As Global Perspectives has been reporting for two years now, the Chinese economy is in trouble, despite efforts by Chinese leaders to hide their recession. China has relied upon export growth targeted at 10 to 11% to pull it out of recession but July figures just released showed export growth at a disappointing 1%.
The sagging economy of European nations and lower demand in the USA have lowered demand for Chinese products. China has been fighting a recession that it will not admit and it is far deeper than Chinese leaders will acknowledge.
Inside China, bank loans have declined, construction has crashed, real estate values gone down causing massive failures. There are pockets of failure and tragedy in the Chinese economy.
China has responded with their old tool of allowing their currency to decline in value vs the US dollar. This tactic violates agreements and understandings between the West and China and is sure to increase tensions between the US and China.
Global Perpectives has said it before and we restate it today. China is in an economic war with the West, represented by the USA. This is a war of economic domination and leadership. It is a war that China has pursued for decades, through patent violation, exploitation of cheap labor, manufacturing of substandard and often dangerous products, dumping, price manupulation, and behind the scenes governemnt manipulation of international commerce and markets.
"Chinese made" has become synonymous with "knock offs". The government agencies of China which regulate patent disputes and illegal copies of American and Western goods is a joke by any standard. The court system of China offers little justice and is dominated by political hacks. Behind a veil of smiles and courtly banquets and toasts is a dark side of base corruption that violates even the ethics of Communism. China has lacked the will to root out this corruption. This is the Achilles heel of the nation.
This inability impacts everything...even economic policies that drive the nation into further recession. The Chinese people are a good people, family oriented and steeped in a culture of character, ethics and morality that precede the leadership of the last 70 years. In those traditional ethics and values we see hope for the nation. That hope is based upon a wish that someday the people of China will enjoy leadership that reflects traditional values of China. Those teachings and values from centuries past that offered some moral compass.
Chinese leadership has refused to accept the other side of the coin in economic development which includes a matter of philosophical ethics. China must fulfill demands for upgrading standards of consumer safety, environmental responsibility, and simple ethics in business relationships. "Made in China" is a message that the goods are cheap, sometimes dangerous, and created by the hands of workers who have few rights. When American businessmen see "Made in China" they assume that design and engineering have been stolen and copied often by poverty stricken labor in sub standard factories.
Perhaps this Chinese recession will bring a new philosophy of integrity to bear upon Chinese leadership. That could have powerful implications and might even bring Chinese political relations out of the dark paranoia that causes them even to quake at the utterance of "Dalai Lama". Thus far, all we see is a return to old ways...more of the same out of China, both in economic philosophy and political backwardness. If this proves to be the case, then, China will retain its position as a "wanna be" that could have been, but for it's inability to shed the darkness of bygone origins.