PRC Economy - New Reflections : Dec 15 2011

All threads that are locked or marked for deletion will be moved to this forum. The topics will be cleared from this archive on the 1st and 16th of each month.
Locked
Liu
BRFite
Posts: 824
Joined: 12 Feb 2009 10:23

Re: PRC Economy - New Reflections : Dec 15 2011

Post by Liu »

BMW,usually belongs to those tacky rude new-rich

Lexus: usually belongs to the rich men,running small business.

Volvo: usually belongs to those low-profiled rich guys ,and you never know where his money come from.

Cayenne: usually belongs to Mafia bosses.

Passat: Usually belongs to either the head of counties/ town ore small businessmen.

Regal: its owners usually are rich ,but not very rich.....

Audi: 90% of is owners are hign-ranked officials, the rest are those new-rich who like pretending to be high-rank officals.

BMW: 100% of its owners are rude nouveau riche
Last edited by Liu on 30 Nov 2014 20:32, edited 3 times in total.
Liu
BRFite
Posts: 824
Joined: 12 Feb 2009 10:23

Re: PRC Economy - New Reflections : Dec 15 2011

Post by Liu »

Christopher Sidor wrote:Thanks Liu your posts have been the most informative. How do you plan to pay for your automobile? Is it through financing or is it an outright purchase? If it is financing, what is the rate of interest that you will or are paying? Is it fixed for the tenure of the loan or is it floating?

And if possible can you please shed some light on how an average PRC citizen purchases his automobile?

few of Chinese around me buy auto through financing,as I know. we usually buy auto through outright purchase in cash.

According to my personal experience,the budget of most CHinese family auto purchase is between 100-300K RMB,which usually are 1-2 year saving of one Chinese employee-class family( I mean, two jobs,one couple with 1 or 2 kid).

Almost all guys around me bought their first auto after 2008,and their first auto were usually family cars costing 100K RMB or so.
But after 2012,many of them started replacing their first family car with SUV such as Escape,which usally cost 200K RMB or so....So am I.

of course, I live in a 3-tie mid-size inland CHinese city. so the above tells you the case in a ordinary Chinese inland City.

As for the case in rural China, that is usually a different story.Many of my relatives are peasant-workers from rural villages. they usually work in factories or construction sites neary their home villages.many of them have not bought cars yet and usually commute by riding Motorbike or Elec-bikes. But some of them also started buying cheap low-end cars or second-hand cars too,which usually cost 50-100K RMB. 50-100K RMB is usually also 1-2 year saving of those peasant-worker families.


BTW,when I graduated from the university in 2000, my yearly salary was only 1500 USD while the most crappy car cost 10K USD at that time in CHina.
So ,at that time, ordinary Chinese could not afford car at all. it was after 2008 or so that CHinese ordinary families became rich enough to afford car gradually.
So, it was also in 2008 or so that the auto sale in CHina exploded and overtook USA and CHina became global largest auto market overnight.
niran
BRF Oldie
Posts: 5535
Joined: 11 Apr 2007 16:01

Re: PRC Economy - New Reflections : Dec 15 2011

Post by niran »

China manufacturing growth plunges
The index, which tracks activity in factories and workshops, is considered a key indicator of the health of China's economy, a major driver of global growth. A figure above 50 signals expansion, while anything below indicates contraction.

The results came after a closely watched private survey fell to a six-month low and showed manufacturing stagnating.
member_28756
BRFite
Posts: 240
Joined: 11 Aug 2016 06:14

Re: PRC Economy - New Reflections : Dec 15 2011

Post by member_28756 »

Hmmm...interesting view. china as number 1 is nonsense only measurement by PPP, by dollar term its only 55 percent of the US.

http://www.vanityfair.com/business/2015 ... al_twitter
Without fanfare—indeed, with some misgivings about its new status—China has just overtaken the United States as the world’s largest economy. This is, and should be, a wake-up call—but not the kind most Americans might imagine.
By Joseph E. Stiglitz

SOFT POWER For America, the best response to China is to put our own house in order.

When the history of 2014 is written, it will take note of a large fact that has received little attention: 2014 was the last year in which the United States could claim to be the world’s largest economic power. China enters 2015 in the top position, where it will likely remain for a very long time, if not forever. In doing so, it returns to the position it held through most of human history
The source of contention would surprise many Americans, and it says a lot about the differences between China and the U.S.—and about the dangers of projecting onto the Chinese some of our own attitudes. Americans want very much to be No. 1—we enjoy having that status. In contrast, China is not so eager. According to some reports, the Chinese participants even threatened to walk out of the technical discussions. For one thing, China did not want to stick its head above the parapet—being No. 1 comes with a cost. It means paying more to support international bodies such as the United Nations. It could bring pressure to take an enlightened leadership role on issues such as climate change. It might very well prompt ordinary Chinese to wonder if more of the country’s wealth should be spent on them. (The news about China’s change in status was in fact blacked out at home.) There was one more concern, and it was a big one: China understands full well America’s psychological preoccupation with being No. 1—and was deeply worried about what our reaction would be when we no longer were.
Liu
BRFite
Posts: 824
Joined: 12 Feb 2009 10:23

Re: PRC Economy - New Reflections : Dec 15 2011

Post by Liu »

MANNY K wrote:Hmmm...interesting view. china as number 1 is nonsense only measurement by PPP, by dollar term its only 55 percent of the US.

http://www.vanityfair.com/business/2015 ... al_twitter
Without fanfare—indeed, with some misgivings about its new status—China has just overtaken the United States as the world’s largest economy. This is, and should be, a wake-up call—but not the kind most Americans might imagine.
By Joseph E. Stiglitz

SOFT POWER For America, the best response to China is to put our own house jin order.

When the history of 2014 is written, it will take note of a large fact that has received little attention: 2014 was the last year in which the United States could claim to be the world’s largest economic power. China enters 2015 in the top position, where it will likely remain for a very long time, if not forever. In doing so, it returns to the position it held through most of human history
The source of contention would surprise many Americans, and it says a lot about the differences between China and the U.S.—and about the dangers of projecting onto the Chinese some of our own attitudes. Americans want very much to be No. 1—we enjoy having that status. In contrast, China is not so eager. According to some reports, the Chinese participants even threatened to walk out of the technical discussions. For one thing, China did not want to stick its head above the parapet—being No. 1 comes with a cost. It means paying more to support international bodies such as the United Nations. It could bring pressure to take an enlightened leadership role on issues such as climate change. It might very well prompt ordinary Chinese to wonder if more of the country’s wealth should be spent on them. (The news about China’s change in status was in fact blacked out at home.) There was one more concern, and it was a big one: China understands full well America’s psychological preoccupation with being No. 1—and was deeply worried about what our reaction would be when we no longer were.
even measured with dollar value, china's GDP is to surpass USA before long. however,it is not a big deal indeed that even china's GDP has surpassed USA's,because china's population is 4 times of USA's. it will deserve heated applauds and pride if one day china's per capita GDP is to surpass USA's.


I mean, if the average monthly salary of Chinese common can be about 3000 USD(20K RMB), then CHina would deserve applauds and could proudly tell us all that CHinese people's life quality can match developed countries.
member_28756
BRFite
Posts: 240
Joined: 11 Aug 2016 06:14

Re: PRC Economy - New Reflections : Dec 15 2011

Post by member_28756 »

Liu wrote:
even measured with dollar value, china's GDP is to surpass USA before long. .
Hey buddy don't count your chicken before the egg hatches. China is facing lots of internal problem right now, nothing is a given.
Liu
BRFite
Posts: 824
Joined: 12 Feb 2009 10:23

Re: PRC Economy - New Reflections : Dec 15 2011

Post by Liu »

MANNY K wrote:
Liu wrote:
even measured with dollar value, china's GDP is to surpass USA before long. .
Hey buddy don't count your chicken before the egg hatches. China is facing lots of internal problem right now, nothing is a given.
ok,let's wait and see. i think that IN 5 years at most ,it is quite easy for china's per capita nominal GDP to reach 12-15k USD. that is equal to coastal china's today or Poland's today. that also means that china nomial GDP is to reach 20trillion USD and surpass USA'S. the average monthly salary of CHinese employees today is 500-600 USD or so. in 5 years, it will be 1000 USD or so and catch up with taiwanese ,Poland's or Shanghaiese today.
Austin
BRF Oldie
Posts: 23387
Joined: 23 Jul 2000 11:31

Re: PRC Economy - New Reflections : Dec 15 2011

Post by Austin »

Good View Point on Chinese Economic Bubble by David Stockman

member_28756
BRFite
Posts: 240
Joined: 11 Aug 2016 06:14

Re: PRC Economy - New Reflections : Dec 15 2011

Post by member_28756 »

who is this Manas Chakravarty ? :-?

http://www.livemint.com/Opinion/z8a4Z3w ... ing-C.html

No point in bragging about India’s growth rates overtaking China’s

China’s GDP in 1990-2013 increased at CAGR of 10.2%. Neither the IMF nor OECD projects Indian growth reverting to even 8% any time soon. It is not an occasion for celebration

Manas Chakravarty
Yogi_G
BRF Oldie
Posts: 2412
Joined: 21 Nov 2008 04:10
Location: Punya Bhoomi -- Jambu Dweepam

Re: PRC Economy - New Reflections : Dec 15 2011

Post by Yogi_G »

Shanghai stasticians fail to see that India achieves robust growth inspite of multi party chaotic democracy. The strength the democracy brings to the nation is not directly measurable. China only really needs a US civil war or a Soviet Union melt down to realize its true strength. Lets see how they speak of growth numbers then.
zengerl
BRFite -Trainee
Posts: 46
Joined: 14 Feb 2009 19:04

Re: PRC Economy - New Reflections : Dec 15 2011

Post by zengerl »

Yogi_G wrote:Shanghai stasticians fail to see that India achieves robust growth inspite of multi party chaotic democracy. The strength the democracy brings to the nation is not directly measurable. China only really needs a US civil war or a Soviet Union melt down to realize its true strength. Lets see how they speak of growth numbers then.
Well, it seems that democracy fails to bring Ukraine anything except chaoes and poverty.
zengerl
BRFite -Trainee
Posts: 46
Joined: 14 Feb 2009 19:04

Re: PRC Economy - New Reflections : Dec 15 2011

Post by zengerl »

MANNY K wrote:
Liu wrote:
even measured with dollar value, china's GDP is to surpass USA before long. .
Hey buddy don't count your chicken before the egg hatches. China is facing lots of internal problem right now, nothing is a given.
The problems China is face are no more than US or Indian is
Liu
BRFite
Posts: 824
Joined: 12 Feb 2009 10:23

Re: PRC Economy - New Reflections : Dec 15 2011

Post by Liu »

zengerl wrote:
Yogi_G wrote:Shanghai stasticians fail to see that India achieves robust growth inspite of multi party chaotic democracy. The strength the democracy brings to the nation is not directly measurable. China only really needs a US civil war or a Soviet Union melt down to realize its true strength. Lets see how they speak of growth numbers then.
Well, it seems that democracy fails to bring Ukraine anything except chaoes and poverty.
that is 'democratic chaoes',which is superior to 'autocratic stablity' in china. 'democratic poverty' in Ukraine is surely more valuable than 'autocratic rich' in China.
disha
BR Mainsite Crew
Posts: 8242
Joined: 03 Dec 2006 04:17
Location: gaganaviharin

Re: PRC Economy - New Reflections : Dec 15 2011

Post by disha »

zengerl wrote: Well, it seems that democracy fails to bring Ukraine anything except chaoes and poverty.
Dude, wrong example. Outside of Africa, India is the genetically most diverse and also the most diverse in all other respects nation on Earth. Get used to it. You can apply Burnol if you need to.
Hari Seldon
BRF Oldie
Posts: 9373
Joined: 27 Jul 2009 12:47
Location: University of Trantor

Re: PRC Economy - New Reflections : Dec 15 2011

Post by Hari Seldon »

That 50 center cheeni trolls still visit this thread (its been ages for moi, admittedly) is proof enough of their insecurity about their true prospects, only.

A genuinely strong and secure nation needn't worry what time-passesers someplace online say about it. No?
nandakumar
BRFite
Posts: 1638
Joined: 10 May 2010 13:37

Re: PRC Economy - New Reflections : Dec 15 2011

Post by nandakumar »

Extract from an interview of a China expert in the Barron's weekly who thinks that there is more trouble ahead for China than what people are currently assuming.
How bad can the situation be when the Chinese economy grew by 7.3% in the latest quarter?

People are crazy if they believe any government statistics, which, of course, are largely fabricated. In China, the Heisenberg uncertainty principle of physics holds sway, whereby the mere observation of economic numbers changes their behavior. For a time we started to look at numbers like electric-power production and freight traffic to get a line on actual economic growth because no one believed the gross- domestic-product figures. It didn’t take long for Beijing to figure this out and start doctoring those numbers, too.

http://online.barrons.com/articles/anne ... 1417846773
Read it all.
Liu
BRFite
Posts: 824
Joined: 12 Feb 2009 10:23

Re: PRC Economy - New Reflections : Dec 15 2011

Post by Liu »

nandakumar wrote:Extract from an interview of a China expert in the Barron's weekly who thinks that there is more trouble ahead for China than what people are currently assuming.
How bad can the situation be when the Chinese economy grew by 7.3% in the latest quarter?

People are crazy if they believe any government statistics, which, of course, are largely fabricated. In China, the Heisenberg uncertainty principle of physics holds sway, whereby the mere observation of economic numbers changes their behavior. For a time we started to look at numbers like electric-power production and freight traffic to get a line on actual economic growth because no one believed the gross- domestic-product figures. It didn’t take long for Beijing to figure this out and start doctoring those numbers, too.

http://online.barrons.com/articles/anne ... 1417846773
Read it all.
well,
in a word , communist-haters always don't accept the case that one autocracy like CHina can have a successful economy.

if autocracy like CHina can have its people as rich as USA, it means that all their view of the world are wrong....that is apalling completely.....
rsingh
BRF Oldie
Posts: 4451
Joined: 19 Jan 2005 01:05
Location: Pindi
Contact:

Re: PRC Economy - New Reflections : Dec 15 2011

Post by rsingh »

disha wrote:
zengerl wrote: Well, it seems that democracy fails to bring Ukraine anything except chaoes and poverty.
Dude, wrong example. Outside of Africa, India is the genetically most diverse and also the most diverse in all other respects nation on Earth. Get used to it. You can apply Burnol if you need to.
Asking on behalf of zengerl ; what is Bulnor ?
nandakumar
BRFite
Posts: 1638
Joined: 10 May 2010 13:37

Re: PRC Economy - New Reflections : Dec 15 2011

Post by nandakumar »

Asking on behalf of zengerl ; what is Bulnor ?[/quote]
Burnol is a popular ointment applied to treat burn injuries. It has been used as a metaphor to denote someone 'burning with envy' and hence require application of the cream 'burnol'! On a side note, I am not sure if the phrase, 'burning with envy' is merely an english translation of a phrase common to most Indian languages or it is accepted usage in the english language. Perhaps Englishmen and Americans too burn with envy!
niran
BRF Oldie
Posts: 5535
Joined: 11 Apr 2007 16:01

Re: PRC Economy - New Reflections : Dec 15 2011

Post by niran »

China manufacturing index worsens
PMI for the month came in at 49.5, below the break-even point dividing expansion and contraction, the bank said in a statement.
The result, compiled by information services provider Markit, was lower than November's final reading of 50.0 and the weakest result since May's 49.4.
panduranghari
BRF Oldie
Posts: 3781
Joined: 11 Aug 2016 06:14

Re: PRC Economy - New Reflections : Dec 15 2011

Post by panduranghari »

Liu wrote: that is 'democratic chaoes',which is superior to 'autocratic stablity' in china. 'democratic poverty' in Ukraine is surely more valuable than 'autocratic rich' in China.
Touche!
Suraj
Forum Moderator
Posts: 15043
Joined: 20 Jan 2002 12:31

Re: PRC Economy - New Reflections : Dec 15 2011

Post by Suraj »

The Scale Of The Chinese Real Estate Crash Is Terrifying
Image
Image
Image
Almost CNY 5 trillion in annual land lease/sales receipts is a stunning amount of credit entering the system. No wonder they can fund so much activity with more than mere tax revenues. the steep falloff will have a significant effect on their balance sheet.
nandakumar
BRFite
Posts: 1638
Joined: 10 May 2010 13:37

Re: PRC Economy - New Reflections : Dec 15 2011

Post by nandakumar »

Chinese efforts ar rebalancing the economy towards more consumer demand is proving to be harder to achieve if the recently released Unilever's fourth quarter number are anything to go by. The company admitted that Chinese market took a 20 per cemt hit in sales in fourth quarter.
http://mobile.reuters.com/article/idUSL ... 0?irpc=932
Though the company didnt give country wise breakup, emerging markets account for 50% of global sales. In the event, 20% fall n China look steep. For instance I can't recall a quarter when Unilevers sales suffered a 20% drop in the Indian market.
panduranghari
BRF Oldie
Posts: 3781
Joined: 11 Aug 2016 06:14

Re: PRC Economy - New Reflections : Dec 15 2011

Post by panduranghari »

Chinese workforce shrinks by 4 million IN 1 YEAR
The mainland's working-age population continued to fall last year as Beijing struggled to address a spiralling demographic challenge made worse by its one-child policy.

The mainland's total population stood at 1.37 billion at the end of 2014, according to the National Bureau of Statistics, an increase of 7.1 million on the previous year.

The working-age population, between 16 and 59, fell to 915.8 million last year, down 3.7 million from the end of 2013.

While the shrinking labour pool is helping to prevent a rise in unemployment, it is also driving up labour costs and eroding the manufacturing and export competitiveness that helped fuel China's 30-year expansion.

"It will clearly mean that in the coming 10 years, labour will contribute less to growth than it has done in the last two decades," said Louis Kuijs, Royal Bank of Scotland Group's chief greater China economist.
Victor
BRF Oldie
Posts: 2628
Joined: 24 Apr 2001 11:31

Re: PRC Economy - New Reflections : Dec 15 2011

Post by Victor »

More on the Chinese bubble economy and its coming problems:

Why Paul Krugman is scared of China
China needs to execute -- from an economy powered by investment to one driven by consumption -- will be incredibly difficult.

One of the biggest challenges is China's demographic crisis, Krugman said, which is partially related to the aftermath of the country's one-child policy.

"China has been so successful at growing its modern economy that it's running out of peasants,"
Victor
BRF Oldie
Posts: 2628
Joined: 24 Apr 2001 11:31

Re: PRC Economy - New Reflections : Dec 15 2011

Post by Victor »

A look inside China's ghost cities.

What could possibly have been the thought process and planning that went into these building orgies? It's difficult to imagine this ending well.
Theo_Fidel

Re: PRC Economy - New Reflections : Dec 15 2011

Post by Theo_Fidel »

BTW how prescient was Jim Chanos on shorting commodities based on China growth/demand. Made out like gang busters.
Folks on BRF made fun of that prediction IIRC.
member_28756
BRFite
Posts: 240
Joined: 11 Aug 2016 06:14

Re: PRC Economy - New Reflections : Dec 15 2011

Post by member_28756 »

Since when does the Economist become a propaganda mouth piece for the Chinese ?


http://www.economist.com/blogs/freeexch ... s-slowdown
China's slowdown
From a very big base

Jan 20th 2015, 10:26 by S.R. | SHANGHAI



MUCH of the analysis of China’s 2014 GDP data, which the government published today, has focused on the economy’s slowdown. That is, on one level, understandable. Growth of 7.4% was China’s weakest in 24 years (see chart below). It was also the first time this century that China has missed its official growth target, falling just short of the official goal of 7.5%. But on another level, the focus on the slowdown seems almost myopic. China joined an exclusive club last year: its economic output exceeded $10 trillion, making it only the second country to achieve that feat (America reached this level in 2000). At market exchange rates, China’s economic output was $10.3 trillion last year, more than five-times bigger than a mere decade ago, when it was $1.9 trillion.

Moreover, the increase in China’s economic size means that slower growth now generates as much additional demand as its turbo-charged growth did just a short time ago. Last year’s growth, even with subdued inflation, yielded an extra 4.8 trillion yuan in GDP, almost exactly the same as in 2007, when growth ran to 14.2% and inflation was far higher. And because the economy today includes more labour-intensive services than in the past, China is doing even better at creating new jobs: it added 13.2 million urban jobs last year, compared with 12 million in 2007.



This would all be beside the point if China’s growth was simply the prelude to a spectacular collapse. But looking beyond the headline GDP figure, China’s growth also appears to be slowly becoming better balanced. The big concern since 2009 when China unleashed a mammoth stimulus programme has been the economy’s excessive reliance on investment and its sluggish consumption spending. Gross fixed capital formation accounted for 48.3% of China’s growth in 2011, well above the peaks of roughly 40% hit by South Korea and Taiwan when they industrialised last century. We will have to wait for a breakdown of GDP by expenditure to get the 2014 figures for China, but the data from today's release point in the right direction.


First, even with last year's 'mini-stimulus' to prop up growth, investment is, little by little, playing a diminished role in China's economy. Consumption drove 51.2% of growth last year, up 3 percentage points from a year earlier. With the contribution from trade also positive for growth, China’s investment-to-GDP ratio is likely to have declined. This can also be seen from the rising share of services in GDP. Services, which are more closely correlated with consumption than with investment, grew to account for 48.2% of the economy last year, up 1.3 percentage points from 2013.

Second, healthy wage growth means that labour’s share of China’s economic output rose last year, another critical part of tilting the country towards greater consumption. After controlling for inflation, incomes increased 8% last year, three-fifths of a percentage point faster than the economy as a whole. Importantly, this income growth probably also resulted in a mild improvement in income equality within China because it was rural citizens, poorer than their urban counterparts, who did particularly well. Rural incomes increased 9.2% last year on average, while urban incomes rose 6.8%. The gap between urban and rural incomes peaked at a ratio of 3.3-to-1 in 2009; it fell to about 2.9 last year.

Anytime there is good news to be gleaned from Chinese statistics, it is customary to ask whether the government’s numbers can be trusted. This is a fair question given evidence in the past that officials, especially those at the local level, have manipulated data to flatter their performance. It is well known that even Li Keqiang, now China’s prime minister, cast doubt on the reliability of local numbers when he was the Communist Party chief of Liaoning province. A divergence between resilient economic growth and the much slower increase in electricity output over the past year has fuelled suspicions that the government is again playing games, since electricity used to be a close proxy for the economy as a whole. But that is an outdated way of looking at the Chinese economy: as the services sector grows more quickly and heavy industry weakens, slower electricity output is to be expected. A 2013 survey of Chinese statistics by Carsten Holz of the Hong Kong University of Science and Technology found no proof of falsification. That said, he also noted that a lack of transparency made it impossible to double-check final data.

In this respect it is encouraging that China missed its 2014 growth target. The message from the top of the government is that growth is not as big a priority as in the past. It is a message reinforced by the constant repetition of President Xi Jinping’s favourite slogan for describing the economy, the ‘new normal’. That phrase, intended to describe slower but higher-quality growth, was trotted out no fewer than eight times by the statistics bureau during today’s GDP news conference.

The Chinese government’s tolerance for the slowdown will be tested in coming months as property investment, the biggest single driver of the economy in recent years, is likely to weaken yet further. The International Monetary Fund has cut its forecast for China’s 2015 growth to 6.8%. That would be its weakest performance in 25 years. But when headlines appear about the 25-year low, as they inevitably will, it is worth remembering that the Chinese economy is more than 25-times bigger than it was in 1990.
rsingh
BRF Oldie
Posts: 4451
Joined: 19 Jan 2005 01:05
Location: Pindi
Contact:

Re: PRC Economy - New Reflections : Dec 15 2011

Post by rsingh »

Overheard that China may have to devalue its currency .........any truth in that?
vina
BRF Oldie
Posts: 6046
Joined: 11 May 2005 06:56
Location: Doing Nijikaran, Udharikaran and Baazarikaran to Commies and Assorted Leftists

Re: PRC Economy - New Reflections : Dec 15 2011

Post by vina »

rsingh wrote:Overheard that China may have to devalue its currency .........any truth in that?
They have already taken steps to weaken it. Cutting the reserve ration, more stimulus expected... the same old game. I had predicted here in 2008 after the crisis, that the Chinese stimulus would be massively wasted and mis-spent. Yeah it is only when the tide goes out you know who has been swimming naked. The Chinese have been covering up the huge problems in their banking system in terms of bad loans and loans which will never be paid back. Most of their public accounting system is shot. For eg, the Indian banks are taking huge hits in terms of non performing assets for their loans to power and infrastructure projects that got stalled under the previous govt.

What about the huge loans given out by the Chinese banks to all that excess capacity that the investment binge and misdirected spending that the Chinese went on ? Where is the write down on that. No sir, it is put your head in the sand and pretend it aint happening. One or two more "stimulus" like this, China will be bankrupt, the Chinese govt anyway robs it's citizens blind, and will do that again, but be prepared for a massive eruption of unrest, and when that happens in totalitarian socities or formerly totaliarian societies (like Ukraine and Soviet Union), we know what happens.
nandakumar
BRFite
Posts: 1638
Joined: 10 May 2010 13:37

Re: PRC Economy - New Reflections : Dec 15 2011

Post by nandakumar »

A blog in WSJ quotes McKinsey research report to say that Chines public, private and banking sector debt now stands at 282% of its GDP which it reckons is way too high. To put this perspective, debt level in the Indian economy would be around 175%.
http://blogs.wsj.com/economics/2015/02/ ... mic-risks/
member_28640
BRFite
Posts: 174
Joined: 11 Aug 2016 06:14

Re: PRC Economy - New Reflections : Dec 15 2011

Post by member_28640 »

Signs of Impeding Chinese Diwali,
Freeing up 100B$ for banks to lend + High percentage of bad loans = Delaying shit hitting the fan (But it splatters harder when it hits)

Govt also to fund real estate, for who asks the acolyte.

India should insulate itself from Chinese debt and march forward, really Modi is lucky global geopolitics is playing to his favour.
Its upto him to extract maximum advantage by moving into India not just manufacturing but also more IT into India while providing a base for start-ups to flouish.
Clicky
Austin
BRF Oldie
Posts: 23387
Joined: 23 Jul 2000 11:31

Re: PRC Economy - New Reflections : Dec 15 2011

Post by Austin »

Race To The Bottom Is On: China Heading Toward Big RMB Devaluation


By William Pesek at Bloomberg
China has entered the global monetary-easing fray, along with more than a dozen other economies, after its central bank surprised investors by cutting reserve requirements 50 basis points to spur lending and combat deflation. But Beijing may be raring for an even bigger and more perilous fight — in the currency markets.

Reducing the amount of cash that banks are required to set aside (to 19.5 percent), as China has just done, is largely symbolic — a don’t-panic-we’re-on-top-of-things reassurance to international markets and local property developers. Still, the move is also an inflection point. China is in all likelihood about to loosen monetary policy considerably to support economic growth. If global conditions worsen, China’s one-year lending rate, now at 5.6 percent, could head toward zero.

At the same time, something else is afoot in Beijing could have even greater global impact. The central bank is cooking up measures to widen the band in which its currency trades. People’s Bank of China officials say it’s about limiting volatility as capital zooms in and out of the economy. Let’s call it what it really is: the first step toward yuan depreciation and currency war.

As China grapples with its slowest growth in 24 years, President Xi Jinping is under pressure to stimulate the economy. Yet that would run afoul of his pledges to curb runaway debt and credit (the latter jumped about $20 trillion from 2009 to 2014). What better way to gin up growth without adding to China’s bubbles than by sharply weakening the exchange rate? A cheaper yuan would boost exports and buy Xi more time to recalibrate growth engines away from excessive investment and debt. “The real economy desperately needs a weaker yuan,” says economist Diana Choyleva of Lombard Street Research.

The question is, does the rest of the world? Any significant drop in the yuan would prompt Japan to unleash another quantitative-easing blitz. The same goes for South Korea, whose exports are already hurting. Singapore might feel compelled to expand upon last week’s move to weaken its dollar. Before long, officials in Bangkok, Hanoi, Jakarta, Manila, Taipei and even Latin America might act to protect their economies’ competitiveness.

China may be feeling increased urgency as it looks around the Asia-Pacific region. On Feb. 3, Australia surprised markets with a 25 basis-point rate cut, a step that Christy Tan at National Australia Bank says “stoked speculation of a currency war.” That move, she says, might have been what prompted the PBOC to suggest that it’s “preparing possible responses” to shifting financial dynamics.

For China, Japan represents the biggest provocateur. The 30 percent drop in the yen under Prime Minister Shinzo Abe is slamming Chinese industry. Key beneficiaries of the policy such as Toyota and Sony (both projected huge profits this week) are lowering prices to gain market share abroad, effectively exporting deflation. Abe also gives Beijing political cover to devalue. It would be hypocritical, after all, for U.S. Senators Lindsey Graham and Charles Schumer to bash China for currency manipulation and not Japan.

There’s obvious danger in so many economies engaging in this race to the bottom. It will create unprecedented levels of volatility in markets and set in motion flows of hot money that overwhelm developing economies, inflating asset bubbles and pushing down bond rates irrationally low. Consider that Germany’s 10-year debt yields briefly fell below Japan’s (they’re both now in the 0.35 percent to 0.36 percent range). In a world in which the Bank of Japan, the European Central Bank and the Federal Reserve are running competing QE programs, the task of pricing risk can get mighty fuzzy.

What’s more, Asia’s currency rivalries may be self-defeating. As Raghuram Rajan, governor of the Reserve Bank of India, toldBloomberg Television, “If you’re not increasing domestic activity but depreciating your exchange rate, you’re essentially drawing demand from the rest of the world.”

Risks abound for China. Devaluing, Choyleva says, could expose the economy to foreign-currency debt, and “the market has no idea about the true size of this exposure.” The real fireworks, though, would be in Asian markets. A competition to ease monetary policy is one thing. A currency war with the world’s biggest trading nation could turn into a crisis.
Rahul M
Forum Moderator
Posts: 17168
Joined: 17 Aug 2005 21:09
Location: Skies over BRFATA
Contact:

Re: PRC Economy - New Reflections : Dec 15 2011

Post by Rahul M »

someone please explain to this econ novice.

what exactly are the downsides for PRC if they devalue the yuan ?
Austin
BRF Oldie
Posts: 23387
Joined: 23 Jul 2000 11:31

Re: PRC Economy - New Reflections : Dec 15 2011

Post by Austin »

Me too econ novice but devaluation of Renminbi would sky rocket the inflation and consumer commodity and food cost would go up specially the imported stuff.

If Chinese corporate have borrowed loans then repaying USD/Euro loans would get expensive for them if they exchange Renminbi for Green Buck.

On the positive note exports would get more competitive and devaluation would help the local industry which produces similar product compared to import market.
Austin
BRF Oldie
Posts: 23387
Joined: 23 Jul 2000 11:31

Re: PRC Economy - New Reflections : Dec 15 2011

Post by Austin »

nandakumar wrote:A blog in WSJ quotes McKinsey research report to say that Chines public, private and banking sector debt now stands at 282% of its GDP which it reckons is way too high. To put this perspective, debt level in the Indian economy would be around 175%.
http://blogs.wsj.com/economics/2015/02/ ... mic-risks/
In that chart the US, Germany , Soko , Canada and Australia looks no better

IF you compare the gross figure the Chinese Debt is around $28.2 trillion while similar figure for US debt is around $60 trillion
rsingh
BRF Oldie
Posts: 4451
Joined: 19 Jan 2005 01:05
Location: Pindi
Contact:

Re: PRC Economy - New Reflections : Dec 15 2011

Post by rsingh »

Yes but US can print dollah and rule the world.
Austin
BRF Oldie
Posts: 23387
Joined: 23 Jul 2000 11:31

Re: PRC Economy - New Reflections : Dec 15 2011

Post by Austin »

rsingh wrote:Yes but US can print dollah and rule the world.
They have been doing that since 2008 but thats not indefinate , QE has too many bubbles and its consequences are to put it mildly unknown and to quote Alan Greenspan the father of QE the bubble would burst eventually

http://www.wsj.com/articles/former-fed- ... 1414597627
Locked