In 1979, Chinese Premier Deng Xiaoping designated four areas as Special Economic Zones (SEZ). Three were located in Guangdong Province, the southeastern region that wraps around the city of Hong Kong. One of those, situated just on the other side of the water from the then-British controlled jurisdiction, Shenzhen would be transformed from a sleepy village of 30,000 residents to a glittering 12-million-person megalopolis in less than four decades.

By definition, the process required internal migration – as was its political purpose. After decades of the economic devastation from forced collectivization especially based on agriculture, the Chinese leadership were by the end of the seventies finally willing to let private enterprise have a go. The SEZ’s were meant to be the experimental platform from which modern China has sprung.

Formerly subsistence farmers, peasants, would be brought to the coast and into these brand-new industrialized districts. A middle class would rise to replace abject poverty, the grandest demographic shift in human history. There was an endless reserve of human capital to just waiting to be mobilized, all it needed was just a little capitalism.

Obviously, Shenzhen in early 2009 ran into trouble like everywhere else in the world. The Great Financial Crisis was a global event, and so was the wave of economic retrenchment. Industry was hardest hit owing to its sensitive relationship to finance and global money. In a globalized world, nothing can move without the monetary grease.

At its worst, in February 2009 shippers were charging nothing except fuel and fees to send containers out of China. Freight loads plummeted, both incoming and those outgoing. Just as Shenzhen had become the industrial heartland supported by the inestimable millions of migrant workers, for the New Year Golden Week holiday 2009 it was believed that millions went home for it but never returned.

Despite all that, China’s National Bureau of Statistics (NBS) reported that Industrial Production throughout the whole country had fallen to a worst 5.4% year-over-year growth in November 2008. The following month, December, it was 5.7%. Only in three months total was IP below 8%, the final one being April 2009 at 7.3%.

Perhaps Chinese officials were tempted to fudge, to reassure not just Chinese workers but more so international financiers in order to show them it wasn’t all that bad. However low the industrial sector might have dropped out, we are relatively sure that this Great “Recession” was for China very mild in its other dimension – time.

It had been the same way during the business cycle prior, too. In 2001 and 2002 during what was the dot-com recession in the US, the global economy also hit a rough patch. Chinese IP slowed to 7.9% in November 2001 and then a bottom of just 2.7% growth in February 2002. Those were the only two months less than 8%. A year later, in February 2003, Chinese industry was back roaring at almost 20% growth.

Given the behavior during these times, declared recessions and clear economic rough spots, what are to make of China’s industrial circumstances now? Many have made the claim the global economy is booming and China with it. How can that be?

The latest figures for March 2018 released today by the NBS show Industrial Production has grown by all of 6%. That’s nearly as bad as the worst months of 2008-09. But we aren’t talking about just a single month. IP in China has been 8% or less for a shocking 44 months straight. That’s rounding into four years at levels associated with the worst economic environments in the country’s modern quasi-market history.

There isn’t any hint this is about to change.

China’s economy is merely rebalancing, they claim. And that’s true in a very narrow sense. The rest of its system is growing faster than industry, but not as a conscious choice. In fact, the growth rates of those other sectors, largely service, have been impacted by the industrial and manufacturing slump, too. That’s why China’s overall economic growth has decelerated to what used to be recognized as dangerously slow.

Rebalancing is nothing but a positive euphemism for how the whole economy is being pulled down rather than maturing into a Western-style consumer-oriented system; it’s just that the non-industrial sectors are slowing themselves a little slower than the snail’s pace of manufacturing and industry.

Chinese officials know it, too; or, at least they do now. When it all got very serious toward the end of 2015, it may have seemed as if China tried one last desperate gamble to get things moving in the right direction again. A massive “stimulus” program was unleashed early on in 2016 including a monetary/credit/leverage component. The results they produced were, to put it mildly, unlike a recovery.

A more realistic assessment of the situation post-2016 might place a great deal more emphasis on what to do when there isn’t going to be growth than the mainstream, Western view of how growth is always guaranteed (if, supposedly, given enough time). This is, I believe, what we see in Fixed Asset Investment (FAI) for both private and state-owned channels. In the former, in places like Shenzhen private firms are whatever word qualifies as below reluctant.

In public FAI, the plan is increasingly clear. They are winding down what’s left of 2016’s programs. It didn’t work, at least according to the perspective and expectations of Western convention. But what if that round of “stimulus” wasn’t really about creating recovery at all? What if instead it was intended to do nothing more than buy time?

In other words, the idea appears to have been to cushion the blow so that China’s economy wouldn’t rush to its lowest state all at once – the so-called hard landing. There are dangers associated with either case, but many more and more extreme ones would have been unleashed by uncontrolled, non-recoverable slowing to begin 2016. There was always going to be an “L”, they just didn’t want too much downdraft before the flattening out.

Remember, it was May 2016, as all this was taking place, when “someone” (almost certainly Lui He, or Uncle He) warned about the “L.” The fact that the alarm was raised by any authoritative source should have been appreciated for what’s happened since. As I described it earlier this year:

Liu wasn’t openly contradicting the Communist economic position, either, he was instead clarifying it. To the West, a dangerously slowed China (with massive downside rather than upside risks) seems inconceivable. But mainstream commentary is, obviously, woefully uninformed on the economy in China as well as everywhere else.

Another month of Chinese economic statistics, all of them signaling nothing better than the second part of the “L.” A recession is like China in late 2008 and early 2009 when the economy might absorb even a substantial and devastating hit but then gets right back up. What’s a word for when it stays down? More than one may apply.