COMMENT: Dear Mr Armstrong,
Absolutely agree that the lockdown and social distancing will alter society profoundly. Notwithstanding the China’s government promoting inter-province movement, there is still lingering reluctance by the people to travel to Hubei province unless they have to. Apparently the narrative now on social media in China is to avoid Guangzhou because of some recent infection cases. This demonstrate the psychological impact on the population as a whole and the stigma of coming from the most affected province.
Just last week a friend whilst driving a car with Hubei province number plate (not even a Wuhan’s number plate) into a shopping complex car park in Guangzhou province, he was singled out for temperature checks whereas cars with local number plates are only randomly checked. And this occurred repeatedly in other car parks too.
The difference in China is that the government is actively promoting economic activities (work resumption) and integration whilst being on guard for cluster outbreaks. Local city councils had introduced cash vouchers lottery in shopping complexes to draw crowds. Restaurants are giving larger discounts than before. E-commerce for agricultural products directly from farms to consumers are being promoted aggressively. Logistics are being prioritized. Auto sales are being promoted even by provincial governments by offering special discounts. In short all things about economic activities are being promoted.
For now, as you said economic sluggishness will likely to persist for a while because of the loss or reduction of income and reduced sales especially in the services sector. Major industrial firms’ profits fell 37% y-o-y for Q1 and is forecasted to fall 10% y-o-y for Q2. Certainly “close proximity” businesses are more affected than others. 9 million new graduates will enter the sluggish job market. Some bright spots are the 86 million trips booked for this 5 day May holiday which is higher than last year’s and the return to normalcy for Shanghai’s traffic. Shanghai and Wuhan traffic. Though Wuhan’s dine-in restaurants are the most affected, reports from friends are that restaurants in other less affected cities are returning to some semblance of normalcy though they have to offer bigger discounts to draw in the customers.
China has no illusions that cash handouts directly to the population (targeted group, yes) will be the answer. Instead they prioritize assisting businesses to survive as they provide employment. They understand CONFIDENCE is the key to promote economic activities. And I believe their understanding of this is reinforced over the years since your meeting with them in 1997.
It is human nature that it takes time for confidence to return. Thus the outcome of the post world-wide lockdown is also dependent on the regional population’s experience as well as the government’s policies.
Mr Armstrong, perhaps your influence in the acceleration of capitalism in China is much more than it is known. How about having your books on “Economic Confidence” being translated into Mandarin which may very well turn out to be a best-seller ?
Thank you for sharing your observations and knowledge with all who want to understand the “inter-connectivity of all things” we humankind do. I definitely had my eyes opened up after 4 WEC and 6 years reading your blog.
REPLY: Yes, I would like to begin to translate to Mandarin. It is very clear that the West is in the process of committing economic suicide. China has the opportunity to become the Financial Capital of the World provided they respect the free movement of capital and ensure the legal system is fair and just. Global capital flows will dry up as a direct result of this virus and the insane reaction of politicians. They have been using this for political gain, but in the process, they are destroying the economic survivability of the West. Where Communism fell in China and Russia during the first 8.6-year wave, we are looking at the aggressive attempt by the Socialists to seize power in the West that will only destroy the economy which forced the same collapse of Communism. You simply cannot suppress the people indefinitely. Human rights* are about freedom — not suppressing the individual for the benefit of the state.
When I was invited by the government back in 1997, I met with the central bank which was being run by people who actually had the experience. They had been sent to work at various banks around the world and then returned with knowledge of how the real world works. I was also taken to a secret facility where they were monitoring everything on the internet and downloading knowledge to become capitalistic. I was taken to a meeting and shown that they were monitoring every price and showed me 249 varieties of tea they were tracking. What I was most impressed by was they were monitoring everything to learn, but they were not interfering. They were studying the free market movements which are critical.
- Americans use the term civil rights which to the rest of the world is called human rights. American courts typically see human rights as closer to crimes against humanity, i.e. Hitler or Stalin. This definition of American civil rights more appropriately translates into human rights, i.e. the United Nation’s Universal Declaration of Human Rights.