Will the day ever come when China’s GDP exceeds that of the United States? Economist Emin Yilmaz says, “The GDP of a dictatorial despotism deviates greatly from the reality. Some studies have shown that China’s true GDP is only about 60% of what the Chinese government authorities say it is. The Chinese economy will probably be weakened in 10 years” – he said. (Part 1)
Hong Kong stocks are down 56% from their 2018 highs.
In recent years, most of China’s economic growth has come from real estate and infrastructure investment. However, in recent years, the capital invested has become less efficient. In order to produce output, growth cannot be expected without further inputs. This was no longer possible.
It is a well-known fact to global market participants that the real estate bubble will burst and China’s economy will suffer. That is why Hong Kong stocks are down 56% from their 2018 highs.
If we were to define a financial crisis in numbers, we could say that it is the level at which the index is at half of its high. Since Hong Kong stocks are already below half their high, it is not an exaggeration to say that we are entering a financial crisis.
Discrepancy between light usage and the level of economic development
I would like to introduce one more economic reality. Did you know that China’s true GDP is only about 60% of what is announced by the Chinese government authorities?
A study conducted by the University of Chicago has shown this view.
The IMF (International Monetary Fund) and the World Bank have recently begun to take a similar approach. The study was extracted by comparing the economic growth of each country with the amount of night lights (lights) obtained from satellites, and the results were published in “TIME” magazine in November 2022, comparing past images with the economic strength of each country at that time.
It was found that dictatorships such as China showed a large discrepancy (そご) between the level of light usage and the level of economic development.
The shocking conclusion reached as a result of the study was that China’s GDP is only 60% of that announced by government authorities.
The GDP of a dictatorial despotism deviates greatly from the actual situation.
The results of this study reveal an extremely interesting fact.
When we look at the figures for so-called developed or liberal countries such as the United States, Europe, and Japan, there is almost no discrepancy between “GDP calculated by the amount of light at night” and “GDP reported by the authorities.
What happens in countries with only partial freedom, or countries with democracy but with various problems?
Lebanon, Mexico, Colombia, Nigeria, the Philippines, and other countries have higher “GDP reported by the authorities” than “GDP calculated by the amount of light at night.
When we look at more perfect dictatorships, we find that the discrepancy is even worse, with China, Ethiopia, and others being the best examples of this.
China’s GDP overtaking that of the U.S.” is an empty statement.
In light of this fact, the theory that China will overtake or surpass the U.S. in terms of GDP can only be considered empty.
China itself probably knows that its economy will weaken in the next 10 to 15 years.
It may be that China itself is aware that its economy will lose vitality and its national strength will sink, just as it did in Japan after the bursting of the bubble economy.
Then there are the social problems. The most serious is related to food.
Soybeans, corn, and pork are said to be essential ingredients in the average Chinese diet.
Soybeans and corn are used to feed pigs, so to put it bluntly, they form a trinity with the Chinese.
Although these foods are inseparable from the commodity market, a very interesting phenomenon can be observed. In years when corn prices rise, meat prices often fall.
This is especially true for beef.
