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In terms of economic growth, although China’s economic growth rate in 2015 has dropped to the lowest level in 25 years, only 6.9%, it is still one of the few in the big countries. The US GDP growth rate in the first three quarters of 2015 was 2.9%. 2.7%, 2.2%, less than half of China.
The data that best refutes the "Chinese economic hard landing theory" is the sustained and rapid growth of Chinese consumption. In the first three quarters of last year, US personal consumption expenditure increased by 3.3%, 3.3%, and 3.2%, respectively, reaching the highest level in years—this is regarded as the strongest argument for the “strong growth†of the US economy. The total retail sales of consumer goods in China last year was 10.7% year-on-year, and the actual growth rate after removing the price factor was still 10.6%. From the perspective of consumption growth, China is three times as big as the United States with "strong growth" in the economy; some people claim that the Chinese economy is "hard landing", which is obviously absurd.
Despite the fact that China's economic growth rate is declining and a number of overcapacity industries are under-employed, the far-reaching impact is the profound “creative destruction†that the Chinese economy is experiencing – emerging industries are booming. Last year, the added value of industrial enterprises above designated size increased by 6.1% over the previous year. The added value of high-tech industries increased by 10.2% over the previous year, 4.1 percentage points faster than the above-scale industries, and 11.8% of the above-scale industries. Last year, it increased by 1.2 percentage points. Last year, investment in the steel industry fell by 11%, investment in the coal industry fell by more than 14%, but investment in computer, electronics and communications equipment manufacturing increased by 13.3% year-on-year, and investment in pharmaceutical manufacturing grew by nearly 12%.
The alarm bell that "Soros shorts China" is not the "China output deflation theory" that he said, because this view is also inconsistent with the facts. In an interview with Bloomberg, Soros claimed that the three major sources of global deflation are China's slowdown in economic growth, falling crude oil and raw material prices, and competitive devaluation of national currencies. Now the three sources are complete. Like the "China's export inflation theory" in the bull market of the primary products in previous years, this statement is at least taken for granted, if not intentionally confused. As the world's largest importer of energy and raw materials, China is the importer of inflation and current deflation in previous years, not the exporter; on the contrary, due to the current rise in labor costs in China, China has weakened the pressure of global deflation.
In the current global deflation period, China's industrial producers' ex-factory price index and purchase price index have declined for several consecutive years, and the purchase price index is lower than the ex-factory price index. For example, the 2015 China industrial producer purchase price index fell by 6.1 year-on-year. %, the ex-factory price index fell by 5.2% year-on-year. The data shows that China is the importer of external deflationary pressures, and China has eased the pressure of global deflation.
The reason for this is that China's labor market continues to be close to full employment, and labor wages have risen, offsetting the impact of falling energy and raw material prices to some extent. This also makes the price of consumer goods in China's consumer price composition rise, which has been higher than the price increase of service for three consecutive years.
More importantly, deflation and inflation are essentially monetary phenomena. In the past few years, inflation has come from the Fed’s loose monetary policy. The current deflation stems from the Fed’s tightening of monetary policy and the PBC’s supply of global money. Although the influence of the change continues to rise, it is not at the same level as the Fed.
Then, who is Solos’ shorting China? - Not China, but other emerging market economies. In an interview, Soros claimed that the hard landing of China's economy has begun to happen, but also believes that "China can solve this problem. China has many resources and has a broader space for policy choice than most countries..."
Therefore, in his short selling and the resulting wave of speculative currency attacks, the biggest impact will not be China, but other emerging markets. In the face of such an impact, other emerging markets should deepen international monetary cooperation with China, eliminate the gap that international speculators represented by Soros can use to launch attacks, and smash this nonsense with powerful actions to promote development.
(The author is a researcher at the Research Institute of the Ministry of Commerce)
Summary "Soros short China" What storm sounded the alarm that? It is by no means what he claims to be "a hard landing of the Chinese economy has begun to happen" because this view cannot withstand the facts. From the perspective of economic growth, although China’s economic growth rate in 2015 fell to 2...
What is the alarm bell that "Soros is shorting China"? It is by no means what he claims to be "a hard landing of the Chinese economy has begun to happen" because this view cannot withstand the facts.