The (Ongoing) Myth Of Stable China

There are those who believe that the Chinese economy has stabilized, as if that was a good thing. Many of these people, mostly economists, said and declared much the same after 2012. That China’s economy might be in 2016 merely as bad as it was in 2015 is a highly negative development, one which requires standards for economic judgment to be still further reduced, starting with “stimulus.”

The latest data from across the Pacific shows that nothing has changed, save one factor. Industrial Production grew by just 6.1% in September, down slightly but not really from the 6.3% in August. IP has been at or below 6.3% in all but two of the 19 months dating back to last March. Both of those were temporary jumps to 6.8% that after each found economists trumpeting the value of “stimulus”, especially the second this past March. It was not the expectation that these programs would “stabilize” Chinese growth but rather that stimulus would do what it is supposed to do, meaning restoring acceleration toward a Chinese economy more recognizable to its past miracle that would aid the ailing, flagging global system. To declare stability now is to admit defeat.

And it is not the first one. This has become a very regular pattern where if lost in the morass of traditional, orthodox perspective the changes in the Chinese economy are obscured along these very lines. In tandem with this supposedly “stabilizing” economy is the Chinese “rebalancing”; where industrial growth predicated on exports was once the driving force of the Chinese “miracle” it shall gently fade in favor of a more modern and benign economy driven as in the West by consumers. This claim first gained serious traction, as excuses always do, the first time the “unexpected” weakness hit.

In the years immediately following the Great “Recession”, the Chinese economy seemed to find the same footing it had held all during the later 1990’s and 2000’s. It looked like a recovery in the truest sense of the word, where the idea of rebalancing was ridiculous but from the other end (not needed). It was only when the global economy suddenly and unexpectedly (to economists) fell off after 2011 that Chinese consumers gained any notice.