PRC Economy - New Reflections : Dec 15 2011

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amit
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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 30 Jan 2012 13:52

VikramS wrote:I have pondered about what people mean by a "moral compass" or the lack of it. That post about "superiority of Chinese construction" bought the message home. I am sure most Chinese posters who are active here, are decent hard-working people, trying their best to make their lives better. But this utter lack of compassion/concern is so reminiscent of our former cousins in the West; it made me sad, since at a personal level, I like most Indians who have interaction with people of Chinese origin, have strong respect for the individual Chinese


Actually Vikram, if I may point out, it's not even a moral compass issue. This "mine's bigger than yours" kind of trolling is due to a deep sense of insecurity.

Let me explain with an analogy:

There's a new kid on the block who's sold his kidney to buy an iPhone (for folks who may wonder at this tad strange analogy, please do a simple Google to understand the context) thinking that folks would only take him seriously if he had one. Now he's showing off his shiny new phone to his SDRE neighbour who's the only kid on the block who doesn't have one and is still happy with his ancient Nokia Symbian phone. SDRE says: "So what, your phone can make a phone call, send messages, check email, and play games. My old Nokia E61 can do all that, so what's the big deal?"

So the kid, feeling the pain of being short of one kidney, naturally gets mad and starts to shout: "You stupid ignorant SDRE, don't you know my phone is the bestest, greatest and coolest phone in the whole universe! You're such an ignorant simpleton, you don't even know that!" Naturally the new kid gets even more mad when the SDRE kid yawns and says, "but your stupid phone has poor battery life, calls drop and you need a damn case so as to ensure that the phone remains connected and if you drop your phone then it will break into pieces while my phone is rock solid, has great reception and the battery lasts like forever. Moreover my phone costs half yours and does almost everything your phone does?"

Have a heart for the poor kid with his brand new iPhone. Don't be too harsh on him, after all he sold his kidney for the phone because a "wise party boss" told him that's the only way people would take him seriously and would respect him. It's not his fault, the poor guy, after all long after his iPhone konks out he's destined to go in and out of medical clinics for thinking his health and well being was tied to a dream sold be Westerners who have laughed all the way to the bank.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby kancha » 30 Jan 2012 14:33

To put things in perspective

Chinese Teenager sells Kidney for iPhone

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Sri » 30 Jan 2012 16:13


amit
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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 30 Jan 2012 16:43



Sri,

Thanks for posting this.

Also, this is how I ended my last post:

... a dream sold be Westerners who have laughed all the way to the bank.


May sound a bit melodramatic. But the three quotes at the end of the video are interesting and worth posting here:

· G3said:
At January 28, 2012 7:48 pm
Is Apple willing to pay $10 more for each device FoxConn made for it? It would just $500m (about 50 millions iPhones and iPads). That is only a small dent in Apple last quarter revenue (out of some 46.3 billion dollars).
But Apple wouldn’t. You are in this absurd, hypocritical situation that companies like Apples try to squeeze every single drop of profits from China based manufacturers while blaming them for abuses.
Such is the Americans. We care more about our cats and dogs than people in Africa.
·
ricecakesaid:
At January 28, 2012 9:44 pm
That’s why Apple is hoarding tremendous amount of cash because Apple’s model is not sustainable. When you have lot of cash you can take up and run away as fast as you can when you are deep in trouble.
·

bjornsaid:
At January 29, 2012 9:34 am
I noticed that in the office where the interview is is being conducted there are wall clocks to be seen from every angle.
The difference in china is that the wall clocks are replaced by widgets per hour. Time pressure is experienced by both work places. Try working in your office without a clock; it will make you even more stressed.
It seems that cheap labor in developing economies has been the substitute for slavery in our society. Eventually we will have to go elsewhere for our slaves.


The more I read about it, the more I'm convinced that China can keep its development model, we are better off without it.

We'll probably take a generation longer than China to grow rich. However, I think that's worth it, we'll be a nation more at peace with ourselves.

Don't tell me the stuff that's going on in China today isn't having any effect on the collective psych of the nation.

More often than not we get wowed by the shock and awe of 10,000 Km of HSR, the world's largest concentration of skyscrapers, 30 storied buildings coming up in 15 days and all that rah, rah. However, it's useful to also look under the hood and see what all this speeding is doing to the engine. And what you see is not pretty.

I love this thread because it regularly looks under the hood.

When looking at Chinese metrics, the trick is not to look at it as one would look at normal countries, if you do so you invariably jump to the wrong conclusions.

JMT and all that.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby ldev » 30 Jan 2012 22:36

Renting a girlfriend to celebrate Spring Festival in China becoming popular

LOL!!

“Don’t talk about relationship, it’s just a deal.” That is not only a dialogue in the new released Hong Kong film Flying Swords of Dragon Gate, but also the description of a recent phenomenon that single men and women rent a girlfriend/boyfriend to go back home with them to celebrate Chinese Spring Festival.

For young bachelors, the seven days Spring Festival means not just the reunion with families, they need to face the pressure driven by relatives to take a girlfriend/boyfriend home, especially for those who is working far away from home. However, there’s always a solution to this pressure. The internet gives them a quick way to rent a friend.


To rent a girlfriend/boyfriend was not common several years ago. But this Spring Festival, many Chinese online shopping websites emerged some services to have people act as boyfriends and girlfriends, meeting the demand of some young adults.

The online sellers will put on their real pictures for customers to choose. After confirmation, sellers and buyer will arrange a rehearsal to make them look and act like a real couple and to prevent spilling the beans in front of family members.

Theo_Fidel

Re: PRC Economy - New Reflections : Dec 15 2011

Postby Theo_Fidel » 30 Jan 2012 23:04

amit wrote:We'll probably take a generation longer than China to grow rich.


Not even that. We are less than 5 years behind.

Panda is like a mountain climber who thinks only he can climb the mountain because of big schlong.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby VikramS » 31 Jan 2012 01:10

Theo_Fidel wrote:
amit wrote:We'll probably take a generation longer than China to grow rich.


Not even that. We are less than 5 years behind.

Panda is like a mountain climber who thinks only he can climb the mountain because of big schlong.


It would be better to qualify statements like above when we talk about behind or forward.

The PRC has cornered the world's manufacturing market using a combination of ultra-low cost labor, inexpensive infrastructure, dirt cheap financing and a centrally organized effort to encourage Chinese exports. While the empire was built upon low-cost labor, labor rates are rising fast in the PRC. However, because they are so entrenched, any new player has a much higher bar. Given that, there are going to be niches where others can compete with the PRC and identifying and working on those would be great.

While we in India clearly understand the cost of PRC style progress, and also realize that such a model will not work in India, we also need to find ways to adapt that model which allows India to be competitive. There was a time when we would often hear that it is very hard to compete with Chinese manufacturers because their labor costs are so low. I did not understand the relevance of it, till I read up on the Foxconn drama.

However, things are changing in China too so the cost argument is going to be less valid than it used to be a few years ago. The ability of low cost manufacturing to generate a very large number of jobs can not be disputed; so taking a few leafs from the Chinese experience is going to be worth it.

On a different note, I was distressed to read about the GMO suicides; I did not know about the details. I do wonder why the government did not step in to provide debt relief to small farmers, and increase access to seed loans which would reduce the role of the unscrupulous private lenders. I also feel that the time is ripe for the creation of farmer owned co-opratives where small lots are combined to create larger farms which can be operated with greater efficiency. I was struck by the fact that the farmers switched to GM seeds without giving them a trial in a smaller part of their field. No experienced manager would allow an organization to take such risks; in this case it was a matter of life-death. Perhaps if they had tried it out on 20% of their grown up area in the first year, and gradually increasing it, the consequences would not have been so drastic. But I digress.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Theo_Fidel » 31 Jan 2012 01:17

The question is purely on rich/wealth. No needed to make it more complicated than that. No qualifiers necessary. We are 5 years behind.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby wrdos » 31 Jan 2012 06:44

Dear Mr. amit

Thank you very much for your lengthy replies. Since you know the peasant girls living situation in Indian countryside even better than i do, so can i make conclusions as below?

Since the Indian peasant girls have freedom to move to cities.
1. They do not move to cities, instead to stay and endure the countryside life, simply because the peasant girls' expected salary in coastal Indian towns is just as low?
2. Or, the expected salary is higher, but the Indian public transportation is still too dangerous for Indian girls to travel such a long distance, without accompany of their fathers or brothers?

OK, then let's make an assumption.

There is a company, called Foxconn or something.

They provide you a base salary of 12400 rupee for 8 hours/day and 5 days /week. You are often required to work overtime and very tired, but they would pay the difference so most of you can expect about 25000 rupee per month averagely.

The dormitory's condition is not very good, you have to share your room with other 5 girls. The city is cooler than your home India but still very hot, above 35 degree in the hottest week. But no worry, the company dormitory, as well as your working place and the shuttle buses traveling between, are all fully air-conditioned.

This is the working and living situation of Foxconn Zhengzhou, at the poor Henan province in central China. Not Shenzhen, not Guangzhou, not Pearl River Delta area of the Guangdong province. BTW, at least 6 of 31 Chinese provinces or metropolitan areas are richer than Guangdong, Inner Mongolia included.

Sir, given such a situation, the Indian peasant girls would rather stay and endure in their country side mud houses without running water, electricity and even toilets?

Foxconn workers in China are poorly paid, by an American or even Taiwanese standard. It is true.
Last edited by Rahul M on 31 Jan 2012 15:55, edited 2 times in total.
Reason: warned for trolling.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby ldev » 31 Jan 2012 07:03

Shanghai Aims to Become Center of Yuan Trade

Shanghai’s currency market is now largely limited to domestic clients because of controls on capital flows and Hong Kong has been allowed to start an offshore market for trading the yuan. Buyers of yuan still need to seek approval to bring the currency into mainland China for investment purposes.
The Shanghai interbank offered rate will become the benchmark interest rate for pricing yuan-denominated assets at home and abroad, while the yuan reference rate will become the key exchange rate, according to the plan. China said in March 2009 it aimed to make Shanghai a world financial center commensurate with the nation’s economic strength by 2020.


As I posted earlier, the CPC will monitor the progress of offshore yuan trading in Hong Kong and then based on stability will gradually open up Shanghai. The timeframe is sometime between 2015-2020. This then will result in full yuan convertibility and an effort to move the Chinese economy to a more balanced equilibrium. Whether it will be successful or not is as of now, up in the air.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby wrdos » 31 Jan 2012 07:09

Theo_Fidel wrote:The question is purely on rich/wealth. No needed to make it more complicated than that. No qualifiers necessary. We are 5 years behind.


This year is 2012, so India is now China at 2007? Excellent!

- So the India GDP is 3.3 trillion US$ now?
- So India's Foreign-exchange reserves is now >1.5trillion and will doubled within 3 years?
- So 4 years ago, India had finished her first manned space flight?
- So next year India will held an Olympic, instead of London?
- So 2 years from now, India's GDP would equal to Japan's GDP at market value, despite the yen would appreciate nearly 30%?
- So Indian people will buy more cars than America within 2 years from now?
- So India will open new expressways >8000km, i.e. equals to Japan's total expressway network, in this year alone?
- So India's expressway network will be longer than the American inter-state within 4 years from now?
- So thousands km of HSR are under construction now, within 2 years, India's HSR network will be longer than all the other countries' combined?

BTW, I have been on the BR 7 or 8 years. I am tired of hearing expressions like "India WILL", but let's wait 3 or 4 more years to observe.
Last edited by wrdos on 31 Jan 2012 07:19, edited 1 time in total.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 31 Jan 2012 07:17

Wrdos,

I used think your an intelligent poster. Please don't do anything further to show how wrong my assessment was.

India does not have companies which employ 1.2 million people who work with no medical, no unions and general in concentration camp like conditions with armed guards around the place. And all for what? So that a company like Apple can increase its cash hoard by $40 billion in one year!

So you see your attempt at apples to apples is silly to say the least.

Like I said don't stretch your credibility and lose the respect that you've earned. There are many things in which China has achieved admirabele progress and this is universally recognizeed here. Concentrate on that. It's good to be a proud Chinese, just don't be a CPC troll.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby wrdos » 31 Jan 2012 07:27

Mr. Amit, I know you are an intelligent poster. But please, do not be misled by the Western Media. Foxconn China is not a perfect working place, but it is not as bad as the western median describing.

They do not want India to follow the Chinese way, not for the Indian but for themselves.

India has 1.2 billion population. You have to build infrastructure as China, you have to develop manufacturing industry to provide the Indian people even you do not want to export. You own people need.

According to me, India needs these kind of manufacturing jobs more than the so called ITs. That South Korean, Taiwanese, and American are making more money from the i-phone is not a reason to give the jobs to other countries and deprive the peasant girls' chance to move out from the absolute poverty.

Less is better than 0.

BTW, the "concentration camp like, with armed guards" Foxconn dormitory are fully air conditioned.
The company considers it as a welfare, and they would be happy to pay a worker 1200 rupee/month additional, if he/she prefers to live outside.

amit wrote:Wrdos,

I used think your an intelligent poster. Please don't do anything further to show how wrong my assessment was.

India does not have companies which employ 1.2 million people who work with no medical, no unions and general in concentration camp like conditions with armed guards around the place. And all for what? So that a company like Apple can increase its cash hoard by $40 billion in one year!

So you see your attempt at apples to apples is silly to say the least.

Like I said don't stretch your credibility and lose the respect that you've earned. There are many things in which China has achieved admirabele progress and this is universally recognizeed here. Concentrate on that. It's good to be a proud Chinese, just don't be a CPC troll.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 31 Jan 2012 08:49

Wrdos,

I repeat: You don't get it at all. What the West wants or doesn't want matters dilly squat in India. Whatever happens in India is what Indians want. The choice is made by collective majority. Are they always right? Hardly. India has made mistakes and will also do so in the future. But everybody owns up collectively and then gets ready to take the right path.

What the West really wants is for India to become another China in terms of single minded focus on growth at any cost; that would give them an aternative to China and a way to play off one against the other.

However, like I said it matters little what they want.

Foxconn factories are airconditioned not because the company wants to give its workers a good working environment but because the products they make require a cool and dust free environment which can only be achieved by controlling the tempreature and air quality. Foxconn workers in China work in airconditioned factories but they need to go to the toilet only during the toilet breaks and not when they need to go due to the call of nature. They also have no stools to sit and rest and have cameras constantly monitoring their work - something straight out of an Orwellian nightmares. So please spare me the drivel.

In India, as we've seen with the Foxconn Chennai case, there would be employees unions who would keep hawk eye on the mangement to ensure that no unethical practices are allowed. The management, again going by the Foxconn Chennai example (remember same management in Shenzhen and Chennai) would be looking after employee welfare because they wouldn't be able to function otherwise. And guess what? Foxconn Chennai productivity is as good as those achieved by the company in China and elsewhere!

So let me amend my previous statement: Indians don't want concentration camp like working enivronment even if they are airconditioned.

The negative effect of this is that, as I said earlier, India would probably take longer to get rich than China but get rich it will.

The other problem with you folks is, thanks to the CPC you've forgotten your history. You only see the past 500 years. What you forget is that for much of recorded human history, that is around 3 millenas, China and India have been the wealthiest countries in the world where the pinnacle of science, innovation and culture ruled. After the abberation of the past 500 years, things are going back to its natural order.

And when you think in terms of millenia whats a few decades? Maybe (and that's a big maybe, because social unrest is a genie waiting to pop out of the bottle in your country) China will become a wealthy nation, with the world's largest GDP one decade before India either surpasses it or becomes the second largest nation in terms of GDP. But is that one decade advantage worth the pain that your country is going through in terms of environmental degradation, lack of workers rights and supression of free expression and all the general malises associated with a police state? Why don't you ask the parents of all those children killed in the 2008 earthquake if it was worth it? Why don't you ask those Foxconn workers who were desparate enought to want to commit suicide if it's worth it?

Please think like a member of a proud race of people with great achivements, who consitute one-fourth of humanity and not like a CPC drone. Like I said there a many things that the Chinese can be proud of, and I have many Chiense friends who are proud of them. But Foxconn and its airconditioned concentration camps is not one of them.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby wrdos » 31 Jan 2012 09:18

Amit

Not only the working place, the DORMITORY where worker live, are also air-conditioned. Of course, air conditioner in China is very common, more necessity than a luxury.

And, of course the dormitory room, though air-conditioned,is sure too small for you or the other elite Indian. A monthly income of 24000 rupee is also too poor. But, please do not deprive the Indian peasant girls, thus their future children, the opportunity to move out from the absolute poverty. Ask them, whether they want or not.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby vish_mulay » 31 Jan 2012 10:31

A monthly income of 24000 INR in China is just above poverty line.
FYI
http://www.numbeo.com/cost-of-living/co ... rrency=CNY

Difference
Consumer Prices in China are 44.13% higher than in India
Consumer Prices Including Rent in China are 54.41% higher than in India
Rent Prices in China are 127.26% higher than in India
Restaurant Prices in China are 59.99% higher than in India
Groceries Prices in China are 53.16% higher than in India
Local Purchasing Power in China is 50.90% lower than in India


FYI
http://www.brisbanetimes.com.au/technol ... 1qjyy.html

The road to Chengdu

Foxconn's factory in Chengdu, Lai Xiaodong knew, was special. Inside, workers were building Apple's latest, potentially greatest product: the iPad.

When Lai landed a job repairing machines at the plant, one of the first things he noticed were the almost blinding lights. Shifts ran 24 hours a day, and the factory was always bright. At any moment, there were thousands of workers standing on assembly lines or sitting in backless chairs, crouching next to large machinery, or jogging between loading bays. Some workers' legs swelled so much they waddled. "It's hard to stand all day," said Zhao Sheng, a plant worker.

Banners on the walls warned the 120,000 employees: "Work hard on the job today or work hard to find a job tomorrow." Apple's supplier code of conduct dictates that, except in unusual circumstances, employees are not supposed to work more than 60 hours a week.

But at Foxconn, some worked more, according to interviews, workers' pay stubs and surveys by outside groups. Lai was soon spending 12 hours a day, six days a week inside the factory, according to his paychecks. Employees who arrived late were sometimes required to write confession letters and copy quotations. There were "continuous shifts," when workers were told to work two stretches in a row, according to interviews.

Lai's college degree enabled him to earn a salary of around $22 a day, including overtime - more than many others. When his days ended, he would retreat to a small bedroom just big enough for a mattress, wardrobe and a desk.

That accommodation were better than many of the company's dorms, where 70,000 Foxconn workers lived, at times stuffed 20 people to a three-room apartment, employees said. Last year, a dispute over pay set off a riot in one of the dormitories.

Foxconn, in a statement, disputed workers' accounts of continuous shifts, extended overtime, crowded living accommodations and the causes of the riot. The company said that its operations adhered to customers' codes of conduct, industry standards and national laws. "Conditions at Foxconn are anything but harsh," the company wrote. Foxconn also said that it had never been cited by a customer or government for underage or overworked employees or toxic exposures.

"All assembly line employees are given regular breaks, including one-hour lunch breaks," the company wrote, and only 5 percent of assembly line workers are required to stand to carry out their tasks. Work stations have been designed to ergonomic standards, and employees have opportunities for job rotation and promotion, the statement said.



Read more: http://www.brisbanetimes.com.au/technol ... z1l0eYiCik
Last edited by vish_mulay on 31 Jan 2012 10:35, edited 3 times in total.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Prem » 31 Jan 2012 10:31

China urged to lift rare earth sales after WTO ruling
http://www.ft.com/intl/cms/s/0/3cdc1446 ... z1l0cjxukZ
The EU has demanded that China loosen its policy on sales of rare earth materials after the World Trade Organisation upheld a ruling that Beijing’s policies to limit raw material exports violated international trade rules.The WTO’s appellate body issued its decision on Monday, endorsing a previous finding that export duties, quotas and other policies enacted by Beijing to limit the foreign sale of nine raw materials were not justified on environmental or self-sufficiency groundsHigh quality global journalism requires investment. It also represents an example of the US and the EU joining forces to confront China on trade matters – a strategy that both Washington and Brussels believe will help maintain leverage over the world’s second-largest economy.The WTO case has acquired even greater importance amid Beijing’s moves to impose similar restrictions on the export of a rare earths, a category of 17 elements that are found in an array of high-tech products, including solar panels, wind turbines and mobile phones. Such goods are themselves becoming an increasingly important battleground for trade conflicts, with the US having launched a wide-ranging investigation against China’s support for its renewable energy industry. S

Theo_Fidel

Re: PRC Economy - New Reflections : Dec 15 2011

Postby Theo_Fidel » 31 Jan 2012 11:07

The psychotic thinking that links HSR to wealth of the Chinese people is truly laughable. :rotfl: :rotfl:

By the way dear wrdos humble humble IR transports more passengers than your might flighty ding dong HSR. So who benefits more?

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby VikramS » 31 Jan 2012 11:40

wrdos:
At least to me the primary purpose of this thread is to learn about PRC and see what India can or can not borrow.

I appreciate your thoughts about how India too should try to develop better infrastructure and try to attract as may jobs as possible.

The problem is that what worked in China will not work in India. There are many dimensions to it. Let me address a few.

#1: Land Ownership: Till very recently, land/real-estate ownership in China was heavily controlled by the state. It is in 2007 that the structure of land-lease was approved. What this meant was that CPC and state owned companies could pretty much get as much land as they needed, at very low costs. In India land acquisition costs itself are very high.

#2: Financing: Interest rates in China were artificially low; real interest rates being negative for a long time. This allows the land acquired in #1 to be developed on money borrowed at low rates. This has eaten up the savings of many of the millions who toiled to save a little; but allowed great infrastructure to come-up. In India interest rates are generally higher giving the savers better protection over inflation but increasing the cost of development.

#3: Fixed Investment Spending: Over the last few years, a bulk of Chinese GDP growth has come from what is called fixed-investment, primarily construction; between 35-45% of the GDP is from that sector. #1 and #2 above enabled that. However, that kind of breakneck development is not sustainable in the Indian financial system. In the Chinese system, local governments took on big debt to finance the construction of new infrastructure, with the hope that continued growth will make the projects viable. I am not really not sure what the source of all that capital is, but many of those projects now face debt servicing problem. Since everything in China, is eventually state controlled, it will not lead to a Western style banking crisis. But clearly the ability to sustain GDP growth by infrastructure spending is hitting limits. The first sign of caution was when the government did NOT reduce the reserve ratios last night , when all pundits expected it; the Chinese government wants to prevent any recurrence of the poor investments made during the great stimulus of 2008-2010.

#4: Balance in Growth: India simply can not afford to have that level of fixed investment spending to sustain GDP as China has. However the size of the fixed investment as a component of GDP makes China's economic growth very lop-sided. It seems to be dictated by the need to meet targets. The amount of money being spent on fixed investments is unheard of in any economy of this size.

There is an argument that there are so many people who are yet to become rich, and they need the infrastructure. The problem of course is that the people who need the infrastructure are unlikely to afford it. heech referred to a WSJ article about affordable housing, where the basic assumption was that the house would cost 21 man years of wages (shared by three workers with the price being seven time their earnings). To give you a perspective, during the bubble years people were buying housing 6-8 times their income in the US; the conservative norm is 4-5 times annual income.

There is a lot of linear extrapolation being done about how the infrastructure may be used in China; linear extrapolations typically do not stand the test of time. Compared to what China Indian growth while lower, is much more balanced.


#5. There is also the question of wages. The Foxconn debate did highlight one thing. Until recently, it would have been almost impossible for anyone to compete with the wage structure in China. I do realize that the 900Yuan was the base number, and when you add overtime, raises due to experience etc. the income is higher. However the base itself was very low. In all that discussion about Foxconn Chennai, what was lost was that whatever they were doing in Chennai was so out of norm with normal Indian practices, in the organized sector. Wages have been going up rapidly in China, which is a great thing; it will also allow others to compete. But till recently Indian industrialists could simply not compete. It is not just the wage structure; it is also the labor laws, the environmental laws and other sundry things.

#6. Mind you, the current Indian government is using a lot of populist measures, which will slow down growth; in India the country grows in spite of the politicians. And there are areas like mining where all the laws are flouted, especially since political connections forms a big part of getting the mining rights etc. There is a general sense of outrage with corruption in India, which erupted last year with the middle class on the streets all over the country. Hopefully it will lead to more focus on development.

Each country will have to take its own path which is consistent with its culture.

What does bother me is the amount of censorship in China, and face-saving tendencies which I have observed over here. When people are only told about the good things about a system, and nothing bad is exposed, the perspective becomes unbalanced. You end up with statements like zlin's about how superior Chinese construction is when tens of thousands of school children had died in the same incident. That is what bothers me and many Indians. Eastern philosophies emphasize balance; the need to recognize the good and the bad, the ying and the yang. Good things do not happen when balance is lost.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby vina » 31 Jan 2012 11:56

That is what bothers me and many Indians. Eastern philosophies emphasize balance; the need to recognize the good and the bad, the ying and the yang. Good things do not happen when balance is lost.


You are wasting your breath here. You are talking to a bunch of "de-cultured" or should be "culture revolutionized" bunch of bots who have been told to hate the "four olds" or whatever by Chairman Mao, totally sold into a materialistic culture (Communism after all raises Dialectical Materialism to the status of the official theology of the Marxist Church , resulting in absurdities where you have folks measuring worth of a person /life by such things as "I have an iPhone, do you ?. My palty boss drives an Audi, while I drive only a Chery QQ and hence I am a "failure" kind of thing and have totally lost even the remnants of critical thinking and toe the "party line" like lemmings (coerced or otherwise in pursuit of pelf and the fishes and loaves of power) and frankly seem to be little more than the typical well drilled propaganda mouthpieces with canned "media /influence" strategies that is just out of the play book of a totalitarian dictatorship (Nazi Germany, Stalinist USSR, DPR Korea, PR China , all of them feed of one another in this and look and feel the same, including the giant squares in the towns and marching soldiers, shame, they built one right at the foot of the Potala Palace in Lhasa, as if the Tibetans give a f*ck about the PLA goose stepping around) .

It is all so boring and frankly jaded.

Theo_Fidel

Re: PRC Economy - New Reflections : Dec 15 2011

Postby Theo_Fidel » 31 Jan 2012 12:13

VikramS wrote:#3: Fixed Investment Spending: Over the last few years, a bulk of Chinese GDP growth has come from what is called fixed-investment, primarily construction; between 35-45% of the GDP is from that sector.


Yup! Investment is running at 70% of GDP now. RIR is running at 6 or so and rising!

Image

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby niran » 31 Jan 2012 13:05

USA EU India Mexico ganging up on China

In a ruling, the WTO Appellate Body found China's export restraints on several industrial raw materials used as key components in the steel, aluminium, and chemicals industries to be inconsistent with China's WTO obligations.

The European Union and Mexico joined the US as co-complainants in the dispute. Upon a US request, the WTO Dispute Settlement Body (DSB) will adopt the panel and Appellate Body reports within 30 days and call for China to bring its measures into compliance with its WTO obligations.

Argentina, Brazil, Canada, Chile, Colombia, Ecuador, India, Japan, Korea, Norway, Saudi Arabia, Chinese Taipei, and Turkey joined as third parties in the dispute.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 31 Jan 2012 13:09

wrdos wrote:Amit

Not only the working place, the DORMITORY where worker live, are also air-conditioned. Of course, air conditioner in China is very common, more necessity than a luxury.

And, of course the dormitory room, though air-conditioned,is sure too small for you or the other elite Indian. A monthly income of 24000 rupee is also too poor. But, please do not deprive the Indian peasant girls, thus their future children, the opportunity to move out from the absolute poverty. Ask them, whether they want or not.


So Wrdos turns out to be sleeper CPC bot after all these years! :-)

Some supervisor somewhere is getting his undies in a twist with all the truth spilling on a BRF thread which was seen as a vehicle to "educate poor SDRE In'juns how great and TFTA the CPC has made China". My dear Wrdos the more you try the more the truth will continue to spill out. I don't know what you've been told but in this day and age the Internet that lies beyond the Great Chinese Firewall has a wealth of data on what it is really like in China today. Read the post made by vish_mulay just after yours! :-)

And yes I'm sure the Foxconn dormitories are airconditioned. Must be otherwise the poor workers would suffocate to death because this says:

Lai's college degree enabled him to earn a salary of around $22 a day, including overtime - more than many others. When his days ended, he would retreat to a small bedroom just big enough for a mattress, wardrobe and a desk.

That accommodation were better than many of the company's dorms, where 70,000 Foxconn workers lived, at times stuffed 20 people to a three-room apartment, employees said. Last year, a dispute over pay set off a riot in one of the dormitories.


You know what, the poor Indian peasant girl for whom you worry so much about may not have an airconditioner at home but she has more space in her house than these Foxconn workers.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 31 Jan 2012 13:15

niran wrote:USA EU India Mexico ganging up on China

In a ruling, the WTO Appellate Body found China's export restraints on several industrial raw materials used as key components in the steel, aluminium, and chemicals industries to be inconsistent with China's WTO obligations.

The European Union and Mexico joined the US as co-complainants in the dispute. Upon a US request, the WTO Dispute Settlement Body (DSB) will adopt the panel and Appellate Body reports within 30 days and call for China to bring its measures into compliance with its WTO obligations.

Argentina, Brazil, Canada, Chile, Colombia, Ecuador, India, Japan, Korea, Norway, Saudi Arabia, Chinese Taipei, and Turkey joined as third parties in the dispute.


Boss the story headline says: India, US Win Raw Material Export Case Against China

Can you explain why exactly you changed that to : USA EU India Mexico ganging up on China

The report says:

In a ruling, the WTO Appellate Body found China's export restraints on several industrial raw materials used as key components in the steel, aluminium, and chemicals industries to be inconsistent with China's WTO obligations.

The Appellate Body affirmed a WTO dispute settlement panel's July 2011 finding, therefore agreeing with the US and rejecting China's attempts to portray its export restraints as conservation or environmental protection measures or measures taken to manage critical shortages of supply.

<
<
<snip>
<

The raw materials at issue include various forms of bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus and zinc.
<
<
<snip>
<

Export restraints on these types of industrial products can skew the playing field against the US and other countries in the production and export of numerous steel, aluminium and chemical, and a wide range of other products, the USTR said.

Besides, they can artificially increase world prices for these raw materials, while artificially lowering the prices for Chinese producers.

This enables China's domestic producers to produce lower-priced products from the raw materials and thereby creates significant advantages for China's producers when competing against US and other producers, both in China's market and other countries' markets.

Such export restraints can also create substantial pressure on foreign producers to move their operations and, as a result, their technologies to China.


Can you tell us which part of this report seems to suggest that the other countries are "ganging up" on poor innocent China?

We'd like to know why you display this bleeding heart for a ruthless Merchantilist trading power like China?

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby niran » 31 Jan 2012 13:29

amit wrote:Can you tell us which part of this report seems to suggest that the other countries are "ganging up" on poor innocent China?

We'd like to know why you display this bleeding heart for a ruthless Merchantilist trading power like China?

there is a word "Sarcasm" this news item was pointed to me a huffing puffing teary eyed Chinese
on the lines of "they are going to loot all of China Raw material"
besides sensationalism is much good.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 31 Jan 2012 13:47

niran wrote:
amit wrote:Can you tell us which part of this report seems to suggest that the other countries are "ganging up" on poor innocent China?

We'd like to know why you display this bleeding heart for a ruthless Merchantilist trading power like China?

there is a word "Sarcasm" this news item was pointed to me a huffing puffing teary eyed Chinese
on the lines of "they are going to loot all of China Raw material"
besides sensationalism is much good.


I see. Fair enough.

But perhaps you could have posted the above as a footnote in your previous post, would have made things clearer.

Anyway choro we have better things to fry here! :-)

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 31 Jan 2012 14:55

It should be obvious by now that our Chinese posters are very proud of Foxconn and the fact that practically the entire supply chain of Apple goes through China.

We've been talking about the working conditions in the Foxconn factory which makes iPhones and iPads. However, there's another side to the price that China is paying for the privilege of making all the gadgets that we buy at unbeatable China prices.

This report by a host of organisations - Friends of Nature; Institute of Public & Environmental Affairs; Green Beagle; Envirofriends; and Green Stone Environmental Action Network - looks at the long-term environmental impact that China is willingly absorbing by allowing Apple to almost exclusively source its raw materials and manufacturing out of that country. Before proceeding further it's useful to remember it's not only Apple but almost every damn company has similar set-ups in China and are doing the same thing. So its Apple multiplied several fold.

Oh yes before this is dismissed as Western propaganda, this is what the executive summary says:

Faced with an ever evasive Apple, a group of Chinese NGOs decided to dig deeper and carry out further investigations into the environmental problems that exist within Apple’s supply chain. Through five months of research and field investigations we have found that the pollution discharge from this $300 billon dollar company has been expanding and spreading throughout its supply chain, and has been seriously encroaching on local communities and their surrounding environments.


There's too much damning data to post all of it here, so please do take the time to glance through the report. However, here are some random excerpts:

The large volume of discharge in Apple’s supply chain greatly endangers the public’s health and safety. Through the process of our investigations, we discovered several suspected suppliers to Apple that have been the target of numerous complaints from local communities. Located in Kunshan, the two companies Kaedar Electronics and Unimicron Electronics have been subject to repeated complaints from local residents due to their emissions discharge. The residents of this community worry that the
health of their children will be severely damaged. More seriously, a village in the vicinity of the company has experienced a phenomenal rise in cases of cancer.



Foxconn Electronics, located in Taiyuan, Shanxi Province, has a huge production capacity and is involved in serious pollution resulting from its metal surface processing. In recent years the local residents have repeatedly filed complaints with local agencies against the Foxconn factory’s irritant gases. These gases often leave the nearby residents with irritated nasal passageways, watering eyes and they sometimes make it hard for residents to open their windows, due to pollution being so intense. The local
government has called on the company to control its pollutant discharge many times, but the pollution that severely affects the quality of life for the residents has yet to be resolved.


Each day, Ibiden Electronics Beijing Company produces several dozen tons of hazardous waste containing heavy metals copper, nickel and cyanide. However, during further checks the environmental agency discovered that even though there are strict national regulations for the hazardous waste transport manifests to be filled out; in this case they were all left blank. After checks, the agency also discovered that the exact whereabouts of the heavy metals sludge was not clear. Moreover, the Shenzhen Municipal Hazardous Waste Treatment Station who are responsible for the treatment of hazardous waste from the electronics industry, including Foxconn’s, was also found to have discharged pollutants against the authorized standards.


From these two investigations, the coalition has discovered more than 27 suspected suppliers to Apple
that have had environmental problems. However, in the ‘2011 Supplier Responsibility Report’ published by Apple Inc., where core violations were discovered from the 36 audits, not a single violation was based on environmental pollution. The public has no way of knowing if Apple is even aware of these problems. Again, the public has no way of knowing if Apple has pushed their suppliers to resolve these issues.


For this kind of company to have passed an audit led by Apple’s Vice-President and then go on to win the main contracts for Apple’s global iPad market, it must surely leave one to question Apple’s auditing process. However, there has been no way to confirm any of these queries with Apple Inc., as the company will not actively disclose any information, nor will it even passively respond to questions
regarding their suppliers. Under the cover of Apple’s annual auditing report, the company continues to issue contracts to polluting companies for its OEM production, so as to pursue blood stained profits at the cost of the environment and communities.


The Chinese government is known to be tough on foreign companies. In exchange for access to its huge market it has demanded and gotten things like:

a) Access to valuable IP;
b) Forced JVs in which the local partner invariably steels the IP and sets up a rival company (remember Cisco, Huawei and 2 million lines of code?);
c) Gets companies to invest in things like R&D centres; plus a number of other things.

Now China is a lucrative market for Apple, can't the Chinese govt arm twist to Apple to clean up its act? Or is it that the Govt is shit scared that Apple would just pack up its bags and leave?

In a previous post I highlighted the comments sections to a NYT video on the Foxconn situation. Let me post it again:

· G3said:
At January 28, 2012 7:48 pm
Is Apple willing to pay $10 more for each device FoxConn made for it? It would just $500m (about 50 millions iPhones and iPads). That is only a small dent in Apple last quarter revenue (out of some 46.3 billion dollars).
But Apple wouldn’t. You are in this absurd, hypocritical situation that companies like Apples try to squeeze every single drop of profits from China based manufacturers while blaming them for abuses.
Such is the Americans. We care more about our cats and dogs than people in Africa.

·
ricecakesaid:
At January 28, 2012 9:44 pm
That’s why Apple is hoarding tremendous amount of cash because Apple’s model is not sustainable. When you have lot of cash you can take up and run away as fast as you can when you are deep in trouble.
·

bjornsaid:
At January 29, 2012 9:34 am
I noticed that in the office where the interview is is being conducted there are wall clocks to be seen from every angle.
The difference in china is that the wall clocks are replaced by widgets per hour. Time pressure is experienced by both work places. Try working in your office without a clock; it will make you even more stressed.
It seems that cheap labor in developing economies has been the substitute for slavery in our society. Eventually we will have to go elsewhere for our slaves.


The last two bolded quotes are IMO very relevant in this case. Who is manipulating whom?

I've been talking about the "costs" associated with this helter skelter grow at any cost attitude of CPC. The environment is just another aspect of this "cost".

So while folks like Wrdos sleep happily with the idea of the poor Foxconn factory line worker sleeping in an airconditioned room the country's environment is being raped.

Remember that old hackneyed saying? Nero fiddling his harp as Rome was burning? :-)

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 31 Jan 2012 16:01

What really saddens me is that these Chinese drones focus on all the wrong things to trot out as "achievements".

I know perhaps some folks may disagree, but for me personally the things I really admire about what the Chinese has done over the last 60 years are the following:

1) Improving the basic nutrition levels of all sections of the population. I know with the current wave of contaminated food, spurred by the get rich at all costs mantra popularised by CPC, some of that achievement has been dented. But pre 1978 the achievements IMO were impressive.

2) How they have managed to improve agricultural production by cutting waste and developing (with international help) super efficient supply chains. It's useful to remember that despite almost being twice the physical size of India (that is including Tibet) China has far less arable land than India. Yet it produces much more in almost every category and after feeding its own population is still a major exporter of vegetables to the entire Southeast Asian region.

3) It's achievements in basic education and eradication of illiteracy. We've also had good progress on the literacy front but that's only recently while the Chinese have been at it for much longer. I also suspect that the aam janta in China receive better quality elementary and secondary education than the aam janta in India. Of course this changes drastically as we go up the value chain in terms of schooling.

There are quite a few others. However, as none of them are sexy, you won't find the Chinese drones talking about them. They'd rather talk about HSR, Foxconn and other stupid projects little realising that these will be the downfall of the great CCP and possible China too.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby svinayak » 01 Feb 2012 23:40

Came to know about some important facts of the Chinese population from a PhD in economics

In 1978 Deng passed policy to restrict families to have one child policy. The average age of the population was around 22 years in China in 1978. This population in 2018 will be 62 years. In year 2018 the retirement age of the large one child population will reach and they will go for the state welfare benefit.
In that period there will be large proportion of supported population compared to the
working population. This could result in sudden decline in the GDP in 2018 nad later.

before 2018 PRC GDP may even surprass US and will be largest GDP in the world. But the future looks uneven

Theo_Fidel

Re: PRC Economy - New Reflections : Dec 15 2011

Postby Theo_Fidel » 02 Feb 2012 08:04

http://english.caixin.com/2012-01-06/100346469.html

A golden era for rapid transit expansion is ending abruptly in China's cities, leaving railway builders and suppliers in the lurch
The property market controls, which began in 2010, diminished demand for the valuable land that local governments typically sell to raise fiscal revenue. As a result, cities have less money to spend on railways and other infrastructure. Each of the cities of Chengdu, Xi'an and Shenyang plans to open a second subway line in 2012. After that, the boom will end, as no additional lines are planned in these cities, a source at the central government's National Development and Reform Commission (NDRC) told Caixin. "Prospects for urban rail investment are hardly ideal," said Zhang Jiangyu, vice director for NDRC's transit technology planning office. "Seventy to 80 percent of the projects are being postponed nationwide. "

Rail sector manufacturers, which had been expanding factories over the past five years, are feeling the sting. "Right now, all orders are being pushed back," said an executive at China South Locomotive and Rolling Stock Corp., which makes subway cars. "Local governments everywhere are out of money. Cities that never had cash problems before, like Guangzhou, Shenzhen and Shanghai, are all tight on capital."In the coming two years," he lamented, "it seems our production will not even reach half of its capacity."


For example, rail lines were built where few people live on the outskirts of the Hunan Province city of Changsha, said Wang Chengli, an urban transit professor at the city's Central South University. Today, exit gates for some of the city's finished subway stations lead to farm fields. Wang said Changsha authorities installed far fewer kilometers of track in the city's center than in its suburbs. Each project was approved by the central government, he added.

Zhang says China learned important lessons from the fast-track subway program. For example, he now thinks subways should never have been built in "many cities." "The only cities that should have built subways are super-large ones such as Beijing, Shanghai, Tianjin, Shenzhen, Wuhan, Nanjing and Guangzhou," Zhang said. "Provincial capitals such as Shenyang and Taiyuan can handle their transit needs with a single, light-rail line." Subways can be uneconomical in smaller cities. :rotfl: Now they learn Zhang said final costs for many projects were often much higher than a local government's estimate.

In general, Zhang said, one kilometer of subway track costs at least 400 million yuan to build. City officials "build and change (project plans) at the same time," Zhang said. "An original plan might be to build elevated lines to bring down costs and get NDRC's approval," he said. "But later, the plan could be changed to require digging tunnels."


Jin is also concerned about financing future subway projects. "Urban rail construction is about to experience problems of unsustainability," he warned. "The liability of subway projects nationwide adds up to more than 1 trillion yuan. From a macro perspective, that's a huge debt burden." Some city governments, such as Beijing's, have sought to sidestep the real estate-related revenue crunch by introducing strategic investors to help support urban rail projects.

Beijing's Line 4 subway, for example, was financed through a private-public partnership. About 10.7 billion of the 15.3 billion yuan($2.8 Billion for 1 line!) the entire Phase 1 + Phase 2 of Delhi metro cost roughly $2.6Billion construction cost was shouldered by a city government entity called Beijing Infrastructure Investment Corp. Covering some of the price tag for trains and signal equipment, which cost about 4.6 billion yuan altogether, was Beijing MTR Corp., a joint venture formed by two Beijing city government-backed companies and the Hong Kong subway operator MTR Corp., which is a government company.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Singha » 02 Feb 2012 08:17

I read somewhere a chinese co had developed a small maglev train for urban light rail kind of application.
http://daily.bhaskar.com/article/WOR-TO ... 78275.html

Theo_Fidel

Re: PRC Economy - New Reflections : Dec 15 2011

Postby Theo_Fidel » 02 Feb 2012 08:27

Where is Chola when you need him. Wonder what he thinks of this 20 million car miracle now.

http://www.economonitor.com/blog/2012/0 ... -in-china/

Can consumption possibly surge? No, not if the household sector is going to be forced to clean up the banking mess again. This is the same problem that caused household consumption to drop after the last banking crisis from a very low 46% of GDP in 2000 to an astonishing 34% in 2010.

n that light, it was interesting to see this article in Wednesday’s South China Morning Post:

The Chinese government is planning new policies to boost domestic consumption, especially of vehicles and appliances, in a bid to offset the effects of sagging export demand, the China Daily reported on Wednesday, quoting a government official. With tax rebates on vehicles and domestic appliances either having expired or due to expire, the government is working on new measures, said Huang Hai, former assistant minister of commerce and a member of the economic and trade policy consulting committee linked to the Ministry of Commerce.


The Financial Times version of this story makes a classic mistake:

China has ample room to stimulate consumption. Household spending accounted for half of gross domestic product two decades ago but dwindled to just 33.8 per cent of GDP in 2010, a record low for a major economy in peacetime. China is probably now at a turning point in that consumption is beginning to become a bigger force in the economy, but this will be a “longer-term process”, said Zhu Haibin, an economist with JPMorgan.

For years China bulls have been arguing that because the Chinese save so extraordinarily much money, there is plenty of room to stimulate consumption – just get them to save a little less. The problem with this reasoning is that consumption is not low because Chinese households save a lot (they save in line with other Asian countries as a share of their income, and less than some). It is low because household income is such a low share of GDP.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Dhiman » 02 Feb 2012 11:38

Theo_Fidel quoting Financial Times wrote:The Financial Times version of this story makes a classic mistake:

China has ample room to stimulate consumption. Household spending accounted for half of gross domestic product two decades ago but dwindled to just 33.8 per cent of GDP in 2010, a record low for a major economy in peacetime. China is probably now at a turning point in that consumption is beginning to become a bigger force in the economy, but this will be a “longer-term process”, said Zhu Haibin, an economist with JPMorgan.

For years China bulls have been arguing that because the Chinese save so extraordinarily much money, there is plenty of room to stimulate consumption – just get them to save a little less. The problem with this reasoning is that consumption is not low because Chinese households save a lot (they save in line with other Asian countries as a share of their income, and less than some). It is low because household income is such a low share of GDP.


My hope is that India's rise will take its "natural course" as opposed to a financially engineered and manipulated course even if it means that we are 20 years behind China, because 200 years from now one no one is going to worry whether it is China that is behind or if it is India that is behind. What people will worry about is which country is more conductive to life and certainly CCP's strangle hold of China is not going to help there.

The goal should never be to ape China, because if a colony of ants were as big as humans, then rest assured the ant colony's natural level of organization would not just beat the crap, but also run circles around CCP's Chinese empire. The goal, IMHO should be to grow and prosper along a natural course in tune with nature - and this I think is in tune with the "Indian way".

Ultimately if done right, India's growth would make the world a "saner" place rather than a corporate, investor driven world where "greed is good" and a worker has to migrate 1000 km away from village, open fields, and clean year to spend 12+ hours a day breathing toxic fumes in a factory and sleeping in a cell.

So where does this leave the farmer who is currently committing suicide as a result of his bad loans and crop failure? Hopefully NREGA will do the trick in the short to medium term and in the long term I would much rather have millions of individual farmers who would literally be the owners of their own farm business rather than being subjected to the push and pull of global financial market greed combined and super-tight global supply chain (I would bet that ant's could create a better supply chain then humans any day) which control the multinationals that supply GM seeds to these farmers.

Slack is good, not everything in this world has to be super-efficient and tight and not everything in the world needs to be dictated by its current price in global commodity or stock exchanges. Slack offers flexibility. Self-reliance is not a socialist relic, its good and essential for any free-loving society rather that subjecting a local farmer to vagrancies of global supply chains, credit default swaps, and global stock market fluctuations. Very relevant today when the world is reeling from one engineered financial crisis to another that were created in the board rooms of companies.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 02 Feb 2012 12:10

Theo_Fidel wrote:http://english.caixin.com/2012-01-06/100346469.html

"Provincial capitals such as Shenyang and Taiyuan can handle their transit needs with a single, light-rail line." Subways can be uneconomical in smaller cities. :rotfl: Now they learn Zhang said final costs for many projects were often much higher than a local government's estimate.


Good fine Theo! :-)

So Shenyang and Taiyuan do not have the financial capacity to handle a subway line and should have light rail lines.

But you know what? Both have HSR and I'm sure they are so crowded that people are packed like sardines in each coach.

According to Wiki Chacha

The Shijiazhuang-Taiyuan PDL lost ¥0.8 billion in its first year and is set to lose ¥0.9 billion in 2010


Shenyang is even "better connected" with HSR lines.

So there you have it, these cities are not considered viable for subway lines but have enough passengers who can pay for HSR travel!

I guess this logic leads to what this article says about HSR. Some grim facts indeed:

Statistics from China's Railways Ministry showed that the ministry would have to pay as much as 140 billion yuan (US$21 billion) in bond repayments in 2011 alone, said the article.

It said that the ministry had already accumulated up to 1.7 trillion yuan (US$258 billion) in total debt by the third quarter of 2010, and that the number was estimated to have reached 2 trillion yuan (US$304 billion) by the end of 2010.

This means that the ministry is required to pay interest of up to 120 billion yuan (US$18.26 billion) each year, it said.

However, according to the article, the country's railway system is only able to pay interest on the debt, and might not even be able to do that if it loses profits.

The operating cash flow of China's railway system stood at just around 113.9 billion yuan (US$17 billion) in 2009, and that figure is estimated to increase to only 130 billion yuan (US$19.78 billion) in the near future, according to the article.


Incidentally the stats quoted by this article is from here:

The financial outlook of China's high-speed rail network seems grim, according to an article posted on the Chinese Economic Net Feb. 28. (last year)


Look at the solution that is being proposed:

As for the advice to double freight rates or volume, the article said that doing so would not guarantee an increase in revenues as demand could decline with freight price hikes; also, the number of passengers traveling by trains could decrease due to increases in freight volumes.

Therefore, China's railway system might not be able to sustain normal operations if it does not borrow more money, even though higher borrowings could aggravate its financial situation, it said.



China's railways posted an average annual profit of 2 billion yuan (US$304 million) during 2004-2009. It earned 8.7 billion yuan (US$1.32 billion) at its peak in 2007, and lost 13 billion yuan (US$1.98 billion) in 2008, its worst-performing year, official statistics showed.


So some elementary math: Bond repayments that was due last year was US$21 billion. Per year interest rate payment works out to US$18.26 billion. And China Railway's average annual profit is US$304 million.

I second Theo, where is Chola saab when we need him the most

Oh, there's more interesting stuff in the article:

The article equates the railway system in China to the "speculative borrower" and "Ponzi borrower" identified by economist Hyman Minsky. Minsky identified three types of borrowers who contributed to the accumulation of debts: hedge borrowers, speculative borrowers, and Ponzi borrowers.[


A hedge borrower could pay back both the principal and interest from current cash flows; a speculative borrower could only cover the interest due and would need to borrow further to pay back the principal, while the Ponzi borrower is unable to pay either the interest or principal with current cash flows. This type of borrower relies, instead, on the appreciation of asset values to make sufficient payments.


This last part in blue/bold brings us back to a comment in the article posted by Theo:

The property market controls, which began in 2010, diminished demand for the valuable land that local governments typically sell to raise fiscal revenue. As a result, cities have less money to spend on railways and other infrastructure.


I hope it should now be clear why China railways is in deep sh!t with its pet HSR.
Last edited by amit on 02 Feb 2012 12:20, edited 1 time in total.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 02 Feb 2012 12:20

Theo_Fidel wrote:The Financial Times version of this story makes a classic mistake:

China has ample room to stimulate consumption. Household spending accounted for half of gross domestic product two decades ago but dwindled to just 33.8 per cent of GDP in 2010, a record low for a major economy in peacetime. China is probably now at a turning point in that consumption is beginning to become a bigger force in the economy, but this will be a “longer-term process”, said Zhu Haibin, an economist with JPMorgan.


I understand your point about FT's classic mistake and agree 400 per cent.

However, FT got this one right, perhaps inadvertently:

For years China bulls have been arguing that because the Chinese save so extraordinarily much money, there is plenty of room to stimulate consumption – just get them to save a little less. The problem with this reasoning is that consumption is not low because Chinese households save a lot (they save in line with other Asian countries as a share of their income, and less than some). It is low because household income is such a low share of GDP.


The 40 per cent savings rate is because of the amount of cash held by Govt-linked entities. The common citizens do not have sufficient cash to sustain the export driven economy that China has built. So if exports fall off the cliff, there's going to plenty of problems which even the omipresent CPC may find hard to handle.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 02 Feb 2012 12:50

Meanwhile prospects are not so rosy in Panda land.

The pearl is losing its lustre, it seems.

Pearl River Delta firms worried about 2012 prospects


Processing companies in the Pearl River Delta in southern China are facing gloomy prospects for 2012 because of decreasing orders, a labor shortage and postponement of payments by their buyers, reports the Beijing-based China Business Journal.

Citing a survey by private foreign-trade services company Onetouch in Shenzhen, the journal said liquidity pressures have mounted on small and medium enterprises in the past five months, peaking in December, as many foreign buyers have delayed their payments in the wake of the European debt crisis.


Liu Xiaoyu, the general manager of Huahui Electronic Company, said he had to place half of his employees on furlough in December because of a lack of orders.

According to statistics released by the Foshan Nanhai Entry-Exit Inspection and Quarantine Bureau, 37% of the firms in Pearl River Delta had not received any orders for 2012 by the end of 2011.



Even if there were orders, Liu said, he would not accept them until he was certain that buyers would pay him without delay after delivery, because deferred payments have driven many local firms to bankruptcy.


A survey conducted by the city government of Dongguan showed that only 90% of these workers would return to their jobs in the city after the Spring Festival holiday, which lasts until the end of January. Shenzhen experienced a 200,000-person labor shortage after the 2011 holiday.


Finally, the inevitable is happening, perhaps a tad too early for the CPC Mandarins:

A purchasing manager with Li-Fung in Hong Kong said that China's advantage in manufacturing toys, garments and footwear is disappearing. Overseas customers are soliciting suppliers from Southeast Asian countries, especially Cambodia, Bangladesh and the Philippines, where they can find cheaper substitutes for Chinese suppliers.

He said a garment which costs US$2 a piece in China could be made in Bangladesh for US$1.30. His figures were confirmed by the China Leather Industry Association, which said China is more expensive than India and Vietnam in labor costs for footwear.
Last edited by amit on 02 Feb 2012 12:51, edited 1 time in total.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby wrdos » 02 Feb 2012 12:51

Hehe, I heard somebody talking about Shenyang, the capital city of Liaoning province where I was from. I am very happy the city is becoming known in such a remote country.

Shenyang is located at Northeast China, famous for heavy industry. In 2011, its population was about 8.1million with a per capita GDP of US$11,301, way higher than either the provincial average of $7795 or the national average of $5450. All at the average market exchanging rate, 1dollar =6.5yuan in the past year.

The city is now operating 2 lines of subways, with a total length about 55km. The other 3 lines are under construction.Shenyang has also very good HSR connection with all of its neighboring cities, either already finished or will be finished within this year.

As for air transportation, in last year, for the first time its airport could boast of a >10million annual usage, although it is still lower than its rival city Dailian in the same Liaoning province.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby amit » 02 Feb 2012 12:54

wrdos wrote:Hehe, I heard somebody talking about Shenyang, the capital city of Liaoning province where I was from. I am very happy the city is becoming known in such a remote country.

Shenyang is located at Northeast China, famous for heavy industry. In 2011, its population was about 8.1million with a per capita GDP of US$11,301, way higher than either the provincial average of $7795 or the national average of $5450. All at the average market exchanging rate, 1dollar =6.5yuan in the past year.

The city is now operating 2 lines of subways, with a total length about 55km. The other 3 lines are under construction.Shenyang has also very good HSR connection with all of its neighboring cities, either already finished or will be finished within this year.

As for air transportation, in last year, for the first time its airport could boast of a >10million annual usage, although it is still lower than its rival city Dailian in the same Liaoning province.


Hehe Wrdos. :lol:

I see you ignore the stats on the Chinese Railways and concentrate on trivia. Why don't you write a Letters to the Editor to the news outlet which wrote the article that the Shenyang subway line is not viable. In China building more lines does not equate more passengers, we already know that.

Just to recap the problems of Chinese Railways:

Bond repayments that was due last year was US$21 billion. Per year interest rate payment works out to US$18.26 billion. And China Railway's average annual profit is US$304 million.


Hehe, Wrdos you are really funny! :rotfl: :rotfl:

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby wrdos » 02 Feb 2012 13:30

Hi, amit!

I happened have a Ph.D in transportation engineering. Do you think i have time to waste by debating with some "expert" who insisting that a 8 million population city with a >$11000 and increasing per capita GDP economy, can solve it transportation problem with "a single, light-rail line"?

Sir, it was about 2003 when i first visited this forum. I have lost each debate here. Firstly, whether there is a J10 or not. Then About J10 and LCA, which going to service sooner. Then about FC-1 and LCA, which is going to service sooner. Then about whether India can surpass China before 2005 or 2010. Then whether China would collapse after 2008. Then about why China expressway construction a waste or not. Then about whether there is a J20 or not. Yesterday about whether India is only 5 years away from China, then today about the HSR and subway......

I lost each time. I even lost a debate with a friend who have plenty traveling experience to China and insisting that average income in India is higher than in China. Although he agrees "even a bus station in a Chinese town looks cleaner and better organized than Indian airports." And with the other friend who even insisting the average income in slum Bombay is higher than China.

Each time I could only say, "I lost but let's wait and see".

Most major Chinese HSR lines would be finished within this year. We do not need to wait 3 years to see it is a failure or great success, economically.

Let's wait and see.

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Re: PRC Economy - New Reflections : Dec 15 2011

Postby Dhiman » 02 Feb 2012 14:57

wrdos wrote:Sir, it was about 2003 when i first visited this forum. I have lost each debate here. Firstly, whether there is a J10 or not. Then About J10 and LCA, which going to service sooner. Then about FC-1 and LCA, which is going to service sooner. Then about whether India can surpass China before 2005 or 2010. Then whether China would collapse after 2008. Then about why China expressway construction a waste or not. Then about whether there is a J20 or not. Yesterday about whether India is only 5 years away from China, then today about the HSR and subway......
...

Most major Chinese HSR lines would be finished within this year. We do not need to wait 3 years to see it is a failure or great success, economically.

Let's wait and see.


There are all shades of opinions regarding China in India, so this just shows what you in particular have been focusing on. But, let's look it from international media perspective: In early nineties, international media was full articles on Chinese economy, with hardly any articles on Indian economy. In mid nineties, articles regarding Indian economy started appearing frequently in International media. By 2005, the issue was not "investing in either India or China", but "investing in both India and China". In 2008-10 timeframe, I started seeing international media speculation on whether India will overtake China or not.

This graph should shed some more light on such comparisons. India's GDP in 2010 is what China's GDP was in 2003-04 timeframe (six years). But really, I don't see the same level of hype and CCP chest beating that happened in 2003-04 timeframe regarding China .

Personally, with respect to economic and development metrics, I don't think India is going to be overtaking China in any realistic timeframe as China has a head start and lot of accumulated momentum that comes with that head start. What will probably happen is that such comparisons are going to become more and more irrelevant sooner or later (in a good way). Politically what this means is that China is not the only kid in town and this is definitely not "fun" for CCP. Something that CCP has been realizing only in last couple of years.


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