False dilemma

The decisions made by entire nations in this article are largely illusory, but the Defense Department loves the "Dragon as next greatest enemy" scenario. In any case, the notion that the Paper Dragon will somehow revoke its "financing" to the U.S. and create the domestic demand needed to support its (centrally planned) population should face harsh criticism.

This particular passage is interesting to note:

The trouble is that the Chinese clearly feel they have enough U.S. government bonds. Their great anxiety is that the Obama administration's very lax fiscal policy, plus the Federal Reserve's policy of quantitative easing (in layman's terms, printing money), are going to cause one or both of two things to happen: the price of U.S. bonds could fall and/or the purchasing power of the dollar could fall. Either way the Chinese lose. Their current strategy is to shift their purchases to the short end of the yield curve, buying Treasury bills instead of 10-year bonds. But that doesn't address the currency risk. In a best-selling book titled Currency Wars, Chinese economist Song Hongbing warned that the United States has a bad habit of stiffing its creditors by letting the dollar slide. This, he points out, is what happened to the Japanese in the 1980s. First their currency strengthened against the dollar. Then their economy tanked.

If only this tectonic shift of maturity swapping was true. TIC data (linked on this page) does not support this and shows either steady or slightly falling purchases of U.S. maturities by foreign concerns all across the curve. China has not done anything remotely like revoking the U.S. credit card. And, let us recall that the current account deficit is NOT "Financed" by foreign purchasers of U.S. dollar denominated securities. That is a remnant of the gold standard and is not applicable. The U.S. spends then taxes...it does NOT need to "get" dollars from Chinese or anyone else in order to deficit spend.

And the "going out strategy" reminds me of another Asian economy buying up real foreign assets such 10% appreciation to infinity golf courses...until those prices crashed as well. A heavily imabalanced fighter will typically lose to a well-rounded opponent, and the Paper Dragon has looked top-heavy for a long time.

The "reliability" of the Paper Dragon's Economic releases...

For anyone who reads this blog (search "Paper Dragon" and see previous articles), it should not be news that Economists are "questioning" China's wonderfully smooth growth records.

However, the financial media is now starting to ask questions about annual GDP growth figures that are (warning: slight exaggeration ahead) as smooth as Madoff returns.

All this "growth" and the Yuan does not appreciate. GDP and economic releases are and always have been an engineering problem (input X figures to achieve Y) for political regimes similar to China's system.


Economists at odds over China data reliability
By Geoff Dyer in Beijing
Published: January 14 2009 17:10 | Last updated: January 14 2009 17:10
Ask a Chinese official about the prospects for the economy this year and the response will be short and crisp – “8 per cent”. Some aim a touch higher, while a few others talk vaguely of risks. But none departs from the party line of uninterrupted high growth.



The target of 8 per cent is to assure Chinese citizens that the authorities have the situation firmly under control. Yet given the obvious and sharp slowdown in the economy in recent months, this confident prediction has reopened a debate about the credibility of Beijing’s growth statistics.

Since China’s ability to weather the international financial crisis will help determine the depth of the global recession, investors all over the world are asking whether they can rely on official statements about the performance of the economy.

Few economists doubt the underlying trend of high growth in recent decades in China, but many believe that the authorities play down the volatility of the economy – under-reporting growth in boom periods and over-reporting in the years when activity is weak.

The suspicion was underlined on Wednesday when the Chinese statistics bureau announced that growth in 2007 had been revised up to 13 per cent from 11.9 per cent – the second significant revision of the gross domestic product figures for that year. The reliability of statistics will be at the fore again next week when last year’s fourth quarter GDP figures are released, a period for which most indicators suggest there was a rapid slowdown.

The Paper Dragon redux...

Markets are, as evidenced by the recent peformance of the Hang Seng, finally waking up to the Macro prospects for China in light of a depreciating dollar against a Yuan that the PRC will not allow to
appreciate. Something has to give, and it will. As I have said many times, China (which I have pejoratively called "The Paper Dragon") is in deep trouble. If it allows the Yuan to appreciate, its export industry will be "adversely effected". If it does not, rampant money creation (read: inflation) is the result.

Now, academics (in China, no less) are waking up to the facts of life as well. China will now face an immense challenge to its legal rule set as the temptation to keep politically connected (yet functionally bankrupt) businesses afloat...which is the "objective necessity" (to borrow from the incomprehensible Marxist lexicon) of central planning. Ruling with an Iron Hand on a sliding scale indeed.

Link: http://piaohaoreport.sampasite.com/default.htm

excerpt:

Not all of my readers will agree that large Chinese banks are basically insolvent, but I am very skeptical that the published figures correctly state the extent of bad loans. They almost certainly understate the extent of expected bad loans associated with the surge in new lending over the past three years.

The option framework predicts that in such a case investor perceptions of the quality of management or of levels of non-performing loans will have little to no impact on the share price performance of Chinese banks. Instead share prices will primarily reflect investor perceptions of changes in China’s underlying economic volatility. China’s banks are expensive, in other words, not because they are in good shape, but rather because there is so much future uncertainty about the Chinese economy, and it is increases in that uncertainty, not improvements in the quality of the banks, that are most likely to drive prices up.

This has happened in many countries undergoing reform besides China. For example when Mexico’s 18 banks were privatized in 1991-92 as part of the massive economic and political reforms the country was undergoing (I was part of the team at credit Suisse First Boston that advised the government on the privatization), their purchase prices far exceeded even the most optimistic estimates provided by the advisors, the government, and the banking industry, which were largely based on discounting expected earnings.

The game.

The Paper Dragon continues to pressure its competitors for more IMF power...effectively positioning itself for a more "multi-lateral" world where IMF SDRs are the only true global reserve "currency".

These efforts should fail as the Paper Dragon's competitors (principally the U.S.) understand this strategy and are simply waiting for the inevitable massive GDP and associated wealth collapse.

Paper Dragon

Readers of this blog already know the REcapitulators opinion of China.  Now, the Bank of International Settlements weighs in with a good rendition of the "somewhat" obvious...

The Chinese economy seems to be demonstrating very similar,
disquieting symptoms," it said, citing ballooning credit, an asset
boom, and "massive investments" in heavy industry.

Some 40pc of China's state-owned enterprises are loss-making,
exposing the banking system to likely stress in a downturn.

It said China's growth was "unstable, unbalance, uncoordinated and
unsustainable"

Still Communist.  Still Centrally Planned. Still harboring great masses of people that have no access.  Hayek's "The Fatal Conceit" contained all of the intellectual groundpinnings for the refuation of such a plan.

Now let's add massive corruption and near institutionalized cronyism, which appear to be invevitable evolutionary appendages to Communism, and you have the paper dragon of China.

Market declines, inflation...

...lower (real) GDP forecasts, etc. And now, the world is focusing in on the demographic "challenges" the paper dragon faces.

This article is as good as any in levelling a healthy degree of skepticism regarding the Paper Dragon's prospects and global ambitions.

A snippet:

According to a United Nations forecast in 2008, the over-60 and over-65 age groups in China were expected to account for 12.3% and 8.2% of the population respectively in 2010, against 7.5% and 4.9% in India.

The new census demonstrates, however, that China’s population is aging even faster than expected. According to the survey, over-60 and over-65 make up 13.26% and 8.87% of the population.

The new Census also revealed that the imbalance between the ratio of boys to girls is also still increasing. The sex ratio in 2010 was 118.06, which is 1.2% more than 2000.

Based on the data of the 2000 census as well as the new census, China’s comprehensive national strength, from the viewpoint of its demographic structure, is currently at a historical peak. The working-age group of those 15-64 years, has reached almost 1 billion people, an all-time high, with the elderly dependency ratio less than 12%, and the general elderly dependency (ratio of the non-labor population to labor population) only 34%. In other words, China has never been less burdened by a non-labor population.

But again from the viewpoint of the demographical structure, China is set to repeat Japan’s economic recession experience of the 1990s. The difference is Japan became rich before growing old, while China is growing old before even getting rich. The average GDP of Japan today is above $40,000, while it is still just $4,000 in China.

The Paper Dragon...

...experiencing a (very) mean reversion.

This is partly reflected in higher commodity prices China must buy to satiate its manufacturing appetite (itself a function of control for the Communist Party).

But where IS the Paper Dragon getting those wonderful GDP figures from if net exports have been declining for over a year? Did a quarter of a Trillion dollars in domestic demand materialize out of the ether?

Of course not. Once those capital intensive negative present value projects financed by "loans" from Communist controlled banks begin defaulting in earnest, perhaps maybe, just maybe, we will see Chinese GDP figures ensconced on something approaching reality.

The Paper Dragon, post Olympics...

Much like my incessant posting of articles on the EU/$ cross, I will likely not post any more news relating to my "Paper Dragon" thesis. It appears that the liquidity crunch started on NY time and rotated counter-clockwise across the planet. The EU first, now Asia.

This article is the opening salvo of their putative problems.

http://www.nytimes.com/2008/09/05/business/worldbusiness/05yuan.html?_r=1&oref=slogin

Now the central planners have some explaining to do and difficult choices to make. Economics is the cause of most of the world's upheavals.

If a country with over a Billion people could not find enough spectators for Olympic events, I doubt they will be able to engineer a recovery out of this malaise.

From Dragon to Bear

The biggest risks in the world have transferred from the "Paper Dragon" of China to Russia, which has played its hand wonderfully during this Arab Spring.

As the direct beneficiary of marginal changes in Middle East oil demand, you can be certain that Russian interlopers have been operating in the region for some time in order to secure the necessary volatility.

The situation is reminiscent of the events leading to the battle of Adwa, with Russia countering the West's influence whilst simultaneously securing pipelines and stable demand in China and Europe.

Compared to the flailing responses of the U.S., these are masterstrokes.

Paper Dragon

I have made the argument here before that China is experiencing a bubble of its own and that 10% growth is unsustainable in a De facto centrally planned economy rife with cronyism and corruption. (not to mention that nearly 50% of the "earnings" of Chinese companies derive from stock market gains)

In addition to the above, it is beneficial to analyze the micro market and determine what events could serve as a catalyst to the inevitable volatility. The below is one such instance.

China's markets brace for massive share inflow: report Tue May 6, 1:11 AM ET


Chinese stock markets are bracing for fresh pressure in May when a massive number of new shares will become freely tradable after being locked up under local regulations, state media said on Tuesday.

A total of 284.1 billion yuan (40.6 billion dollars) worth of shares will become freely tradable in May at the expiry of a mandatory lock-up period, the Shanghai Securities News reported.

This is up nearly 90 percent from 150 billion yuan of newly tradable shares in April but was still in line with the monthly average for the whole year, according to the paper.

China's stock market hit a historic high in October, but then slumped by nearly half in the ensuing months, partly due to the overhang of these shares.

Only in late April did the market stage a rally, encouraged by a decision by Beijing policy makers to cut a stock transaction tax to one third.

Out of the shares that will become tradable in May, slightly more than half will be in Bank of Communications, the newspaper said.

The Paper Dragon...

...more of an Oligarchy than a Communist State. We see the angular momentum of power at work here. It does not change the world over unless some exogenous forces (such as term limits and other controls) the incumbent(s) to hand over the keys for the good of the system. From African warlords to Chinese revolutionaries...its all the same. Accumulate, accumulate, accumulate.

By FT Reporters
Published: March 29 2010 22:37 | Last updated: March 29 2010

New Horizon Capital is one of the most influential and successful participants in China’s fledgling private equity industry. It has billions of dollars under management and a stable of investors that includes Deutsche Bank, JPMorgan Chase, UBS and Temasek, Singapore’s sovereign wealth fund. But you would not guess any of that from its central Beijing headquarters.

The company has no nameplate in the lobby of the Golden Treasure Tower, a nondescript building near the Forbidden City, the traditional seat of imperial power. Its simple 12th floor offices are identified only by a small sign inside the door that reads, in Chinese, “New Horizon Growth Investment Advisory Limited”.

The company does not need flashy suites as it has one of the most valuable assets in China. He is Winston Wen, an MBA from Northwestern University’s Kellogg business school in the US who keeps a low profile and bears a striking resemblance to his father – Wen Jiabao, premier of the People’s Republic of China.

The younger Mr Wen and New Horizon are in the vanguard of a more aggressive generation of taizidang (“princelings”) – offspring of senior Communist party officials – who dominate the burgeoning home-grown private equity industry, where huge profits are to be made from restructuring state assets and financing private companies.

In 2009 private equity deals in China totalled $3.6bn, accounting for one-third of all such transactions in the Asia-Pacific region, according to Thomson Reuters. But industry participants say the potential market is far larger.

According to those working in the sector, the princelings’ ascendance is squeezing out less well connected operators, including foreign firms, which might have important consequences for two reasons. First, private equity could play an important role in modernising the economy, channelling funds to promising but capital-starved companies – but those benefits will be felt only if the industry is run in a professional and competitive manner.

Second, some in the political establishment fear that princeling dominance of private equity could exacerbate public perception of nepotism and misrule at the top of the Communist party. In an opaque authoritarian system lacking the popular legitimacy of a democracy, such fears are hard to dismiss. A recent online opinion poll by the People’s Daily, the party’s official mouthpiece, found that 91 per cent of respondents believe all rich families have political backgrounds.

In an interview with the same newspaper, the former auditor-general said the fast-growing wealth of officials’ children and relatives “is what the public is most dissatisfied about”. Li Jinhua, widely respected as the senior graft-busting official between 1998 and 2008, told the paper this month: “From the numerous cases currently coming to light, we can see that many corruption problems are transacted through sons and daughters.”

Many of the elite’s children are western educated and, over the past 15 years, dozens have been recruited by western companies and banks hoping to secure an entry into the Chinese market and win mandates to take state-owned companies public in New York or Hong Kong. As most foreign investors know, employing the relative of a senior party leader as an adviser or employee can help cut through bureaucratic obstruction and resistance from local interest groups.

Paper Dragon printing paper...

the risks here were fairly straightforward. China stuck between the proverbial rock and hard place, and the is caught in intertemporal public unrest management mode.

Chinese inflation sped to a 25-month high in October and bank lending blew past expectations, highlighting the challenge faced by Beijing as it battles to keep a lid on price pressures.

The data left little doubt about why the central bank raised reserve
requirements this week and pointed to further tightening steps, from
rate rises to yuan appreciation, in coming months.

Markets have already moved to factor in tighter policy with five-year Chinese government bond yields rising sharply in expectations of a rate rise before the end of 2010.

However, while world markets swooned in October on fears that Chinese tightening would dent demand, evidence of the economy’s continued strength and a belief inflation might drive investors to hard assets provided a lift to commodity prices globally.

Yuan (the paper of the Paper Dragon)

In response to a friend asking about the implication of Yuan appreciation:

While standard Keynesian macro-economic analysis adequately address the various "hand waiving" or "this happens then that happens in perfect textbook lockstep like fashion", one must keep in mind the probabilities involved here. What is more likely (or more easy politically), the Chinese government (still communist) allowing state-owned businesses to fail, or continuing to prop them up for a time? For example, China injected about 50 billion into a certain domestic bank prior to its IPO simply to clean up its liabilities and zombie loans...I very much doubt they will stray from those habits should the Yuan start hurting large exporters.

We can take a lesson from the Japanese MOF on this one. Its a very similar policy model in the sense that "all" of the MOF members went to the same university and think the same way: Weak yen = good until we can actually generate domestic aggregate demand (although I really am reluctant to use Keynesian concepts in todays world of fiat currency)

Lastly, let us quantify who owns what. Notice the foreign ownership of U.S. debt securities purchased by China on a monthly basis...some simple relationships reveal themselves while comparing net purchases, the U.S. dollar, the S&P and, of course, bond yields.

http://www.treas.gov/tic/s1_41408.txt

The paper dragon is printing paper...

...as I have stated here previously, the dangers of cost-push inflation in China is making Yuan appreciation impossible to accomplish. Control is slipping away.

Though inflation exists in China, rarely will an official warn the public to expect it to continue.

A member of the Chinese National Development and Reform Commission recently spoke anonymously to domestic media, saying that further interest rate increases will not control inflation so the public must simply be resigned to it, according to Deutsche Welle.

Subsequently, many media outlets, including China's state-run Xinhua News Agency, reported numerous responses from Internet users. The public decried the NDRC’s warning as illogical.

A continuous political signal, intent on stability and the suppression of discontent, is being sent: Endure the inflation because there is no way out.

As Markus Taube, director of East Asian Studies at the University of Duisburg-Essen, explained to Deutsche Welle, stability requires that inflation be controlled; had there been no inflation at the end of 1988, the bloodshed during 1989 might have been avoided.

Since then, the Chinese regime has been alert to the threat inflation poses to stability, and is now admitting openly that interest rates cannot stop rising prices. Some bloggers are actively suspecting a replay of the “Jin Yuanjuan” era (a currency that lasted only 10 months and depreciated more than 20,000 times its face value) during the late 1940s.

Taube says that the simplest way to relieve inflation is to allow the renminbi to appreciate, avoiding international currency speculation, encouraging investment into China, and increasing both the circulation of currency and the pressure on inflation.

But the consequence is that currency appreciation will seriously affect export costs and lead to a chain reaction from the public—something the Chinese regime would rather avoid.

"Control"...

...is a brittle, somewhat fictive thing when it concerns national interests.

The cycle of life continues...just as Cuba has been ruined by totalitarian rule via "freedome fighters", so to has China's idustrial output been appropriated by "communists".

Labels are useless when analyzing these societies. It is a simple matter of power and the means of production. It is a strange truth that China is much closer to the Bourgeoisie/proletariat dichotomy than the U.S., so I guess they follow their philsophical master in at least one respect...

from a Foreign Affairs article outlining some of the "challenges" the Paper Dragon faces:

Increased misappropriation of land, rising income inequality, and corruption are among the most contentious issues for Chinese society. China’s State Development Research Center estimates that from 1996 to 2006, officials and their business cronies illegally seized more than 4,000 square miles of land per year. In that time, 80 million peasants lost their homes. Yu Jianrong, a senior government researcher, has said that land issues represent one of the most serious political crises the CCP faces.
From 1996 to 2006, Chinese officials and their business cronies illegally seized more than 4,000 square miles of land per year. In that time, 80 million peasants lost their home.

China’s wealth gaps have also grown; according to Chinese media, the country’s GINI coefficient, a measure of income inequality, has risen to about 0.47. This level rivals those seen in Latin America, one of the most unequal regions in the world. The reality may be even worse than the data suggest. Wang Xiaolu, the deputy director of the National Economic Research Institute at the China Reform Foundation, estimates that every year about $1.3 trillion in income -- equivalent to 30 percent of China’s GDP -- goes unreported. More than 60 percent of the hidden income belongs to the wealthiest ten percent of China’s population, mostly CCP members and their families. The use of political power to secure inordinate wealth is a source of considerable resentment, and the wealthy are keenly aware of it. They now employ more than two million bodyguards, and the private security industry has grown into a $1.2 billion enterprise since it was established in 2002.

The Paper Dragon...

Getting closer and closer to open flames...

Kenneth Rogoff, ex-chief economist for the IMF, told Bloomberg Television in Hong Kong that the denouement could prove abrupt after such a torrid boom. "You're starting to see that collapse in property and it's going to hit the banking system," he said.

The government is trying to deflate the housing market gently, mostly using tools known as "financial repression" rather than Western style rate rises. Xu Shaoshi, land minister, said sales are already dropping. "In another quarter's time or so, the property market will probably come to a full correction and prices will fall. It's hard to say to what extent they will fall," he said.

At the same time, China is shifting its foreign reserve strategy, rotating out of Europe and into Japanese government bonds (JGBs). Japan's finance ministry said China bought $6bn (£3.9bn) of bonds from January to April, a record pace of accumulation.

Analysts say Beijing is hunting for fresh places to park its reserves after losing confidence in eurozone debt. It already holds around 70pc in dollars, a level deemed too high by many in Beijing. China's move helps explain the fall in yields on 10-year JGBs to just 1.06 pc last week, and why the yen has appreciated to ¥87 to the dollar -- nearing levels last seen in 1995.

China views soaring house prices as a threat to social stability, since workers are shut out of the market. The price-to-earnings ratio is 13 in Beijing and Shanghai, four times Western levels.

Charles Dumas from Lombard Street Research said China's boom had been driven by its fiscal stimulus of 13pc of GDP, the largest ever by major country in such a short period. The boost was concentrated in 2009, with credit growth running at 25pc of GDP.

"The Chinese had nowhere to put their savings since real interest rates were negative and capital controls stopped them investing abroad, so they bought apartments," he said.

The Paper Dragon has it under control.

...and yet, wage pressures subsist in light of price controls.

“China has made capping price rises the priority of macroeconomic regulation and introduced a host of targeted policies. These have worked,” Wen said in the commentary.

“We are confident price rises will be firmly under control this year,” Wen said.

He said the current situation follows increases in banks’ required reserve ratios and interest rates, which were hiked 12 times and four times, respectively, since 2010. He also cited reforms to the yuan’s exchange rate in June 2010, which have so far led to a 5.3% appreciation against the U.S. dollar.

The magnanimity...

...of the paper dragon once again "surprises" us.

In an export-driven economy that benefits from currency depreciation, this was certainly not motivated by a desire to help the rest of the world.

Another round of competitive devaluations. This will be fun.


By Joe Mcdonald, AP Business Writer
China's premier says stimulus package `biggest contribution' to world; Asian stocks rise

BEIJING (AP) -- China's massive stimulus package will help contribute to global stability by boosting investment in the world's fourth-largest economy and consumer spending, the nation's top economic official said Monday.
Faced with the prospect of zero export growth, closing factories and mass layoffs, China joined moves by governments around the world to cushion the blow of the global slowdown with the announcement of the $586 billion package.

Stock markets in Japan, Hong Kong and mainland China soared in response.

The plan calls for higher spending on roads, airports and other infrastructure, tax deductions for exporters and more aid to the poor and farmers. Spending on health and education will increase, as well as on environmental protection and high technology.

"We must implement the measures to ensure a fast and stable economic development," Premier Wen Jiabao said at a meeting of government leaders, according to a report read out on the state television. "They are not only the needs of the development of ourselves, but also our biggest contribution to the world."

The announcement comes before Preisdent Hu Jintao attends a meeting this week in Washington of world leaders to discuss a response to the global crisis.

Exporters say orders have fallen sharply, leading to an increase in factory closures and layoffs. Chinese economic growth fell to 9 percent in the latest quarter, its lowest level in five years, and analysts expect export growth to fall as low as zero in coming months as global demand weakens.

A beautiful anecdote...

...about economic realities within the belly of the Paper Dragon. You simply cannot make this stuff up.

(from the FT)

Before his arrest on corruption charges, Wang Yi was not only a powerful financial official in the Communist party but also one of China’s most celebrated modern classical music composers.

But since his detention and arrest last year, Mr Wang’s magnum opus – a symphony called Ode to China – has been dropped as a repertoire staple of the China National Symphony Orchestra and his compositions derided by formerly adoring media commentators and critics.

Mr Wang is described now as someone who has trouble reading music, had no formal training and was reliant on ghost writers to produce what was once hailed by state media as “China’s answer to Mozart” and “music for rejuvenation of the nation”.

Official reports suggest that most of the millions of renminbi spent on tickets to see Mr Wang’s works came from businesspeople and officials hoping to curry favour with him.

The case is one example of the extraordinary influence senior party officials with few or no artistic credentials wield over the Chinese arts.

Critics say these factors are the main reason China, the world’s biggest exporter of manufactured goods, has produced relatively few cultural or artistic exports in recent years – despite a multibillion-dollar global campaign and regular exhortations from leaders to develop the “cultural industries” and “soft power” of the nation.

“The officials want China to be seen as a cultured, creative nation, but in this anti-liberal political society everything outside the direct control of the state is seen as a potential threat,” says Ai Weiwei, a well-known contemporary artist and a bold critic of Communist party rule.

“The people who control culture in China have no culture, and in this system art provides a hugely lucrative source of corruption.” Mr Ai notes that artistic works, because they are not officially included in the assets of officials, have become popular as bribes, and many officials have learnt to paint, write or compose music so they can sell their works to people who expect favours in return.

Because of the patronage and benefits officials can bequeath, their work is lauded as genius, unless they fall from grace, as in Mr Wang’s case. Two weeks ago a Beijing court handed him a death sentence suspended for two years, so he is likely to remain in prison for the rest of his life.

Mr Wang served first as vice-chairman of China’s securities regulator in charge of share issuance and fund management, and later as vice-governor of the powerful state-owned China Development Bank, which owns part of Barclays in the UK.

Although he had never studied music and had not heard a full symphony until eight years ago, Mr Wang decided to nurture his latent talent after a trip to Tibet, during which he was struck with an overwhelming urge to sing.

Its Official...

...the Paper Dragon has now capitulated somewhat.  Recall all those silly tomes designed to induce fright regarding the downfall of America and the rise of China as the ascendent hyper-power.

It is Russia that will suprise us with Imperial ambition, not the Middle Kingdom.

HONG KONG — Premier Wen Jiabao of China warned on Sunday of “huge downward pressure” on the Chinese economy, in the clearest expression yet of concern at the top of the country’s leadership about a sharp slowdown in recent months.