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Data Says China’s Economy Faces Most Difficult Time

An Internet posting by author Tuozhanlaogou (拓展老狗, WeChat account name) has been widely spread in China. Using data and charts, the author explained that China’s economy is at its most difficult time:

  • 28.54 million people used Baidu to search for jobs in 2019, whereas less than 7.5 million people did that in 2018.
  • China’s banking section is making so much money that it squeezes profits out of other industries. China has four companies ranked in the top ten companies with the highest profits in the world. All of them are banks. China’s banking section claimed 40 percent net income return, whereas the U.S. banking section only claims 14 percent.
  • China’s state-owned enterprises (SOEs) are growing and the private companies and foreign companies are shrinking. In 2018, the rate of net asset increase vs. total profit (an indicator of investing profits into businesses) was 60.7 percent, -99.4 percent, and -1.6 percent, for the three types of business. The negative number itself indicates that the economic sizes of the private and foreign companies are shrinking.
  • People are short of money. The fund industry (both mutual funds and hedge funds) raised 500 billion yuan (US $72 billion) in the third quarter of 2017 alone. However, for the whole year of 2019, it has only raised 180 billion yuan.
  • 1,884 movie or TV related companies closed in 2019.
  • New car sales dropped 2.76 percent in 2018 compared to 2017. From January to October 2019, the number of new cars manufactured and sold dropped 10.4 percent and 9.7 percent respectively, compared to a year ago.
  • China’s M2 money is out of control. It has increased from 11 trillion yuan in 1999 to 194 trillion yuan (US $28 trillion) in 2019, twice China’s anticipated GDP in 2019. The U.S. M2 money in 2019 is only US $15 trillion and its GDP is US $21 billion; its M2 is only 71.6 percent of its GDP.
  • In the past 12 months (December 2018 to November 2019), the Purchasing Manager’s Index (PMI) was below 50 for nine months and above 50 for only three months. The economy is considered contracting when the PMI is below 50 and expanding when above 50.
  • China is departing from real (manufacturing) businesses. Among the total companies’ assets in China, the financial and real estate industries claim 47.9 percent of the assets, whereas the manufacturing sector only accounts for 11.7 percent.
  • In the first six months of 2019, all provinces in China, except Shanghai, ran into a fiscal deficit.

Source: Sina, December 8, 2019