Commentary on Political Economy

Saturday 20 April 2024


China’s Season of Magical Thinking and Accounting

Beijing’s statistics may or may not be cooked. The big numbers still don’t tell you how ordinary people are doing.

How high for how long?
How high for how long? Photographer: China Photos/Getty Images AsiaPac

Today’s Must-Reads

Lies, Damn Lies and Geopolitics

The news out of China sounds good: First quarter gross domestic product growth at 5.3% was higher than expected, according to the country’s National Bureau of Statistics, handily beating the 5% official target. While some analysts adjusted their China assessments upward, skepticism prevails. Shuli Ren says it’s not just because the People’s Republic has a reputation for economic numbers that are suspicious, but even if the headline growth figure is accurate, it doesn’t reflect how ordinary folks are faring. For one thing, the 5.3% is real GDP, which is adjusted for inflation and, as Shuli says, “doesn’t offer useful insights into stagnant income growth experienced by workers and corporations” because China’s economy is “experiencing its longest deflationary streak since 1999.” She points out that the country’s CSI 2000 Index “whose small-cap companies are more sensitive to business cycles, is down 20% for the year.”

President Xi Jinping may find satisfaction in the fact that the manufacturing sector has been the major engine of growth. But how sturdy is that numerical validation of his ambitions for exports and new energy projects? Pressed by the US, Mexico has just decided not to offer Chinese EV makers subsidies offered to other carmakers in the past. Meanwhile, says Liam Denning, Washington appears to be hurtling toward remaking the rules of global trade — as embodied in the World Trade Organization — to subvert China’s dominance in alternative energy technology, which White House climate envoy John Podesta called “climate dumping.” Getting more people to buy EVs may help decarbonize the globe, says Liam, but it won’t help the Biden administration stay in the White House if all those cars are Chinese.

The US continues to tighten the screws on Beijing in geopolitical terms. Washington, under President Joe Biden, is “developing a ‘latticework’ of partnerships around the Indo-Pacific” to box-in China, says Minxin Pei. These include arrangements, such as the US-Japan-Philippines relationship, a similar trilateral with Japan and South Korea; the AUKUS alliance with Australia and the UK; and the Quad grouping with Japan, India, and Australia. “In many ways,” Minxin says, “Beijing has only itself to blame for Biden’s success. In the last decade, its in-your-face approach to Japan, South Korea, and the Philippines has thoroughly alienated nations that might otherwise have stayed on the sidelines of the Sino-American rivalry.”

For potential foreign investors, China is becoming ever more opaque — and that’s a turn-off. Even as Xi tries to reform the economy, says Shuli, the lack of insightful official statistics is becoming a hindrance. “It’s becoming harder to read the economy and figure out when and where it bottoms,” she writes. Until Beijing becomes transparent, good news is no news.

Your Vacation Home Can Be Good for the Economy

With the UK suffering a housing shortage, politicians are picking on the owners of second homes and casting them as villains — selfish “house-hoggers” — in the fight. But Merryn Somerset Webb points out that fewer than 500,000 had use of vacation homes in Britain in 2021. That’s 0.75% of the population. She posits an opposite solution: “Might it be that the UK needs not fewer holiday homes but many tens of thousands more?” There is a greater ratio of holiday home ownership in the Nordic countries, she says, even if those mostly seaside structures are simple and can be used only during the warmer months. In the UK, says Merryn, “Coastal and rural communities tend to be older, poorer and have higher levels of unemployment than the rest of the UK. They need the income, the jobs and the opportunities that come from visitors. If they can have those without being priced out of the housing market, all the better.” For now, trying to find an affordable seaside rental is likely to get you the equivalent of “a large stationary caravan.” She concludes: “The answer to all this is to build.”

Telltale Charts

“Companies don’t usually complain that their profits are too high, but such is Wise Plc’s predicament. The fintech isn’t allowed to pay interest to UK customers because it isn’t licensed as a bank. … [T]he British firm went public in 2021 and offers more than just cross-border money transfers – it holds more than £13 billion ($16.2 billion) of customer balances and provides debit cards. … However, it remains authorized only as an Electronic Money Institution — hence the UK interest prohibition.” — Chris Bryant in “Why Wise Hates Making So Much Money.”

“When does a strong dollar become too strong? ‘Right now’ would be the cry of most emerging-market currencies, not to mention policymakers in Japan. Even the European Central Bank says it’s paying attention to the foreign exchange market. … It’s not a crisis yet; but trying to call a top is futile, and the risk of something breaking is increasing. As the US economy becomes ever more internally strong and self-obsessed, emerging-market economies are likely to suffer first and most.” — Marcus Ashworth in “King Dollar Risks Becoming Greenback the Bully.”

Further Reading

So long, Chairman Mark. — Tim Culpan

How long will luxury be sitting pretty? — Andrea Felsted

No golden rule for Zimbabwe. — Justice Malala

AI versus the conspiracy theorists. — Parmy Olson

Don’t just take yachts from oligarchs. Tax them! — Lionel Laurent

Recession — a double dip — comes to New Zealand. — Daniel Moss

Walk of the Town: Take in This Show for Earth Day

I very rarely go to Chelsea here in London, but a friend had invited me to my first football match at Stamford Bridge stadium. With almost two hours to kill before meeting up, I stopped by the Saatchi Gallery off King’s Road. It would be a half-hour walk from there to a pub where Chelsea FC fans gathered before matches. I thought I’d have a quick look-see at the gallery; I ended up staying until the announcement came over the PA system that all guests had to leave.

At the Saatchi Gallery.Photograph by Howard Chua-Eoan/Bloomberg

On exhibition were 94 large-format images by the Canadian photographer Edward Burtynsky. He specializes in industrialization and its consequences — and the resulting visions, some of which take up entire walls of the gallery, are stunning, mesmerizing and ultimately troubling. It’s impossible to reproduce the effect of the photography: They are the size of paintings by Jackson Pollock or David Hockney, or large fragments of the wall art of Keith Haring. They are all gorgeous until you read the caption and look at the almost pointillist detail. Then you realize this is what humanity has carved onto the face of the earth, our legacy of litter and rot. What appears ethereal and abstract is concrete and often deadening.

Burtynsky’s Uralkali Potash Mine

In this show, entitled Extraction/Abstraction, Burtynsky has used a whole range of techniques — many from high up in the air — to capture the effects of agriculture, mining, ship dismantling and the profusion of hi-tech garbage. There is an endless expanse of Spanish greenhouses, gorgeous to behold — and then you read of the enormous amounts of plastic sheeting that must be used and constantly replaced to keep the indoor agriculture industry going.

Burtynsky’s greenhouses in Spain.
Burtynsky’s center-point irrigation circles in the US west. The faded ones are where the water has run out.

His studies of center-point irrigation are spirographic beauties. The technology was a godsend for desert agriculture but devastating to millennia of “fossil” water supplies. And short-lived. Eventually, the water runs out. What’s left are dusty circles, like the immense Nazca lines in Peru, a warning to extraterrestrials about how destructive earthlings have been to their own home planet.

Burtynsky’s rivers in Iceland.

Water has had a dramatic presence in the news this week — with titanic torrents falling on arid Dubai, the likely consequence of climate change, as Lara Williams said in her column. Burtynsky’s images of water are engrossing and hypnotic. Many are of ecosystems that have been pristinely preserved. But then there are those bejeweled surfaces that tantalize you — like jam and marmalade glittering on toast — until you realize those surfaces are poison.

Burtynsky’s aerial view of copper mining in Arizona.

If it wasn’t for a football match, I would have missed all of this. See the exhibition to commemorate Earth Day next week. Burtynsky: Extraction/Abstraction will be at the Saatchi Gallery in Chelsea, London until May 6, 2024. (And in case you’re wondering, I managed to walk to the game on time.)


No cartoon today. I’m mourning one of my favorite buildings, the old stock exchange of Copenhagen — Børsen — which was gutted by fire this week. It was always the backdrop of an afternoon glass at a favorite wine bar in the Danish capital, just across the canal from the center of Denmark’s government — popularly known as Borgen. I wrote a column this week proposing that Denmark’s burgeoning corporations should take the lead in restoring it. In any case, here is a photo of one of my now poignant afternoons with Børsen’s dragon-tailed spire in the distance. I raise a glass to its memory.

A glass to the memory of Børsen.Photograph by Howard Chua-Eoan/Bloomberg

Notes: Please send cheers and feedback to Howard Chua-Eoan at

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