Lately, a variety of economic statistics out of China have cast doubt upon this. Electricity production is down. Exports are down. Even the government is having problems:
February 17 – China Knowledge: “China saw its fiscal revenue fall 17.1% year on year to RMB 613.16 billion (US$89.72 billion) in January, according to…the Chinese Ministry of Finance…”.
17%? That does not happen in a growing economy.
Similar and worse statistics are emanating from all over Asia and environs, as reported by "Credit Bubble Bulletin":
February 16 – UPI: “Japan’s economy shrank in the fourth quarter at the worst annual rate since the first quarter of 1974, government officials said. The Japanese economy, the second-largest in the world, was particularly hard hit by plummeting exports and a downturn in domestic consumer spending… The real gross domestic product declined at an annual rate of 12.7% from October to December…”
February 16 – Bloomberg (Tom Kohn): “The cost of protecting Japanese corporate bonds from default rose to a record after the economy shrank the most since the 1974 oil shock last quarter.”
February 16 – Bloomberg (Michio Nakayama and Shigeru Sato): “Japan’s electricity generation dropped for a sixth straight month in January, falling 6.4% from a year earlier as factories and businesses cut production because of the deepening recession.”
February 18 – Bloomberg (Janet Ong and Yu-huay Sun): “Taiwan’s economy shrank at the fastest pace on record last quarter… Gross domestic product fell 8.36% from a year earlier…”
February 18 – Bloomberg (Janet Ong and Yu-huay Sun): “Taiwan’s central bank cut interest rates to a record low... Governor Perng Fai-nan and his board pared the discount rate on 10-day loans to banks to 1.25% from 1.5%...”
February 16 – Bloomberg (Seyoon Kim and William Sim): “South Korea faces a ‘deeper and longer’ recession than during the 1997-1998 Asian financial crisis as the global slump pummels exports and indebted consumers and companies cut spending, Nomura Holdings Inc. said. ‘The biggest difference this time around is the country’s exports won’t provide a cushion for a drop in local demand,’ Nomura’s… Kwon Young Sun said.”
February 16 – Bloomberg (Sangim Han and Kim Kyoungwha): “South Korea failed to meet its target at an auction of 10-year bonds for a second consecutive month on concern that the nation will increase debt sales to fund stimulus spending.”
February 17 – Bloomberg (Shamim Adam): “Singapore’s exports fell the most in at least 22 years in January… Non-oil domestic exports dropped 34.8% from a year earlier, after contracting 20.8% in December…”
Back to China. Numbers are only numbers. However, please click on and read the following report from a man who claims to be on the ground in China, as reported by Mish in "Inside China". Here is a sample of this man's report:
I've been to China a lot Mish, spent many months at a time there for the last eight years. China is already in a massive overcapacity real estate bubble. They are building three apartments for everyone that is lived in. Most apartments are empty and those that are rented do not come close to paying the interest on the loan.
There are huge department stores with products loaded on the shelves and staff everywhere and no one is shopping! Staff outnumbers customers five to one. It's surreal. They are ready, waiting for a great wave of shopping to come, but no wave is coming.
Eventually this "borrow and build" economy will be a pop heard round the world. China runs on construction, build build build, but there is no reason for that many places and spaces and big mall businesses with no consumers.
Is it possible that the corruption and overbuilding were worse in China than in the U.S. and U.K.?
If so, the implications would be horrible for China but perversely could be good for us, as the Chinese would then be forced to stop building/over-building roads and other infrastructure, and could then keep buying our debt at expensive prices (low interest rates).
Another wrinkle in a wild and crazy time.
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