Commentary: Talking Down to Chinese Economy is Groundless

File photo: Night view of Beijing

Billionaire investor George Soros said at the recent World Economic Forum in Davos that China’s economy is heading for a hard landing, a slump that will exacerbate the global deflationary pressures. His talking down to the China’s market has led to widespread concerns and heated discussions. In fact, what Soros said was nothing new from any of the previous predictions claiming that China’s economy is about to “collapse”. Only this time it becomes more baffling with the seemingly professional terms such as “hard landing”, “deflation”, and “debt burden”.

How realistic was Soros’ remark? In fact, if one gets into the lives of the locals in China, one can hardly find any sign of depression or so-called “collapse”. For example, the number of Chinese outbound tourists reached 120 million last year. And Chinese consumers can be seen everywhere in duty-free stores. Meanwhile, there is this Singles’ Day, a Chinese e-commerce holiday that falls on November 11 annually – merely on this day alone last year we saw three times the purchases spent by all U.S. online shoppers on both Black Friday and Cyber Monday together. For the United States, in the contrast, one out of eight families lived on food stamps and over 120 thousand families filed for bankruptcy every month after the financial crisis. It is obvious that, even without any professional analysis, these simple and concrete observations are saying that the landscape of Chinese economy is prosperous.

“A hard landing is practically unavoidable,” said Soros on Chinese economy. Similar predictions of such could be traced back to the 1997 Asian financial crisis. We know that history has annulled such predictions. China’s economic scale is ten times larger than what it was 20 years ago, with per capita income increased by 4 times. The era has changed. If China could manage the “soft landing” in the 1990s, then with the current inventories that China processes - the abundance of material resources, the more sophisticated the market system is, and more fruitful results of reform – the country surely will not let the economy fall.

Mao Zedong once wrote: “It is important to view things from a long-term perspective.” China has a population of 1.37 billion, among which 900 million are working labors. Besides, China has 70 million market entities. With all these as the backdrop, Chinese economy is in good shape despite some ups and downs. The nation’s vast potential and its great resilience have made rooms for a healthy and sustainable development. It is true that certain data might not seem promising, or that a few enterprises did undergo difficulties. Nevertheless, these are not sufficient indication of a long-term economic decline. It is nothing but a temporary pain from the reforms. We are at an essential stage that to undergo a more advanced economic form becomes inevitable and necessary. There is no need to worry excessively.

No valid economic analysis could be achieved if one can't see the forest for the trees. A closer look would find that those who held a theory of a bearish Chinese economy are merely based on uncorroborated evidence, or even erroneous data. With regard to the saying of capital outflows, China’s foreign investment in 2015 was in fact six percent more on a year on year basis, a rate within the top three of the world. Meanwhile, with regard to the saying of fall of export, China’s CPI in 2015 has been retained on a moderate level. The fall on export figures has little or no impact. Then, it is the saying that China's overall debt-to-GDP ratio has reached 300 percent. This is totally fabricated and nonsense. The fluctuation in the Chinese stock market is to a great extent due to immature security regulation system and immature investors. It cannot reflect how well the economy is doing. As for the rates of Chinese Yuan, it is totally kept within a rational range. If someone uses such uncorroborated or erroneous evidence as guidance to their investment, then the so-called “financial tycoons” will lose everything in the game.

Facts alone are eloquent enough. After entering a new norm, the outlook of Chinese economy remains promising, and it is still a powerful engine to fuel up the economic recovery of the world. The added value of hi-tech industry grew 10.2 percent last year, whereas the energy per unit of GDP decreased by 5.6 percent. There is an average of 12,000 new enterprises registered every day in China. All these achievements did not come easily; they are earned by the hard work of Chinese people. More importantly, as Chinese people are getting wealthier, they are paying more attention to culture, education, medication, and life insurance. The elevation of such demands will broaden up the economic transactions. Currently, China is dedicating itself to a new “supply-side structural reform”, which aims to improve productivity and realize human-centered development. Just look at the demands from Chinese consumers – the Japanese toilet seats that Chinese shoppers are crazy about; the tiny roller ball on the tip of a ballpoint pen that still needs to be imported to China; the rising senior care market; the astonishingly growing box office, and the huge potential in the online education market – all of these are proving that China is upgrading itself to a consumption structure, and it has great potential in the demands from consumers that are eagerly waiting to be discovered and fulfilled. The “supply-side structural reform” today is catered for such demands, and will help promote Chinese economy to a whole new stage.

There is a “famous saying” from Soros: “Economic history is a never-ending series of episodes based on falsehoods and lies, not truths. It represents the path to big money. The object is to recognize the trend whose premise is false, ride that trend and step off before it is discredited”. Now, a bunch of people with this or that unspeakable purposes began to fabricate such “episodes of falsehood and lies”. The truth speaks for itself. China is the locomotive in the world economic growth train, whether they like it or not. As Chinese President Xi Jinping once said, China will always be a contributor to the global development. “You can take a ride on our express train or just make a hitchhike, all are welcome.”