The Chinese economy has been teetering on the brink of disaster seemingly forever and now respected author Gordon Chang warns it has drifted past “the point of no return” in its journey to disaster.
“The economy is essentially moribund as there is not much that can stop the ongoing slide. A contraction is certain, and a severe adjustment downward — in common parlance, a crash — looks likely,” Chang wrote for The National Interest.
“It is no coincidence that Chinese leaders are now pressuring analysts and others to brighten their forecasts and not report dour news, to show zhengnengliang — 'positive energy' — a sure indication Beijing has run out of real options,” he wrote.
“China, therefore, has passed not only an inflection point but also the point of no return. There are no longer off ramps on the road leading over the cliff,” wrote Chang, author of "The Coming Collapse of China."
China's investment, factory output and retail sales all grew more slowly than expected in April, adding to doubts about whether the world's second-largest economy is stabilizing, Reuters
Growth in factory output cooled to 6 percent in April, the National Bureau of Statistics (NBS) said on Saturday, disappointing analysts who expected it to rise 6.5 percent on an annual basis after an increase of 6.8 percent the prior month.
“China’s statisticians appear to be just making the numbers up. Even China’s own technocrats do not believe their own numbers,” Chang said.
“Fraser Howie, the coauthor of the acclaimed Red Capitalism, notes that the chief of a large European insurance company, who had just been in meetings with the People’s Bank of China, said that even the Chinese officials were joking and laughing in derision when they talked about official reports showing 6 percent growth,” Chang wrote.
Meanwhile, fixed investment by private firms continued to slow, indicating private businesses remain skeptical of economic prospects. Investment by private firms rose 5.2 percent year-on-year in January-April, down from 5.7 percent growth in the first quarter.
"It appears that all the engines suddenly lost momentum, and growth outlook has turned soft as well," Zhou Hao, economist at Commerzbank in Singapore, said in a research note.
"At the end of the day, we have acknowledge that China is still struggling."
Reuters reported on Saturday that China's banking regulator has sent an urgent notice to banks telling them to clear bottlenecks holding back lending to private firms.
In its data announcement, the statistics bureau said "because the total amount of private investment is relatively large, its continued slowdown could restrain stable growth, and requires a high degree of attention."
Meanwhile, China's property market is also of investor concern.
"Property prices and sales have risen in recent months, accompanied by a sustained advance in new construction. That occurred even though China is weighed down by unsold homes with enough square footage to fill seven Manhattan islands," The Wall Street Journal
"After engineering a credit-fueled property upturn, Beijing has started tapping the brakes amid concern that it has overshot, economists say. Among the fixes Beijing has imposed are a decrease in bank lending and more purchase restrictions on some of the hottest property markets, including Shanghai and Shenzhen. A column in the official People’s Daily recently criticized debt-fueled growth policies, warning that China faces a 'property bubble.'"
(Newsmax wire services contributed to this report).
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