Liu, the bankrupt scrap dealer, said abandoning Beijing was her family’s only option. “It’s natural. We came here for work. We lost 200,000 yuan. We can’t afford to live here any more,” she said.
“Maybe one day we’ll return – but I don’t know when.”
That’s anecdotal of course, but it does seem to be a general trend. So it’s time to start asking a very simple economic question: what would count as evidence for pending Chinese negative economic growth? I don’t mean permanently negative, just negative for the duration of a recession.
Imports and exports falling 7-8% don’t cut it, because durables-based foreign trade falls much more rapidly than the rest of an economy. You could have positive growth of three percent, mostly in the services sector, and still plunging demand for raw materials on global markets.
So what would count as a sign of pending negative growth? When individual dealers with essentially no remaining capital return to the countryside for cheaper living costs? Foreign investors wishing to leave the country or radically cut back? Inquiring minds wish to know.
The Guardian article is here, with good cameos from Adam Minter and Christopher Balding.