A shocking poll exposes the utter contempt the elite holds the general public in, with more than three quarters wanting to ration food and energy to combat ‘climate change’ and a majority wanting air travel for holidays banned.
The survey was conducted by the Committee to Unleash Prosperity (CUP), a Maryland-based non-profit advocacy group.
The organization polled members of America’s 1 per cent – defined as people who have a postgraduate degree and an annual income of more than $150,000.
77 per cent of elitists who were asked, “To fight climate change, would you favor or oppose the strict rationing of gas, meat and electricity?” said they would favor such a policy.
That figure rises even higher to 89 per cent amongst Ivy League graduates.
Presumably, their wealth will ensure they are exempt from such rationing while poor people can go whistle.
In addition, 69 per cent of elitists want an immediate ban on gas stoves, while 81 per cent want gas powered vehicles outlawed.
A majority also want the government to forbid the use of air conditioning and non-essential air travel, effectively outlawing vacations, rules that presumably won’t apply to their private jets and luxury compounds.
67 per cent of elitists also believe that teachers should decide what children are taught compared to 26 per cent who think parents should decide.
The poll also reveals how the elite are totally at odds with the general public in both lifestyle and beliefs.
When canvassed on how much freedom the United States should bestow on its citizens, 47 per cent said people had too much freedom compared to 21 per cent who said there was too much control.
In comparison, 57 per cent of voters said there was too much control compared to 16 per cent who said there was too much freedom.
74 per cent say their finances are getting better, while just 20 per cent of the general public say the same.
A whopping 84 per cent also approve of the job Joe Biden is doing as president, while recent polls show Biden has an approval rating of around 39 per cent with general voters.
“The people who run America, or at least think they do, live in a bubble of their own construction,” write the poll’s authors.
“They’ve isolated themselves from everyday America’s realities to such a degree their views about what is and what should be happening in this country differ widely from the average America.”
As Chris Morrison notes, the poll results are likely to be mirrored across the western world, in a similar way to how the backlash against the elite’s policies are replicated in numerous different countries.
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Nasdaq’s ‘Right Idea, Wrong Price’ Is Usually A Recipe For Trouble
Authored by Ven Ram, Bloomberg cross-asset strategist,
During the dotcom bubble, stock traders had the right idea, but had no clue how to price that view. Now they are grappling with much the same issue – only, this time around, substitute dotcom with artificial intelligence.
The bigger concern is that the gravy train may run as long as it did then.
The Nasdaq 100 has surged to a record, putting it within striking distance of 17,000, enough to induce vertigo in anyone looking at valuation metrics.
Investors who are buying at current levels may get an earnings yield of some 3.30% – considerably less than the 4.15% that Treasuries offer. In doing so, they are essentially willing to forgo the safety of Treasuries for the promise of growth from technology stocks.
It’s a no-brainer that artificial intelligence will change the face of technology as we know it.
It may even boost productivity growth, which can augur a profound shift in everything from economic growth to currency valuations. So one can relate to such enthusiasm for technology stocks.
The trouble, though, is coming up with a right price tag on stocks given that transformative potential.
Back during the go-go days of the internet fever, traders bid up anything with a .com tag attached to it, with nary a concern about how they would get their revenue – much less worry about their earnings.
We all know how that movie ended.
Some of the market’s most favored AI bets, such as Nvidia, are now trading at a prospective P/E of 46x.
While that may sound astounding, it’s not uncommon to see multiples of 70x, 80x during times of frenzy.
Which is what worries me.
During the height of the dotcom bubble, the Nasdaq’s P/E ratio soared past three digits while the current P/E of about 30x may seem rather pale.
That is why it’s hard to call a halt to this rally even now (even though downward revisions are dominating upward recently)…
And the S&P is richer than it was at the peak of dot-com bubble…
But suffice to say what Warren Buffett is often fond of saying: “A pin lies in wait for every bubble, and when the two eventually meet, a new wave of investors learns some very old lessons.”
There, Trump’s appeal is with the state’s Superior Court where the judge in charge stayed the case Wednesday until after the Supreme Court ruling.
Proceeding to remove Trump from the ballot initiated by states or citizens’ lawsuits are based on a Civil War-era constitutional amendment that disqualifies government officials who engaged in insurrection from holding office.
As of Thursday, the newspaper listed 17 as having been dismissed and, considering the Supreme Court’s makeup, said that it was likely that Trump would appear on ballots after all.
A lawsuit against Trump’s ballot inclusion was just dismissed last week in Washington state.
“This has the potential to tear our nation apart if left unchecked,” Missouri Republican Secretary of State Jay Ashcroft said in a statement.
Ashcroft led a group of 11 state election officials (secretaries of state from Alabama, Arkansas, Idaho, Indiana, Kansas, Montana, Nebraska, Ohio, Tennessee and West Virginia joined Ashcroft) in submitting an amicus or “friend of the court” brief “in support of neither party,” according to the document.
Ashcroft’s coalition argues in a 26-page documentthe U.S. Constitution doesn’t empower a state official to disqualify candidates for federal office.
The brief also states historical precedent doesn’t give secretaries of state any power to disqualify a candidate under the Constitution.
In the last few decades, there has been a global shift towards a “cashless world,” a trend that continues to shape financial autonomy. Physical currency is becoming increasingly rare as the majority of the world’s money supply exists in electronic form. Governments and financial institutions are actively promoting a cashless society, raising concerns about individual financial freedom.
The Federal Reserve’s last annual update on physical currency in circulation reported about 2.2 trillion dollars in physical cash supply. This includes physical coins (dimes, quarters, dollars) and green Federal Reserve notes. Nevertheless, there has been a rapid shift towards electronic funds. In the current era, the total global money supply is predominantly composed of electronic funds, with physical currency representing a diminishing percentage.
The concept of Central Bank Digital Currencies (CBDC) in the last year has gained substantial prominence globally.IMF Director Kistalina Georgieva noted in her speech last year that CBDCs have already been introduced in The Bahamas, Jamaica, and Nigeria, with over 100 additional countries (including the United States) currently in the exploratory phase.
The push towards a cashless society is often justified on grounds of enhanced security, with claims that electronic transactions deter terrorism, money laundering, and counterfeiting.
However, upon closer examination, it becomes apparent that the primary objective is an attempt to ‘bar the doors’ and keep assets within the US Financial System. Reduced reliance on physical cash facilitates increased monitoring and taxation of financial transactions, aligning with the government’s and central planners’ interests.
Interestingly, even with the diminishing purchasing power of the US dollar, the face value of Federal Reserve notes has also been decreasing. Today, the highest denomination note produced by the Federal Reserve is the $100 note. The elimination of higher denominations, such as $500, $1,000, $5,000, and $10,000 notes, began in 1969. Discussions continue, with some advocating for the complete discontinuation of cash.
Governments benefit from a cashless system as it allows for more efficient taxation and central planning, while banks see advantages in increased fees and regulatory power.
A cashless society results in larger bank deposits, contributing to an expansion of the money supply through fractional reserve banking.
The move towards a cashless society raises concerns about individual control over personal wealth.
Governments and large banks are likely to exert increasing pressure to discourage holding liquid wealth outside the banking system.
Acquiring physical cash and precious metals may become more challenging, potentially reaching a point where coins and Federal Reserve notes are no longer considered legal tender.
Contrary to paper currency, the intrinsic value of precious metals, particularly gold and silver, has hardly been impacted by these government decisions. We talk more about this in our Confiscation Con white paper, here.
The use of gold and silver as money is determined ultimately by the free market and the free market alone.
As we continue to move towards a cashless era, it’s wise to contemplate shifting a larger portion of your electronic dollars into physical assets like gold and silver, particularly in anticipation of the impending Central Bank Digital Currency (CBDC). Gold and silver are the best historically reliable assets for safeguarding wealth, offering a prudent strategy to avoid becoming a casualty in the ongoing ‘war on cash.’
The following years will likely see more nations – including some that have been known as tax havens – join the initiative spearheaded by the OECD and the G20.
It is seeking to collect billions of dollars every year on company profits that have so far been taxed at often much lower levels and to rein in what the organizations call base erosion and profit shifting (BEPS), basically the ability of large multinationals to pay negligible amounts of taxes by using global corporate structures and favorable offshore tax regimes.
In the graphic below, Statista;s Katharina Buchholz shows the effects on corporate tax in jurisdictions that have adopted or are in the process of adopting these new corporate tax laws and so far had effective average taxes rates lower than 15 percent.
While the changes in corporate tax law in these places might be especially stark, research by the OECD has found that low-taxed corporate profits exist in places known for low taxes as well as in countries with high overall corporate tax, as these do habitually carve out exceptions for some large corporations. A paper by the organization has found that more than half of multinationals’ profits taxed at below 15 percent were created in countries considered high tax jurisdictions, where statutory and effective average corporate tax rates already exceed that threshold.
Among low tax countries, the Bahamas as well as the self-governing British Crown dependencies Guernsey, Jersey and the Isle of Man are currently working on implementing new laws – despite being in earlier stages of the process still. Orbitax, which maintains a tracker of country implementation, said the changes announced by the Bahamas’ Attorney General would constitute “a seismic shift” in the country’s tax system. All four jurisdictions are considered tax havens following a popular definition and have been confirmed by the OECD to levy effective average corporate taxes of 0 percent. However, additional tax havens with a 0 percent effective tax – like the Cayman Islands, the British Virgin Islands and the Turks and Caicos Islands – have signed onto the initiative, but are among the laggards in the process.
Corporate tax rates for multinationals are also rising in Andorra even though the European micro nation said it wasn’t home to many companies with annual revenues over 750 million Euros or their dependencies, to whom the law applies – highlighting how tax havens do differ from one another.
The dataset also shows that out of annual average multinational profits of $5.9 trillion assessed over four years in nations taking part in the BEPS initiative, $750 billion were taxed below 5 percent and $1.39 trillion were taxed at between 5 percent and 15 percent.
After so much gore, however, the end of this conflict still seems distant, and none in power appear confident that it’ll go their way.
A wild card in all this is the United States and the question of whether the world’s greatest military power can or will continue to provide direct security assistance to Ukraine.
The Biden administration, which pledged only months ago to support Ukraine for as long as it takes, is on the back foot, and money for a war on the other side of the world has run out.
Russia is waiting and eager for the opportunity to seize what it has been denied—at least, that’s what White House National Security Council spokesman John Kirby said.
“There’s significant risks to the Ukrainian armed forces if foreign aid and assistance dries up and we’re not able to continue to support them in their fight,” Mr. Kirby told The Epoch Times in December 2023.
“Ukraine is under significant threat right now from Russia, particularly from the air and drone and missile strikes on their energy infrastructure. And we know that the Russians intend to go back on the offense, particularly in the east.”
Ukraine has fought hard and won back about half the territory initially seized in Russia’s full-scale invasion. But Mr. Kirby said he fears that Ukraine’s “ability to continue to defend themselves and to rid their territory of Russian soldiers” will be compromised without supplemental U.S. funding.
“They have clawed back more than 50 percent of the territory that the Russians first took in those opening months,” he said.
“That’s not insignificant. Now, it’s due to a lot of their courage and bravery, but it’s also due an awful lot to the United States and to leadership around the world getting aid and assistance in there.”
A Partisan Issue
Whether the United States will continue that assistance remains to be seen.
In all, the United States has committed more than $44 billion in military aid to Ukraine since February 2022, with much of that in the form of presidential drawdown authorities, according to the Department of Defense.
The drawdown involves the United States transferring weapons directly to Ukraine from its own stockpiles and then spending the money to replenish its own stores.
The Pentagon has all but run out of money to replenish its stocks, so most military aid to Ukraine has, for the time being, halted.
In October 2023, President Joe Biden proposed a $105 billion supplemental spending package for Israel, Ukraine, and the U.S. southern border. Of that amount, some $44.4 billion would pass directly through the Pentagon.
The supplemental bill has stalled in Congress, where a partisan fight over its scope and priorities has erupted, throwing the future of the nation’s support for Ukraine up in the air.
The congressional gridlock mirrors U.S. popular support for the war, which began to crater amid Ukraine’s much-hyped but flagging counteroffensive last fall.
According to a survey conducted by the Chicago Council on Global Affairs in October 2023, about half of Republican voters and more than three-quarters of Democrat voters favor continuing support for Ukraine.
Similarly, a majority of Democrats believe that the United States should furnish Ukraine with military and economic support for as long as it takes the nation to win back its occupied lands; whereas a majority of Republicans believe that U.S. leadership should urge Ukraine to pursue a negotiated settlement with Russia.
Even among Republicans in Congress, however, there’s deep disagreement about what aid should be delivered to Ukraine and why.
“I do not think that we should continue funding the Ukrainian war,” Sen. J. D. Vance (R-Ohio) told The Epoch Times. “I think it’s destroying the country at this point, meaning the perpetual war is destroying the country.”
Other Republicans agree with the need to fund Ukraine but have said that President Biden should give greater precedent to domestic issues such as securing the southern border.
Sen. John Kennedy (R-La.) is among that group and has said that supplemental spending for Ukraine is a nonstarter until the Biden administration recalculates its spending priorities.
“It’s nowhere, and it’s not going anywhere,” Mr. Kennedy said to The Epoch Times about the supplemental spending package.
“Having an open border is more important to President Biden than aid to Ukraine, Taiwan, or Israel. Will that change? I don’t know.”
Democrats, too, are having difficulty imagining a new path forward.
Sen. Richard Blumenthal (D-Conn.) told The Epoch Times that swift passage of the supplemental spending package is “unlikely” but that he remains “hopeful” for a compromise early in the year.
Sen. John Fetterman (D-Pa.) told The Epoch Times that he had “no idea” whether the supplemental request would pass but that Congress should approve “critical aid” to U.S. allies and partners, including Ukraine and Israel.
Assistant Secretary of State James O’Brien said at a hearing of the Senate Foreign Relations Committee on Nov. 8, 2023, that Russian President Vladimir Putin was “playing a waiting game.”
“He thinks that if he can wait for our elections or for Ukraine to get tired, then he can survive,” Mr. O’Brien said. “Putin says that if we walk away, Ukraine falls in weeks.”
Ukraine in a Stalemate
Most experts don’t believe that Ukraine would fall in weeks without the United States.
However, many believe it’s likely that the embattled nation would be forced into a brutal stalemate with Russia and, at some point, would need to cede some of its territory to its aggressor.
Ukraine has pushed its partners for more funding, and Ukrainian President Volodymyr Zelenskyy was in Davos, Switzerland, on Jan. 15 to propose a Global Peace Summit to chart a path toward victory for his nation.
Ukraine simply doesn’t have a viable strategy for victory without international arms shipments such as those provided by the United States, according to Peter Rough, director of the Center on Europe and Eurasia at the Hudson Institute, a conservative think tank.
“U.S. security assistance is essential for Ukraine,” Mr. Rough told The Epoch Times in an email. “There is no path forward without it.”
Ukraine could likely continue to fight and bleed Russia without U.S. arms, according to Pavel Baev, a research professor at Peace Research Institute Oslo in Norway, but it would be limited.
“Ukraine can defend against new Russian offensives, but most certainly will not be able to launch a new counteroffensive without significant and sustained U.S. military support,” Mr. Baev told The Epoch Times in an email.
Mr. Baev said Ukraine could muddle along through the harsh winter and spring conditions without more U.S. aid but would be hard-pressed to contend with Russia toe-to-toe during next summer’s military campaigns.
“A temporary pause, like the one happening now, is unhelpful but not disastrous … [but] a permanent cut of the U.S. support grants Russia a serious advantage for the summer campaign season.”
Similarly, Dakota Wood, a senior research fellow at the Heritage Foundation, said it’s “very unlikely” that Ukraine could continue to conduct its aggressive war effort without U.S. support.
Ukraine could hurt Russian forces badly but not remove them from the occupied eastern territories, he said.
“If the U.S. stops providing support, Ukraine may find ways to continue resisting Russia for a while, such that Russia is unable to push further into Ukraine, but it will not be able to dislodge Russia from the territory it controls, and Ukraine is likely to lose more, especially along the Black Sea coast,” Mr. Wood said in an email to The Epoch Times.
Mr. Baev and Mr. Wood agreed that with European assistance alone, Ukraine could defend its current territory for some time.
European assistance isn’t guaranteed, however, and should U.S. assistance falter, European leaders would likely follow suit.
Since 1945, a total of 3.5 million tonnes of uranium has been produced globally.
Together, Canada and the U.S. account for over 29% of global production, mining 932,000 tonnes over the last several decades.
*Until 1991, USSR comprised the uranium production of Russia, Kazakhstan, Uzbekistan, Ukraine and other former Soviet Union republics.
During the Cold War, the USSR mined over 377,000 tonnes of uranium for a variety of purposes including nuclear reactors and naval fuel.
Due to demand from nuclear reactors, uranium production sharply increased from the 1960s to the 1980s. With this came the construction of the earliest generation of nuclear plants. Today, about 436 nuclear reactors are in operation.
Since the war in Ukraine, uranium has drawn increased attention given its role in nuclear weapons. Ukraine had 15 nuclear reactors depending on uranium from Russia, but the country rapidly signed a deal with Canada due to their exposure to the crisis.
Similar to Ukraine, nuclear reactors in Finland were at risk since their Russian-made reactors relied on the know-how of Russian firms.
While uranium is used for defense purposes, it also plays a key role in electricity generation thanks to its low carbon footprint. In the U.S., about 19% of electricity is powered from nuclear plants, and around 10% of global electricity is from nuclear power sources.
Former British Prime Minister Boris Johnson says the Davos elite are “trembling violently” at the very real prospect of Donald Trump winning the presidency again.
Johnson made the comments in an exclusive article for the Daily Mail.
“In the cocktail parties of Davos, I am told, the global wokerati have been trembling so violently that you could hear the ice tinkling in their negronis,” wrote the ex-PM.
After his landslide win in Iowa earlier this week, Trump is expected to enjoy a repeat performance in New Hampshire on Tuesday despite the avalanche of challenges he has faced.
“In the senior common rooms of our universities, in the synod of the Church of England, in the Orwellian corridors of the BBC and among much of the UK establishment there has been a caterwauling orgy of nose-holding abhorrence,” thundered Johnson.
Boris pointed out that the more insane the attacks on Trump become, the more he seems to thrive.
“The more frenzied the effort to cancel him, the stronger he becomes. The more bitterly his enemies wage lawfare against him, the more unstoppable he seems to be,” he wrote.
The prospect of Trump returning to the Oval Office had caused a collective “shriek” from the “Western liberal intelligentsia” and manifested a “sheer, gibbering funk,” according to Johnson.
As we previously highlighted, prominent leftists are once again hysterically whining about the rise “rise of fascism” in response to Trump’s success in shades of rhetoric that preceded his 2016 victory.
Trump has yet to announce who his running mate will be, but former Fox News host Tucker Carlson’s chances of being his VP pick appear to be gaining momentum.
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Through the back door of a New York City building, some of the most potent American business leaders were smuggled in for a tabletop exercise simulating a Chinese invasion of Taiwan.
The secrecy made it look like they were “in a witness protection program because they were so concerned about retaliation from the CCP [Chinese Communist Party],” said Rep. Mike Gallagher (R-Wis.), who hosted the exercise in September 2023.
“If this retaliation is how the CCP will treat business partners in peacetime, think about how it would act in war—and the ramifications to our economy, especially our critical supply chains, including pharmaceuticals and semiconductors, in a Taiwan invasion scenario,” Mr. Gallagher told The Epoch Times.
The idea of the tabletop simulation stemmed from his exchanges with financial executives.
One told him there is “zero” chance that the CCP will invade Taiwan. Another said the United States will never sanction China, even if it invaded the self-governed island.
“It’s clear that, in many cases, Washington and Wall Street are living in two different worlds. One is the real world, the other a fantasy land,” said Mr. Gallagher.
The New York City simulation didn’t focus on military conflicts but on areas of economic warfare such as shipping routes, supply chains, and money transfers.
“We saw that if China were to invade Taiwan, the losses across our financial system would dwarf the write-downs taken at the outset of the Russia–Ukraine war. The entire U.S. economy and banking system would be imperiled,” Mr. Gallagher said.
“Equity markets would drop precipitously as global shipping lanes closed, shipping insurance premiums skyrocketed, supply chains broke down, and the specter of global conflict grew. Americans would see their pensions shrink and their bank accounts hemorrhage cash.”
The wargame participants—financial, pharmaceutical, and mining executives—walked away from the simulation with a different understanding: The United States must immediately prepare an economic contingency plan to reduce critical supply chain dependence on China and curb Beijing’s access to U.S. funds to support its aggressions.
In addition, the United States can’t afford to rely on economic means alone to deter China from taking Taiwan by force; credible military deterrence is a must-have.
“I think the executives who took part left aware of the danger, but many remain afraid to speak out,” Mr. Gallagher said.
Restricting U.S. outbound investment to China is a top priority of the House Select Committee on Strategic Competition between the United States and the Chinese Communist Party, also known as the Select Committee on the CCP.
When such investments help Chinese companies develop technology that the regime then uses to advance its military capabilities, the panel views it as the United States funding its own destruction.
With bipartisan support, the Senate has passed language addressing this issue, initially as an amendment to the 2024 annual defense act. A similar bill passed the House Foreign Affairs Committee.
House Speaker Mike Johnson (R-La.) left the language out of the yearly defense act that was passed in December 2023; an updated version for a House floor vote is expected this year.
In addition to addressing China-related economic security issues, several of the select committee’s Taiwan policy recommendations were included in the 2024 annual defense act, including a new program of military cybersecurity cooperation with Taiwan and increased congressional oversight of weapons sales to the island to reduce backlog.
Since its launch last January, the Select Committee on the CCP has demonstrated a rare bipartisan culture on the Hill.
Chairman Gallagher and the committee’s ranking member, Rep. Raja Krishnamoorthi (D-Ill.), have spoken in lockstep during hearings and often held press conferences together.
Rep. Dusty Johnson (R-S.D.), a committee member, said the two leaders have been accommodating to different views.
The group’s economic policy recommendations released in December had the endorsement of all but one member.
“Our product is a consensus work product,” Mr. Johnson told The Epoch Times.
Rep. Ashley Hinson (R-Iowa), another select committee member, also credits Mr. Gallagher and Mr. Krishnamoorthi for leading “the most substantive, bipartisan work in Congress.”
In an email to The Epoch Times, she highlighted a roundtable event the panel held in her home state of Iowa regarding the CCP’s agricultural theft as an example of how the panel used “firsthand knowledge” and “real experiences” to “craft the policy blueprint to ensure the U.S. is competing with China rather than enabling their malign and destructive behavior.”
The committee’s work hasn’t gone unnoticed by its subject of focus: the CCP.
Chinese propaganda articles label the committee an “anti-China pioneer” and often report its action as another “restless move.”
A September 2023 paper published by China’s Tsinghua University’s Center for International Security and Strategy warned that the committee might transform into a “center coordinating China policies for all parts of the U.S. Congress.”
The article warned that the panel could raise the American public’s awareness of the China threat, which it labeled “misinformation.”
To some committee staff members, criticism from the CCP is an endorsement of their work. A sign in their office says: “Have we worked harder than our CCP counterparts today?”
A Deal Contingent on Taiwan
Since the inception of the Select Committee on the CCP, Mr. Gallagher has repeatedly warned that the current timeframe is the “window of maximum danger” related to Taiwan.
However, some analysts don’t view military conflict over Taiwan as inevitable.
If regime leader Xi Jinping sees hope in a “peaceful unification” of Taiwan, he may be incentivized to hold off an invasion, said Bonnie Glaser, a managing director for the German Marshall Fund think tank.
Shi Shan, a China expert with decades of journalist experience both in the mainland and in Hong Kong, said that view was “correct in theory.” He uses an alias to avoid reprisals from the CCP.
Mr. Shi has learned from CCP insiders that Xi has to deliver Taiwan to his Party within a certain timeframe in exchange for his lifetime CCP leadership—a prize, that if achieved, would elevate him to the level of Mao Zedong, who established communist China in 1949 and drove his political enemies to Taiwan.
Xi began his third term last year after removing the two-term or 10-year limit in China’s Constitution. The constitutional amendment was passed in March 2018. At the 19th Party Congress a year ago, Xi persuaded CCP senior leaders to extend his reign by promising them Taiwan, Mr. Shi said.
In his 2024 New Year address, the 70-year-old communist leader reiterated that the unification of China is a “historical inevitability.”
Mr. Gallagher and Rep. Michael McCaul (R-Texas), the House Foreign Affairs Committee chairman, said that when authoritarian dictators warn the world about their plans, we should heed them.
Mr. Shi told The Epoch Times more about Xi’s inflexible internal situation.
“Xi is preparing China for a war with Taiwan. Because of that, the Party needed a leader beyond the previous term limit. If he gives up on the goal, the disagreeing forces within the Party will hold him accountable because he has made himself an exception and made the economy suffer. He has so much on the line that he cannot change his course.”
Deflation is Making China’s Growth Look Much Better Than It Really Is
By John Liu and Zheng Wu, Bloomberg markets live reporters and strategists
Three things we learned last week:
1. China met its 2023 growth target but the data understated challenges. Data released Wednesday showed the world’s second-largest economy grew 5.2% last year, above Beijing’s official target of around 5%. Besides a low base in 2022, when stringent Covid curbs severely disrupted economic activities, the nation’s longest deflation streak since 1999 also boosted the headline growth number.
China’s gross domestic product was reported in real terms, after discounting the price factor in nominal growth. As consumer and factory-gate prices fell last year, the price adjustment effectively inflated the growth rate.
The difference, known as the GDP deflator, is now the biggest “inflator” in GDP calculation in 14 years. Some private-sector economists say last year’s actual growth was much lower.
2. Investor anxiety is growing over Beijing’s plan to fix the economy this year. News that China is considering 1 trillion yuan ($139 billion) of new special sovereign debt, only the fourth such sale in the past 26 years, did little to help market sentiment. The MSCI China index has dropped nearly 10% so far this year, down 60% from its peak in 2021. Disappointed local investors paid a premium of more than 10% for exchange-traded funds to chase Japanese stocks instead.
Investors had hoped for stronger public spending to offset weak consumption but were disappointed after Premier Li Qiang downplayed the idea of big stimulus again at the World Economic Forum in Davos. The People’s Bank of China’s surprise move to hold its key policy rate unchanged Monday also curbed their enthusiasm. Officials even avoided acknowledging that the economy is in deflation.
3. Youth unemployment data returned after a six-month halt. The 14.9% jobless rate for December still looks concerning, although it was down from a record 21.3% in June, after which authorities suspended releasing such data.
While the government said its new methodology, which excludes students, reflected a more accurate picture of unemployment, some economists cautioned the fresh criteria made it hard to assess the December number. Still, more transparency is better.
