Kudlow has no insight into Chinese economy

Source:Global Times Published: 2018/8/18 6:34:45

Larry Kudlow, US President Donald Trump's top economic adviser, said Thursday that China's economy looks "terrible," and that investment there is "collapsing." Kudlow also warned that China should not underestimate the hardline attitude of the US. 

Kudlow made those remarks in response to Trump's question at a cabinet meeting about China's prospects and his statement could be regarded as both a warning to China and the cheering on his White House colleagues.

Citing unsubstantiated data, Kudlow said that "Chinese retail sales, business investment is collapsing." Kudlow also insisted that Chinese industrial production has experienced a tremendous tumble and is now lingering at a low level. 

However, there is a huge difference between Kudlow's statement and the newly released statistics in China.

China's economic growth was robust from January to July this year. During this period, China's high tech industries increased 11.6 percent year on year while equipment manufacturing and strategic emerging industries increased 9 percent and 8.6 percent respectively. The supply structure is being continuously optimized. 

Furthermore, retail sales for communications equipment and cosmetics have maintained a two-digit growth. Manufacturing investment growth has rebounded for four consecutive months. 

Fixed asset investment in the private sector gained 8.8 percent, a small increase for two months in a row. 

Over the last seven months, China's economy has also achieved several major goals including stable production growth, better supply structure, employment and price stability, continued growth of economic vitality and the improved economic outlook. As seen by all, China's economy has revealed strong resilience and vitality during the trade war provoked by the US. 

It is true that the strength of US dollar against the yuan has led to an increased number of people wanting to change yuan for dollars. However, it is unclear whether Kudlow wants to see the Chinese renminbi depreciate or appreciate. In the past, the US accused the Chinese government of manipulating currency and also boasted that depreciation is a sign that people are selling Chinese currency to withdraw from China.

Kudlow was well known for being an economic media commentator on CNBC before he started serving as director of the National Economic Council. His most well-known exploits were when he wrote articles praising the American economy and resolutely denied the possibility of the US getting caught in a financial crisis, just before the start of the subprime mortgage crisis.

American economist and Nobel Prize winner Paul Krugman once said about Kudlow, "At least he's reliable, that is, he's reliably wrong about everything." 

According to White House officials, one of the major reasons Kudlow was hired was because the White House wanted someone who can advocate the US' policies on TV. We must admit, Kudlow has done that part of his job very well.

It's also important to remember that Gary Cohn, the former economic advisor to Trump, was replaced by Kudlow due to his insistence on free trade.

In fact, Kudlow supported free trade and opposed arbitrary tariff increases before accepting his new position, meaning that he completely abandoned his ideals when he took Trump's job offer.

Kudlow is acting more and more like an ideological activist now. Based on his political stance, vague impressions, and incorrect information, Kudlow is advocating for the White House to commit a fully-biased trade policy toward China.

The White Houses' top economic advisor is a key position that requires the highest level of professionalism. Many of Kudlow's predecessors are well-known economists who used to abide by the integrity of scholars to maintain an objective position. Their job was to provide consultation to the US president and refused to make decisions.

In this regard, Kudlow is an exception.

As Trump's top economic advisor, Kudlow is not making any contributions toward the settlement of China-US economic relations. Instead, he is trying to justify the US' trade war against China.

It appears as though Kudlow is attempting to continue his job as a TV commentator and is purely passionate about winning a "war of words."

It should be noted that Kudlow is not the toughest hardliner in the White House and is known for his flexible political stance. He only recently made a visit to China in May, so his knowledge of Chinese economics is limited. If Kudlow could spend more time on professional research and analysis, he could gain more respect in the US and abroad.

Posted in: EDITORIAL

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