Wolff Responds: "Being Silly About China" dated July 22, 2026

[00:00:00]Welcome friends to another Wolf Responds.

[00:00:05]I call this one being silly about China.

[00:00:10]We all know, you know, and I know, that China is now, if not the enemy or adversary of the United States, it is that part of the world about which Americans are becoming increasingly anxious.

[00:00:31]This program is called being silly about China.

[00:00:38]Because anxious can, if you're not careful, lead you to become silly about anything.

[00:00:46]And we have become silly about China.

[00:00:51]Not a nice silly, not an impressive silly, a kind of pathetic silly, but one that needs to be talked about. What do I mean?

[00:01:03]Here we go.

[00:01:05]Over recent weeks, there have been headlines, perhaps you've seen them, indicating that the annual growth rate of the economy in the People's Republic of China is at one of its lowest levels in years.

[00:01:23]Namely, an increase scheduled for this year, and they know enough about what's going on to get a good estimate of this year, will be very close to what it turns out to be, 4.3%.

[00:01:40]What that measures is the growth of the Chinese economy.

[00:01:45]It literally adds up all of the goods and services they produce. It's called the gross domestic product, GDP, and it's growing at 4.3% in the year 2026.

[00:02:02]>> [snorts] >> And all of the headlines I read, and I read at least a dozen, all said smallest in a long time.

[00:02:13]Some of them embellished that by saying China's having difficulties or problems or or something else like that.

[00:02:22]The impression being left for a casual reader who either doesn't know much or doesn't read much, that the Chinese economy is not in good shape or having serious difficulties or maybe falling apart or however they interpret the overwhelmingly negative tone of the article.

[00:02:48]You'd think 4.3% was a disaster.

[00:02:55]All right, here's now why it's silly.

[00:02:59]If the United States could get 4.3% Mr. Trump would be yelling it from the rooftops. He'd be saying, as he loves to say, how great he is for having brought that to the United States.

[00:03:19]4.3% is way better than what the United States can do, has done, or will do this year.

[00:03:32]The United States government and most international agencies have the following number for the growth of the GDP of the United States this year 2026.

[00:03:46]2.1% less than a half the rate of China.

[00:03:55]So, if China is in trouble with 4.3, what in the world would you say about the United States?

[00:04:05]Well, to listen to Mr. Trump, he doesn't mention anything like that. He tells you that the stock market is up.

[00:04:13]Well, as any student of the stock market can tell you, the stock market can be up and the economy can be in the toilet.

[00:04:22]He tells you about the stock market because it's one of the few up statistics around. All the rest of them are like this one.

[00:04:32]We're growing at a half the rate, not even, of the People's Republic of China.

[00:04:40]But, it's actually even sillier.

[00:04:43]Because that's been the story for the last 30 or 40 years.

[00:04:49]On average, United States has been growing at 2 to 3% per year.

[00:04:56]And the Chinese government at 5 to 9%.

[00:05:01]Way more.

[00:05:03]That's why the Chinese economy has caught up to the American. That's why China is the other superpower in the economic world we live in. That's why Americans are anxious about China.

[00:05:22]Because they figured out how to grow faster than anybody else has ever done, including the United States.

[00:05:39]So, it's just silly to focus on the fact that it's 4.3.

[00:05:45]It's technically true that is lower than they usually get probably because of all the disruptions in the world.

[00:05:55]Not disruptions by China, disruptions by the United States fighting with the Europeans against the Russians in Ukraine.

[00:06:05]By the United States supporting Israel with the horrors of Gaza.

[00:06:10]By the United States and Israel attacking and fighting a war with the Iran. Those things disrupt the world economy and China is part of that.

[00:06:23]But China is doing very well compared to everybody else.

[00:06:29]Portraying them as a problem and difficulty is propaganda and not very good either.

[00:06:39]Now, why does it matter?

[00:06:42]Well, now let's take a look at what the Chinese economic development has accomplished and why it it's important.

[00:06:52]China is now the world's number one manufacturing country. Let me drive that home. Manufacturing is when you make a thing.

[00:07:02]It's not a service.

[00:07:03]A service is when like you have a a haircut.

[00:07:07]A service is like you get a meal in a restaurant.

[00:07:11]Manufacturing is making a chair or making a software program or making uh your clothing and so forth.

[00:07:22]China dominates in manufacturing.

[00:07:25]The total manufacturing sector in China is larger than that of the United States, Britain and Germany combined.

[00:07:37]It's greater in China alone.

[00:07:42]No other country is as important to the production of goods in the world as is China.

[00:07:56]That means it's got millions of people working with machines to produce things all the time.

[00:08:07]And those people are given all kinds of incentives to come up with new developments, new technologies, new systems of production. They're becoming more and more efficient. For example, you might not know, but China has installed many more robots in its manufacturing sector than we have, either absolutely or on a relative basis.

[00:08:35]They really are moving the technology ahead. We're not doing that because our manufacturing sector is much smaller.

[00:08:47]Because they have a big manufacturing sector, they spend a lot of time producing engineers of all kinds. People who can master and improve your production processes.

[00:09:04]They graduate many, many more engineers each year than does the United States or for that matter Europe.

[00:09:15]Yes, that's partly true because they're a much larger country by population, but they graduate many more than India does, too, and India now has a larger population than China does.

[00:09:32]But the whole world of technological development is going faster in China because it is such a large sector.

[00:09:43]Research and development is something all Chinese industries, not just manufacturing, but their service sector also, are constantly revolutionizing.

[00:09:57]You may all have heard of economies of scale.

[00:10:01]The larger the quantity of output you produce, the cheaper you can make each one.

[00:10:09]These are e- economies, excuse me, you can get by large-scale production.

[00:10:15]Well, China is a much larger country.

[00:10:18]It has 1.4 billion people.

[00:10:23]Three, four times the population of the United States, maybe a bit more.

[00:10:29]So, they get more in the way of economies of scale, and that makes them more efficient.

[00:10:38]In many lines, more and more each day.

[00:10:44]You begin to get the picture?

[00:10:46]China, in a way, is the up-and-coming country in the world economy. It's already been that for 15 years. I'm just letting you know because Americans keep reading headlines, China having problems, instead of understanding the larger picture.

[00:11:06]Does China have problems? Of course, it does.

[00:11:10]All kinds of problems.

[00:11:14]But economic growth isn't one of them.

[00:11:18]Now, why is that particularly important?

[00:11:21]Here's a simple reason.

[00:11:24]The vast majority of people on this Earth are not Americans.

[00:11:31]We comprise 4 and 1/2% of the people of this planet. That's all.

[00:11:41]Add Europe and the United States, you're still under 10% of the people of this planet. The other 90% live in Asia, Africa, Latin America, and so on.

[00:12:00]And most of them want one thing above all others, to get out from poverty, to be able to have a decent life, enough to eat, adequate clothing, good shelter, medical care, education, transportation, an opportunity to relax, to enjoy their children, and so on.

[00:12:29]You know what I mean. It is the same thing you want.

[00:12:35]That's what they want. They want economic development. It's their number one. They want to get out of poverty as far and as fast as they can.

[00:12:47]China is now the way to do that.

[00:12:53]Let me say that again.

[00:12:55]China is the model if fast economic growth is what you want.

[00:13:02]If you don't want to wait, if you feel you've waited all your life, that your parents and grandparents waited all theirs, if you're tired of waiting, and the 90% of the world very tired of waiting, then China is the model because it has shown how to go from poverty.

[00:13:27]50 years ago, China was one of the poorest places on this planet.

[00:13:33]All that is now a memory in China, barely remembered.

[00:13:41]They are now a middle-income country, not as rich as United States, not at all.

[00:13:48]But compared to where they were, in a generation, they have come so far that you have to understand why their political leaders are so secure.

[00:14:03]Because they preside over a population that has its criticisms of them, for sure, and then often for good reasons.

[00:14:12]But wow, when it comes to economic development, they do recognize what the Chinese have accomplished.

[00:14:24]Dismissing them with silly headlines [snorts] that stress the negative without the context of what they have achieved is childish.

[00:14:38]I'm using the word silly cuz I don't want to be too harsh.

[00:14:44]Let me conclude by telling you what it means that China has done such an incredible job of economic growth.

[00:14:55]Well, they can produce on a scale nobody else can.

[00:15:01]And what can they produce?

[00:15:03]Pretty much everything.

[00:15:05]They have shown they can match our high-tech.

[00:15:09]Companies like uh Walmart or Apple or Intel or Amazon have their equivalents in China.

[00:15:20]Literally.

[00:15:23]China produces the best electric cars and trucks in the world, far better and cheaper than anything produced by the United States, including Tesla.

[00:15:35]They have amazing achievements.

[00:15:39]That means, friends, that they can produce missiles and drones more, faster, and better than anybody else, and give them to Russia to use in the Ukraine, and have Russia pass them to Iran to use in the Gulf.

[00:16:01]Our adversaries are now our economic competitors, and we haven't had that in the United States for a century.

[00:16:12]The Soviet Union never was an economic competitor. It was too small, it was too backward, it was too weak. It had a strong military, and that frightened the United States, but economic competitor, it never was, never came close. That's not the case with China.

[00:16:34]China is an economic competitor as well as a military one.

[00:16:41]And, of course, politically, every country in the world is paying attention.

[00:16:47]China is where you can borrow money if you can't get it from the West. China is where you can sell your goods if you can't sell them in the West. When President Trump hit the world with tariffs, many people around the world, businesses and countries, said, "Okay, bye-bye, America. We'll sell what we have to China." And China bought it.

[00:17:13]The world has changed.

[00:17:16]It's now bipolar.

[00:17:19]Two poles. The United States whose star is on the way down, and China whose star is on the way up.

[00:17:31]Indeed, if you're honest and you look at China, you would recognize that China is now where the United States was a century or maybe a century and a half ago. The up-and-coming country when the British Empire was on the way down. The country that would replace the British Empire. The country that would become the big power in the world. You should recognize in China what we Americans ought to remember about ourselves.

[00:18:08]And then we ought to sit down and work out a live and let live relationship with them, rather than rattling a saber before we are told by them that they really have more sabers than we do.

[00:18:27]If interventions like these strike you as useful, please share them with your friends, your neighbors, your co-workers. That's why we make them.

[00:18:38]And if you can help us pay the costs, financial costs of producing and distributing them, that would be appreciated enormously as well.

[00:18:50]Thank you for your attention.