealt with every challenge thrown its way. Even the global financial crisis barely registered. Beijing merely flooded its domestic market with cheap money, creating an artificial infrastructure boom. While Britain’s economy shrank by 4.3 per cent in 2009, and America’s by 2.8 per cent, China grew by 9.2 per cent.

China’s National Bureau of Statistics has released data showing the economy expanding by 7 per cent in both the first and second quarters of the year. But the NBS is constantly accused of cooking the books — it’s notable that their figures tally precisely with state forecasts set out late last year.

A more realistic assessment comes from Andrew Polk, a senior economist at The Conference Board (TCB) in Beijing, who believes output grew at 4 per cent in each of the past two years, and will continue to expand at or below that rate for the foreseeable future. ‘For a fast-growing emerging market like China’s, which is in the mode of playing catch-up with the wider world, a growth rate of 3 per cent or 4 per cent is in or close to recession,’ he says. ‘It’s like zero growth in a mature economy like Britain’s or America’s.’

Anne Stevenson-Yang, co-founder of the independent Beijing consultancy J Capital Research, has spent the past few months in the industrial north-east of the country, wandering deserted factories and building sites. ‘That part of the country has been in rough shape for some time, with falling bank deposits, halted construction projects, high inventories and plummeting sales at auto dealers. I visited a large machinery factory running at 80 per cent of the capacity it was at two years ago, and that is not atypical.’

She found the same problems in the once-bustling cities of the far south, where discontent and joblessness is rising fast. ‘Everyone I meet is looking for a job, and considering moving to Shanghai,’ she laments. During a tour of a vacant cold storage facility in rural China with a party official, her group was confronted by an angry mob, who forced them to flee. The official later explained why: ‘There used to be an orange grove on that site, so we chopped down the trees to build the facility to create jobs. But no one wanted to invest in it, and now there are no jobs, and no oranges.’

This gathering storm helps explain Beijing’s reaction to the bursting of the latest stock-market bubble, which had been driven by speculative retail buying. When shares in Shanghai and Shenzhen topped out in mid-June, having more than doubled in just seven months, China’s leaders had two choices: to let prices settle at a more natural level, or to intervene.

Having tacitly encouraged the boom by lifting restrictions on buying shares with borrowed money, Beijing saw little choice but to intervene, particularly when day-traders, deeply in debt to loan sharks, began flinging themselves from office windows. Party leaders clamped down on ‘short selling’, forced tame banks and brokers to buy and hold shares, and blamed the whole sorry mess on meddlesome foreigners, who had played no part in it at all. In fact, the real losers in June and July were holders of securities listed in the West. A generalised anxiety provoked by tumbling Chinese shares (contradicting the view of some London pundits that it was all a local difficulty, of no great relevance to western investors) knocked the stuffing out of the FTSE 100 index, and dragged British blue-chip stocks to their lowest levels since January.

The reason for the party leaders’ heavy-handed action, which makes a mockery of China’s much-trumpeted desire to reform the financial system and wrest market share away from inefficient state firms, is simple. ‘China’s leaders are panicking,’ says Polk. ‘They don’t want any volatility in the financial sector, as they truly don’t know how shaky its foundations are.’

There’s a strong and abiding fear of economic slowdown here. The last time growth seriously stuttered was a quarter of a century ago, when China’s political leaders made a series of panic-induced and near-fatal missteps. Hasty reforms designed to boost wealth and improve the lot of farmers led to a credit glut and a brief but unruly housing boom, and inflation exceeded 30 per cent in late 1988. With living conditions deteriorating the following year, tens of millions of migrant workers flooded into the cities, while students spilled on to the streets. The party panicked and sent in the tanks. China’s global image is still recovering.

But China’s economic troubles today are nothing for the rest of the world to feel smug about. We should be desperately worried about a sharp contraction in an economy that really matters. Many spent the summer fretting about contagion stemming from a failed Greek state. Greece accounts for less than 0.3 per cent of the world’s economic output. China’s share is 13.4 per cent and rising. A blowout in one or more of its tyres would hurt everyone, from indebted multinationals who have bet heavily on continued Chinese growth to overleveraged nation states whose finances would be devastated by another slump.

In recent weeks, everyone from fund managers to multinationals has begun to speak about what might happen if China’s economy falters. Audi, Jaguar Land Rover and BMW have all slashed local production forecasts or issued local profit warnings. Ford is expecting car sales in China to fall for the first time since 1990. Given how integral China is to global trade, this matters. Last year, Beijing was the largest sovereign importer of crude oil, copper and soy beans. It is a voracious buyer of French cheese, Scottish salmon and New Zealand lamb, and the world’s biggest consumer of cars and smartphones. There is virtually no industry that it does not influence, nor any multinational that does not include Chinese land, labour or capital somewhere in its supply chain.

We simply don’t know what a slump in 21st-century China would look like. Will it be short and sweet, allowing the economy to cleanse itself of a huge backlog of toxic bank loans before emerging invigorated? Or will it mark the beginning of the end of the Chinese dream: the moment when, from Washington to London to Tokyo, we see that the new emperor really has no clothes? To Fraser Howie, co-author of Privatising China, the greater concern is whether the current leadership is capable of keeping calm and carrying on. ‘Look at the way the government handled a simple stock crisis,’ he says. ‘How are they going to manage a genuine debt or bank crisis? Everyone’s confidence in the competence of the government has been shaken, and they are now seen as highly reactive and highly incompetent. It should be worrying for everyone.’

The last time China’s economy actually shrank was way back in 1976, a year also marked by the death of a dictator and the denouement of one of the most horrific revolutions in human memory. Back then, a recession in the People’s Republic would have been of only peripheral concern to the outside world. Now, it could drag the whole world economy down with it. Little wonder that alarm bells are ringing in Beijing and beyond.

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  • Sue Smith

    Absolutely agree with this. A few years ago I remember the CEO of BHP Billiton, Marius Kloppers, waxing lyrical about “the China miracle”. Right on that very day I said to myself, “yeah, well this isn’t going to last”. So, no surprises for me with this article. As a shareholder and self-funded retiree things are looking grim and don’t ever look like improving within the next decade. Even harder for new entrants into the labour markets!

    Better take on millions of new ‘migrants’. That’ll fix things – NOT.

    • mohdanga

      Yup, more immigration from China is the cure….they have nothing to do with the insane prices of real estate in Vancouver, Toronto and Australia, to name three overpriced markets. But it’s ‘racist’ to think of putting restrictions on foreign investment in property.

      • Sue Smith

        Please spare a thought for my third son, who is desperate to get into the Sydney market and with a deposit of $200,000 it is still way beyond his scope to buy a 3 b/r house 30km from the CBD!!! Chinese buyers in the market and investors. Record low interest rates fuelling same. I’ve told him that under no circumstances should he consider the current market but to wait until interest rates rise and people find themselves with mortgages bigger than the value of their homes.

        • mohdanga

          But it would be ‘racist’ to suggest that maybe restrictions be put on Chinese buyers, wouldn’t it?? We are doomed because of our politically correct attitude toward everything. Foreigners have a very tough time buying property in China, is this not ‘racist’ as well? Or are they just protecting their country?

          Here’s a quote, not sure if the link will come through: “One top Vancouver real estate executive, who did not want to be named, said in 2011 it was estimated that for every $1-million spent on all types of real estate in Vancouver, $300,000 could be attributed to demand from China. Several months ago, coincidentally, the Bank of Canada estimated that some markets in the country are over-valued by up to 30 per cent. – See more at: http://www.theprovince.com/business/Real+estate+exec+Chinese+money+There+huge+stake+local+people+keeping+this+thing+going/10858619/story.html#sthash.y3pzh0hG.dpuf

        • mohdanga

          And just the other night on TV the PM was saying that there should be something done since according to a just released study Chinese buyers make up over 25% of purchasers of homes over $1 million in Vancouver….where the average price is pushing $1 million!!
          For years the MSM was saying that there was no evidence to suggest that Chinese buyers were buying more than a fraction of the houses for sale and that it was all domestic demand…..statements that fly in the face of the facts on the ground. Vancouver is now known as ‘Hongcouver’ because of the massive influx of Chinese immigration. We are destroying our country!

          • Yvonne Stuart-Hargreaves

            You should go to Switzerland . Every village seems to have a Chinese restaurant. Every small town a casino. The 5 star hotels and the boutiques are full of Chinese. Swiss jewellers all employ Mandarin speakers. It is near impossible to go up the Eiger by train as the Chinese have booked all the seats, 6,000 a day for the rest of the rest of the year.

        • Fraser Bailey

          You are assuming that interest rates will rise..

        • Leon Wolfeson

          Aww, you won’t loosen your grip on your finances and help. Right.

    • Leon Wolfeson

      Of course, and your kind of anti-trade ideology is one reason why. You got a nice block on most investment in the UK with your beloved referendum…

  • Yvonne Stuart-Hargreaves

    Good article. China is as important to World economics as Oil. China is trying to make a major shift to domestic consumption. The Communists have a difficult tightrope to walk enriching sufficient people to avoid political turmoil. Equally new rivals in Vietnam, Indonesia even Burma will be a big headache for the tyrants that run China.

  • Jonathan Tedd

    Dr Tim Morgan (Tullet Preobon and Terry Smith’s man) writes on China – cnovinces me that centrally controlled economies come to grief. Obvious really.

    He writes about the energy crunch – credit can only exist if we have the growth to pay it back right? Search surplus energy economics.

  • Douglas Redmayne

    At least it means that interest rates will stay low for longer. We may even get the opportunity to monetise a big tranche of the national debt through QE while no one is watching.

  • Damaris Tighe

    The main lesson I learned from this is confirmation that when governments, national & local, get involved with commissioning factories & whole industries, disaster inevitably follows.

    • sidor

      Right. Like what the US government did during WWII. As a result, the US GDP more than doubled within that period. Was it what you call disaster?

      • Damaris Tighe

        War time is different, of course. War creates its own demand & the result can lift a country out of depression. But it’s genuine demand, not a command economy shot in the dark as the Chinese national & local governments were often indulging in.

        • sidor

          First, it lifted the US economy on a new technological level. Which provided its huge post-war prosperity.

          Second, what is that “genuine demand” which had driven this development? A kind of “invisible hand of the market” created Manhattan project, jet engine, radar, computer? Or were these results of political decisions of the central government?

          • Damaris Tighe

            War created the demand, which is what I said.

          • sidor

            In what way did war created the demand for the Manhattan Project? Was Einstein suggesting it to Roosevelt a war messenger, while the generals who opposed it were pacifists?

          • Damaris Tighe

            The British post war jet aviation industry is an example of this. Sponsored by successive governments, it was cutting edge & superior to the US. That is, until the Labour government decided to cancel & transfer the funding to expanding the welfare state.

            BUT government sponsorship of cutting edge new technologies is not the same as generalised factory building by central & local governments to produce plastic toys etc, because it seemed a good idea at the time & provided jobs.

          • sidor

            I am a bit entangled in your sophisticated literary forms. I don’t see much difference between the two strategies in your last paragraph. Either a government makes decisions about developing a new technology and the respective industry, or it doesn’t. What is your choice?

          • Kennie

            In the UK, the choice is that the govt does not.

          • mohdanga

            “All the major scientific and technological breakthroughs which provided our current economic prosperity were made by governmental decisions on public money with absolutely non-economical purpose.”
            BS. Steve Jobs and Bill Gates founded their company out of their garage.

          • sidor

            And what did they discover?

            According to an opinion poll, most of the Americans believe that computer was invented by Bill Gates. Are you one of these?

          • mohdanga

            Did I say that? The modern computer was conceptualized/developed by Alan Turing prior to WWII. IBM and HP have been developing computer technology for over 80 years, no gov’t involvement.

          • Scorpion DeRooftrouser

            You overstate the case for Turing. The first working computer – as opposed to calculator – was the Manchester Baby in (I think) 1949. It had storage, a crude visual display screen, and was digitally programmable. Admittedly other people, including Turing and the guys working on Radar, invented some of the technologies that made it possible.

          • wjr321

            Remember that there was a post war recession and the U.S. government was dead broke.

            What the war did for the U.S. economy was kill off the competition. Germany, Japan, Italy, Great Britain (to a lesser extent) and France — all key players –were flat on their backs and needing rebuilding. The excess capacity built by the war effort made the U.S. very rich. If you wanted steel, cars or almost anything else you needed to buy U.S. The plants elsewhere were either ruined or social unrest, displacement and supply chain disruption made local things scarce.

        • Roger Hudson

          War genuine demand ?? nonsense, war is a false, man made, economy booster. War is a tool for politicians and big business.

      • SeanLM

        The Great Depression was largely caused by a liquidity shortage created by the federal reserve tightening interest rates 1/3 over four years. The government also increased tariffs dramatically which hurt trade. So if the government gets the “credit” for ending the depression through its wartime procurement, it sure as hell deserves its share of the blame for causing it to begin with unless you subscribe to the idea that breaking a window and then fixing it accrues to society’s benefit. Without the depression or the war, US GDP would likely be higher.

        • sidor

          Quite funny view of economy from the viewpoint of financial dealer. Who believes that the wealth of nation is created by speculations in the stock market.

          1. The crisis of 1929 was created by the speculations on NYSE. Ford, who hated these parasites, was happy when the stock prices collapsed. He didn’t realise how deep was the rot.

          2. The measures introduced by Roosevelt resulted in long depression in the stock market. It regained the 1929 level only after 30 year. GDP has grown by order of magnitude within the same period. That is, the worse it in the stock market, the better for the economy.

          3. It is written in the school textbooks of economics: the only reason for GDP growth is new technology. Which is a result of the development of fundamental science. Both could only be funded by the government. No commercial interest would have payed for nuclear reactor, jet engine, computer, laser, radar or electronics which provided the present level of GDP.

          • mohdanga

            The Great Depression was preceded by the same excessive debt and borrowing levels as currently exists. People spent more than they could afford, racked up debt and bought stock on margin so when the crash came they were wiped out.

            I do believe that Steve Jobs, Bill Gates, HP, IBM, etc are all private companies and individuals which created new technologies and wealth. Same with Edison, Bell, and numerous others. The Wright Brothers were never sponsored by the gov’t.

            Here’s an interesting quote from Wiki: “”In 1923, Edgar Buckingham of the US National Bureau of Standard published a report[7] expressing scepticism that jet engines would be economically competitive with prop driven aircraft at the low altitudes and airspeeds of the period: “there does not appear to be, at present, any prospect whatever that jet propulsion of the sort here considered will ever be of practical value, even for military purposes.
            In 1928, RAF College Cranwell cadet [8] Frank Whittle formally submitted his ideas for a turbo-jet to his superiors. In October 1929, he developed his ideas further.[9] On 16 January 1930 in England, Whittle submitted his first patent (granted in 1932).”

            So an gov’t agency poo poohs the idea of a jet engine….which is then designed and built by a private citizen. Hmmm.

          • Scorpion DeRooftrouser

            Thing is, the jet engine – as with the computer – required several complimentary technologies to make it viable. Your man Buckingham was quite correct – jets flying slowly at low altitudes were (and are still) not economically viable. Jets flying at high speeds at great height, however, work out very well. He wasn’t in a position to know that.

      • Dogsnob

        See what you mean: a World War never did anyone any harm did it?

        • sidor

          It doesn’t appear from you question that you do. Try to read it again, slowly.

          • Dogsnob

            Please accept my apologies. I had indeed taken you to be arguing something you were not.

        • Yvonne Stuart-Hargreaves

          Except the 50 million dead and the 100 million maimed and the 200 million homeless and their 600 million relatives and friends.

          • Dogsnob

            You spotted it. Well done.

          • Yvonne Stuart-Hargreaves

            Yes, and put it in context.

          • Dogsnob

            I was wrong, you missed it.

  • sidor

    The alarm statements about slowing down of China have been regularly made the last couple of decades. All these eventually happened to be just usual BS of the economical “experts”. There is no reason to expect that this one will do better.

    • blandings

      Then you have nothing to worry about old chap.

      • sidor

        Unfortunately I don’t have any business with China. But thanks for your relaxing remark.

    • Arbuthnaught

      This time the state controlled model has reached its limits. The article speaks to the massive, massive misdirection of capitol by the CCP. It is not clear at all that the CCP will take the necessary reform steps away from such actions. It is also not clear that the CCP can make one right decision after another, after another to avoid a severe economic down turn. This slow down is measureable and conceded by the Chinese government, though not how big the slow down actually is.

  • Jackthesmilingblack

    Did that “Tianjin Explosion” slip by you?

  • Ambientereal

    Chinese are taking a little step back only to take a long jump forward. Actually they dictate what will happen in the worldwide economics.

  • Brasidas44

    While I agree with the author that there is a China problem, there are also extremely bad problems in other counties. The impending Greek default is relatively minor, but the fact that Germany is insisting at the government level that there will be no haircut is proof that Germany has really major problems. The Australian economy has numerous long term weaknesses, and is looking bad with the fall in commodity prices. The United States has big problems of structural unemployment, and many sectors with completely unrealistic cost structures.
    If you look around the world, you will see numerous Western governments with huge debts, who cannot raise the taxes to pay for services because none of the taxpayers feel that they are getting value for money,

    • mohdanga

      The reckoning is coming…..debt spiralling, uncontrolled immigration from the 3rd world meaning more debt, taxes, and spending to care for these ‘enrichers’. 30 million illegal Hispanic aliens waiting for Obama to give them citizenship….what could go wrong??

  • jim

    Globalization is a perpetual panic.

    • SeanLM

      And protectionism is for retards.

      • ajcb

        (You’re both right.)

      • jim

        That may be true too….International Socialism and Global Capitalism are both built on the same foundation.When the maoists and the corporate world join forces (and they have) then you’re fuc*ed….What you don’t lose on the swings you lose on the roundabouts.

    • trendsetter

      Scared lefties are having a field day, ….erhm century.

    • Terry Field

      No, it is a perpetual turmoil of renewal and destruction. It is life.
      Lily-livered socialists cannot deal with that unavoidable, and highly desirable reality.

      • jim

        Then it’s a fairly short lifecycle and getting shorter all the time.Dizzier booms.More devastating busts and shorter intervals between. Here comes a Chinese bust ready to derail a fragile western recovery which is barely out of the terminal ward.

        • davidofkent

          The timescales have been fairly consistent over the past 40 years or so. We’ve had a bull market for nearly seven years so it’s time for a correction. The impetus for a correction has come from China this time as it moves from manufacturing to consuming.

          • jim

            But in the decades before that….weren’t the cycles further apart?

        • Yvonne Stuart-Hargreaves

          Still there is a bit more inflation for the poor as Poundlsnd has taken over the 99p shops ,that is at least 1% inflation guaranteed.

    • davidofkent

      The markets are either rising exuberantly or falling in a panic. They occasionally tread water for brief periods. The saying in the broker houses is “the trend is your friend”.

      • jim

        How do you feel about pension funds and local authorities betting on these trends? …. An economy which has some localized elements which are not dependent on the whims and panics at the other side of the world can withstand these trends a little better no?

      • Yvonne Stuart-Hargreaves

        FTSE is at the same level as in 1998. Even though it dropes underperforming shares and co-opts rising companies twice a year it has effectively added no value. Meanwhile the Chief Execs pay has quadrupled.

  • Adam Bromley

    It does like that at last economic reality is catching up with the CCP. Outsiders, as Wilson says, have predicting a slump for over a decade. Each time a downturn seemed likely, the ruling party turned on the money taps, confounding the doom-mongers. But this time is different. Chinese growth figures have always seemed dodgy, the way they matched the state plan regardless of world events or other indices, such as raw material imports or bad loans. If the numbers were true, it would mean that the Chinese had managed the impossible feat of beating boom and bust, with no misallocation of capital, no speculative bubbles, no overcapacity, no excessive credit. It suggests a Godlike wisdom on the part of the government and businesses where they never made mistakes. Never? Can outsiders really trust the same political party that rewrites history, crushes dissent, reveres the genocidal sociopath Mao as a great man and starved 10% of its own population to death in pursuit of his mad dreams of military power? It’s the same organisation; there’s been no Nuremberg trials, no Truth and Reconciliation commission. They have little incentive to be honest and every reason to massage the figures. And now the devil’s bargain is broken – China’s citizens live in a heavily polluted land,with no freedom, run by a corrupt, unaccountable elite without the 10% growth they were promised. Things are going to get ugly.

    • sidor

      You are confused. The war crime condemned in Nuremberg trial was the military aggression starting WWII. Mao didn’t start any war. Whatever happened in China is strictly Chinese business. The Chinese consider him a great leader. You are not in a position to instruct them on how to assess their history. Try instead to instruct the French about their beloved war criminal Napoleon.

      • Adam Bromley

        Nope, I’m not. Charge 4 of the Nuremberg defendants was crimes against humanity, which included murders of German civilians committed in German territory. But the more general point is there has been no public accounting for the CCP’s murderous acts against its own people. By your logic then, the Hutus were entitled to murder every Tutsi as it occurred within Rwanda borders, Saddam Hussein was free to gas the Kurds etc. The principle of crimes against humanity has been established by the UN for decades and used to try defendants with success. Morality is not relative and does not stop at national borders. You also talk about the Chinese as if they are all the same – not true. But if you speak out about Mao, you go to a prison camp.

        • sidor

          Then organise a (retroactive) trial of Lincoln. He killed more Americans in proportion to population than Mao. And also Bismarck, Mannerheim and Franco. We can also recall the victims of famine in Ireland.

          • Adam Bromley

            I’ve just reviewed your comments on other topics and realise that I’ve broken the golden rule about not feeding trolls. The repeated mentions of parasites, idiots, society being sick, Darwin being an idiot etc should have warned me off. My mistake. Go troll someone else.

          • sidor

            To make it short, you have nothing to say in response to what I said above. Nice that you don’t disagree.

            The term “troll” is a common internet jargon invoked when running out of rational arguments.

            Your interest in my humble person flatters. Unfortunately, I cannot reciprocate it. Are you a Darwinist, like Dawkins?

          • Adam Bromley

            Should I venture under the bridge and engage with the troll? Nope. Pass.

          • sidor

            Since you don’t disagree with the above definition of the term”troll”, your statement confirms that you are out of rational arguments.

            Quite similar to Dawkins.

          • Arbuthnaught

            There is a difference in both degree and kind. Your comment reflects a complete lack of understanding, especially the complex dynamic of the American Civil War that can not be blamed on one person. You have a lot of history to get up to speed on. Until then one could easily mistake you for a…… you guessed it, a ……. troll.

          • Yvonne Stuart-Hargreaves

            The UN and its precursor were founded after WW1. Crimes against humanity from before that are outside its remit. Like the Armenian genocide in Turkey.

          • sidor

            A correct remark. Lincoln is out. But Mannerheim and Franco would do.

      • Arbuthnaught

        One might ask why they consider Mao a great leader. Mao has more blood on his hands than any person that has ever lived. Who do you have to be to say that? I reject the notion that atrocities committed in one nation are no one else’s business.

        • sidor

          Because they are clever people with deep understanding of history. For that reason they understand something that you don’t: in historical scale, what matters is the result, and nobody cares about the means after one-two generations. Who cares now how many people were killed by Echnaton, Alexander, Muhammed, Cromwell, Peter the Great, Lincoln or Bismarck? People consider them great leaders because they like the results. Mao will be remembered in history as a builder of a new great empire, like the emperor Qin-Shi Huandi.

          • Arbuthnaught

            I wish China the best. It is a great nation with a great heritage. Your English is great and I wish you the best in life. I would encourage you to read more deeply and understand why everyone in your list does not go together. Moa will be remembered as the man with more blood on his hands than all of the others you cited put together. Great Leap Forward (backwards) Back Yard Steel, Little Red Book, the East is Red, Cultural Revolution what a colossal waste. Yes results do matter. What you do not seem to grasp is that Mao was more than a dictator. He was a Totalitarian. Total control. Lincoln was a democrat in a decentralized government that could easily have been turned out of office by the voters. Lincoln would have found the total control of Mao to be abhorrent. Lincoln was a constitutionalist. Mao was an arbitrary ruler. The list of people you cite are totally dissimilar and reflect only a surface understanding of Western History. The only person in that list that compares to Mao might be Akhenaten. Akhenaten – a god man just like Mao. Who can say that in the broad sweep of history someone else might not have done a better job, using a different ideology without the worst butcher’s bill in history. Mao will be remembered as a destroyer not a builder. China could have done a lot better with someone else. Mao is treated like a god because the CCP has little else to rest on, certainly no a free election for legitimacy.

          • sidor

            All these people killed a huge amount of people for a good cause.

            And what is your problem with Echnaton? You don’t believe in one transcendental God? Atheist? Or a pagan?

          • Arbuthnaught

            May have had a translation problem. Echnaton = Ahkenation = Egyptian Pharo Amenhotep IV? I am a life long Christian and follow the one true God. However good my cause is, I am not allowed to kill to achieve it. A good cause is not enough. I believe I have a duty to persuade people rather than kill them if they disagree with me. I am not a pacifist. I do believe in just war doctrine. The idea of the French Revolution that the old elites must be killed en mass has not worked out, especially in communism.

          • sidor

            The period of Progress, Enlightenment and Reason the products of which we are now enjoying was a result of the enormous butchery of religious wars of 17th century. A question: do you regard this result good enough to justify the means, or you would rather prefer to live without computer, electricity an telephone using horses for transportation?

          • Arbuthnaught

            The I am a product of the Enlightenment and more specifically the Protestant Reformation. When you have absolute standards to judge with, there can be no justification for the killing related to the Reformation. We must not confuse the philosophical foundations of the Reformation with the earthly power seeking of those that sought to repress it. It was never right for the Catholic Church to seek to become a worldly kingdom and fear the loss of temporal power. You are trying justify mass blood shed and it can not be done. The wars happened but you can assign moral blame for the lack of necessity of them. The Enlightenment and the Protestant Reformation were absolutely essential. Today, mass bloodshed can not be a legitimate tool of state power. War making powers must be narrowly tailored to turn back aggression, prohibit territorial conquest, protect the innocent etc.

          • sidor

            I am afraid you failed to answer the question. Let me repeat: do you think the indicated result justifies the means? Or you suggest that the Protestant side should have avoided any violence and lost?

          • Arbuthnaught

            Sorry, did not mean to duck the question. The Protestant side should not have lost. They did not use violence to unjustly hang onto a rotten temporal empire. Results may or may not justify the means. I am deontological. Things are inherently just or unjust in and of themselves. A defensive war, in the case of the Protestants could be justified.

          • matimal

            You talk about it as if you aren’t Chinese or a CCP supporter. Why?

          • Arbuthnaught

            I think the moral and philosophical foundations of communism are completely wrong. “New Scientific Man,” what a joke. The human condition is the human condition. Communism has no answer for the fundamental failings in human nature. The one party state is a dinosaur. The idea that a single party can direct a nation is nonsense. The single party state has corruption built in and guaranteed. Communism crushes and wastes human potential.

          • Hegelman

            The American Revolution was the work of a fanatical minority, not of the great majority. This is long recognised by serious historians. Alexander Hamilton, a revolutionary founding father and therefore likely to exaggerate the support the revolution had, estimated that no more than a third of Americans – he left out the blacks and the native population, of course – ever supported the revolutionaries. A vast part of the American population not only opposed the revolution but fled the country. Ask Canadians: many of them are descendants of those who escaped the American Revolution. As a matter of fact, a higher proportion of the population fled the American Revolution than fled Lenin’s Russia.

            For the native population and the blacks the American Revolution was a disaster with few parallels. The white settlers were now enabled to expand into most of America which the British had reserved for the natives. By the end of the nineteenth century the native population had been decimated. It is one of history’s most terrible genocides and puts in the shade anything that happened under Stalin or Mao.

            The US black population suffered a huge extension of slavery in space and numbers. The US abolished slavery long after the British Empire did so, and only at the cost of one of the most terrible civil wars mankind has ever known. The US blacks remained a semi-serf, segregated population until as late as the 1960s, when world factors like the challenge of Communism forced the US ruling class to emancipate them.

            Such is the real, unedifying story of the American Revolution.

            The human costs of the English Revolution deserve a brief comment. They were some of the worst that any political development has ever had: the wars unleashed by it in Ireland are estimated to have killed off 40 percent of the population ! Again, it makes Stalin seem like a tyro.

            Christianity came at a prohibitive price, too: ask the Jews and the natives of the Americas, both of whom suffered near-extinction thanks to it. Germany lost one third of its population in the wars let lose by the Reformation.

            No serious person will say that therefore the American and English revolutions, and Christianity, should not have happened. We just need to factor in the grotesque human price paid for them – in proportion to population far exceeding the price for the Russian and Chinese Revolutions.

          • Arbuthnaught

            Am I not supposed to know the items you listed? I knew each and everyone of them. I think it is important to use an absolute scale as well. Stalin alone is probably responsible for 10X the bloodshed of every item you listed, combined…. I believe that the pre-modern list you provided stems from fundamental flaws in human nature: standard conflicts of territorial acquisition, greed, power etc. The modern conflicts of communism had all those elements as well but also in addition lots of notions like the deification of the party and state, death and violence on an industrial scale as a matter of state policy, hideously based on the “new scientific man” etc. I reject the characterization of the founders as fanatical. They were an educated and economic elite, motivated by a particular view of English history, law, economics and religion. They were leading citizens, creatures of the establishment yet critics of the establishment. Using the term fanatical I think tends to lump them in with others that do indeed deserve the title. “…in the wars let loose by the Reformation…,” or Counter Reformation as the case may be.

          • Hegelman

            I get rather bored with your special pleading. I obviously succeeded in unsettling your vulgar, ignorant and fanatical mind, if it can be called one. You can make all the dull, incoherent excuses for the Founding Mammals that you want, but the fact remains that they regarded blacks as work animals to be worked to death and then disposed of and Amerinidans as vermin to be shot off. The Communists with their supposedly deadly new age view of man had the idea that blacks were fully human before the Christian West did and it was thanks to the challenge of Communism that desegregation happened in the US when it did: Eisenhower, who thought it indecent for a black man to sit down at table with whites remarked how important it was to emancipate the blacks if the Communists were not to take advantage. Since the collapse of the Communist challenge a lot of inhumanities that we thought had vanished for ever from the West have returned: like mass homelessness, driving the disabled to suicide (a UK speciality), etc.

          • Hegelman

            “I believe that the pre-modern list you provided stems from fundamental flaws in human nature…”

            I have no interest in your tedious, petty-minded beliefs. What I cited were historical facts. Your nature is grossly flawed, to be sure.

          • Hegelman

            “Who can say that in the broad sweep of history someone else might not have done a better job, using a different ideology without the worst butcher’s bill in history? ”

            Who can say that in the broad sweep of history someone might not have done a better job than Christianity which led to the near -extermination of the Jews and the natives of the Americas and the loss of one third of the population of Germany in the Reformation?

            Who can say someone might not have presented a smaller butcher’s bill than Churchill who deliberately let one tenth of all Bengalis perish in a famine in 1943, refusing to supply food aid after years of draining India of food and forbidding the US and Australia to help either as they offered to do?

            We can all play these games, you know. I would advise you to desist from your hollow, cheap, philistine and ignorant moralising.

          • Arbuthnaught

            Whoa! Of course none of the things you mentioned above should have happened. I did not mean to deny or minimize the many truly horrible episodes in Western History. I was indeed aware of Churchill’s food policy. You have not supplied me with any particulars I was unaware of. I do not think it is philistine at all to say that the totalitarians of the 20th century are quite different in both degree and kind. I am hardly the only one to make that case…… It is hardly philistine, ignorant or moralizing of make that point. Who does one have to be to moralize against Mao? I feel like I am having to revisit the philosophical grounds on which the cold war was won and that should not be the case.

        • Yvonne Stuart-Hargreaves

          It is a travesty that Japan and Germany are excluded from the UN security council for their last misdemeanours when China sits on it regardless.

  • Arbuthnaught

    I think it looks likely that China will get stuck in the development trap. The current Chinese model has gone as far as it can go. The next stage in Chinese development will require reforms that the CCP has not shown a willingness to embrace. The effect of the current economic crisis in China will be interesting to watch.

  • Steven Rhan

    What keeps coming out of all this is from the start it’s been a naive mistake to interpret China’s growth data from a western free-market perspective, compounding the otherwise expected usual deceptions coming from Beijing. Thus long yielding an apparent wow – factor growth model- strictly within in a microcosm of state-run propaganda and one-party information control. The numbers looked impressive, until one digs a little deeper into the relevant realities ‘on the streets’.

  • Ron

    Is this why the Bank of England are talking a rate increase and Cameron is looking to be protected by being in the EU.

  • matimal

    I feel very smug about china’s problems. I’m more than willing to suffer myself so that the CCP is weakened and even destroyed.

    • sidor

      Start your suffering right now by refusing to use Chinese-made comp and phone.

  • Terence Hale

    “China’s economic slowdown is the biggest story of the year”. China’s economic slowdown is just part of an economic cycle and has something to do with market saturation, raw material and production problems. What the West has to worry about is China jumping into the sanction market opened by the West losing markets never to be regained.

  • ian channing

    A hukou is not a work permit. It means household registration, which influences migrant worker access to social security, schooling and much else. It is one of the basic realities of life in China.

  • Carla Chamorro

    Back to Chop Suey China

  • Cobbett

    3 cheers for globalism.

  • Velo

    Journalists are willfully ignoring this story. It’s being covered up. A lot will unfold on the currency markets in the next eight weeks. The writing is on the wall.

  • Kasperlos

    The China card was a capitalists wet dream: An authoritarian state keeping the workers in check, low wages, loose rules and regulations. The only thing the capitalists had to do was to ensure the monthly envelopes were sent out on time to the interested parties. The freak hybrid of the Communist Party and ‘Free’ Market is playing its last hand; any country where the military runs factories and industries is doomed to failure. Hope the entire fraudulent ponzi scheme collapses into the dustbin of History and China resurrects the Great Wall to once again become a hermit kingdom. Meanwhile, every Chinese with ample cash is attempting to sneak it out for the usual safe havens.

  • Blindsideflanker

    Global stock markets going bust. Commodity markets going bust, Bond markets going bust. Gold going bust.

    I don’t think I can ever remember a time when there was no safe haven.

  • Latimer Alder

    A Chinese factory making windmills is suffering from lack of demand?


    Soon the western obsession with these useless obsolete behemoths will be over. Mourned only by the ‘Greens’ and their troughing, grunting fellow-travelling subsidy parasites and leeches.

    • ohforheavensake

      And this misses the point, just a bit.

  • sidor

    Can anyone of the learned economists explain, briefly and in clear terms, what is the relevance of the stock market to the Chinese economy? As long as the Chinese GDP keeps growing at the rate of 7%, who cares what happens with the useless crowd of stock exchange parasites?

    • Blindsideflanker

      To get GDP is economic growth.

      To get growth you need investment in factories.

      To get investment capital, you either go to a bank to get loans, or attract investors , which is best done in a regulated environment, i.e a stock market.

      • sidor

        A small lecture on the US economic history

        The Dow Jones Index reached again the level of 1929 only in the late 1950s.

        The US GDP has tripled within that period.

        Conclusion: the worse is the situation in the stock exchange, the better for the economy.

        • Blindsideflanker

          And the the economy didn’t recover to trend growth until the beginning of WW11.

          • sidor

            Let me repeat my earlier statement that you don’t seem to disagree with.

            1. The Dow Jones recovered the 1929 level only in the late 1950s.

            2. The US GDP within that interval of time has grown from the 19232 minimum by about factor 7:

            Conclusion: It is good for the GDP growth when Dow Jones is down. Other way around: the rapid growth of Dow Jones results in a depression. That is, if they dropped the NYSE index a couple of years before 1929, the depression could have been avoided. It looks like the Chinese government is doing exactly that. Very clever.

    • ohforheavensake

      The Chinese economy looks like it’s growing at something like 4%- which for a developing country, is the equivalent of UK GDP flatlining. The stock market crash in China is a symptom of a wider failure in the Chinese economy; they inflated a debt bubble, which looks like it’s bursting.

      • sidor

        Looks like where? Reference?

  • WarriorPrincess111111

    All the more reason not to put all one’s eggs in one financial basket! Finance has always been a very tenuous market area, a country should never rely on it for its total economy.
    If industry was more balanced throughout the westernised world this situation would not be so serious.

  • Madan Menon Thottasseri

    It is an indisputable fact that the fall in Yuan had lead to a spirited devaluation of many currencies with an aim to support their exports! The Indian industrial sectors like stell, automobile component, tyre etc that have a direct impact on Yuan devaluation while they have a large overhang of Chinese capacity in the global trade. Power and telecom sectors may have indirect impact due to a combination of increased input cost and foreign currency borrowings.

    We have to know that the exchange rate of Rupee with US dollar is the significant factor and is negatively associated with corporate profitability indicators. Naturally the banking sector will be adversely affected. Only when Rupee appreciates, corporate performance gets a boost and in the long run the impact should balance import-export elastics. We can expect increased volatility in exchange rate in all emerging market economies. This will be reflected in the bullion market as price of gold gets enhanced by currency wars.

    Now the nine percent dive of Stocks has created shock-waves around the world. Oil priced did fall to a fresh 6 ½ year low. The China driven macro panic leading to decline in crude oil would profitably enable India to improve CAD ( Current Account Deficit) so as to keep inflation under control. I wish that investors need not get panic and divest their holdings. Initiatives under ‘Make in India’ and ‘Digital India’ must help India to accelerate manufacturing activities. Rupee crash will give a marginal benefit to our exporters.

  • Cornelius Bonkers

    Should we be surprised that the CENTRAL POLITICAL PLANNING of a capitalist economy is turning into a catastrophe? China’s leaders can have no idea of the importance of the market determination of the correct PRICE of things. When Corbyn wins the labour election watch out for a similar melt down…may our gods help us…

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