PRC Economy - New Reflections : Dec 15 2011

[panduranghari]

Further trolling will earn you a vacation from the site to contemplate your anti-proletariat splittist tendencies and perform re-education.

That poster 'Liu' will probably be jailed tomorrow by CCP for failing the party.

[Picklu]

Further trolling will earn you a vacation from the site to contemplate your anti-proletariat splittist tendencies and perform re-education.

That poster 'Liu' will probably be jailed tomorrow by CCP for failing the party.

But which Liu? From the posting style, it is quite obvious that more than one person posts using that id.

[Vriksh]

Consider his highness Liu == online PRC ambassador/embassy/PR firm posted to republic of BR (RBR)

[hanumadu]

Chinese Developer Evergrande Gets $16 Billion Lifeline Amid Slump

The numbers involved are mind boggling. The top 4 or 5 chinese companies alone can account for the NPAs of all Indian banks.

Chinese banks have extended $16 billion in credit lines to shore up one of the country’s largest and most heavily indebted home builders, as pressure mounts on developers short of cash in a slumping property market.

Evergrande had total borrowings of 151.8 billion renminbi at the end of June, the most recent figure available. But that number did not include an additional 44.5 billion renminbi worth of perpetual bonds, so called because they have no fixed repayment date, which the company carries on its books as equity.

China came THIS close to another massive property developer default

Evergrande Real Estate Group, one of the country's largest developers, will receive more than $16 billion in credit lines from Chinese banks, the New York Times reported Tuesday.

As prices fall and housing units remain empty, real estate developers are having trouble paying back debt. Evergrande, while one of China's biggest developers, has also racked up one of the highest levels of debt, much of it from foreign investors.

But according to analysts cited in the article, the billion-dollar lifeline is only a short-term solution as China's housing market continues its downward spiral.

According to the New York Times, Evergrande's debt reached about $24 billion by the end of June, plus another $7 billion in perpetual bonds marked as equity. Company sales last year reached about $20 billion.

Earlier this year, another prominent developer Kaisa Group Holdings defaulted with more than $10 billion in debt and had $2 billion in assets frozen.

The $16.2 billion in credit will come from Bank of China, Agricultural Bank of China, Postal Savings Bank of China, and China Minsheng Bank.

[Liu]

do you want to know how to decorate one new appartment? how much it costs?
I am glad to tell you all about it,because I am going to decorate one new appartment. in one tier3 city in CHina...maybe people can learn the life cost, life way of ordinary people and other interesting economy information about ordinary CHinese.


well, I spent about 0.55M RMB(about 90K USD) buying one house 3 years ago. I paid for it with about 30% in cash and 70% bank mortage loans. the house is in a small colony of the outskirt town of the mid-size city,Ganzhou city, Jiangxi province.
here is is the picture of the small colony
http://www.9ihome.com/info/a9iHome/Uplo ... 293090.jpg


http://www.9ihome.com/info/a9iHome/Uplo ... 354368.jpg


the house is on the ground floor . it is about 130+ square meters large . It has 3 bedrooms, one sitting room, one dinning room,one kitchroom,two toilet-rooms,two balconies and one 40-square-meter-large garden.
here is the the picture.

http://www.9ihome.com/info/a9iHome/Uplo ... 354449.jpg
http://www.9ihome.com/allphoto/photo/20 ... 698902.jpg
Now, the house is still not occupied. But I am going to move in before the next Chinese new year Fest. So I am turning to Decoration companies for the design/bid of the house-democration.

the above one is one offered design,with a estimated budget about 200K RMB(about 35KUSD). the budget including the expenditures for house-appliances(TV sets,ACs,regrigerator..etc) and furnitures.
.
http://i2.tietuku.com/e768f00251a696f7.jpg

in fact ,the design was offered just seval hours ago this afternoon. My wife and I are to anylized it ,but wont made our decision immediately until finising the comparation with other designs...

[Bade]

^^ That is a bad deal in comparison with India. With $900k, one can buy anywhere between 4-5 homes in the luxury segment in a tier-3 city, and up to 10 homes if one goes a shade lower in luxury. Chinese are getting a very bad deal for the money being spent.

[Liu]

^^ That is a bad deal in comparison with India. With $900k, one can buy anywhere between 4-5 homes in the luxury segment in a tier-3 city, and up to 10 homes if one goes a shade lower in luxury. Chinese are getting a very bad deal for the money being spent.

Sorry,it is '90k USD'. type error occured. It might cost 900k usd in tier1 cities like Beijing. But in tiers 3 cities like Ganzhou, such a apartment cost only 90k usd.

[Liu]

^^ That is a bad deal in comparison with India. With $900k, one can buy anywhere between 4-5 homes in the luxury segment in a tier-3 city, and up to 10 homes if one goes a shade lower in luxury. Chinese are getting a very bad deal for the money being spent.

Sorry,it is '90k USD'. type error occured. It might cost 900k usd in tier1 cities like Beijing. But in tiers 3 cities like Ganzhou, such a apartment cost only 90k usd.

[Vriksh]

how many years of average local income for an average local house in 1st/2nd/3rd tier city in China.

[Chinmayanand]

China Lands Hard: Rail Volume Plunges, PMI Tumbles Into Contraction, Employment Worst Since Lehman

Chinese rail freight collapses 9.1% YoY; China Manufacturing PMI tumbled back to a contractionary 49.2 - lowest in 11 months; and the Employment sub-index plunged to its lowest since Lehman ... yeah but apart from that, everything is awesome. And for those excited about just how disastrous Chinese data is (and thus how huge the next stimulus unleashing will be), think again - China now sees exactly where the last trillion dollar QE went... a de minimus and unsustained blip in the economy and liquidity-fueled rampage in stocks (which is not what a corruption-crackdown politburo wants to encourage).

Single Whammy: CHINA JAN.-FEB. RAILWAY CARGO VOLUME FALLS 9.1% Y/Y

Double Whammy: China Manufacturing PMI prints 49.2 - lowest in 11 months

Triple Whammy: Employment collapses...

[Hari Seldon]

^Bah. China will do just fine.

I await the day it overtakes unkil in $GDP. Should rebalance the world and make it more asia centric for the first time in centuries.

[amit]

Err, Hari ji it will be China centric which is very different from Asia centric. The signs are already evident. Remember under the present dispensation what is good for China is not good for India and Japan. Just think Middle Kingdom and the system of tributes. IMO one shouldn't let a personal dislike of Amir Khan cloud the big picture. JMT

[RamaY]

I would argue that India should help Mr Hun to get the mantle from Amir Khan ASAP. Mr.Hun is a better seat warmer than AmirKhan while Vishnugupta gets ready for Rajasuya for next 20yrs.

[Vriksh]

Visa on arrival facility to Chinese citizens for entry into India. Nothing on Indian MSM yet
http://www.dailymail.co.uk/indiahome/indianews/article-3010151/PM-pushes-Chinese-tourists-visa-arrival.html

[Suraj]

We Traveled Across China and Returned Terrified for the Economy

China’s steel and metals markets, a barometer of the world’s second-biggest economy, are “a lot worse than you think,” according to a Bloomberg Intelligence analyst who just completed a tour of the country.

What he saw: idle cranes, empty construction sites and half-finished, abandoned buildings in several cities. Conversations with executives reinforced the “gloomy” outlook.

“China’s metals demand is plummeting,” wrote Kenneth Hoffman, the metals analyst who spent a week traveling across the country, meeting with executives, traders, industry groups and analysts. “Demand is rapidly deteriorating as the government slows its infrastructure building and transforms into a consumer economy.”

The China Steel Profitability Index compiled by Bloomberg Intelligence barely rose in March, a time after the annual Lunar New Year when demand would usually surge, and so far this month has resumed its decline. Steel use this year is down 3.4 percent, after slumping as much as 4 percent in 2014, according to BI. It had steadily risen for more than a decade.

Prices for commodities from iron ore to coal are sinking as China’s leadership tries to steer the economy away from debt-fueled property investment and smokestack industries, embracing services and domestic-led consumption. At the same time, President Xi Jinping is stepping up efforts to combat pollution, further squeezing industry.

Economists are forecasting 7 percent growth in China for this year, in line with government targets and down from 7.4 percent in 2014, according to the median of 59 estimates compiled by Bloomberg. That’s about half the last decade’s peak rate of 14.2 percent in 2007.

The slowing steel and metals activity suggests the outlook could be grimmer.

“There is a big fear this is going to get worse before it gets better,” Hoffman said in an interview. “It’s as bad as the data looks, if not worse.”

[Suraj]

Lovely airport, where are the planes? China's white elephants emerge

When officials reopened the airport on the sparsely populated Dachangshan island off China's north-east coast after a $6 million refurbishment in 2008, they planned to welcome 42,000 passengers in 2010 and another 78,000 in 2015.

However, fewer than 4,000 passengers – or just a 10 a day - passed through its gates in 2013, data from China's civil aviation authority showed.

Since February last year, China has approved at least 1.8 trillion yuan ($290 billion) in new infrastructure projects to counter a slowing economy. The approvals come just as the full costs of the underused airports, expressways and stadiums built during the last spending binge are beginning to emerge.

While construction firms profited from the boom, it saddled China's provincial governments with $3 trillion worth of debt, with the most over-exuberant seeing their local economies weaken and become imbalanced towards the building sector.

The economy in Liaoning province, which includes Dachangshan island, was one of the slowest growing in China in 2014 - GDP expanded 5.8 percent, far undershooting its 9 percent target.

"There needs to be serious discussions over the economic rationality of large-scale engineering projects. Do we really need this many high-speed lines and airports?" said Lu Dadao, an academic at the Chinese Academy of Sciences.

A government official and economist estimated in November that China has wasted an approximate 42 trillion yuan on "ineffective investment" in the five years from 2009, with the problem worsening in the last two years.

AN AIRPORT, NO FLIGHTS

Despite its modern airport, finding a flight to Dachangshan island is not easy. Staff at Zhoushuizi International Airport in the port city of Dalian, the destination of the sole published route, said flights to the Changhai airport on Dachangshan have not operated for the last six months.

On a recent Wednesday morning, the airport's ticket counter was deserted apart from a female airport official. Still, its speckled grey marble floors were scrubbed shiny by a cleaning attendant, while the toilets were spotless.

"Call in two to three days to check if there's a flight," the official told Reuters. "The plane's under maintenance." A male colleague sat next to the baggage screening machine, head bent towards his knees, seemingly falling asleep.

Outside, there is little sign the small airport has had much impact on the island of about 30,000 inhabitants. Instead of shops or eateries, fishermen's homes surround the airport. Ferries are the preferred mode of transport to Dalian, locals said.

Undeterred, the Dalian government plans to spend 1.48 billion yuan ($238.9 million) this year to expand the airport to accommodate 250,000 by 2020, as part of its latest drive to spur the economy and to turn the fishing outpost into a holiday destination, according to local media reports.

Wu Hong, an official from Dalian Changhai County's publicity department, said the airport expansion was meant to keep up with the island's development, adding that it received 1.1 million tourists last year.

"In gross domestic product terms, none of this is bad. It generates growth, one way or another," said J Capital Research analyst Susannah Kroeber, who has been tracking China's infrastructure build-out since 2012.

"But is it useful and an efficient use of your resources? Absolutely not."

LARGEST, HIGHEST, LONGEST

Many of China's local governments set up corporations to obtain loans for massive infrastructure and real estate projects, skirting rules preventing direct borrowing while amassing a debt pile now seen as a key risk to the economy.

The results include the world's longest ocean-crossing bridge near the city of Qingdao and the highest railway track, which connects Qinghai province to Tibet. New districts built to house thousands have also been built, with some, such as Ordos in Inner Mongolia and Yujiapu in Tianjin, turning into ghost cities as China's residential property market slows.

While little official information is available on user numbers, China's expressways bled $10 billion in 2013 on toll revenue shortfalls. China Railway, which oversees the expansion of the world's longest railway network, is now 3.4 trillion yuan in debt, it said in September.

Still, there are concerns that it will be difficult to wean authorities off the addiction to over-building, particularly as signs emerge of fast-accelerating construction activity in China's inland western regions, where almost 40 percent of approved airport, railway and road projects are located.

Cement production is growing at its fastest rate in places such as Guizhou and Yunnan, two of China's poorest provinces that are in the southwest of the country, according to government data.

In northern China, where local governments are now dealing with overcapacity of steel and cement after their building booms, "you get a window into what happens after you build out pretty much all that you can possibly build," J Capital Research's Kroeber said.

"The early development of those trends...we think are starting to play out in other parts of the country now." ($1 = 6.1955 Chinese yuan)

[amit]

We Traveled Across China and Returned Terrified for the Economy

China’s steel and metals markets, a barometer of the world’s second-biggest economy, are “a lot worse than you think,” according to a Bloomberg Intelligence analyst who just completed a tour of the country.

What he saw: idle cranes, empty construction sites and half-finished, abandoned buildings in several cities. Conversations with executives reinforced the “gloomy” outlook.

“China’s metals demand is plummeting,” wrote Kenneth Hoffman, the metals analyst who spent a week traveling across the country, meeting with executives, traders, industry groups and analysts. “Demand is rapidly deteriorating as the government slows its infrastructure building and transforms into a consumer economy.”

The China Steel Profitability Index compiled by Bloomberg Intelligence barely rose in March, a time after the annual Lunar New Year when demand would usually surge, and so far this month has resumed its decline. Steel use this year is down 3.4 percent, after slumping as much as 4 percent in 2014, according to BI. It had steadily risen for more than a decade.

Prices for commodities from iron ore to coal are sinking as China’s leadership tries to steer the economy away from debt-fueled property investment and smokestack industries, embracing services and domestic-led consumption. At the same time, President Xi Jinping is stepping up efforts to combat pollution, further squeezing industry.

Economists are forecasting 7 percent growth in China for this year, in line with government targets and down from 7.4 percent in 2014, according to the median of 59 estimates compiled by Bloomberg. That’s about half the last decade’s peak rate of 14.2 percent in 2007.

The slowing steel and metals activity suggests the outlook could be grimmer.

“There is a big fear this is going to get worse before it gets better,” Hoffman said in an interview. “It’s as bad as the data looks, if not worse.”

This is something a lot of us predicted here a few years ago. Even as the fourth or fifth largest economy, China used to produce more steel per annum than the combined output of the next nine top steel producers.

It used to produce more steel than its economy was capable of absorbing. Even as the world's No2 economy the same is the case. It's little wonder that China builds those massive useless airports and cities. They have to in order to keep the steel industry as well as others like cement - the case in this industry is the same though at a lower scale as the steel industry - chugging along.

Unfortunately for China, unlike consumer goods, there is no ready exportable market for capital goods like steel and cement because every country with the capacity to import protects their domestic industries.

This is one reason China is so desperate to build all those infra projects in Africa and Pakistan. They need to consume their own steel and cement and keep their building industry chugging along.

For too long China has been a one-trick pony. Eleven understands this. Let's see if he can do something about it without causing too much pain.

[hanumadu]

From suraj's post

"In gross domestic product terms, none of this is bad. It generates growth, one way or another," said J Capital Research analyst Susannah Kroeber, who has been tracking China's infrastructure build-out since 2012.

Seriously, she calls herself an analyst? If it was so simple, then wouldn't everybody do that to generate growth one way or the other?

[chola]

From suraj's post

"In gross domestic product terms, none of this is bad. It generates growth, one way or another," said J Capital Research analyst Susannah Kroeber, who has been tracking China's infrastructure build-out since 2012.

Seriously, she calls herself an analyst? If it was so simple, then wouldn't everybody do that to generate growth one way or the other?

No, almost everyone would if they only could create credit in the same way and same abundance as the chinis. The biggest issue with most nations (outside the West and Japan) is the lack of cash or credit to build infrastructure. Worrying about white elephants is putting the cart before the horse. Who cares about waste when you have no credit to start off with?

Think of it this way. Your next door neighbor was able to print paper money that got them a house 10 times the size of yours when they are just a family of three, a pool when none of them could swim and a garage full of cars when only one of them could drive. Wasteful but . . .

You're going to say to yourself that you hope you will never be able to create these riches because "Haha, those guys can't even use them"?

No, your proper response should be to understand HOW they are able to do this so that WHEN you can do the same, you will use the credit a lot more wisely. You should still want your hands on that money.

What China did, for all intents and purposes, was reach the rarify air of Europe, Japan and of course the United States. They have been able to print money to overbuild without inflating their currency to nothing.

[panduranghari]

From suraj's post

"In gross domestic product terms, none of this is bad. It generates growth, one way or another," said J Capital Research analyst Susannah Kroeber, who has been tracking China's infrastructure build-out since 2012.

Seriously, she calls herself an analyst? If it was so simple, then wouldn't everybody do that to generate growth one way or the other?

But it's true. What bit do you disagree with?

[hanumadu]

From suraj's post

Seriously, she calls herself an analyst? If it was so simple, then wouldn't everybody do that to generate growth one way or the other?

But it's true. What bit do you disagree with?

The part where she says just build anything to generate growth. Didn't Japan try that and is paying for the consequences?

[Suraj]

Beijing enveloped in largest sandstorm in a decade

[Rahul M]

locked, please continue at --> viewtopic.php?f=2&t=7018&start=1280