"The Great China GDP Swindle"

let's

begin China wants growth it wants more

and more of it the linear type that you

plug into your state calculator at the

start of the year and hey Bingo

5% prior to 2008 and the great financial

crisis it was good ship Source from

growing it trade suffer with the rest of

the

world and thrown in with some ample

productive

Investments but since then oneir has

come from funding negative Net Present

Value projects what does that mean

projects that will never make on

discounted cash flow basis they will

never recoup the initial

cost I'm thinking an ocean of empty

Apartments

the great Chinese minds are

confused this is not

confucious the unproductive Investments

were fantastic at boosting

Prestige and

GDP but they saddled the Chinese

Communist party with Oodles of

debt and they're United against

that they find them self trapped by

feser's law of intensity that in order

for GDP to increase in arithmetical

linear

progression the stimulus the state

stimulus it needs a geometric

expansion that's China's GDP model it

requires a geometric intensity of credit

growth

that threatens the

continuity of the Chinese Communist

Party the problem is they still need

that linear

growth but what to

do real estate has

gone if this was PP fiction we would say

Z dead baby

real estate was at least 15% of their

economic recipe

arguably I think it was much

more infrastructure of course still

moves the needle but it also pushes up

debt why because again the discounted

value of all of the economic

benefits will most likely never recoup

the initi isal

cost this form of geometric credit

stimulus is not

good H our

munian candidate

Ponders just what would confucious

recommend of course find other

productive sources of investment duh is

easy brilliant love

it but those areas

those areas where are those other areas

investment let me tell you if they exist

they aren't starved for Capital

funding and they're not big enough to

cover the 33%

whole in your Chinese GDP

calculator

damn okay don't panic let's keep it

simple more trade sulac

come on that always

works except this is

2022 and not

1992 pina's trade suppl is on track to

match historic records of 7 to 8% of

GDP and it's already greater than 1% of

the GDP of the entirety of the rest of

the

world in short it's already way too big

to be thinking of a geometric intensity

of

growth damn I hear our confucious

brothers

say the great at Michael Pettis

estimates the Chinese

trade would need to expand by 3% of

Chinese GDP each and every

year I know you're loose I know you can

perform flow in your mind but can you

see round

corners do you think China's trade suus

in the year

2025 will reach 15% of

GDP I'm going to tell you straight

is not going to

happen damn I hear the Chinese Communist

body say what's

left okay don't panic let's boost

consumption share of

GDP it's ridiculously low it sits it

resides at

40% of

[Music]

GDP problem

is he pushed and pulled and pursued this

idea for the last 15

years so how's that

going well they managed to be

spanding by a few percentage points of

GDP over that period whereas they need

that every single

year hold on hold on hold on hold

on what's the problem

here problem is our Chinese citizens get

hammered by the state their

take-home share of what they earn is way

below International standards okay okay

I hear I hear you say raise it that's

the

problem for the state to

succeed the state must

shrink or a steain bike would see

this is a monster that only understands

expansion that if the monster stops

growing it

dies de for consumption to rise to

comparable levels with the rest of the

world the Chinese Communist Party would

need to eliminate the powerful local

government

sector presuming it doesn't want Chinese

death to rise fur Vis the size of this

economy and I would say good luck with

that but maybe that's why they pricked

the real estate

bubble smoked the local bureaucrats out

of their stazzy bunkers humble them

bring them down a peg or two all hail

the

center

maybe either way at least a third of

their decelerating GDP growth was

historically derived from unproductive

Investments I don't think anyone would

challenge that

assession there isn't an obviously large

pool of productive investors to be found

and to be financed to provide a

Panacea and the tread suplus with the

rest of the world is at such gargantuan

levels that most likely it's

peaked and productive Investments well

productive Investments are well funded

by the private sector and anyway they're

too small to fill GDP

deficit the

deficit of the linear

calculator the deficit in the desire for

linear growth and what more

consumption consumption makes

sense but it needs the statist state to

shrink sludging L they trudged through

sludge comes to

mind okay holy crap I can hear Z shout

where is that confidential foldom Mar

Dooms Day

planning

Taiwan come on you cannot be serious