China Admits "Economic Downturn Just Beginning", Slashes Salary Guidelines

Tyler Durden's picture

In what may be the most direct admission that China's economy is about to grind to a deflationary halt, today China's Global Times, a newspaper which is seen as a propaganda companion to the official People's Daily, revealed data showing this year's proposed salary guidelines according to which there is a broad wage growth declines in virtually every single province on the mainland, which according to the Chinese publication "confirms the country is experiencing an economic slowdown."

Salary guidelines are issued by local governments as a reference to help firms decide how much they should increase their employees' salaries. They are based on labor market conditions and economic growth, among other factors.

Global Times notes that compared to 2015 salary guidelines, wages in 2016 have grown at a slower rate in virtually all 19 provinces and regions that have so far published their annual guidelines for firms. Northeast China's Heilongjiang Province has not released salary guidelines for years as the region has been experiencing a recession and therefore wages are not generally increasing.

Seventeen provinces have seen a decrease in salary standards, including North China's Hebei Province, South China's Hainan Province, Northwest China's Xinjiang Uyghur Autonomous Region and East China's Jiangxi Province. The only increases were seen in Southwest China's Guizhou Province and Beijing Municipality.

"2016's guidelines have seen a slowing of salary growth after years of increases, which means that the speed of wage growth has surpassed economic growth since China's labor contract law was adopted in 2007," Wang Jiangsong, a professor at the China Institute of Industrial Relations, told the Global Times on Tuesday.

Confirming that the only way for Chinese wage growth is down, Wang Jiangsong, a professor at the China Institute of Industrial Relations, told the Global Times that "since China's labor contract law was adopted in 2007, wage increases have surpassed economic growth."  He said the slowdown reflects China's economic downturn. It also means that local workers will not be happy.

But more troubling was Wang's next admission: "the decrease reflects Chinese economic downturn, which is just now beginning and will last a long time since China has passed its economic boom period in which many problems were hidden but now those problems will gradually surface."

In short, declining wage growth, with aggregate 2016 demand driven by the biggest credit impulse and expansion in Chinese history. To all those who truly believe in the global reflation these, we wish you the best of luck.

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HRH Feant's picture
HRH Feant (not verified) Dec 6, 2016 4:33 PM

Oh well. Let the Chinks suffer. About time. The US stopped being their doormat. GOOD.

Cognitive Dissonance's picture

Remember when it was said "When America sneezes, the rest of the world catches a cold?"

It may just be the other way around, only this time China has a cold and America catches pneumonia.

Grandad Grumps's picture

American business will start coming back to America and that will cause trouble around the world.

Will we be happy then? I don't know.

The Black Fleet has returned.

knukles's picture

As an export state, China's down turn means that the buyers of her iCrap and trinkets, knockoffs and MSG is slowing.
China merely responds to a decline in the final demand for her stuff
Which is ubiquitous, globally

Think about that for a sec.... "ubiquitous, globally"

 

undertow1141's picture

Wise old adage "Don't put all your eggs in one basket."  In this case China is the basket into which the US corps and Politicians put all our eggs in. This can't/won't end well.

daveO's picture

If/when the Chinese get desperate enough, they may pull a 'Chavez' and take the other 49% ownership of those factories. 

Stuck on Zero's picture

China can build a few dozen more cities and voila ... everything is good again.

Draybin Deffercon III's picture
Draybin Deffercon III (not verified) Cognitive Dissonance Dec 6, 2016 4:40 PM

A ChiNa crash could be very negative for Bitcoin.

https://localbitcoins.com

CPL's picture

Vegan zombies want grains....in Europe...where all the money is.  So free cruises have been arranged to dump a billion tourists that once filled the charity camps you all helped create to ease your white guilt of running the drug and gun trade in Africa for so long.  Africa has decided to ship you all the overhead that you created and paid for.  The bond market isn't the only thing out that where chickens come home to roost.  Let no good deed go unpunished is going to be the lesson here.

-gets popcorn-

-deploy Tripoli cruise line services-

-give them a billion poor and starving masses-

-Jazz Hands!-

Arnold's picture

The first thing you've ever posted that I agree with completely.

Must be The Donald-elect effect?

Let us carry on before we become soppy.

gustolehe's picture

or not. if it comes with a devaluing yuan - this generally sees an increase in btc. if china goes down hard (remembering how much credit is in the system) then there goes export markets, there go the mineral producers, there goes the chinese property bubble, there goes Canada, Oz property bubbles. Replace it with currency wars, economic wars and eventually hot wars. In this case everything gets hurt, but gold and bitcoin will be first to reverse.

Arnold's picture

If I wanted Bitcoin, I would have to buy it through a vender.

Almost no one is a miner.

The commies know how and where it is being converted,

That is the weak link.

FuckJanetYellen's picture

Nothing a little wonton soup can't fix.  Fuckin Gooks!

FuckJanetYellen's picture

Nothing a little wonton soup can't fix.  Fuckin Gooks!

Arnold's picture

You mistake Chinese with Vietnamese.

Very common with room temperature IQ trolls.

And up vote yourself too.

Tsk...Tsk.

May I speak to your supervisor, please?

gdpetti's picture

True, the worse thing anyone can do to an empire is tell the truth to its own people... which is why we here in the States are fed fake news our entire lives.. unless we seek our the truth for ourselves... assuming we are looking for it and have learned to recognize it when we find it. The West has been setting up CHina for the last few decades, and under Xi, the Chinese are taking the reins back for themselves... or so it seems... and what better way to send a signal to Wall Street and the rest of the Western banking empire than tell the truth about their own economy? Something we would never do unless we want to pop the balloon ourselves? If China sneezes, it's guaranteed that the world will catch a cold, as it has been the biggest driver of the global economy in the last decade.

Keep unloading all that USTbill debt... let your rich citizens know that the Western bubble is about to pop... send the signal for market collapse... Wall Street will love it, no? Add in all the other black swans, and it seems CHina is just helping us out... putting a pin in our hands as if they learned how to play Russian Roulette.

FredFlintstone's picture

China only owns $1.3T. A drop in the debt bucket.

laomei's picture

China is a country that no one actually needs.  They have nothing really all that special about them.  All "their" technology and innovation were stolen from others.  Their supply chains are an artificial construct as well.

 

The only reason China ever mattered was because of cheap labor.  Welll, labor is no longer cheap in China.  To pay a worker $1000 a month, you will be paying the government another $1200.  And when you let that worker go, you will be shelling out $20,000 in fees, fines and penalties.  When your IP is stolen, you will be laughed at. When you spend half a million dollars to fight, you will be awarded $30,000 and the other company will vanish and reform as a new company which you have to sue all over again.

 

With automation, there is no reason to give a shit about China at all.  

11b40's picture

I think you are very close to correct.

I also wonder what China will do when the peasants realize that robots are replacing them, and the riots start.  A billion hungry Chinese will not be a pretty sight.

Rey dTutto's picture

Hungry folks historically become warlike. WWIII may be caused by multiple revolutions instead of empires clashing.

Consuelo's picture

 

 

"...China has a 'cold'"...?

 

Damned dyslexia again...   I coulda sworn I saw: 'China has a gold'...    Now that would probably be more like MRSA pneumonia...

SilverRhino's picture

Watch what happens if a civil war breaks out in China.   They'll be dead for the next 80 years in international trade.

 

Kirk2NCC1701's picture

The leader of China's Green Shoots Party asks for a recount.

Grandad Grumps's picture

Hmmm ... from my experience, the Chinese are just people too, who basically want the same things for their families that we want.

We seem to get all hung up on what governments want and do and do not understand that governments don't actually represent the people. Governments want to control the people because they fear the people.

Son of Loki's picture

Will those Mainland Gubmint officials still be able to buy the multimillion dollar shacks in Seattle, SF, Hongcouver, etc?

I'm waiting until Trump taxes foreigners on their yuuuge holdings in the USA. Some sweet revenue there.

SILVERGEDDON's picture

Governments want to control the people because they want to live off the people's efforts for a free ride.

There. Fixed it for ya.  

HRH Feant's picture
HRH Feant (not verified) Grandad Grumps Dec 6, 2016 5:03 PM

GG: I agree. Which is why I named Xi. And included a slur. Not accidental. A little humility is usually good. What is that old proverb? Pride goeth before the fall. Indeed.

E.F. Mutton's picture

Have they considered the wondrous benefits of unchecked muzzie immigration?

CJgipper's picture

The solution is clearly importing more rapefugees.  They'll do the jobs that Chinese won't and fix the demographic issue all at once.

joego1's picture

They have already appropriated entire Muslim provinces which have given them indigestion to the max.

ZoroAustrian's picture

Surprisingly honest macro-economic communication for a 21st C. govt.  When have we ever heard something besides "everything's great, print moar!" from our fearless leaders?

Cognitive Dissonance's picture

If they are admitting to this level of contraction, it must be really really bad.

Last of the Middle Class's picture

I used to see signs in West Texas when I lived there that said "Please God let there be another Oil boom. I promise I won't piss away all the money next time"  Same with China. See ya at the next raping of the American worker for cheaper shit at Wal Mart!

HRH Feant's picture

I make a good chunk of change reselling all of that shit stored in people's houses. You gotta love America!

NoDebt's picture

"Salary guidelines are issued by local governments as a reference to help firms decide how much they should increase their employees' salaries."

Just when you think the US is about the worst, most intrusive, over-regulated police state on this fucking rock, you get a reminder it could be worse.  A LOT worse.

Here's how much you can pay your employees.  Sincerely, your loving, benevolant government.

You want to know why I think China is doomed to failure and will NEVER be a world power?  That's why.

 

wisehiney's picture

Sounds highly deflationary.

Initially.

Bill of Rights's picture

I'm in the stagflation camp which is very positive for Gold ...

Bill of Rights's picture

" Making China Poor again "

Cardinal Fang's picture

No work, no rice!!!

Somehow I get the image of that female cadre in 'The Killing Fields' smacking the guy down before they put the plastic bag over his head....

Rainman's picture

Just beginning ?

In the words of the infamous Larry Lang , circa 2011 ..." Every province in China is Greece "

http://investmentwatchblog.com/professor-larry-lang-every-province-in-china-is-greece/

Son of Loki's picture

Due to climate change I'm sure. However, I'm glad the Chinese are not blaming any of their economic disasters on Trump....yet.

NugginFuts's picture

Next article forthcoming:

 

Renowned Chinese Professor Goes the Way of Vince Foster;Govt Hails New Era of Amazing Economic Growth.

 

Anyone not towing the party line re: all things "Everything is awesome" will be Mao'd into silence.

Being Free's picture

This news is hugely bullish for US Equities and may be the spark we need to get valuations reflated to higher, more reasonable, levels and get the markets moving higher again. 

Calc's picture

The last 25 years were all about China contributing to global GDP... Where will the next "growth engine" for the world come from?

Arnold's picture

The new Mexican State of California?

People's Republic of South Canada?

Texican Republic of Austin?

sinbad2's picture

Central Asia, the last un-raped market.

That's why the US wants to invade Russia, to get to central Asia and be the middleman selling Russian resources to Asia and Europe.

moonmac's picture

When China’s lead times drop from 90 days to 30 days it’s not because their productivity tripled.