Neo-con nonsense on China's economy

By John Ross
0 Comment(s)Print E-mail, July 29, 2015
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The Chinese economy grew by 7 percent in the first half of this year. When comparable American GDP figures are published later this week, it will be seen that China's economy is growing twice as fast as the U.S. Yet, despite this obvious reality, a strange campaign is underway in sections of the international media declaring China's economy is in "deep crisis." We need to understand the reasons for this distortion.

First, to avoid misrepresentation, it should be clarified that leading international analysts are presenting factual studies of China's economy. For example, in the Financial Times, Goldman Sachs' former chief economist Gavin Davies, a leading analyst of the global economy, noted an increase in China's growth since the first quarter. Using the Fulcrum "nowcast" model -- a method of predicting current GDP based on correlations of various current data -- Davies noted: "Chinese activity has risen to 7.9 percent from the low point of 5 percent earlier in the year. This rebound has followed… a major shift toward reflation in macroeconomic policy in the second half of April."

Similarly, Ian Bremmer, president of Eurasia Group, America's best known political-risk consultancy, wrote an analysis for Time magazine with the self-explanatory title "No, China Is Not in an Economic Meltdown." Regarding international discussion of China's share market, he declared: "China's government has tools it can use to protect the market that Washington doesn't have."

But despite these statements, certain media sources have launched a concentrated campaign claiming China is in deep crisis. Bloomberg, in particular, has played a key role in promoting a claim that events on China's share markets threatened the stability of the entire world economy. The character of these stories is clear from their headlines, for example, "If China Isn't a Global Risk, What Is?" and "The Chinese Stock Meltdown That Makes the Greece Saga Look Trivial." Bloomberg highlighted claims by U.S. hedge fund manager Paul Singer that China faced a situation "way bigger than subprime [mortgages]" -- the financial meltdown leading to the 2008 international financial crisis.

The Wall Street Journal (WSJ) carried similar articles with headlines such as "China's Stock Plunge Is Scarier Than Greece."

Factually, such claims are pure nonsense. The argument China faces economic problems comparable to Greece is ridiculous. The latter is a country in which every bank was closed for weeks! No evidence was presented, nor could be presented, that China faced a financial crisis comparable to the U.S. 2008 subprime crash -- which virtually bankrupted the entire U.S. financial system and plunged the world into recession. Recent events on China's shares market do not even remotely approach in scale such seismic financial events as Greece, let alone the US sub-prime mortgage crisis. As already noted, China's economy is growing more than twice as fast as the U.S. So, facing these objective facts, why are such entirely inaccurate stories appearing?

The answer can be found by examining their editorial lines. Bloomberg and the WSJ strongly support Prime Minister Shinzo Abe's policy to remilitarize Japan and confront China -- a Bloomberg editorial declaring "Japan Is Right to Ramp Up Its Military" and one in the WSJ declaring "Full marks to President Obama for removing any ambiguity about whether the U.S. is treaty-bound to defend Japan's Senkaku Islands [Japan's name for the Diaoyu Islands]."

Bloomberg criticized the U.S. nuclear deal with Iran, with an editorial entitled "Obama's Unsatisfying Answer on Iran," while a similar WSJ editorial was headlined "The Iranian Inspections Mirage." Bloomberg and the WSJ seemingly are following a "neo-con" agenda.

The WSJ also specializes in articles regarding a supposed "Coming Collapse of China" -- to cite the title of Gordon Chang's 2001 book typifying the genre. In one analysis in the WSJ this year: "Washington should start paying attention if it wishes to avoid being surprised by political earthquakes in the world's second-largest economy." A recent lengthy WSJ essay was headlined "The Coming Chinese Crack-up." Yet, repeated predictions of China's "collapse" have failed to materialize over the decades in which they have been put forward.

For businesses, understanding this reality is crucial. It is impossible to cheat large scale economic processes. Businesses acting on such internationally inaccurate information lose large sums of money or give openings to competitors. George Soros lost a billion dollars because he was misled into supporting pro-Western groups during Russia's privatizations. Some Western construction equipment manufacturers left China's market to their rivals for years because they were advised for political reasons to prioritize India instead. More generally, readers should understand that Bloomberg and WSJ are not following standards of objective journalism but a game of carrying out a political attack on China in the form of factually ludicrous economic articles.

The writer is a columnist with For more information please visit:

Opinion articles reflect the views of their authors, not necessarily those of

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