I answered a question on Quora.
It doesn’t matter how China is doing at any time in history. The Chinese do not think like Westerners and only a Westerner would ask how is “China doing” at any given time. “Is doing” is present tense. Western thinking. The Chinese authorities are focused on the future. The short answer is that China will do quite well economically because they understand economics.
Unlike the US and allies, China thinks long-term (so does Russia).
Western style democracy actually prevents problems from being solved because both government and business only think of short-term solutions. Politicians, like Trump, are focused primarily on getting votes in the next election. They are not particularly concerned with whether the economy will crash after they leave office unless the crash will affect their party’s chances of dominating the Senate and/or Congress.
Trump is focused on solving short term economic problems. He does not understand macroeconomics. In macroeconomics, you know that in the oil and gas business, science and technology are part of the economic equation. Thus, a good economist understands, for example, that, all things being equal, no matter how much a government subsidizes or promotes the energy industry, liquefied natural gas (LNG) can’t compete with gas delivered in a pipeline. Yet Trump insists that Europe simply MUST buy US LNG and stop buying Russian pipeline-delivered gas.
He thinks that they are just being proud and stubborn when they refuse to buy his gas. But in fact, they understand some basic economic principles and it is this understanding that dissuades them from buying American.
A good economist in the oil and gas industry knows two sci-tech principles about hydraulic fracturing (fracking) that the government also should know if they want to foster a healthy economy and avoid investing in boondoggles:
1—extraction of gas or oil by fracking is an expensive process and will make the product less competitive than a product obtained without the use of it, that is, the product obtained from Saudi Arabia, Iran or Russia that is obtained without the cost-adding process of fracking.
2—deposits extracted by fracking have a shorter useful life and require more-frequent drilling and/or reprocessing.
An article by Nick Cunningham posted at oilprice.com discusses this issue in some detail:
“… shale wells typically see production deplete by 70 to 90 percent in the first three years, while fields see output drop off by about 20 to 40 percent per year without new drilling.
That means that the industry has to constantly plough more money back into production, just to keep output flat.
At the same time, not every shale well is the same. The core areas, or “sweet spots,” typically make up just 20 percent of a given shale play. When shale drillers move beyond the core, they tend to post less impressive production figures.”
This site says average lifespan of an oil and gas well is 12 yr
While [fracked] shale gas wells have a long life, they drop down to about 10% of their initial production after about 5 years or so.
Jacqueline George, Author of Fracking 101 A Beginner's Guide to Hydraulic Fracturing
Answered Oct 16, 2016
I’m not going to stick my neck out too far on this one because we don’t yet have the evidence for modern horizontal wells. I can say that the production flush for a new shale well is very short lived and by two years the wells are typically limping along.
This real-world science-based info on fracking is why the purely economic picture looks so dismal, with most US oil operations running in the red or showing near-negligible profits, as reported, for example, here.
Diamondback Energy and Continental Resources had breakeven prices at about $52 and $37 per barrel in the third quarter, respectively, according to the Al Rajhi report. Parsley Energy, on the other hand, saw its “cash required per barrel” price rise to nearly $100 per barrel in the third quarter.
I think the most relevant question here is why the oil execs sank so much money into fracking ventures before doing the feasibility and profitability studies that would have shown that fracking was not a paying proposition for their shareholders. And I think the answer to that is that politicians and msm hyped fracking and the notion that America had the largets oil and gas deposits anywhere in the world and that it would be patriotic to invest in their extraction, particularly as if would show those Russians that the US is no. 1.
Trump’s typically short-term solution to the slump in the oil business was to push for a tax “reform” that went into effect in 2017. This bill gave oil companies negative income taxes, or in other words, corporate welfare, paid for out of taxpayer funds. When Mussolini did this sort of thing -- ie, mixing busines and government, they called it fascism. Some called it corporatism. And that is what America and its allies have. This is not textbook capitalism any more.
So the man who thundered at China and slapped tariffs on its exports for subsidizing its exports is doing exactly that, subsidizing US exports.
Now, let’s not forget the other side of the coin. Remember when Trump came back from his China trip and boasted of all these deals signed with Xi to buy American? Most were not contracts but just memoranda of understanding (MoU’s) – not binding by definition -- and most went nowhere. China gets to play too, and one of its first responses was to abruptly end a deal made to buy US LNG.
Remember we said that China plays the long game, and one of the long-term weapons against the US is an arrangement with Russia and the EU in response to the Iran sanctions. It is called the Special Purpose Vehicle, and its purpose is to create and implement a new payment transfer system to replace the US SWIFT system, which has been used for years as a weapon against nations that refuse to kowtow to the bullies in Washington. The EU has seriously resented Trump and his sanctions and tariffs, particularly his heavy-handed attempt to force Europe to buy US LNG and wean itself off Russian pipeline gas. They told him outright his sanctions on Russian gas were an attempt at extortion. This foolish attempt on his part turned the tide in Europe and now they are determined to go it alone economically – and probably in other ways as well.
Once this system is completed and in place, if it is successful, there will be less – or no – bite in the US sanctions. This will be a tremendous boon for Russia, Iran and China in particular but also for many other recipients of US abuse. But worse, for the US, is that it will become quite easy to make international trade settlements in non-dollar currencies without recourse to a US weapon of economic destruction. Trade settlements in any currency provide added value to the currency in question, and are a step in elevating the currency to reserve currency status. The euro is the prime candidate for replacement of the US dollar. But the yuan is not far behind.
So, to answer the question, China is not doing too badly, but the prognosis for Chinese future growth looks good. Thanks to Donald Trump.