Some interesting facts issued forth this past week – I use the word, “facts”, deliberately and advisedly as so much of what we read/hear today only loosely fits that classification (if at all). I am addressing not only the issue of fake news, however defined, but also the deliberate slanting of the raw data used to generate the so-named facts. In the preceding issue of Global Gab, I referred to the conclusion espoused by “economists at the Institute for China’s Economic Practice and Thinking” (located at Tsinghua University) which predicted that, “the (Chinese) economy will stabilize and grow by 6.3 percent this year”….no mention was made of who the economists were, what data was used, what formulae were applied – just the conclusion that they would reach half-way between the lowest and the highest projections for the year. Wow, talk about coincidence.
This projection was reported on June 24th/19 in the Global Times and the Global Gab issue to which I refer was dated June 30th/19 – on July 1st, ie. one week after the report was publicized by the Chinese Government in their Global Times (which is 100% owned and operated by the Chinese Government), South China Morning Post reported that the Caixin/Markit Purchasing Managers Manufacturing Index fell to 49.4 in June, from 50.2 in May (of note, this is the lowest percentage since January of 2019, which followed The Donald’s first major imposition of tariffs). Following that up, Bloomberg reported on July 5th/19 that industrial orders in Germany had fallen 2.2% – of more concern, they had been expected to only drop 0.1%. Bloomberg today, July 7th/19, reported that the 224,000 new jobs reported is not as good a figure as it seems, as they estimate that at least 500,000 people have dropped out of the workforce altogether. And I will add that this doesn’t count how many people are working, but unproductively/inefficiently/ineffectually eg: a college degree-certified librarian pumping gas. Bloomberg also reported that the ISM index dropped for the 3rd straight month and that the measure of new orders is exactly at 50 ie. the dividing line between growth and contraction. And, on the same day, they also reported that Europe’s PMI was at its lowest level since 2013. But we have been assured that China’s economy will grow 6.3% with them having access to all this data beforehand – imagine what it could have been!
So someone who looked only at the above-mentioned report regarding the predicted movement of the Chinese economy or at the latest jobs report of the US economy would be quite at ease with the presumed direction of both – until other real hard undisputed facts are introduced into the mix. I, for one, would not want to own an interest in a barber shop these days as people will soon be tearing their hair out by the roots. I am making light of the matter but it isn’t funny at all.
And the people running the country in China, even as the citizens become more informed through officially forbidden sources such as VPN’s, seem to be increasingly relying on giving news as positive as possible, even to the point of ridiculousness. Until recently it was accepted worldwide, in the absence of any other information, that the deaths of pigs in China from the African swine flu epidemic as officially reported by the Chinese Government was accurate at approximately 30% (which in and of itself is a staggering figure and represents the entire yearly production of hogs in the USA). After all, no one would expect anyone to lie about such a thing – what would be the point? Sometimes I think that officials just lie because that’s all they know how to do – the real figure, based on data that has just come out from numerous sources, is that the death rate is closer to 50% ie. it was deliberately under-reported by roughly 65%! And this isn’t a question of misleading the educated travelled computer-savvy people…..the people who handle the pigs, who shovel the crap, who have to burn/bury/dispose of the corpses know the truth and are talking. How does hiding the truth serve anyone’s interests? In the Great Famine of just 60 years ago, the Mao Government could (and did) keep things quiet because people could not communicate and people could not go from one area to another – the times are different but the people responsible for the People’s Welfare are abrogating their responsibilities. I shudder to think of their response if SARS or another similar pandemic hits.
In the meantime, China’s economy is struggling and the Government’s efforts seem to be more and more of the one-trick pony variety – easing the rules on lending and thereby pumping up the real estate market. Every Chinese bank is over-exposed to real estate, either through loans to builders or due to mortgages, or both. Remember, almost all builders are either State-Owned Enterprises or might as well be given their cosy relationships with various government agencies – you cannot be a builder or any magnitude in China without these relationships. And, if you are a builder, you run the risk of being found on the wrong side of an equation and being jailed (as just happened to Wang Zhenhua of Future Land) – and what I would love to know is who sold those shares short in the few days before he was picked up.
The fact that what goes up must come down hasn’t yet makes all these officials think that they have invented a new economic theorem, that the Chinese economy is different from any that of any other country in any other period in history. One might say that their version of MMT (Modern Monetary Theory) is it – until it just isn’t. And, when it falls, it’s going to be fast and hard and disastrous….and it’s coming.
Some words of advice – since the onset of The Donald’s ongoing trade disputes with China, Canada, Mexico, and just about everyone else of consequence worldwide (wasn’t it Donald who said that, “trade wars are easy to win”?), many Chinese companies have been scrambling for ways around the tariffs….and, given past predilection, they do what comes seemingly naturally, they cheat. Shipping companies, forwarding companies, agents, manufacturers – some suggest that they will mark the products as coming from Vietnam, India or wherever. DO NOT LISTEN AND DO NOT FOLLOW THEIR ADVICE (sic). All they know is that they want your business and will say and promise anything to get it – and then, when it goes sour, and it most definitely will, they will say, “sorry” (that is, if you can get any answer at all). Customs & Excise USA is very capable and very savvy and they know very well who is producing what and, between computer records and on-site inspections, they can get to the bottom of anything in a hurry. Anyone playing this game is looking at a guaranteed world of hurt. And every client of any Chinese company so caught will be hauled over the grill. If someone suggests that they can ‘help’ (sic) you in such a manner, get far away as fast as you can.
The Donald is accusing China and The Euro Bloc of engaging in currency manipulation – gee, is that a thing? Who knew? He conveniently overlooks the fact that the US has been quietly and consistently devaluing its currency for the last 30+ years, but since when has Donald let the real facts get in the way of making an accusation? The problem is that China now has his number. When he originally forced the closure of ZTE, they were totally taken aback and were ready to agree to just about anything – but you’ll notice the change in language from then to now. Now China is making demands – lay off Huawei, cancel all the new tariffs etc. & etc.. Donald didn’t make the arrangement at the time of ZTE because it was too quick, too easy, and, most importantly, too soon. He needed something closer to the next election, when he could parlay a perceived victory over China into a victory at the polls. But China has now figured him out and they are going to run him ragged – if he doesn’t give in, they’ll simply take their economic lumps for the next 2 years and guarantee that he won’t be around for another term as the US economy will be in the dumpster along with theirs. Donald’s idea of long-term strategy is 15 minutes from now – he is outmanoeuvered and outclassed by masters of the game who play for their own ends and long-term and effectively have to directly answer to no one.
SCMP reported on July 3rd/19 that 100 prominent academics and policy advisers signed an open letter to Donald Trump stating that, “they are deeply concerned about the growing deterioration of ties between the two countries (to wit, USA and China)” – like Donald is even going to read it, right? He not only seems to have the attention span of a brain-addled gnat but he just doesn’t care. He has said more than once that the only view that he cares about is his and he has made that abundantly clear time and time again that he knows more than anyone else when it comes to the military, the economy, the clandestine services, the ______ (anything and everything – you can fill in the blank). Joseph Nye, on July 3rd/19, published a piece for The Project Syndicate in which he concludes that DT’s “wrecking ball approach…will prove costly for America’s national security, prosperity, and way of life”. I wish that I could find fault with his analysis but it, if anything, is understated. Trump has picked a fight with every major ally – why would anyone stand with him knowing that he could and will turn on a whim?
Enough about Donald – it seems that Elisabeth May is leaving her own time bomb for her successor, sort of like a going-away present with a bang at the end. She let the Beijing Government have it both barrels about their heavy-handedness in Hong Kong and reminded them about their ‘commitments’ (sic) to the point that Beijing called in the UK ambassador. Of course this affair is not going away overnight and her successor is going to be stuck dealing with an undeniably sticky wicket, what! Should be interesting.