Two CNN reports on Thursday suggest that China has good reason to play hardball with U.S. trade negotiators. The first article notes that Chinese technology giant Huawei is seeing big growth in domestic smartphone sales, while Apple is seeing decline. The second report indicates that China’s exports are resurging well above economic analysis.
I call a foul ball on both counts.
What we’re seeing here is not some surprise revival of China’s slowing, inefficient, and subsidy-dependent economy. It’s a paper-thin fiction born of Xi Jinping’s propaganda machine, state influence over consumers, and capital evacuation from China.
Let’s start with the export issue. The first thing to note here is that the statistics relied upon are wholly sourced from the Chinese government and thus, as with China’s climate emissions reports, about as credible as Rep. Alexandria Ocasio-Cortez’s economic theories. Indeed, they are even more unreliable than normal in the sense that the government wants to send a message of economic strength to the U.S. as the two nations continue trade negotiations. But as CNN correctly notes, part of the reason that Chinese exports may appear to be growing is not that China is selling more, but that foreign companies are relocating capital out of that country. Perhaps here China’s perceived strength is actually an indicator for increased weakness.
The story is similar with the cellphones. China’s government revels in propagandizing for its own interests. Attempting to pressure U.S. companies into asking the White House to cut a China-friendly trade deal, China has been pushing its citizens to buy Huawei over Apple. Now, in most countries, most citizens would probably ignore their government’s advice and buy whichever phone they felt was better (which, objectively, is Apple phones).
But it’s a different situation in China. If you’re a Chinese government employee or doing business with government (which includes a lot of Chinese who own smartphones), it’s not a great idea to ignore overlord Xi’s diktats. Doing so suggests less-than-maximal loyalty to the party. That course closes doors to personal interest and risks personal liberty.
Be cautious of Chinese claims of an economic revival. Xi’s economy is in trouble.
