{"id":13232,"date":"2015-10-10T16:44:25","date_gmt":"2015-10-10T21:44:25","guid":{"rendered":"http:\/\/olduvai.ca\/?p=13232"},"modified":"2015-10-10T16:44:25","modified_gmt":"2015-10-10T21:44:25","slug":"the-reality-behind-the-numbers-in-chinas-boom-bust-economy","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=13232","title":{"rendered":"The Reality Behind the Numbers in China\u2019s Boom-Bust Economy"},"content":{"rendered":"

The Reality Behind the Numbers in China\u2019s Boom-Bust Economy<\/a><\/h3>\n

Last year, the world was stunned by an\u00a0IMF report<\/a>\u00a0which found the Chinese economy larger and more productive than that of the United States, both in terms of raw GDP and purchasing power parity (PPP). The Chinese people created more goods and had more purchasing power with which to obtain them \u2014 a classic sign of prosperity. At the same time, the Shanghai Stock Exchange Composite more than doubled in value since October of 2014. This explosion in growth was accompanied by a post-recession construction boom that rivals anything the world has ever seen. In fact, in the three years from 2011 \u2013 2013, the Chinese economy consumed\u00a0more cement<\/a>\u00a0than the United States had in the entire twentieth century. Across the political spectrum, the narrative for the last fifteen years has been that of a rising Chinese hyperpower to rival American economic and cultural influence around the globe. China\u2019s state-led \u201cred capitalism\u201d was a model to be admired and even emulated.<\/p>\n

Yet, here we sit in 2015 watching the Chinese stock market fall apart despite the Chinese central bank\u2019s desperate efforts to create liquidity through government-backed loans and bonds. Since mid-June, Chinese equities have fallen by more\u00a0than 30 percent<\/a>\u00a0despite massive state purchases of small and mid-sized company shares by China\u2019s Security Finance Corporation.<\/p>\n

But this series of events should have surprised nobody. China\u2019s colossal stock market boom was not the result of any increase in the real value or productivity of the underlying assets. Rather, the boom was fueled primarily by a\u00a0cascade of debt pouring<\/a>\u00a0out of the Chinese central bank.<\/p>\n

China\u2019s Real Estate Bubble<\/h4>\n

Like the soaring Chinese stock exchange, the unprecedented construction boom was financed largely by\u00a0artificially cheap credit<\/a>\u00a0offered by\u00a0the Chinese central bank<\/a>. New apartment buildings, roads, suburbs, irrigation and sewage systems, parks, and commercial centers were built not by private creditors and entrepreneurs marshaling limited resources in order to satisfy consumer demands. They were built by a cozy network of central bank officials, politicians, and well-connected private corporations.<\/p>\n

– See more at: http:\/\/www.cobdencentre.org\/2015\/10\/the-reality-behind-the-numbers-in-chinas-boom-bust-economy\/#sthash.fAtXnwDy.dpuf<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

The Reality Behind the Numbers in China\u2019s Boom-Bust Economy Last year, the world was stunned by an\u00a0IMF report\u00a0which found the Chinese economy larger and more productive than that of the United States, both in terms of raw GDP and purchasing power parity (PPP). The Chinese people created more goods and had more purchasing power with […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[6276,130,7380,9456,2902,7012,827],"class_list":["post-13232","post","type-post","status-publish","format-standard","hentry","category-economics","tag-boom-bust","tag-china","tag-cobden-centre","tag-gap","tag-real-estate-bubble","tag-shanghai-stock-exchange","tag-united-states"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13232","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13232"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13232\/revisions"}],"predecessor-version":[{"id":13233,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13232\/revisions\/13233"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13232"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13232"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13232"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}