China is important today. Julie is writing about it on page 4 and I give you three snippets here that have been in the news recently and may be of interest.
How big is big?
China’s development since 1979 is for the record books. No country in history has pulled as many people out of poverty as China has - and done it in such a short period of time. China now has the largest economy in the world as measured by purchasing power parity, which adjusts the size of an economy for the level of prices. But keep in mind China has four times the population of the U.S., its per capita GDP is much lower than ours, and the average Chinese spends about as much as the average consumer in Cameroon. Big is important but China still has a long ways to go.
The Keqiang Index
What do Chinese officials focus on when looking at the economy? We don’t really know but one of the lesser reported stories in the Wikileaks revelations in 2010 was from the Premier of China, Li Keqiang. In a leaked cable Mr. Li questioned the country’s officially reported GDP numbers. He prefers to look at three indicators when measuring the economy - railcar loadings, electricity consumption and disbursed bank loans. How are these doing now? As of September, electricity consumption was growing but at the second slowest rate in eighteen months. Rail car loadings were down and Chinese bank loans were up but were showing a reduced growth rate. All this indicates a slowing Chinese economy. China is not headed for recession but you can see that the days of 10-12% growth are behind. Just like Japan, Korea, Taiwan, etc. before it, China’s rapid growth is coming back to earth.
Where is everyone going?
A lot of people in China are working on Plan B. China’s political winds are shifting, the air is miserable in many cities, there is intense job pressure, and good education and health care is expensive. It is estimated that of the country’s 2.4 million millionaires, 64% have either secured residency abroad or have plans to. Better to be safe than sorry I guess. The chart in the upper right shows the cost of buying a “golden visa” which allows someone to live in Europe for up to five years and then apply for permanent residency. Portugal has one of the most successful programs. A total of 1,360 visas have been issued since 2012. Eighty percent of these have gone to Chinese citizens, bringing in $1.1 billion in real estate investment.