- - Tuesday, February 16, 2016

ANALYSIS/OPINION:

There’s a tradition — some call it a blind spot — in the mainline media to give the Chinese Communists the benefit of all doubts, in the way of cutting the one-eyed man an unearned advantage in the kingdom of the blind.

It’s a remnant of World War II and the Nationalists of Gen. Chiang Kai-shek, who were pressured by the United States to embrace the Communists in a coalition government designed to fight the Japanese more efficiently. The compliant press mob assured one and all that the Communists were not Stalinists, after all, but benign “agrarian reformers.” Three-quarters of a century later and more than 50 million Chinese dead at the hand of the Communists, the government in Beijing still enjoys special pleading.

All evidence points to a Chinese crackup, or an explosion of violence against its neighbors and the United States, or both. The New York Times, which has been wrong so many times, is still at it. Keith Bradsher, the Hong Kong bureau chief of the newspaper, examined some of the current Chinese economic horrors, and concludes that it’s “difficult to discern the underlying health of the economy.”

The evidence is actually hidden in plain sight for anyone who looks for it. When bloody rioting broke out in Hong Kong during the celebration of the Chinese New Year (the year of the monkey), it was clear to all that the riots were caused in part by continuing anger over broken promises. The Hong Kong Chinese have been deprived of many of the freedoms they enjoyed under British colonial rule, which Beijing had promised to respect on the colony’s “return” to the Mainland. Xi Jinping, the Communist Party boss, continues an unprecedented crackdown on his intimidated opposition. He so wants to be Mao Tse-tung.

Every Chinese who can is turning his yuan into dollars to get himself and his family out of the country, including some of the billionaires created by two miraculous decades of high growth, as well as several high officials of the Communist Party. The enormous Chinese reserves of $3.23 trillion were reduced by $637 billion last year. China is faced with the dilemma of printing more yuan to buy more dollars or waiting out the crisis as the value of the Chinese currency dips and drains in value.

Even the statistics of crisis are suspect. One big investor estimates that China’s foreign reserves are $2.2 trillion at most, and the People’s Bank of China, the central bank, puts its estimate at $3.23 trillion.

Beijing escaped the worst effects of the world financial crash of 2007-08 by pumping $580 billion into the economy. But this established an infrastructure bubble — with lending in 2008 totaling nearly half of the equivalent of the year’s GDP. Ghost cities were built and now there’s no one in them. The credit binge still hangs over Chinese banks. The country’s biggest banks’ earnings, which were running at an annual gain of 20 percent only a few years ago, have effectively dropped to zero. So have profits.

China still recorded an enormous trade surplus, $63 billion, in January. But China’s trade contracted significantly more than economists had expected, as the world’s second-largest economy suffered a slowdown at home and no real movement toward the goal of a consumer economy.

Exports fell 6.6 percent on an annual basis, compared with forecasts for an increase of 3.6 percent. Imports slipped 14.4 percent against expectations of a 1.8 percent rise. This is according to government data, which is not always reliable.

Dong Tao, an economist at Credit Suisse in Hong Kong, says China’s economy is in a cyclical downturn that will require structural reforms to cure. Reform has been slow, he says, and will probably continue to be slow, dragging down growth further. Not happy times, indeed.

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