On worrying about China

Today, in February 2016, government employees are safe, and there is no threat of social disorder. Although the housing market has cooled, this is the result of deliberate government policy. Further, too many apartments have been built – Chinese people prefer to invest in hard assets – and getting credit today is much more difficult than it used to be (the negative side to the stimulus).

Nevertheless, restaurants are busy, consumers are spending, and the mood on the street seems to be OK.

A word of caution, though.

Last night I had dinner with friends at a local hot-pot restaurant near my home in Jiangbei District. It's a humble place catering to the laobaixing(ordinary people) who keep the economy ticking over at ground level.

Zhou Ming is a salesman for a company which imports mining machinery from Germany. It also manufactures products for export.

He lost his job last week. And last month, a friend of his who works in the local coal industry also lost his job.

Both are upset, not so much at being laid off (believe it or not), but by the lies their employers have been telling. Both companies have been hiding their losses, and providing false statistics to local government overlords.

We can presume then, that these government officials will also be padding their stats to their masters. The system they belong to encourages this type of dishonesty. In fact, it's a traditional survival skill.

When a country has a five-year plan specifying production targets, nobody wants to admit failure. China is a scapegoat society, and failure is always punished.

So, you can see where I'm heading with this. China has been here before. Most notoriously, during Chairman Mao's disastrous Great Leap Forward.

During that time, and as a direct result of doctrinaire policies, crop yields fell disastrously. However, because of the fear of political retribution, leaders at each level in the hierarchy lied about agricultural production – all the way up to the top.

The result of these self-serving distortions was that Beijing had no idea how bad the economy really was at that time. Famine followed. Tens of millions died.