2019/10/30
The following is taken from an essay by Shi Ping published in the October 24 edition of the Sankei Shimbun under a title discussing the Chinese economy’s “desperate situation with no escape.”
China’s National Bureau of Statistics announced on the 18th that gross domestic product (GDP) for the July–September quarter of 2019 had increased by 6.0% compared with the same period of the previous year, recording the lowest growth rate ever.
Of course, this “lowest” is not the actual “lowest.”
The government announced an economic growth rate of 6.6% for 2018, but according to Professor Xiang Songzuo of Renmin University of China, the actual growth rate that year was only 1.67%.
If that is the case, the actual growth rate for the July–September quarter of this year should have fallen to around 1%.
The spectacular high growth that continued for several decades is almost over.
Until now, the Chinese economy has achieved high growth by expanding exports and fixed-asset investment, despite a critically low consumption share of approximately 37%.
However, as labor costs soared amid the inflation that began in 2010, Chinese exports, which had relied on low prices as their competitive weapon, lost their competitiveness and stopped selling as well as before.
With the US–China trade war added to this, Chinese exports, which once grew by more than 25% annually, recorded a decline of no less than 3.2%.
To use a Chinese expression, the “carriage” of exports, which had pulled high growth forward, has come to a complete stop.
As for fixed-asset investment, the other “carriage,” it cannot be said to have stopped, but it has weakened considerably compared with before.
First, both private real estate investment and government-led public works have now reached saturation, so the expansion of investment has no choice but to stagnate.
Fixed-asset investment, which had grown by 25–30% annually through 2010, now has a growth rate in the 5% range and no longer has its former momentum.
Even if exports and investment decline, economic growth can be maintained if consumption increases.
Unfortunately, however, consumption, which was already weak, has cooled further since last year.
Looking at the automobile market alone, nationwide new car sales have remained below their levels a year earlier for 15 consecutive months since July of last year.
The automobile market has begun to collapse.
Since all “three carriages” that drive economic growth—the expansion of consumption, exports, and investment—have ceased to function, the economy has no way to grow.
Declining exports and investment lead directly to unemployment and falling wages, which further cool consumption, and the additional cooling of consumption brings about an even greater decline in industry.
In such a vicious circle, a further decline in the Chinese economy is inevitable.
Next year, it will likely actually experience negative growth.
The expansion of the social crisis accompanying the economic decline is even more serious.
As the gap between rich and poor widens, public discontent is also intensifying.
Among the 260 million people who make up the “floating population [migrant workers],” a further economic slowdown is increasing unemployment and further reducing already low income levels, making social unrest inevitable.
The movement of millions of migrant workers with nowhere to go—in other words, displaced people—could shake the stability of Chinese society.
Furthermore, both the Belt and Road Initiative, the international strategy promoted by China, and its strategy of military expansion aimed at dominating Asia rest entirely on the foundation of economic growth.
If this foundation collapses, the “great rejuvenation of the Chinese nation,” which the Xi Jinping regime holds up as its sole banner, will end as nothing more than a dream.
China, which has just marked the 70th anniversary of its founding on the first of this month, faces an economic and social crisis.
It may be destined to decline in the future, but I want to witness the end of this vast empire.