I am enjoying some down time in the States but still bouncing around doing some work so over the summer, I may not update the blog as much. Baseball games, fireworks, New York City, and middle America are all on the docket for me this summer.
I wanted to write some follow up notes to my BloombergViews piece on left behind children in China. As usual, start there and come here for follow up.
- So often, people that study China, outside observers, and even those of us that live and work there think of China as a developed country. However, and I do not mean this in a critical way, it is not and we too often forget that. Lost amidst the new airports and high speed rail is the fact that nearly half of the population is still only slightly above subsistence farming. Again, I do not mean that as a critique as China has made enormous strides over the past few decades, but as a recognition of fact.
- I’ve gotten a couple of emails asking why I’m picking on China and let’s assume that I am, I don’t think I am but let’s assume that I am, issues like left behind children are a long run inhibitor to Chinese economic development. This cognitive and mental problems impact nearly 1/3 of Chinese children. The gap between rural and urban children is enormous and will impact the ability of China to meet its long term economic objectives. I may be critical of China but it needs to solve these problems to become an advanced economy.
- What astounds me is that this is essentially driven by a government policy that almost requires splitting up families. I find this a personally abhorrent policy. What government creates and accepts a policy that encourages families to be divided?
- Even beyond the left behind children, the status of rural vs. urban children is amazingly different. These are major issues for China.
Some Random Thoughts for China:
- July data is very weak.
- Credit is practically the only driver of the Chinese economy.
- GDP data remains incredibly suspect.
- FX data is incredibly difficult to reconcile.
- Worrying that credit explosion having so little impact on real economic activity.
- Decline in exports and imports is not just related to low global demand and anyone who says so is lying.
- Corporate revenue in Chinese industry is bad in 2016.
- Retail numbers are bogus.
I’m working on a more detailed piece about Q2 GDP which I hope to release next week. It’s coming.
For now, I’m off to start drinking some good old American craft beer.