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Leland Miller on China: Steady high growth rates thing of past

Endless stimulus, ‘backstops’ now seen as threat to CCP, keynote speaker tells F3

Leland Miller is interviewed by FreightWaves CEO Craig Fuller at the Future of Freight Festival in Chattanooga. Photo: Jim Allen/FreightWaves

CHATTANOOGA, Tenn. — The pre-COVID consistent levels of economic growth China reported before the pandemic aren’t returning, even if its “zero-COVID” policies of lockdowns and restrictions were to be lifted.

That was the message of Leland Miller, the CEO of the China Beige Book International and a keynote speaker at the F3: Future of Freight Festival during an interview with FreightWaves CEO Craig Fuller.

Miller’s business grew out of what he said had long been a “serious problem with China watching. You can’t trust the China data and there is now more recognition of that.” 

The China Beige Book was created as a solution, using what Miller said was a basis that looked more to corporate performance, big and small, as well as domestic and foreign-owned, rather than Chinese government data.

The growth reports that have come out of the Chinese government for many years have been  data series with “beautiful lines” that reflect the fact that Chinese leaders “love stability,” Miller said. 

“The important thing is that there is no orchestration of this perfectly stable economy that you see,” Miller said. “There is significant volatility as you would see in any other environment.”


But regardless of what the data says, the strong growth rates of the past years are now “over,” Miller said.

 “It is over because the Chinese government has identified a continuation of this economic growth model as a vulnerability to the Chinese Communist Party [CCP] rule,” he added.

That economic policy has often meant the government would “prop up the economy with a lot of bad loans,” according to Miller. And the danger to the party comes if it “suddenly doesn’t work anymore.”

“People have not wrapped their heads around it,” Miller said. “[But Chinese President Xi Jinping is concerned with] how much money printing and endless check writing to bankrupt companies he can do.”

When the endless stimulus ends, it will not be good for the CCP, Miller said. So by slowing those practices now, the party can “get ahead of it.”

“The party is scared that continuing on this growth model will be a threat to its survival,” Miller said. 

It wants consumers and businesses to know that a permanent “backstop” will not continue to be a government strategy. He added that such a policy already has been implemented in the country’s once-red-hot property sector.

The Chinese economy is also suffering under its zero-COVID policy, which Miller described as a “massive, demand-crushing, smothering device.”

And the problem is that even if lockdowns were eased, as long as zero-COVID is still the law of the land — aimed at no cases at all — such a policy is slowing investment in the economy, Miller said.

Don’t get too excited about an end to China lockdowns when it comes, Miller said. In areas like Shanghai that were under stringent lockdowns that were later eased, as long as zero-COVID policies were on the books, even without lockdowns it stopped companies from investing.

Until zero-COVID disappears, “they’re not going to get out of their current funk.”

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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.