PRC Economy and Industry: News and Discussions

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Purush
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Re: PRC Economy and Industry: News and Discussions

Postby Purush » 21 Sep 2011 06:48

Just to remind you: DO NOT buy Made in China food products. :x

I had posted another news article on this recycled gutter oil business a few months ago.
http://www.bbc.co.uk/news/world-asia-pacific-14894070

More than 100 tonnes of oil were seized in raids across 14 provinces. Some of it had been collected from drains behind restaurants to be sold on.

Six underground factories were found to be producing the oil, which some scientists say can cause cancer.

One firm, which was supposed to be turning kitchen oil into fuel, was selling it as fresh cooking fat.


Gutter oil, as it is known, is well-named, says the BBC's Michael Bristow in Beijing, with some of it collected by dredging the drains behind restaurants. The name is now used for any cooking oil that is illegally recycled.

The raids took place following a four-month police inquiry.

"This case, through a difficult process of investigation... not only struck down a criminal chain of gutter oil producers, but also uncovered hidden details of the offenders' greedy and unconscionable production of poisonous and harmful cooking oil," a ministry of public security statement said.
Public alarm

The sting operation comes more than a year after Chinese state media reported that up to one-tenth of cooking oil was made from recycled waste oil.

The trade has been a problem in China for years - the business is said to be very profitable because of the low costs of the waste oil and refining process.

There have been a number of nationwide campaigns to stamp out the illegal trade.

Scandals over contaminated food have caused considerable public alarm in China in recent years.

In the most serious case in 2008, milk products mixed with the industrial chemical melamine caused the deaths of at least six infants and nearly 300,000 fell ill.

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Re: PRC Economy and Industry: News and Discussions

Postby Shankas » 21 Sep 2011 07:21

China to GM: Give us Chevy Volt secrets or it'll cost $19,000 more

The Chinese government is refusing to let the Volt qualify for subsidies totaling up to $19,300 a car unless G.M. agrees to transfer the engineering secrets for one of the Volt's three main technologies to a joint venture in China with a Chinese automaker, G.M. officials said. Some international trade experts said China would risk violating World Trade Organization rules if it imposed that requirement.

According to the Times, the Chinese demand includes handing over information about the Volt's electric motors, its control system or batteries. Similar demands for trade secrets have reportedly made other electric vehicle makers leery of entering the Chinese market. The Nissan Leaf is unavailable in China, and while Nissan officially refuses to comment on the reason, it's thought that this sort of government demand for intellectual property is behind Nissan's reluctance to consider the Chinese market – despite the high potential subsidies and growing demand.

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Re: PRC Economy and Industry: News and Discussions

Postby vina » 21 Sep 2011 10:25

Anger and Suspicion as Survivors Await Train Crash Report
WENZHOU, China — When a high-speed train rammed into the rear of a second train on July 23 on a viaduct outside this eastern coastal city, the impact cost Chen Lihua, a 38-year-old father of two, eight broken ribs, a punctured lung and one shattered kneecap. His brother died of head wounds.

Those were the injuries. The insults came later.

Mr. Chen said he lost roughly $6,000 in cash and other belongings in the accident. The railways ministry paid him a mere $35.

He asked to be transferred from a Wenzhou hospital to a better hospital in the city of Fuzhou, his hometown. Instead, the ministry moved him to an old-age home, where he receives no medical treatment, despite continuing lung trouble, back pain and other ailments due to his injuries.

“I want to cry, but I have no tears left,” he said. “Our family has already lost someone in this accident. How can they treat us like this? I am being tortured both physically and mentally.”

Almost two months after the high-speed rail crash killed 40 people and injured 191 others, a government investigative panel is readying a report on the disaster, expected to be released this month. But the injured and the survivors of the dead say they have already reached their own conclusions. They say the railways ministry, which has a long history of corruption, skimped on safety, bungled the rescue effort, tried to hide the extent of its failings and showed a callous disregard for victims.

“They are their own little nation,” said Pasquale Liguori, who lost his daughter, a foreign-language student from Naples, Italy, who was on her first visit to China with her boyfriend. “The China Railways Ministry killed my daughter, and they want to hide everything that happened. It is revolting.”

The ministry has said it upholds high safety standards, did not prematurely end the rescue and is participating in a transparent investigation.

The ministry is indeed a fief, a holdover from the era when the state controlled all. With two million workers, it is perhaps the world’s fourth-largest employer, behind Wal-Mart. Its work force matches that of the entire United States federal government, excluding military and postal workers.

It owns the railways it regulates, a built-in conflict that critics say encourages corruption, endangers safety in the name of profit and hinders accountability. Its safety data are not publicly released. It runs its own court system and, until recently, its own police force.

The government has for over a decade discussed dividing the ministry’s business and regulatory functions, as it did years ago with the civil aviation industry. But using its clout as the nation’s mover of coal — and now, as the developer of high-speed rail into one of China’s technological and industrial crown jewels — the rail ministry has adroitly fended off reform.

“The ministry is a monster, half government agency, half for-profit company,” said Zhang Kai, a Beijing lawyer who has faced off against the ministry. “It can choose to behave like either one.”

It is not unusual for victims of government mishaps in China to find themselves isolated and helpless. Chinese authorities typically minimize events that suggest government incompetence lest they encourage social unrest. :rotfl: :rotfl:

But as crash victims and others tell it, the bureaucracy’s handling of the crash is a case in itself. Chinese officials have already declared that the disaster was preventable, caused by human error and poorly designed signal equipment. Now the ministry faces a dilemma: if the government’s investigation does not appear credible, it could hurt the ministry’s chances to export high-speed rail equipment and technology. But any admission of systemic flaws might also scare away customers.

The rescue effort seems clearly mismanaged. “We are utterly speechless and horrified by how the rescue operation was handled,” said Leo Cao, 29, a Ph.D. candidate in information science at the University of North Carolina. His parents were killed and his brother was critically injured in the crash.

“They brought in heavy machinery to restore train operations and to bury train sections at the scene while there were still human beings struggling for life in the wreckageb :shock: :shock: ,”
Mr. Cao said.

Chinese experts said rescue efforts should have continued for at least 72 hours, but the Chinese news media reported that the search for survivors was called off after less than eight hours. Instead, workers cleared wreckage so rail traffic could resume, including digging a pit to bury a carriage of one of the trains involved in the accident. It was dug up two days later after a public outcry alleging a cover-up.

Time-stamped photographs show that workers left a corpse unattended on the ground for 90 minutes, focusing on repairs, :eek: :eek: while frantic relatives waited for news at hospital morgues. A 2-year-old, trapped in a crushed carriage, was rescued 21 hours after the accident only because some local officials ignored the ministry’s orders and continued to search the wreckage.

The ministry’s own contingency plan for accidents emphasizes the need to “seize every minute and second to restore the traffic,” according to Southern Weekly, a Guangzhou newspaper. Less than 24 hours after the accident, it proudly announced that the Wenzhou line was again open for business.

Elsewhere, such conduct might fuel lawsuits, but the ministry’s insular system shields it. Mr. Zhang, the Beijing lawyer, represented a rail passenger who was arrested by railways police officers for allegedly slapping a conductor and shoving another. After a trial that 26 lawyers and academics charged was rigged, a railways court sentenced the passenger in March 2010 to three years in prison. “The No. 1 mission of the court is to protect the interests of the ministry,” Mr. Zhang said.

After families who lost relatives in the Wenzhou crash protested, officials increased the government’s offer of compensation to families to about $145,000. Mr. Liguori refused the offer, calling it an insult to the dignity of his daughter, Assunta. But a Chinese lawyer advised him in an e-mail that “any appeal is basically a waste of time.”

Most worrisome, half a dozen victims or their relatives said, is the imperious attitude of the ministry officials. Mr. Chen said Wu Yantang, the compensation team’s head, cursed his wife and threatened to block his transfer to his hometown hospital if he continued to press for compensation. “His attitude reminded me of the mafia,” he said. “It chilled our hearts.”

Mr. Wu said, “Everyone was treated fairly according to the regulations.”

Lin Mingming said he protested the transfer of his father, who suffered major head injuries, to an old-age home with Mr. Chen. But he said he was told: “This is a political issue. You have no other choice.”

Some victims are pushing back. Mr. Cao’s parents remain in the morgue of Wenzhou People’s Hospital No. 2 while he and his brother seek legal advice. His brother, Henry Liheng Cao, 32, suffered a massive abdominal hemorrhage, a ruptured spleen and kidney, broken ribs and a fractured ankle. He remains hospitalized in Wenzhou.

“This train crash took the lives of my beloved parents, wrecked my good health and threw the future of my family into jeopardy,” said Henry Cao, an entrepreneur from Colorado Springs. “Fairness and justice is all that I ask. There are serious doubts whether such basic tenets are obtainable here.”




With this kind of inhuman , Orwellian nightmare running the lives of 1.5 billion people on earth and calling itself "People's Democracy" I really see very dim prospects for mankind.

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Re: PRC Economy and Industry: News and Discussions

Postby Raja Bose » 21 Sep 2011 10:38

^^^Their behavior is hardly shocking given their outlook. Its all about saving face.

Regardless of how much the chipanda drones trumpet about their progress, wealth and technological advances...till they actually experience democracy and figure out the basic tenets of freedom, humanity and dignity for themselves, they will remain primitive and backward even compared to the likes of failed countries like Pakistan.

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Re: PRC Economy and Industry: News and Discussions

Postby vina » 21 Sep 2011 13:52

Raja Bose wrote:^^^Their behavior is hardly shocking given their outlook. Its all about saving face.

Regardless of how much the chipanda drones trumpet about their progress, wealth and technological advances...till they actually experience democracy and figure out the basic tenets of freedom, humanity and dignity for themselves, they will remain primitive and backward even compared to the likes of failed countries like Pakistan.


Indeed. Some things about Chinese govt and their behavior is totally incomprehensible to me. The average Chinese I see in the US (not the ABCs, but even off the FOB Chinese and taiwanese ) are fine people. I guess that is the nature of totalitarianism that makes the PRC at a collective level so grotesque and twisted.

Today on all the TV channels in India there is the story of a daring helicopter rescue in the earthquake affected Sikkim. There was an interview with the pilot of the Chetak helicopter on NDTV and I was watching. The pilot was describing the scene about how they came across a stranded bus, there were ITBP jawans at the scene, there were a few injured people, one was critical . There was no place for the helicopter to land (there were landslides on both sides , with the bus in the middle), and so they decided to do a rescue while on hover and the helicopter came to within 6 to 7 feet off the ground and the pilot said "We had two Brigadiers on board , who in the best traditions of the Indian Army, JUMPED OFF the hovering helicopter to make room for the critically injured person (the co pilot leaned back and opened the door for them to jump off), one ITBP jawan clambered up and pulled the injured person up, with the others pushing from below!

I simply CANNOT imagine such a scenario in China, unless it is stage managed propaganda show to show the PLA in a "glorious" light. The Brigadiers would have outranked the pilot and the copilot massively and I doubt any pilot would have suggested that the Brigadiers get off and walk it back. My guess is that they must have offered and told the pilot to go ahead and do the rescue!

And here we have Chinese railway ministry big shots instead of clearing bodies and cutting open coaches to search for survivors and injured, calling off rescue in 8 hours and ordering the mangled coaches to be BURIED in the river bed itself.

Shame.

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Re: PRC Economy and Industry: News and Discussions

Postby Rishirishi » 22 Sep 2011 03:38

Was in China this year (xiamen among others).

My observations:
Builders are highly connected with the party officials and get loans to fund projects. I saw for my self thousands of empty flats arround. Dont know if they are owned by someone or what, but there are whole complexses with multiple 20 story building vacant. Yet construction is happening at rapid speed. thousands of new flats are being built. In the city centere there was a HUGE mall. there were about 1000 shops in it, 95% are empty.

Could very well be a calculated strategy from the government. There are sufficient number of people in China who can occupy the flats. Perhaps the government just wants to see millions of homes being built and later find ways to move people into them. The Chinease government owns the entire financial system and can simply right off the loans. China has massive foreign reserves as well as very healty balance of payment situation. It can afford a lot.

But one thing is for sure. The construction boom will have to end sooner or later. Becasue even in China there is a limit as to how much you can build. When the massive construction industry comes to halt, it will effect tens of millions of people, raw material prices as well as case a slowdown of the economy. Imagine an system that annually produces sufficient housing for the entire of Britain, comming to a halt.

http://www.dailymail.co.uk/news/article-1339536/Ghost-towns-China-Satellite-images-cities-lying-completely-deserted.html

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Re: PRC Economy and Industry: News and Discussions

Postby chola » 22 Sep 2011 08:35

vina wrote:
With this kind of inhuman , Orwellian nightmare running the lives of 1.5 billion people on earth and calling itself "People's Democracy" I really see very dim prospects for mankind.


It is far better to have this inhuman Orwellian nightmare running the PRC than 1.5 billion chini run like Hong Kong or Singapore. If that came to pass, we would see something that really would be frightening beyond measure.

Every culture and civilization is in competition with the other. Frankly, it is rather stupid to wish that our rivals have better governance.

The real competition is not between ideologies. It is between civilizations.

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Re: PRC Economy and Industry: News and Discussions

Postby chola » 22 Sep 2011 08:42

Rishirishi wrote:Was in China this year (xiamen among others).

My observations:
Builders are highly connected with the party officials and get loans to fund projects. I saw for my self thousands of empty flats arround. Dont know if they are owned by someone or what, but there are whole complexses with multiple 20 story building vacant. Yet construction is happening at rapid speed. thousands of new flats are being built. In the city centere there was a HUGE mall. there were about 1000 shops in it, 95% are empty.

Could very well be a calculated strategy from the government. There are sufficient number of people in China who can occupy the flats. Perhaps the government just wants to see millions of homes being built and later find ways to move people into them. The Chinease government owns the entire financial system and can simply right off the loans. China has massive foreign reserves as well as very healty balance of payment situation. It can afford a lot.

But one thing is for sure. The construction boom will have to end sooner or later. Becasue even in China there is a limit as to how much you can build. When the massive construction industry comes to halt, it will effect tens of millions of people, raw material prices as well as case a slowdown of the economy. Imagine an system that annually produces sufficient housing for the entire of Britain, comming to a halt.

http://www.dailymail.co.uk/news/article-1339536/Ghost-towns-China-Satellite-images-cities-lying-completely-deserted.html


A nation of 1 billion poor like China can never have enough housing. We tend to attribute first world problems where real tangible assets like housing outstrip demand to China. China is a piss poor nation.

Poor nations never have more housing or any other hard assets than they need. That is why they are poor.

Every flat in China will come to be occupied at some point especially since there something like 800 million peasants living in huts and caves.

Infrastructure is the best kind of overspending. Eventually they will be used. I'm that that the people investing in them will take a haircut but it is communist nation so everything belongs to the state in the end. This is one thing the chicoms are doing right.

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Re: PRC Economy and Industry: News and Discussions

Postby VikramS » 22 Sep 2011 09:15

chola:

The question is not the need for the housing but the cost of construction, and the ability of people to afford the houses. A lot of construction is financed via loans which are very likely going to go bad.

It is not clear what the repercussions of those bad loans will be since at the end of the day everything is state owned, and the state can recapitalize banks. However, there are going to be fiscal consequences of that including higher inflation.

For some reason people put a lot of emphasis on China's foreign exchange reserves, which I do not understand. Foreign Exchange is typically invested in low yielding bond instruments, outside the country. They are an asset of the state like anything else like mining rights, shipping rights, trading rights or even gold.

The good thing about them is that they are liquid and can be cashed in during the time of need. However, beyond the liquidity there are not very different from other assets of the country. While they allow China to wield influence, they also represent capital not invested in the country.

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Re: PRC Economy and Industry: News and Discussions

Postby chola » 22 Sep 2011 10:19

VikramS wrote:chola:

The question is not the need for the housing but the cost of construction, and the ability of people to afford the houses. A lot of construction is financed via loans which are very likely going to go bad.



As I said, the investors will take a haircut. The PRC is communist. Communism punishes investors and redistributes wealth. Mark my words, those flats will be occupied even if chicoms force people in at gunpoint from their villages. But gunpoint or not, a modern flat is still better than a cave or a mud hut.

Aside from that, the Yuan is non-convertible monopoly money printed by the PRC that can only be used in the PRC. They are creating real structure that can house people with paper the PRC can print ad infinitum (until they reach inflationary pressure.)

There are many things wrong with the PRC government that will eventually leads to a collapse not least by the contradictions its people see in the other parts of the Far East where people are many times wealthier and living in far more rational societies. But building housing is not one of them.

It is not clear what the repercussions of those bad loans will be since at the end of the day everything is state owned, and the state can recapitalize banks. However, there are going to be fiscal consequences of that including higher inflation.


Higher inflation is already happening but lower than we see elsewhere in the third word. In chipandaland because the government ultimately owns everything and brutally suppresses everything, it can make loans disappear or make its investing citizens eat the losses. This is one nation that can literally screw massive amounts of people and then shoot them if they complain.

The housing (and highways, railroads and ports and everything else) is nevertheless real and tangible.

For some reason people put a lot of emphasis on China's foreign exchange reserves, which I do not understand. Foreign Exchange is typically invested in low yielding bond instruments, outside the country. They are an asset of the state like anything else like mining rights, shipping rights, trading rights or even gold.

The good thing about them is that they are liquid and can be cashed in during the time of need. However, beyond the liquidity there are not very different from other assets of the country. While they allow China to wield influence, they also represent capital not invested in the country.


China foreign reserves act (like any other reserve such as gold or silver) as a backing for the Yuan. The Yuan would be worth far less even in China without the giant pile of forex.

There is a reason why Zimbabwe can print trillions of its currency and can't use those trillions of Zimbabwean dollars to build infrastructure. No one will take them because they are worthless. There is no backing.

China can build 65 million empty homes with the Yuan printed by the PRC because the PRC has this enormous pile of cash that can always be used to buy resources.

For example, someone plunks down 1 trillion Yuan for housing and his contractors can buy steel, wood and cement (or the raw material for them) from anywhere in the world because the Chinese government can convert those Yuans into hard currency like the US dollar that will be accepted in South America, Africa, etc.

The Zimbabwean plunks down 1 trillion Zimbabwean dollars and he'd be lucky to get a few loafs of bread. That paper can't be converted into anything else because Zimbabwean government don't own much hard currency.

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Re: PRC Economy and Industry: News and Discussions

Postby Vasu » 22 Sep 2011 10:51

Raja Bose wrote:^^^Their behavior is hardly shocking given their outlook. Its all about saving face.

Regardless of how much the chipanda drones trumpet about their progress, wealth and technological advances...till they actually experience democracy and figure out the basic tenets of freedom, humanity and dignity for themselves, they will remain primitive and backward even compared to the likes of failed countries like Pakistan.


I tell this to every Indian telling me about the great Chinese infrastructure and piss and plogless. How can any nation hope to lead this world when it denies the very pillars of modern society - freedom of the individual, freedom of speech and freedom of the press, among others.

I ask them if they really believe China can be a world leader through intimidation and propaganda? Some are just too smitten by the highways and bridges to think otherwise.

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Re: PRC Economy and Industry: News and Discussions

Postby Hitesh » 22 Sep 2011 19:30

Deleted self goal. Please stick to topic.

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Re: PRC Economy and Industry: News and Discussions

Postby gakakkad » 22 Sep 2011 19:34



Until the day we see that every child or at the very least, 95% of our children are not suffering from malnourishment, 95% of our women are not suffering from malnourishment and we have cure nearly all water diseases that are easily preventable which China has done, let us concentrate on improving ourselves than ridiculing others.




That is not true... malnutrition levels are quite low ... china and Indian levels are comparable...

Water borne diseases are not common in India... Our stats are much better than sub -saharan africa... Only media articles make such comparisons.... verify facts before speaking...

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Re: PRC Economy and Industry: News and Discussions

Postby Theo_Fidel » 22 Sep 2011 20:00

Hitesh,

This is Panda thread not India. Go to India threads to make a post like that.

Every flat in China will come to be occupied at some point especially since there something like 800 million peasants living in huts and caves.


This is not true at all. The vast majority of Chinese live in relatively better houses, even in rural area. Most houses are brick & concrete structures and have water, electricity and a separate toilet. They are also low to the ground, right next to stores and extremely livable. With some clean up and proper investment, local Chinese town can very very authentic and livable places. The Chinese people are getting shafted when they should be getting the money to completely renovate their small picturesque towns. Extensions could easily be made to lower the population density, giving the locals a much better standard of living.

It always baffles me that we don't learn the lessons of Urban planning and how societies function before making comments such as this. China is replicating all the failed ideas of 'Great Society' experiments that were conducted in the rest of the world over the past 100 years. Even today 'blocks of flats' are gradually being abandoned for low scale residential with a small yard. This gives people a sense of ownership and they tend to take care of much better than vast public space that overtime becomes crime ridden, impossible to police, hell holes. These sorts of intimate towns allow the young/old/sick/poor/rich to all live together and tie a tight sense of 'belonging' together, rather than alienation and isolation that flats promote.

The Chinese people are wise enough not to buy this story and have voted with their feet not to move into these mammoth follies. Here's one of several cut sheets I posted earlier. The question you have to ask is which side of the cut sheet is more livable and sustainable long term. I have many many more cut-sheets to make my point. The new areas are horribly designed urban spaces with horrific mistakes on scale, street frontage, public area and traffic patterning.

Image

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Re: PRC Economy and Industry: News and Discussions

Postby ldev » 24 Sep 2011 19:58

The huge Fixed Investments ranging between 35%-45% of GDP over the last few years in China are a deliberate policy to try and cool inflation which is a natural byproduct of the huge trade surpluses the country has been running. The bonus is that new capital stock is being built almost as a byproduct of an inflation fighting regime. Based on some conversations recently with some well connected Chicoms, this policy is not going to change at least for the duration of Hu Jintao's term as President and General Secretary. His tenure has been marked by risk averse decisions. His successor Xi Jinping is inclined to take a more risk oriented approach in all matters. Expect to see China being to flex its new found economic muscle after the leadership change.

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Re: PRC Economy and Industry: News and Discussions

Postby chola » 24 Sep 2011 20:28

Theo_Fidel wrote:Hitesh,

This is Panda thread not India. Go to India threads to make a post like that.

Every flat in China will come to be occupied at some point especially since there something like 800 million peasants living in huts and caves.


This is not true at all. The vast majority of Chinese live in relatively better houses, even in rural area. Most houses are brick & concrete structures and have water, electricity and a separate toilet. They are also low to the ground, right next to stores and extremely livable. With some clean up and proper investment, local Chinese town can very very authentic and livable places. The Chinese people are getting shafted when they should be getting the money to completely renovate their small picturesque towns. Extensions could easily be made to lower the population density, giving the locals a much better standard of living.



How do you make an extension to a cave? Or a hole dug in the side of a hill? Think of this, why would migrant workers crowd the cities in China even though they are paid slave wages and are forced by the hukou system to live, for all intents and purposes, as dalits?

The answer is because the conditions in the real rural areas (not the suburbs) are as desperate as any you see in the world. The living conditions provided by the sweat shop is a step up for these people.

Again, for a population as large and as poor as China's there is no such thing as an oversupply of housing. They will be occupied. The investors will take a haircut but the government will eventually use those homes to urbanize its population.



It always baffles me that we don't learn the lessons of Urban planning and how societies function before making comments such as this. China is replicating all the failed ideas of 'Great Society' experiments that were conducted in the rest of the world over the past 100 years.


Urban planning is for nations with the wealth to worry about placement of homes not those whose problem is to provide adequate homes. Urban planning is the worry of first-rate economies like the West or Japan. We can't attribute first world "problems" to a piss poor nation like China.

When you are poor like China (or India) the first job is to urbanize. Those millions of empty homes are hooked up to electricity, running water and sewage. They are serviced by roads and rail. They might be empty now but it is impossible to imagine a nation with 800 million peasants would not eventually filling them up.

Remember, the PRC is a communist nation. Communist nations redistribute wealth at their whim. To me, the housing scheme is a redistribution of wealth waiting to happen from the investors to the poor through subsidies or outright nationalization of these homes. Besides brute force, it is another way to cap anger among the poor.

Infrastructure for poor nations is the best kind of overspending you can possibly have.

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Re: PRC Economy and Industry: News and Discussions

Postby chola » 24 Sep 2011 20:46

ldev wrote:The huge Fixed Investments ranging between 35%-45% of GDP over the last few years in China are a deliberate policy to try and cool inflation which is a natural byproduct of the huge trade surpluses the country has been running. The bonus is that new capital stock is being built almost as a byproduct of an inflation fighting regime. Based on some conversations recently with some well connected Chicoms, this policy is not going to change at least for the duration of Hu Jintao's term as President and General Secretary. His tenure has been marked by risk averse decisions. His successor Xi Jinping is inclined to take a more risk oriented approach in all matters. Expect to see China being to flex its new found economic muscle after the leadership change.


Fixed investment is what communist nations do. In the long run it will create massive imbalances between supply and demand. But in the short term, fixed investment creates growth. The PRC's saving grace at the moment is the grinding poverty and underdevelopment of its hinterland which means practically anything it builds will eventually have demand.

Once the interior develops then these inconsistencies will create massive problems. Those inconsistencies cannot be solved unless China turn to a democratic free market if not like the US then at least like Singapore.

The chinis had been flexing their economic muscles since 2000. They have made Japan, Taiwan and South Korea dependent on the Chinese market. But the most dangerous time for the chinis (and the best time for India to catch up) is the "middle income trap" with a per capita income of $10k. That is where the inconsistencies of communist government will grind their economy to a halt or create social and political fissures leading to revolution.

The longer the communists hold out against the change to democracy, the better it is for us. The moment they democratize then there will be another chini boom, this time based on the private entrepreneur that we saw in Taiwan and Korea once they democratized in the 1980s when they went from sweat shop to innovation.

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Re: PRC Economy and Industry: News and Discussions

Postby ldev » 24 Sep 2011 21:42

Chola,

Based on my conversations, I think the Chicoms know the vulnerability of their command economy. What is lacking now is the political will to take a risk so late in the two term tenure of Hu Jintao. They know that they have to move towards full convertibility of the yuan, they also realize that step will make the yuan appreciate a lot and put their entire current growth model in jeopardy besides stoking political instability. The fx reserves are meant to buy hard assets/commodities/influence opportunistically. Besides the current international financial architecture lets them take advantage of the USD based system without any of the downsides of owning such a system. They are targetting full convertibility over a 10 year period but I think it will happen sooner. As far as flexing their financial muscle is concerned, what they meant is that compared to the last 10 years, their expectation is that the pace will be stepped up exponentially when the new regime assumes office. I would expect a much more adventurous geopolitical strategy as well. Time for Indian politicians and babus to step up their game.

As far as the West is concerned, they were very blunt about the current economic malaise - essentially that the west has to learn to live within its means, and if that means a sharp decrease in its standard of living and especially retirement, so be it.


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Re: PRC Economy and Industry: News and Discussions

Postby Suraj » 28 Sep 2011 03:00

Shanghai subway trains collide underground, injuring more than 270
Two subway trains collided in Shanghai on Tuesday injuring more than 270 passengers, 20 critically, prompting public anger two months after a crash between two high-speed trains and renewing concerns about China's aggressive rail building plans.

The collision occurred in central Shanghai, near the Yu Yuan gardens, a well-known tourist attraction, after a signal failure meant staff had to direct trains by telephone, though they were also running at slower speeds, state media said.

The official Xinhua news agency said most of the injuries were bruises and bone fractures, and that nobody was in a life-threatening condition. About 180 people have already been discharged from hospital, it said.

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Re: PRC Economy and Industry: News and Discussions

Postby Hari Seldon » 28 Sep 2011 06:51

^^^Worrisome that such news is being 'allowed' to filter out. PRC undergoing its own glasnost? Scary prospect if corruption in china falls by half or something due to active glasnost and an alert public....

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Re: PRC Economy and Industry: News and Discussions

Postby vina » 28 Sep 2011 07:33

^^^Worrisome that such news is being 'allowed' to filter out. PRC undergoing its own glasnost? Scary prospect if corruption in china falls by half or something due to active glasnost and an alert public....


Problem is Shanghai is too big and too "international" and "connected" to be able to suppress such news.

But what can be suppressed will be , especially the news from lesser cities and regions in the interior.

For eg, there were two Tibetan monks who set themselves on fire to protest the Chinese policies against their monastery . Now other than it being buried in some page 10 of some small western outlets, there is nary a squeak on that from any place.

Case in point the despicable and shameless reporting by Ananth Krishnan of Al-Hundi in China. This follows the tradition set by N.Ram of reporting about Tibet, where he goes on Chinese govt invitation (and doesn't report that fact in his article), enjoys the official hospitality of his minders and goes on a big conducted tour of Tibet and does not mention anything AT ALL about the Tibetan people and their daily life or the opposition to Chinese rule and their human interest stories, but goes on and on about the railways and the massive Stalinist square built just under the Potola palace (for the Commies to do massive marches to "shock and awe", the Tibetans I suppose), while a certain Edward Wong (with a good Chinese surname) of the New York times writes a story at the same time as N.Ram , which is 180 deg apart from the N.Ram driven and Edward Wong is ejected out of Tibet for his labors!

Yes, the PRC can suppress and do information warfare thanks only to the active collaboration and connivance of the "Stalinist Mass Murdering Rapists Goons " (Suppiah TM.. thanks) and the shameless likes of Al-Hundi.

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Re: PRC Economy and Industry: News and Discussions

Postby Theo_Fidel » 28 Sep 2011 09:54

chola wrote: The answer is because the conditions in the real rural areas (not the suburbs) are as desperate as any you see in the world. The living conditions provided by the sweat shop is a step up for these people.

Again, for a population as large and as poor as China's there is no such thing as an oversupply of housing. They will be occupied. The investors will take a haircut but the government will eventually use those homes to urbanize its population.
....

......When you are poor like China (or India) the first job is to urbanize. Those millions of empty homes are hooked up to electricity, running water and sewage. They are serviced by roads and rail. They might be empty now but it is impossible to imagine a nation with 800 million peasants would not eventually filling them up.

Remember, the PRC is a communist nation. Communist nations redistribute wealth at their whim. To me, the housing scheme is a redistribution of wealth waiting to happen from the investors to the poor through subsidies or outright nationalization of these homes. Besides brute force, it is another way to cap anger among the poor.

Infrastructure for poor nations is the best kind of overspending you can possibly have.


Chola,

Rural China is horribly invested in, in terms of services, infrastructure and modern amenities. No one disagrees with that. But the Panda-overlords are NOT investing in infrastructure the people can use. They are blowing their wads of cash on pure speculative property development. The jobs the migrants have will never allow them to even buy a $50,000 apartment yet the majority of these highrises are built for $300,000 apartments with their staggering maintenance and utility costs. Some where in my folders I have a sheet that illustrates this better, I'll post it when I find it.

Those pictures I posted were 45 km outside Shanghai. But you can go 300 km outside shanghai and the pictures will be the same. Chinese villages are not caves. Note the distinction I make between the well developed settlements vs the infrastructure around them. I also don't think you understand what is meant by an Urban area. A urban area is defined by density and amenities. A small village of 50,000 with both will be called an urban settlement. Thiruvannaamalai with a population of 150,000 and a density of about 15,000 persons per sqkm and all modern amenities is an urban area. The vast majority of far interior China where the Chinese live is far above Thiruvannaamalai in amenities. Most Chinese are actually already Urban dwellers. Japan & SK are 99% Urban despite the fact that large numbers still live in tiny outlying areas. They never bothered to build an endless series of Apartment blocks marching from one end to the other. You can talk about forcibly redistributing the apartments but the value of these apartments without proper upscale maintenance will drop like a rock. Wiping out a whole bunch of banks that depend on them for collateral.

Finally the vast majority of apartments are not being built in Shanghai & Bejing, Even though those two are adding about 3 million a year. The vast majority, about 12 million a year, are being built in outlandish tiny cities far in the interior like Ordos, Kunming, Changsha & Xian (never hear of it right), which are actually the source of much of that migrant labor to Shanghai & the Pearl delta. Instead of investing its money in proper infrastructure the people can use, rural roads, proper sanitation, transport services, support for the elderly, modern agriculture, etc, Pandaland has raided its banks to fund all manner of harebrained speculative investment that has not touched even 0.1% of the country. Rural infrastructure, which is 99.9% of the country is completely untouched. In many cases apparently since the Ming dynasty. The rural migrants in most instances have left their children back home so they will probably return to their small towns after some time.

Don't fall for the Panda propaganda that the infrastructure of the nation as a whole is getting better, other than tiny isolated pockets it is not.

Theo_Fidel

Re: PRC Economy and Industry: News and Discussions

Postby Theo_Fidel » 28 Sep 2011 10:22

Ahha! Found it! Here you go. Note that this is a random area deep in the interior heartland. Most rural areas are pretty much similar from what Google Earth shows. All images are from Google Earth and are typically less than 2 years old.

As you can see the rural areas are NOT caves and huts per the propaganda put out by Panda leaders. They are actually very livable close knit dwellings and social groups. The houses are very well maintained and are being painfully renovated and upgraded for long term use. All of these qualify at least as urban settlements.

Keep in mind when we talk of urbanizing India what we really mean is breaking the dependence on rural farming as the basis of society. Small settlements with SME making textiles, tools, etc are urban settlements.

What is not happening in Panda fantasy land is any investment in upgrading the rural infrastructure WRT roads, utilities, drainage, security, transport, irrigation, etc. To all appearances these areas have been abandoned by the Panda overlords in order to glorify the flashy speculative frenzy going on. To think that these people will move into the 40th floor of a cramped apartment building after paying out $300,000 is the height of folly. Pure bubble talk. 99.9% of China has been essentially abandoned to its fate. This not any sort of model for development we should follow.

Image

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Re: PRC Economy and Industry: News and Discussions

Postby Theo_Fidel » 28 Sep 2011 18:42

Nice little 5 part write-up on why nothing in China is what it seems. Worth reading the entire thing. Smoke & Mirrors...

http://www.bloomberg.com/news/2011-06-2 ... lling.html

Why Overconfidence Abounds

With such limited domestic spending, why do so many analysts predict that China can continue its robust growth?

In part because they believe in the misguided concept of global decoupling -- the idea that even if the U.S. economy suffers a setback, the rest of the world, especially developing countries such as China and India, will continue to flourish. Recently -- after China’s huge $586 billion stimulus program in 2009; massive imports of industrial materials such as iron ore and copper; booms in construction of cement, steel and power plants, and other industrial capacity; and a pickup in economic growth -- the decoupling argument has been back in vogue.

This concept is flawed for a simple reason: Almost all developing countries depend on exports for growth, a point underscored by their persistent trade surpluses and the huge size of Asian exports relative to GDP. Further, the majority of exports by Asian countries go directly or indirectly to the U.S. We saw the effects of this starting in 2008: As U.S. consumers retrenched and global recession reigned, China and most other developing Asian countries suffered keenly.

Overconfidence in China’s ability to keep its economy booming is also partly psychological. It reminds me of the admiration and envy (even fear) that many felt toward Japan during its bubble days in the 1980s. As Japanese companies bought California’s Pebble Beach, Iowa farmland and Rockefeller Center in New York, what was safe from their zillions? Then the Japanese stock and real-estate bubbles collapsed, and Japan entered the deflationary depression in which it’s still mired.

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Re: PRC Economy and Industry: News and Discussions

Postby ashi » 28 Sep 2011 20:04

India’s best is not good enough to beat China, figures show

In short, despite a decade of dramatic growth (by our own standards), India has fallen farther behind China. India’s position vis-a-vis China as a growing ‘world economic power’ stands diminished as things stand today compared to a decade ago.

Moreover, China’s domestic economy also looks better managed than India’s. Inflation, for example, is better controlled and per capita incomes are rising faster. An authoritarian regime, earlier start to policy reforms and a stronger demographic advantage are factors behind China’s superior performance. With the maturing of reform measures and improving demographics, the next decade might look different for India. But for now, it is indeed falling behind.

Theo_Fidel

Re: PRC Economy and Industry: News and Discussions

Postby Theo_Fidel » 29 Sep 2011 06:24

http://cmp.hku.hk/2011/09/23/15583/

[NOTE: The company is part of China State Construction Engineering Corp, which is listed on the Fortune 500.] The supplier of steel reinforcements for this project is the 9th Metallurgical Construction Company of China (“9th Metallurgical” for short). It is these three illustrious companies that are illegally shortchanging government construction contracts (偷工减料) and falsely carrying out projects.

According to our investigation over recent months, one-third of the reinforcing steel used in this project so far was purchased by 9th Metallurgical from Jintang (金堂), Guanghan (广汉) and other small steel works, and substandard steel materials such as the “inferior steel” (地调钢) that is expressly forbidden by the state are being used [in the project]. This reinforcing steel product does not carry a steel manufacturing number from the producer, and what’s more it has not product quality certification (产品合格证), and all of it was brought on to the construction site at Wanda Plaza in the middle of the night.

The Mianyang Wanda Plaza project is massive, with a construction area of 450,000 square meters. There are a total of seven processing areas for reinforcing steel, and each of these has massive quantities of poor-quality steel. According to our careful estimates made through undercover work, we found that this steel falls below national quality standards — for example 10mm steel reinforcements, which are nationally limited to no less than 9.6mm, are only 8mm at this project site (please see the photographs following this letter).


Image

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Re: PRC Economy and Industry: News and Discussions

Postby skumar » 29 Sep 2011 10:00

chola wrote:<snip>
Let's look at luxury items -- Gucci handbags, BMWs, Audis, Apple Iphones and other trappings of the comfortable class.
<snip>

Since we were talking about cars earlier ...
http://www.telegraph.co.uk/news/worldnews/asia/china/8783588/BMW-town-crashes-in-pyramid-fraud.html

Don't mean to be flippant but things to note here.

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Re: PRC Economy and Industry: News and Discussions

Postby skumar » 29 Sep 2011 10:07

The slave labour efforts of millions of Chinese over the past decades is now represented by the trillion dollar reserves. The dollar is now the biggest ponzi scheme going. The Chinese have realized that the dollar is not going to last and the US has no option but to default. And the Chinese have realized / acted on this faster than we have. They have been using their dollar reserves to buy commodity trophies that will be of value when the s... hits the fan. However when it does, all bets will be off. Will a country that has sold its land / oil parcels to China for dollars continue to honour its obligations? Hence, the break neck infrastructure development within China importing commodities while they ride the dollar tiger as well as they can.

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Re: PRC Economy and Industry: News and Discussions

Postby skumar » 29 Sep 2011 11:43

From the extremely interesting read,
,
"Speculators are starting to take stock of the evidence of a hard landing in China, and industrial commodity prices, including copper, are swooning. As in the past, warnings about shortages in key industrial inputs are magically being contradicted as unaccounted-for stockpiles materialize."
and
"London Metal Exchange bonded warehouses saw copper inventories leap 17 percent in the first quarter. Furthermore, to circumvent tight bank lending in China, borrowers are relying more on available letters of credit to finance copper arbitrage trading and otherwise have the use of the borrowed money with copper purchases as their collateral. If copper prices continue to fall, those borrowers will have to sell their copper on the market to prevent further losses, resulting in still-lower prices."

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Re: PRC Economy and Industry: News and Discussions

Postby abhischekcc » 29 Sep 2011 23:56

As I have pointed out before, if there is a Chinese statistic that cannot be verified by an independant source, it is most likely to be false.

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Re: PRC Economy and Industry: News and Discussions

Postby ArmenT » 30 Sep 2011 10:55

China tech stocks dive on threat of US fraud probe
Chinese internet stocks have dived in New York trading after the US Justice Department said it was considering launching a fraud investigation.

The news was disclosed by Robert Khuzami, director of enforcement at the US financial services regulator.
...

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Re: PRC Economy and Industry: News and Discussions

Postby chola » 30 Sep 2011 16:42

vina wrote:
^^^Worrisome that such news is being 'allowed' to filter out. PRC undergoing its own glasnost? Scary prospect if corruption in china falls by half or something due to active glasnost and an alert public....


Problem is Shanghai is too big and too "international" and "connected" to be able to suppress such news.



The fact that you can have international cities like Shanghai in China when there were absolutely none three decades ago is a competitive danger. Internationalization means creeping international standards.

In China's case, those standards will come mainly from Japan, South Korea, Taiwan and Hong Kong. If the efficiency from these places take hold in more and more Chinese cities, then China will be transformed into a larger version of those East Asian free markets. Because of race and culture it will be automatically hooked into the Jap/SoKo/Overseas Chinese markets and networks that dominate East Asia in ways we can never be.

The saving grace is the Chicoms will never give up power easily and so I hope they hang on for as long as possible.

For those who see Japan, South Korea or Taiwan as harmless entities just because they are democracies, try competing against them in the marketplace. They are ruthless and bloodthirsty.

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Re: PRC Economy and Industry: News and Discussions

Postby chola » 30 Sep 2011 17:18

Theo_Fidel wrote:
Thiruvannaamalai with a population of 150,000 and a density of about 15,000 persons per sqkm and all modern amenities is an urban area. The vast majority of far interior China where the Chinese live is far above Thiruvannaamalai in amenities. Most Chinese are actually already Urban dwellers. Japan & SK are 99% Urban despite the fact that large numbers still live in tiny outlying areas. They never bothered to build an endless series of Apartment blocks marching from one end to the other. You can talk about forcibly redistributing the apartments but the value of these apartments without proper upscale maintenance will drop like a rock. Wiping out a whole bunch of banks that depend on them for collateral.


This is not correct. China is mostly rural. The Chicoms themselves claim that only 38 or 39% is urban. But if you are a multi-national, you don't trust PRC official data, you research things yourself. For MNCs, the rule of thumb is China's effective "urban" population is around 300 million and that is the number you would stake your billions of investment on. Three hundred million is no more than 25%, nowhere near the majority.

Most of interior China might be above Nirmali or some other town in poorest Bihar. Not Thiruvannaamalai. It is a significant tourist area with western amenities which is not nearly the case for rural villages in the vast interior of China.

As for Japan and SK, modern Chinese cities are virtually indistinguishable from Tokyo or Seoul. East Asians are pretty much identical in tastes and habits. The only difference is China is mostly rural while Japan and SK are not.

If China is really so urbanize that building homes is detrimental than it would already be as wealthy as Japan or South Korea on a per capita basis which it is most definitely not.

As I written before, China's banks should have been wiped years ago when they were technically insolvent. I've learned years ago waiting for that collapse that wishful thinking isn't a good investment strategy.

The PRC prints money that only itself could use. It is a state run system who can literally make money appear or make its citizens eat their losses at gunpoint if they're worried about inflation.

Sooner or later this system will reach breaking point because you cannot print forever without inflation. But there is always a period where there is enough confidence in the local currency that you can actually do work with it. In third world nations, that sweet spot period of confidence where the local currency is stable is usually very short.

When you are in the sweet spot, it is far, far better to convert this funny money into hard assets when you can. That is what China is doing with infrastructure.

The vast majority, about 12 million a year, are being built in outlandish tiny cities far in the interior like Ordos, Kunming, Changsha & Xian (never hear of it right), which are actually the source of much of that migrant labor to Shanghai & the Pearl delta. Instead of investing its money in proper infrastructure the people can use, rural roads, proper sanitation, transport services, support for the elderly, modern agriculture, etc,


Theoji, you cannot claim on one-hand that 99% of rural infrastructure structure is completely untouched and then at the same time point to over-investment in outlandish cities far in the interior.

The fact is that interior cities like Xian and Ordos are getting investment means that infrastructure is expanding to the far corners of pandaland. Again, you cannot apply wealthy first world problems like oversupply of housing to a wretchedly poor nation where the vast majority of people still need modern housing.

Infrastructure building is always good in poor nations and even better if they are far from the beaten path like Ordos.


As you can see the rural areas are NOT caves and huts per the propaganda put out by Panda leaders.


I have yet to see the PRC glorify its caves and huts. They always glorify its cities. The caves and huts are pointed out in research conducted by American companies and American media who don't believe in PRC propaganda as a way of protecting investment or projecting market potential.

Theoji, from where I sit, the biggest difference between Indians and Americans is the US business and social communities have a massive presence on the ground in China while Indians depend on second hand observations from non-Indians.

This leads to us to all sorts of myth making about the lizard. Some are imagining that China is more urbanize than it really is so we can say how infrastructure building there is bad. We cannot use this wishful thinking in the business world.

Either China is urbanized and wealthy like Japan and further infrastructure investment is wasteful. Or it is poor and rural and infrastructure is needed. We cannot pretend that China is both poor and the infrastructure it iss building is not needed. It makes no sense. It is obvious that China is poor and infrastructure is needed. Even more so because it is now in the period where its currency is worth something and you can actually use it to build things.

There is a reason American (and Japanese and South Korean) brands dominate the Chinese market place even though they have far more acrimonious political relationships with the chinis. These people do their research with cold hard logic.

Theo_Fidel

Re: PRC Economy and Industry: News and Discussions

Postby Theo_Fidel » 30 Sep 2011 19:04

chola wrote: Theoji, you cannot claim on one-hand that 99% of rural infrastructure structure is completely untouched and then at the same time point to over-investment in outlandish cities far in the interior.

The fact is that interior cities like Xian and Ordos are getting investment means that infrastructure is expanding to the far corners of pandaland. Again, you cannot apply wealthy first world problems like oversupply of housing to a wretchedly poor nation where the vast majority of people still need modern housing.......

.......Theoji, from where I sit, the biggest difference between Indians and Americans is the US business and social communities have a massive presence on the ground in China while Indians depend on second hand observations from non-Indians.

This leads to us to all sorts of myth making about the lizard. Some are imagining that China is more urbanize than it really is so we can say how infrastructure building there is bad. We cannot use this wishful thinking in the business world


Chola Saar,

Pandaland is quite unusual. As you say without a massive presence on the ground we are handicapped in our understanding of what is going on there. But this does not mean we can not apply lessons from history and other places to China. It does not escape gravity.

- First WRT the dichotomy between robust rural housing and a shambles of rural infrastructure, this is not hard to understand. The Chinese people are investing in upgrading and building/rebuilding their ancestral homes or in their ancestral areas. Most of these are fairly sizable towns. The infrastructure that services these towns are not being upgraded. It appears to be deliberate policy.
- Most of Panda money is going into wild speculative activity, which means super duper expressways, apartment complexes and malls, stuff you can sell, bank and show off. Not much is going into upgrading the infrastructure in the small towns Chinese really live in. So you have sparkling expressways that end on dirt roads, HSR stations in the middle of fields and Airports that serve no one. Speculation always destroys wealth.
- Panda overlords are making a bet/speculation that common Chinese will all abandon their homes and move en-mass into these gigantic new apartment complexes far outside their town. Historically, other than communist Russia, this bet has always been a loser.
- WRT western/Japanese companies they are not as smart as you think they are. Not one of them forecast the Global collapse or the debt disaster in Europe. Entire bunches of them went bankrupt from their mistakes. Their 'hard' numbers are only 3 month phenomena. Everyone wants to get in on a market bubble. That's all.
- The bank problem in China 4-5 years ago was quite different. It came about because the banks had forcibly lent to mostly companies to build factories that then turned non-productive. Relative to GDP even back then it was a tiny amount. I don't remember anyone thinking it would be a huge problem for them to clean up. Indian had a similar problem compared to GDP and we cleaned up as well.
- Panda definitely issues propaganda about it people living in huts and caves because this allows them to raze entire cities without a murmur of protest.

Lets do a simple math exercise. About 100 million apartments have now been/under constructed since the late 90's. Enough for about 300-400 million people. China has about 700 million in working age. If on average the apartment/land/infrastructure is worth $200,000 (This is actually conservative by some reports) this works out to about $20 Trillion or so in new 'infrastructure'. Typically you need to keep investing any where from 10% to 15% of this value in maintenance and principle costs to keep the value up/solvent. This would mean that about $2 Trillion of China's national income is permanently dedicated to this expense. About 40% of present GDP! There goes your modern consumer market long term. If we take the xample of the USA, when the residential market reached a bubble value of a about $25 Trillion the earnings of the people was unable to keep that value pumped up through borrowing, paying and taxes. It was that loss of financial ability that pricked the bubble and resulted in the catastrophic crash. We must see when Panda hits that particular wall.

The commercial overbuild is a complete other story. 25 Billion sgft of excessive supply according to some researchers. Enough to put every man/woman and child in a cubicle.

The case is not that China is bound for civilization collapse. There is a 'meat grinder' ahead in China's future. A point where its people and government will be completely reconstituted. All this speculation makes China increasingly unstable and financially insolvent accelerating it appointment with the 'meat grinder' and making the final outcome worse. What comes out on the other side will be very different China, politically, socially and financially. The criticism is that that the Chinese government and people are not ready and the companies in China will go through this meat grinder as well. I hope you are ready for that.

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Re: PRC Economy and Industry: News and Discussions

Postby ashi » 01 Oct 2011 02:19

Foxconn's $12 billion iPad deal in Brazil threatened by local shortcomings

Negotiations between Foxconn and the Brazilian government have temporarily stalled, according to Reuters. Increased taxation, an unprepared infrastructure and the lack of qualified workers are cited as major reasons that threaten the $12 billion investment and are seen as obstacles in economic growth in the region.

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Re: PRC Economy and Industry: News and Discussions

Postby Singha » 01 Oct 2011 20:33

WSJ



By LINGLING WEI

BEIJING—Troubles among small manufacturers in the bellwether Chinese city of Wenzhou are putting a cloud over a key part of China's economy, further shaking investor confidence and underscoring the stakes as Beijing tries to strike a balance between fostering growth and containing inflation.

More than two-dozen small, private businesses in the eastern city known for its entrepreneurial success have gone belly up in recent days because they couldn't repay maturing bank loans, according to state media reports. Wenzhou officials on Thursday urged banks to limit lending rates and make more funds available to small businesses amid worries about a credit crunch.

One of the businesses that closed this week was Zhejiang Xiang Yuan Steel Industry Co., state media said. A sales representative there who gave only his surname, Li, attributed the closure to pulled bank credit. He said the company had more than 100 employees, but he declined to comment further.

Others expressed worry over the business environment in Wenzhou. "The government has promised support for private businesses for years, and I've heard enough of it," said Qu Guoning, who runs one of the hundreds of small makers of electric wires and cables in the city and is fretting about how he will fund a planned business expansion.

The reports have added to downward pressure in China's stock and currency markets because Wenzhou was one of the first places to boom when China began to embrace private enterprise three decades ago and is considered the cradle of private-business ownership.

"Numerous reports of debt distress in Wenzhou have contributed to the latest iteration of China hard-landing anxiety," said Tim Condon, Singapore-based chief Asia economist with ING Groep NV. "The fear is that Wenzhou is the tip of an iceberg."

Further adding to worries over the small manufacturing sector, the HSBC China Manufacturing Purchasing Managers Index on Friday suggested manufacturing activity in September declined for the third straight time. The index is considered to be a gauge of the private sector's performance because it includes small companies. Analysts estimate the small- and medium-sized businesses in the private sector account for 80% of the country's jobs and more than half of economic output.

Damaged also by broader global market turmoil, China's benchmark Shanghai Composite Index fell 6.12 points, or 0.3%, to 2359.22 points Friday, its lowest close since April 2009. In currency markets, traders sent the yuan lower against the U.S. dollar even as China's central bank guided the currency higher. The move tested the trading limits Beijing uses to quell currency volatility for the third straight day.

China is constraining lending as part of its effort to tame inflation, which was spurred in part by its massive investment stimulus during the global financial crisis. But its clampdown on bank credit has put pressure on the private sector, leading to growing fears of a sharp slowdown of the economy that so far has served as a counterweight to weakened economies in the U.S. and Europe.

Wenzhou, a city of more than 1.9 million people, rose to prominence over the years for making cigarette lighters but is now known for its heavy concentrations of everything from sophisticated electronics manufacturing to property development. Its 360,000 small- and medium-sized enterprises account for more than 90% of the city's industrial output, which amounted to 271.5 billion yuan ($42.4 billion) in the first eight months of this year, according to government estimates.

But financial woes of its small manufacturers have intensified since last year, when China moved to rein in bank lending. Private companies—"which China's state banks have traditionally underserved in favor of lending to massive state-owned enterprises—have found financing increasingly hard to come by. In the first seven months of the year, Wenzhou enterprises posted a total of 640 million yuan (about $100 million) in losses, 220 million yuan more than a year earlier, according to local government data.

Zhou Dewen, head of the Wenzhou Small- and Medium-sized Enterprises Promotion Association, a trade group, said "banks are lending at usurious rates" in some cases. A number of the businesses that have closed their doors in recent weeks are members of his group, Mr. Zhou said, though he declined to elaborate.

Chinese officials have said repeatedly they don't anticipate a wave of small-company bankruptcies and have suggested ways to help the sector. In August, for instance, the National Development and the National Development and Reform Commission, China's top economic planning agency, unveiled new rules to encourage private companies to invest in what it calls "new strategic industries" including alternative energy, biotechnology and advanced equipment manufacturing, pledging that qualified private companies will be allowed to raise money by issuing bonds and stocks.

Mr. Qu, owner of the company that makes wires and cables, said he is planning to expand his business into making household appliances, a line of business that promises greater profitability, but which would need "tens of millions" of yuan in investment. Financing, he said, is difficult to get.

Mr. Qu said he is thinking about borrowing against the property he owns. "But the government's harsh crackdown on real estate has limited my ability to borrow using property as collateral," he said.
—Yoli Zhang in Beijing and Shen Hong in Shanghai contributed to this article.

Theo_Fidel

Re: PRC Economy and Industry: News and Discussions

Postby Theo_Fidel » 02 Oct 2011 04:51

Singha wrote:Mr. Qu, owner of the company that makes wires and cables, said he is planning to expand his business into making household appliances, a line of business that promises greater profitability, but which would need "tens of millions" of yuan in investment. Financing, he said, is difficult to get.


I think this is the key thing.

The money is all going to connected state companies and developers who are wildly spending on speculative construction. This is killing even the legitimate manufacturing sector now. This is another problem with making money more expensive, it starts getting diverted into ever more frenzied attempts to raise returns to pay off the banks. Something similar happened in USA when Greenspan raised rates in 2006-2007. Raising rates in a market bubble actually makes things worse and worse.

From our point of view I hope the China bubble continues to get bigger. Need 3 more years IMO. At that point total debt will be a bout 400% of GDP and complete political and economic restructuring will be needed.

Singha
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Re: PRC Economy and Industry: News and Discussions

Postby Singha » 02 Oct 2011 05:55

yeah lets hope the thunder run in construction and bailouts to state owned or allied fatcats continues as long as possible.

Singha
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Re: PRC Economy and Industry: News and Discussions

Postby Singha » 03 Oct 2011 20:09

some good details about the china bullet train technology issues ... foreign cos are not allowed to bid directly, they have to find a state approved local partner. hitachi apparently was asked to supply some parts and did so in a black box manner to make 'cloning' tough.

http://online.wsj.com/article/SB1000142 ... stpop_read


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