China's Much-Touted Economic Model Is Broken

IBD ^ | 08/15/2015

[SeekAndFind]

The horrific explosions at the industrial port city of Tianjin and China's imploding economy show the government at its worst. China's highly touted "model" is broken and faces its day of reckoning.

At last count, Wednesday's explosions in Tianjin had killed 50, including 12 firefighters. More than 500 people were hospitalized, 71 in critical condition, according to CNN. Dozens of people were missing.

The government has been heavily criticized for its response and for clamping down on information about the tragedy. But it's been doing the same with the economy for years — exaggerating its growth rate and vibrancy, and downplaying the rising signs of trouble.

Now, as it desperately devalues its currency to boost export growth, China clearly needs further market reforms — reforms that it isn't likely to make.

The devaluation, which followed trade data showing a stunning year-over-year plunge of 8.3% in July exports, wasn't the free-market fix that the government insisted it was. It was just more tinkering by a country that has routinely falsified its economic numbers.

Moreover, the public response to the Tianjin explosion and the accompanying market meltdowns suggests that average Chinese are beginning to doubt one-party rule. Even the New York Times has noticed. "The situation is shaking the aura of supremacy surrounding President Xi Jinping and the Communist Party, which has portrayed a sense of ultimate authority," it wrote. "But the Chinese government's response to the country's financial woes is creating concerns about its ability to manage a slowdown."

In fact, China has been "managing" a slowdown for half a decade by massaging its GDP numbers. Based on official data, output has "slowed" to just 7% or so. That's still a pretty decent rate. Problem is, no one believes it.

[grey_whiskers]

To quote from a comment on this thread:

What a series of events. Firemen put water on a small fire, which then reacts with calcium carbide to make acetylene, which explodes, setting off ammonium nitrate which then scatters cyanide.

I originally likened it to Obama's Middle East foreign policy, but it could apply just as well to the Obama-China economic dance of doom.

@VanShuyten, I think I'm going to end up using your quote a lot...

[COBOL2Java]

Moreover, the public response to the Tianjin explosion and the accompanying market meltdowns suggests that average Chinese are beginning to doubt one-party rule.

Welcome to the club.

[COBOL2Java]

A study by Xu Ce of China's National Development and Reform Commission found that the government made $6.8 trillion in "wasted" investment from 2009 to 2013.

Sounds vaguely familiar...

[Dr. Ursus]

They’re going to beat us to revolution that both countries need!

[Bluewater2015]

I remember all the doomsayers from the 1980s telling us how Japan was going to conquer the world economically; it was the wave of the future, yadda yadda. Then the bubble burst, and it never really reflated. Now the doomsayers are saying the same thing about China. Stay tuned for a loud pop when that bubble bursts. Parasitic economies that rely on outside exports for their survival run a good sprint, but don’t do well in marathons.

[central_va]

Free Traitors™ are deeply saddened.

[1rudeboy]

Yeah, just imagine. If only we had placed a tariff on bananas from Chile this never would’ve happened. Our central planners are better than their Chinese counterparts. Or so the protectionists say.

[central_va]

Yeah, just imagine. If only we had placed a tariff on bananas from Chile this never would’ve happened. Our central planners are better than their Chinese counterparts. Or so the protectionists say.

Figures Free Traitors™ can distinguish between agriculture and manufacturing, manufacturing wholesaled and shipped off to a Communist Country.

[1rudeboy]

Of course, but can you distinguish between central planners? LOL

[central_va]

Central planners = All patriotic founding fathers.

[Lorianne]

What economic model?

Building humongous ghost cities for millions of people on spec?
That’s some real smart ‘economic model’ right there.
I don’t know why we didn’t think of it first.

[1rudeboy]

We’re hijacking this thread, but how many of the Founding Fathers were in favor of tariffs in order to “save jobs?” Can you name one?

[Moonman62]

Moreover, the public response to the Tianjin explosion and the accompanying market meltdowns suggests that average Chinese are beginning to doubt one-party rule.

...

Many of us in America don’t like our de facto one party rule here either.

[central_va]

The superiority antecedently enjoyed by nations who have preoccupied and perfected a branch of industry, constitutes a more formidable obstacle than either of those which have been mentioned, to the introduction of the same branch into a country in which it did not before exist. To maintain, between the recent establishments of one country, and the long-matured establishments of another country, a competition upon equal terms, both as to quality and price, is, in most cases, impracticable. The disparity, in the one, or in the other, or in both, must necessarily be so considerable, as to forbid a successful rivalship, without the extraordinary aid and protection of government.

--A. Hamilton

Read more:

America Was Founded as a Protectionist Nation

[1rudeboy]

Thanks for making my point. Not a mention of “saving jobs.”

[central_va]

The founders wanted to develop industry and jobs.

Look everyone knows the USA started with no income taxes and tariffs. You like income taxers and no tariffs, then again you are a progressive Free Traitor™ so it doesn't surprise me. You are no conservative that is for sure.

[1rudeboy]

Hamilton primarily advanced the "infant industry" argument, namely, that developing industries need to be protected from their foreign counterparts (and it's true). In the case of an infant industry, he understood that the tariffs should be lifted at some point. You don't see modern protectionists making that argument at all . . . to them, it's about "saving jobs."

For that matter, Solyndra was an "infant industry." How well did that work out for us?

[zeestephen]

Re: “The public response to the Tianjin explosion and the accompanying market meltdowns suggests that average Chinese are beginning to doubt one-party rule.”

Yes.

They want to replace it with the highly successful American model.

Two-party rule, where both parties agree on everything.