J.D

A U.S./China Comparison

US is to China as apple is to orange. China has a long, long way to go before it can realistically be compared to a society where market economics, democratic values, a liberal media, and the rule of law prevail.

Unfortunately, China's governing authorities remain committed to authoritarian governance, state ownership, and broad information control. When these objectives clash with market-oriented reforms, it is the market-oriented reforms which are put aside.

China still has too much in common with North Korea and not enough with the US.

China's Dependence on Exports: An Old Chinese Myth?

As a component of GDP growth, exports have actually grown immensely in the last few years thanks to China's large trade surplus. That said, most GDP growth remains linked to domestic investment. However, as I can observe from the numerous half-empty office and residential buildings, and the innumerable sites which are in the final stage of construction, there is clearly something amiss. China hype aside, analysts need to take a second look. Unfortunately, banks are too busy chasing fees, and too scared of offending the Chinese authorities, to do a good job.

China's Dependence on Exports: An Old Chinese Myth?

GDP describes economic activity but doesn't explain it. Take exports as a proxy for China's integration into global markets and it becomes apparent that China's performance is strongly dependant on two-way flows of goods, services, and investment. As that catalyst now fades, China's downside looms large.