PRC Economy - New Reflections : April 20 2015

The Technology & Economic Forum is a venue to discuss issues pertaining to Technological and Economic developments in India. We request members to kindly stay within the mandate of this forum and keep their exchanges of views, on a civilised level, however vehemently any disagreement may be felt. All feedback regarding forum usage may be sent to the moderators using the Feedback Form or by clicking the Report Post Icon in any objectionable post for proper action. Please note that the views expressed by the Members and Moderators on these discussion boards are that of the individuals only and do not reflect the official policy or view of the Bharat-Rakshak.com Website. Copyright Violation is strictly prohibited and may result in revocation of your posting rights - please read the FAQ for full details. Users must also abide by the Forum Guidelines at all times.
gakakkad
BRF Oldie
Posts: 4438
Joined: 24 May 2011 08:16

Re: PRC Economy - New Reflections : April 20 2015

Postby gakakkad » 08 Sep 2015 21:44

disha it accidentally got posted in the wrong thread...bliss to rectify.. i edited mine...

panduranghari
BRF Oldie
Posts: 3735
Joined: 11 Aug 2016 06:14

Re: PRC Economy - New Reflections : April 20 2015

Postby panduranghari » 08 Sep 2015 22:23

Austin wrote:The best bet for China for short and medium growth is to devaluate their currency further may be by 10-15% as PBOC thinks its viable to make its export competitive for next 5 year and eventually move to a more fair and free floating currency and let market decide the rate of Yuan then let politics decide it.


There is an outflow of forex reserves from the PRC to everywhere else. At the moment the maximum influx is into USD. USD is afterall the cleanest dirty shirt in the laundry. When US raises federal funds rate (more likely this month than the next), the outflow from 10 year treasury will be substantial. 10 year treasury is yeilding about 2% which is very low by historical standards. The rising interest rates will make USD even stronger and for China to maintain the peg, they will haemorrage even more Treasuries. How long can it carry on? As long as the elite wish to keep control in China. The outflow of USD from China will speed up when the funds rate rises. It will be a double whammy for both China and USA. The USDX is likely to rise to as high as 150. I do not think PBoC has to gumption to take the losses on the chin. Either way the control or figment of control of the PBoC over its markets will be lost. There is a long term secure (yeah right!) bull market of the US dollar. No one can compete with it irrespective of how much reserves they hold. It however seems the PBoC is slowly converting the reserves into assets. link

Theo_Fidel
BRF Oldie
Posts: 7613
Joined: 31 Mar 2006 02:15
Location: MO,US,NCJ TN

Re: PRC Economy - New Reflections : April 20 2015

Postby Theo_Fidel » 08 Sep 2015 22:42

Exactly how much of its FOREX can china hemorrhage before things go pear shaped. I can’t imagine they can draw it down to zero. Back when India/SE Asia had its financial wobbles, anything less than 1 years cover spooked the markets into making savage attacks to cause currency crashes. I would imagine if china drops below $1.5 Trillion (its 1 year cover) , the speculative attack of the century would swamp its currency. Any thoughts.

ldev
BRFite
Posts: 1535
Joined: 06 Nov 2002 12:31

Re: PRC Economy - New Reflections : April 20 2015

Postby ldev » 09 Sep 2015 06:52

^^^
Capital account convertibility has restrictions in China. Domestic interest rates are high. The financial market is not transparent. These factors combined together have resulted in unique solutions by Chinese borrowers for their financial borrowing requirements. e.g. Letters of Credit with a 10% margin requirement will allow copper imports which are stored in bonded warehouses. The opener will then get a line of credit equal to 80-90% of the value of the copper at 1.5-3.0% per annum as against the domestic borrowing rates of 10%-15% for such a medium size company. Such a transaction can be described as a "carry trade". The favored currencies in which borrowings happen are the USD and the Yen. Given the almost fixed peg that the Yuan had with the USD, it was almost a risk less carry trade for the last many years. All of that has unraveled with the recent yuan devaluations. It is very difficult to estimate the size of the yuan carry trade but it is estimated at more than USD 1 trillion on a conservative basis. To prevent a panic unwind of this trade has been one of the primary reasons for the PBOC interventions in the market. After all if spending $100 billion in a month can prevent a $ 1 trillion plus unwind, it is money spent well. Some estimates put the China carry trade at much higher levels. Currency interventions and the unwinding of the carry trade will be paid out China's fx reserves.


Vayutuvan
BRF Oldie
Posts: 9861
Joined: 20 Jun 2011 04:36

Re: PRC Economy - New Reflections : April 20 2015

Postby Vayutuvan » 09 Sep 2015 09:09

We can spare a couple of dollars if it means work for a few thousand Chinese.

panduranghari
BRF Oldie
Posts: 3735
Joined: 11 Aug 2016 06:14

Re: PRC Economy - New Reflections : April 20 2015

Postby panduranghari » 09 Sep 2015 12:52

How much forex can China haemorrhage? Dont know.

However 2 ways of looking at it;
1. Forex reserves exist for this explicit purpose. To defend the currency. But how long can you defend an artificial parity? Many analysts look at HK dollar as a proxy for RMB in the forex markets as they believe RMB is very doctored. Riding on the tiger has taken China so far. Will they fall of the tiger and be devoured?
2. China was trying to get too big for its boots. AIIB and the other shenanigans must have annoyed USA. The only superpower wont take this lying down. The dollar is rising and wont stop anyway. Rising interest rates in USA will make it rise higher and faster. Will they/wont they about rate rises has been going on since last December. The problem is this- short of QE4 federal reserve has no other ammunition left to fight the shortage of euro-dollars(dollars which reside overseas). If the rate rise does not happen to normality i.e to 5%, the future problems will be even harder to manage. So what will the Fed do? Wait until problem worsens? Or act now? Even a 5 basis point rise i.e 0.05% rate rise means increase in interest rate payments by 146b dollars.

A_Gupta
BRF Oldie
Posts: 10625
Joined: 23 Oct 2001 11:31
Contact:

Re: PRC Economy - New Reflections : April 20 2015

Postby A_Gupta » 09 Sep 2015 22:15

New York Times:
http://www.nytimes.com/2015/09/10/world ... risis.html

Key takeaways:
The police have been dropping in on investment firms and downloading their transaction records. Senior executives at China’s biggest investment bank have been arrested on suspicion of illegal trading. A business journalist has been detained and shown apologizing on national television for writing an article that could have hurt the market.

The Communist Party’s response to China’s months-long stock market crisis has been swift and forceful. In addition to spending as much as $235 billion to buy shares and bolster prices, the authorities have imposed a range of extraordinary restrictions on the sale of stocks — and backed them with the full weight of a security apparatus usually more focused on political dissent than equity trades.
...
...
...
...
Anne Stevenson-Yang, co-founder of J Capital Research, which analyzes the Chinese economy for investors, said the restrictions on selling had turned the Chinese stock market into “a roach motel for capital.”

“You can enter,” she said, “but if you want to leave, you have to be really fleet about it, because you’re mostly not going to get out.”


Vipul
BRF Oldie
Posts: 3728
Joined: 15 Jan 2005 03:30

Re: PRC Economy - New Reflections : April 20 2015

Postby Vipul » 10 Sep 2015 02:16

China's GDP growth may drop to 2.5% by 2016, says Willem Buiter of Citigroup.

Willem Buiter, former member of the Bank of England's monetary policy committee said that global recession is the most likely outcome with a 55% probability.

He further defines recession as a period during which the actual unemployment rate is above the natural employment rate or the level of actual GDP is below the level of potential GDP, reports The Economist.

Buiter then said that GDP growth at market exchange rates will decline from its likely current rate of 4% (Shanghai statistics is claiming 7% growth rate this year :D ) to 2.%% or less by the middle of 2016 and will stay at or below 2.5% for a year or more.

According to The Economist, the reason that Buiter gave behind saying so is the negative world trade growth in the first half of 2015. "Commodity prices have weakened, global inflation rate has fell down, there is a decline in global stock prices and corporate earnings growth is slowing down in most countries," he added.

Buiter then anticipates that the real state of GDP growth in China is currently 4% and it may drop to 2.5% by 2016 and that would mean recession in China.

He said, "Investment in China has been, on average, woefully inefficient - especially since 2008. Most of it continues to be allocated to infrastructure, construction and traditional industrial and extractive activities."

This situation is unlikely according to Buiter and he said that this will have significant effects in the developed world. According to reports, in 2014, China's share of world GDP was 13.3% and 14.3% of global trade.

Countries that don't directly trade with China will also be affected as they sell to countries that export to China.

Buiter concludes by saying that monetary authorities will have to buckle up in such situation. "If the Fed and the Bank of England hike rates this year or next year they may, if global recession scenario arises, be cutting rates again during the second half of 2016."

Suraj
Forum Moderator
Posts: 11990
Joined: 20 Jan 2002 12:31

Re: PRC Economy - New Reflections : April 20 2015

Postby Suraj » 10 Sep 2015 02:45

Morgan Stanley also estimated that China's true rate of growth right now is 4-5% rather than the officially reported 7% .

Vipul
BRF Oldie
Posts: 3728
Joined: 15 Jan 2005 03:30

Re: PRC Economy - New Reflections : April 20 2015

Postby Vipul » 10 Sep 2015 03:01

If Chinese GDP growth rates drops to (and stabilize at) 3-4% a year then their target of overtaking USA as the largest economy in the world will remain unfulfilled for a very long time. Though it will cause major disruptions around the world this is the time for the western economic powers to do what was done to Japan in 1986-88 and south-east asia in 1997-1998. This may be the last chance to disrupt the chinese aim to dominate the world economic order.

Bade
BRF Oldie
Posts: 7212
Joined: 23 May 2002 11:31
Location: badenberg in US administered part of America

Re: PRC Economy - New Reflections : April 20 2015

Postby Bade » 10 Sep 2015 05:18

This is an opportune time for India, rather than western economic powers to not let China alone dominate the economic order among Asian countries, but with the help of western powers. Next 5 years will give interesting insights to whether this will happen soon enough or not and we will have to wait for another quarter century to see changes in the world order.

Prem
BRF Oldie
Posts: 20913
Joined: 01 Jul 1999 11:31
Location: Weighing and Waiting 8T Yconomy

Re: PRC Economy - New Reflections : April 20 2015

Postby Prem » 10 Sep 2015 06:16

Slowing down of Chinese Fakenumberonomy is much more detrimental for Paki than China itself. If China cannot honor its economic deals with Russia then Paki are way down in priority.Many China watchers in last few years estimated that slow growth rate in China will bring huge internal dissent and PRC will be busy for decade or more to fix its domestic issues and then demographics will kick in to keep it in low /Middle income trap. Russian claim that secret War is being waged by WEST against China may be true after all.

Vipul
BRF Oldie
Posts: 3728
Joined: 15 Jan 2005 03:30

Re: PRC Economy - New Reflections : April 20 2015

Postby Vipul » 10 Sep 2015 07:22

Russia has outlived its utility to china and china has nothing more to gain from it.If anything else Russia needs china more then china needs it. Unless the economy is in a free-fall china will give top priority to investing/setting base in Pakistan.
The Strategic gain of establishing military presence so near the gulf, easy access to Arabian sea & Indian ocean shipping lanes, securing an energy corridor to not having to travel 12,000 extra Kms to transport its oil and bypassing possible Indian control on its movement will make investing in pakistan a priority for china.

disha
BR Mainsite Crew
Posts: 6594
Joined: 03 Dec 2006 04:17
Location: gaganaviharin

Re: PRC Economy - New Reflections : April 20 2015

Postby disha » 10 Sep 2015 07:54

Vipul wrote:Russia has outlived its utility to china and china has nothing more to gain from it.If anything else Russia needs china more then china needs it. Unless the economy is in a free-fall china will give top priority to investing/setting base in Pakistan.
The Strategic gain of establishing military presence so near the gulf, easy access to Arabian sea & Indian ocean shipping lanes, securing an energy corridor to not having to travel 12,000 extra Kms to transport its oil and bypassing possible Indian control on its movement will make investing in pakistan a priority for china.


^^ All well and good., did you count the Bakis in the above mix?

krisna
BRF Oldie
Posts: 5773
Joined: 22 Dec 2008 06:36

Re: PRC Economy - New Reflections : April 20 2015

Postby krisna » 10 Sep 2015 08:02

^^^^
China needs Russia - Chinese easily eneter Siberian territory along its borders. In fact there is rising Chinese numbers.
So in due time there will be expansion of Chinese territory. :mrgreen:

--------------------------------------
about bakis and china angle.
whatever china do to invest in bakis it is and will be a dead investment.
despite land route between bakis and china, it is not enough for huge trsnsport of goods due to the terrain and natural calamities.

OTOH the value is - preventing Indian access to central asia and afghanisthan.
more of this than economy.

china will do everything to keep pok and cok off Indian hands.

panduranghari
BRF Oldie
Posts: 3735
Joined: 11 Aug 2016 06:14

Re: PRC Economy - New Reflections : April 20 2015

Postby panduranghari » 10 Sep 2015 14:19

Vipul wrote:Russia has outlived its utility to china and china has nothing more to gain from it.If anything else Russia needs china more then china needs it. Unless the economy is in a free-fall china will give top priority to investing/setting base in Pakistan.
The Strategic gain of establishing military presence so near the gulf, easy access to Arabian sea & Indian ocean shipping lanes, securing an energy corridor to not having to travel 12,000 extra Kms to transport its oil and bypassing possible Indian control on its movement will make investing in pakistan a priority for china.


Well said. I argued on these lines in The Indo-Russia thread. It was met with the usual condescension. Except for the energy rich situation, Russia finds itself in big trouble. But so does China. Russia cannot deal with India and China at the same time. They will have to pick one and run with them.


Austin
BRF Oldie
Posts: 22058
Joined: 23 Jul 2000 11:31

Re: PRC Economy - New Reflections : April 20 2015

Postby Austin » 10 Sep 2015 15:38



If the Chinese Government fakes it then they can always verify it via MNC sales figure in the country that wont lie , there would be other sources like IMF and WB too.

I remember reading bloomberg cnbc claming a 0.1 % drop in stastics for China GDP was considered terrible and that chinese economydying , I think its usual FUD that keeps coming from time to time.

When Brits economy grow by 0.5 % to 1 % the same MSM would label it as British emerging from recession and all is well and dandy and its the best thing to happen since bread is invented.

Buiter concludes by saying that monetary authorities will have to buckle up in such situation. "If the Fed and the Bank of England hike rates this year or next year they may, if global recession scenario arises, be cutting rates again during the second half of 2016."


Global Recession is fine , what happens to the Bond Market then ?

Suraj
Forum Moderator
Posts: 11990
Joined: 20 Jan 2002 12:31

Re: PRC Economy - New Reflections : April 20 2015

Postby Suraj » 10 Sep 2015 20:30

Considering their growth is primarily investment and not consumption led, consumption figures from anyone are not necessarily a good proxy for GDP growth.

Austin
BRF Oldie
Posts: 22058
Joined: 23 Jul 2000 11:31

Re: PRC Economy - New Reflections : April 20 2015

Postby Austin » 10 Sep 2015 23:00

If manipulating GDP figure is that simple and if chinese can fool every one including UN WB IMF etc then they sure know how to do it and do it consistently.

There is more to Chinese GDP then Shanghai stastics , they are quite a few like Neshant who believe GDP figures of every nation is inflated.

RamaY
BRF Oldie
Posts: 17260
Joined: 10 Aug 2006 21:11
Location: http://bharata-bhuti.blogspot.com/

Re: PRC Economy - New Reflections : April 20 2015

Postby RamaY » 11 Sep 2015 01:57

panduranghari wrote:
Vipul wrote:Russia has outlived its utility to china and china has nothing more to gain from it.If anything else Russia needs china more then china needs it. Unless the economy is in a free-fall china will give top priority to investing/setting base in Pakistan.
The Strategic gain of establishing military presence so near the gulf, easy access to Arabian sea & Indian ocean shipping lanes, securing an energy corridor to not having to travel 12,000 extra Kms to transport its oil and bypassing possible Indian control on its movement will make investing in pakistan a priority for china.


Well said. I argued on these lines in The Indo-Russia thread. It was met with the usual condescension. Except for the energy rich situation, Russia finds itself in big trouble. But so does China. Russia cannot deal with India and China at the same time. They will have to pick one and run with them.


Factually China can't access Arabian Sea without India's involvement in the project. PoK is Indian territory.

KrishnaK
BRFite
Posts: 948
Joined: 29 Mar 2005 23:00

Re: PRC Economy - New Reflections : April 20 2015

Postby KrishnaK » 11 Sep 2015 02:29

Austin wrote:I remember reading bloomberg cnbc claming a 0.1 % drop in stastics for China GDP was considered terrible and that chinese economydying , I think its usual FUD that keeps coming from time to time.

When Brits economy grow by 0.5 % to 1 % the same MSM would label it as British emerging from recession and all is well and dandy and its the best thing to happen since bread is invented.
List of countries by household Do check the relative positions of the UK and China. That might be some part of the reason Bloomberg expects the Chinese to grow a lot faster than the UK. I mean besides being His Masters Voice in the plan to keep China down.

There is more to Chinese GDP then Shanghai stastics , they are quite a few like Neshant who believe GDP figures of every nation is inflated.
Bloomberg is dishing out FUD while Neshant isn't ? :mrgreen:

Shankas
BRFite
Posts: 212
Joined: 13 Dec 2009 19:41
Location: Toronto & Mumbai

Re: PRC Economy - New Reflections : April 20 2015

Postby Shankas » 12 Sep 2015 06:32

How Hacking and Espionage Fuel China’s Growth

Interesting insights into how China blatently and shamlessly steals. Read it all...


Elements of China’s military, state, business, and academia have been interwoven over decades and organized around one goal: stealing secrets from the West.


Organizations throughout China work as “transfer centers” that process stolen information into usable designs. Official programs facilitate the theft.


Just in the last year, he added, his company observed a tenfold increase in the “aggressiveness, depth, and frequency” of insider spy activity and cyberattacks breaching companies.


The idea of official “state-run” companies in China can also be deceiving, since nearly all companies are required to have officials from the CCP assigned to them, according to a client of BLACKOPS Partners Corp. who conducts high-level business in China and spoke under conditions of anonymity.

“Any company that has more than 50 people in it has a government liaison assigned to it,” the source said. “That’s law in China.”


The departments in charge of reverse engineering are officially called China’s National Technology Transfer Centers or National Demonstration Organizations. The book notes these outfits began operating in China in September 2001 and were “established in policy” in December 2007 through the National Technology Transfer Promotion Implementation Plan.

A_Gupta
BRF Oldie
Posts: 10625
Joined: 23 Oct 2001 11:31
Contact:

Re: PRC Economy - New Reflections : April 20 2015

Postby A_Gupta » 12 Sep 2015 06:34


ashi
BRFite
Posts: 456
Joined: 19 Feb 2009 13:30

Re: PRC Economy - New Reflections : April 20 2015

Postby ashi » 12 Sep 2015 20:41

The dangers in Delhi’s dream of overtaking China

India’s overly inflated statistics are breeding a false sense of security

RamaY
BRF Oldie
Posts: 17260
Joined: 10 Aug 2006 21:11
Location: http://bharata-bhuti.blogspot.com/

Re: PRC Economy - New Reflections : April 20 2015

Postby RamaY » 12 Sep 2015 20:50



I strongly support the argument that there are dangers in Delhi's dream (if it exists) of overtaking China, albeit for different reasons!

1/ We don't want India to overtake China in organ trade.
2/ We don't want India to overtake China in oppression of Tibet & Xinjiang
and so on...

subhamoy.das
BRFite
Posts: 1027
Joined: 11 Aug 2016 06:14

Re: PRC Economy - New Reflections : April 20 2015

Postby subhamoy.das » 12 Sep 2015 23:33

Frankly, it is was mind boggling to even dream that Bharat can overtake China, let alone close the gap. Suddenly we are now staring at the fact that the tortoise is actually pulling ahead. Bharta having all the deficiencies, a highly fragmented nation of loosely coupled diverse states, corruption, political instability, way below in HDI, ricketty infrastructure, tough place to do business, how come Bharat is pulling ahead? The only explanation is that either the GDP is fudged or a huge talent pool is being empowered, hungry to innovate and perform, aided by the relatively freedom of a miles-to-go democracy. I would like to bet on the second option. And there is this law of nature at work also. U cannot keep on getting expected changes ( read gains ) all the time. U will get your share of un-expected changes ( read setbacks and losses ). It is time that China start taking on some losses and India some gains!

A_Gupta
BRF Oldie
Posts: 10625
Joined: 23 Oct 2001 11:31
Contact:

Re: PRC Economy - New Reflections : April 20 2015

Postby A_Gupta » 13 Sep 2015 00:29

ashi wrote:The dangers in Delhi’s dream of overtaking China

India’s overly inflated statistics are breeding a false sense of security


India’s statistics are as dubious as those of China. People forget that only last February, India changed the way it calculated GDP, adding more than 2 percentage points to its headline growth rate. On the old measure, India is still limping along at a far from impressive 5 per cent.


What cr*p!

Suraj
Forum Moderator
Posts: 11990
Joined: 20 Jan 2002 12:31

Re: PRC Economy - New Reflections : April 20 2015

Postby Suraj » 13 Sep 2015 01:28

The Financial Times doesn't seem to know what a base year revision is.

panduranghari
BRF Oldie
Posts: 3735
Joined: 11 Aug 2016 06:14

Re: PRC Economy - New Reflections : April 20 2015

Postby panduranghari » 13 Sep 2015 13:12

A_Gupta wrote:
India’s statistics are as dubious as those of China. People forget that only last February, India changed the way it calculated GDP, adding more than 2 percentage points to its headline growth rate. On the old measure, India is still limping along at a far from impressive 5 per cent.


What cr*p!


NOT cr*p.

This post very briefly touches some aspects of the informal sector in India. Since, this sector is not organised strictly on the lines of capitalist systems, theoretical models find it difficult to accommodate them. And owing to the wide cultural and social differences in India, the informal sector is to that extent heterogeneous and differentiated. But, the first step is to identify such a sector and to broadly identify similarities, especially with respect to the production process and the organisation of the production process. It should be noted that the existence of a large ‘unorganised sector’ is not a problem; rather, it is a peculiar characteristic of the Indian Economy. And theory is supposed to be made in accordance with specificities of an economy and not the other way around.

The significance of the unorganized sector is seen when one takes a look at the NSS survey 1999-2000 – around 92% the Indian workforce (around 370 million workers) is employed in the unorganised sector. This is an extremely large section of India. Hence, any macroeconomic analysis (fiscal policy, monetary policy, international trade, etc) ought to look at this section of the Indian society.

The unorganized sector consists of small economic entities which are diverse and differentiated in nature. This sector (a.k.a. informal sector) is larger than the organized sector in terms of the relative share in GDP as well as the workforce. Moreover, the unorganised sector produces about 60 per cent of India’s GDP and also provides livelihood to nearly 93 per cent of the work force. [Kabra 2003] Whereas a report by National Commission for Enterprises in the Unorganised Sector (NCEUS) “estimated the un-organised/informal sector workers as comprising about 86% of work force in the Indian economy in 2004-2005 and informal employment both in the organised and unorganised sector as 92%.” How can any macroeconomic analysis/model leave this sector out?


Now, let us move on to how data is generated for this sector. As the ‘establishments’ in the informal sector are not governed by any legal provisions, no regular data is available such as that of the corporate (organised) sector. The Annual Survey of Industries (ASI) “provides statistical information to assess and evaluate, objectively and realistically, the changes in the growth, composition and structure of organised manufacturing sector comprising activities related to manufacturing processes, repair services, gas and water supply and cold storage” pertaining to the organised sector. [ASI 2005-06] Based on the Population Census (PC), the Economic Census (EC) is prepared which forms the reference for carrying out surveys to capture the informal sector. These surveys are conducted by the NSSO and are called as enterprise surveys.

To sum up, it is evident that the informal sector is an important contributor towards GDP as well as in terms of providing ‘livelihood’ to a large section of the Indian populace. And, we have data sources such as NSSO data which try to capture the process of production in the informal sector and their economic characteristics, which need to be looked at urgently. For any development process that does not explicitly address the informal sector will be blind towards the Indian reality!

References:

Kabra, Kamal Nayan (2003), The Unorganised Sector in India: Some Issues Bearing on the Search For Alternatives, Social Scientist, Vol. 31, No. 11/12 (Nov. – Dec., 2003), pp. 23-46.

ASI 2005-06, Introduction, Accessed at http://www.mospi.nic.in/stat_act_t3.htm on 26th September, 2009.



http://www.alexmthomas.com/2009/09/26/o ... -in-india/

I posit Indian GDP is perhaps at 10 to 12 % per annum if you average it from 1948 to today. And even then I believe we are underestimating the number. FWIW.

A_Gupta
BRF Oldie
Posts: 10625
Joined: 23 Oct 2001 11:31
Contact:

Re: PRC Economy - New Reflections : April 20 2015

Postby A_Gupta » 13 Sep 2015 17:31

panduranghari wrote:
A_Gupta wrote:
"India’s statistics are as dubious as those of China. People forget that only last February, India changed the way it calculated GDP, adding more than 2 percentage points to its headline growth rate. On the old measure, India is still limping along at a far from impressive 5 per cent."

What cr*p!


NOT cr*p.

http://www.alexmthomas.com/2009/09/26/o ... -in-india/

I posit Indian GDP is perhaps at 10 to 12 % per annum if you average it from 1948 to today. And even then I believe we are underestimating the number. FWIW.


That article which is quoted is saying that the Indian aspiration to exceed Chinese growth rates is a delusional and dangerous one, and in that context says, India is cooking the books anyway and nowhere near approaches Chinese growth rates; and I call that cr*p. And you say, not cr*p, India is likely growing faster than China already, and has been doing so from 1948. I am confused.

Gyan
BRFite
Posts: 1183
Joined: 11 Aug 2016 06:14

Re: PRC Economy - New Reflections : April 20 2015

Postby Gyan » 13 Sep 2015 18:07

Can US FED unload some investments to keep dollar low while increasing interest rates?

TSJones
BRF Oldie
Posts: 3022
Joined: 14 Oct 1999 11:31

Re: PRC Economy - New Reflections : April 20 2015

Postby TSJones » 13 Sep 2015 18:30

Gyan wrote:Can US FED unload some investments to keep dollar low while increasing interest rates?


what do you mean by "unload some investments"?

I'm not sure what you mean......

ashi
BRFite
Posts: 456
Joined: 19 Feb 2009 13:30

Re: PRC Economy - New Reflections : April 20 2015

Postby ashi » 14 Sep 2015 04:43

Still made in China

Chinese manufacturing remains second to none


Even though some production is moving to countries nearer its consumers, China remains at the heart of a network known as Factory Asia. It has an excellent infrastructure and an enormous, hard-working and skilled workforce. Though wages are rising, its labour productivity is far higher than that of India, Vietnam and other rivals, and is forecast to keep growing at 6-7% a year to 2025.


ABB’s local engineers developed China Dragon, a robot made specifically for the computer industry, which sells well globally. In many industries China is still learning from the world, say the engineers, but its electronics manufacturing is so advanced that “the world is learning from China.”

panduranghari
BRF Oldie
Posts: 3735
Joined: 11 Aug 2016 06:14

Re: PRC Economy - New Reflections : April 20 2015

Postby panduranghari » 14 Sep 2015 13:53

A_Gupta wrote:
That article which is quoted is saying that the Indian aspiration to exceed Chinese growth rates is a delusional and dangerous one, and in that context says, India is cooking the books anyway and nowhere near approaches Chinese growth rates; and I call that cr*p. And you say, not cr*p, India is likely growing faster than China already, and has been doing so from 1948. I am confused.


You are correct. We got our lines mixed. What you say is correct. However, we are growing faster than what the current models are telling us. And China might be growing faster too. I do not know who is faster. But the current models are inaccurate when they measure our economy. They are western models that fit the western society.

panduranghari
BRF Oldie
Posts: 3735
Joined: 11 Aug 2016 06:14

Re: PRC Economy - New Reflections : April 20 2015

Postby panduranghari » 14 Sep 2015 18:34

Gyan wrote:Can US FED unload some investments to keep dollar low while increasing interest rates?


I think what you are trying to say is can the USG reduce its debt load and decrease its indebtedness to the US fed? In legal terms USG and US Fed are independant entities. However, in 2008 the dilineation was more or less obscured.

The USG is not responsible for dollar strengthening.

The reason why dollar is strengthening is the shortage of dollars overseas. In 2008, 13% of the emerging market debts (dollar denominated) were held by overseas investors. Today its in excess of 30%.

As the bonds mature, the redemptions mean the investors should be given dollars. This is leading to a generalised shortage of dollars overseas.

The Fed does not control the long end of the curve. i.e Fed can raise rates today and affect the money markets today. However, the debts that were denominated to mature in 30 years i.e. 2030 and later, were sold with a expectation that the yeilds would be commensurate to the time taken by the investor to keep the money that long. The people see that 3 year T bond is 2.2% while a 30 year one is 3.6%. People are thus putting money into 3 year bond. And as EM bonds denominated in dollars were giving returns which were easily double of what T bond offers, the investors made a bee line for those bonds. And now the carry is unwinding, there is a shortage of dollars overseas. Even a 5 basis point rise in interest rate i.e0.05% rise means the interest rate payable on the borrowed dollars increases by 146b $.

The Fed could in theory raise rates and let the house of cards fall. Or they could let things be as they are and let the loose monetary policy continue. The problem is as money has got too cheap it has lead to malinvestment. And unless the rates are high enough there wont be any clearing of jetsam and flotsam. Either way they are damned if they do, damned if they dont.

And we are constantly hearing about deflationary pressures. When this is truly the beginning of epic rally is dollar. The dollar is going to rise and the other currencies crash relative to it. We are in uncharted waters. Technically we are hyperinflated, whats left if the palliative printing. Remember Zimbabwe or Germany did not have million dollar notes when hyperinflation started. They came later to keep the system running.

chola
BRF Oldie
Posts: 2857
Joined: 16 Dec 2002 12:31
Location: USA

Re: PRC Economy - New Reflections : April 20 2015

Postby chola » 14 Sep 2015 23:56

panduranghari wrote:
A_Gupta wrote:
That article which is quoted is saying that the Indian aspiration to exceed Chinese growth rates is a delusional and dangerous one, and in that context says, India is cooking the books anyway and nowhere near approaches Chinese growth rates; and I call that cr*p. And you say, not cr*p, India is likely growing faster than China already, and has been doing so from 1948. I am confused.


You are correct. We got our lines mixed. What you say is correct. However, we are growing faster than what the current models are telling us. And China might be growing faster too. I do not know who is faster. But the current models are inaccurate when they measure our economy. They are western models that fit the western society.



Economics is far simpler than people make it out to be than with things like GDP.

The only things that really matters if you get down to brass tacks are sales. If they can buy things, they have money. If they can't, they don't have money. It is that simple.

If you're a MNC (or any small or medium-sized company for that matter), you don't check GDP, you check sales. If the sales are good then you do whatever you can to make sure you have access to that market. If not, then you hope there is future growth but you wouldn't commit the same kind of resources (economic, political capital) you do in an established market with good forward projection.

In 2014, BMW sold 456,000 vehicles in China and just 7,000 in India. This is after faster growth in India than China.

Worse, Tata's JLR division sold 122,010 in chiniland but only 2,913 in India. Tata's corporate review stated the Indian figures represented a 22% growth over 2013. This is an Indian company whose working profit is coming entirely from China. It is not because they didn't want to sell more in India or that Indians dislike Tata makes, it is because the Indian market simply couldn't afford more.

So chasing after the lizard's GDP "growth" is ultimately meaningless. In order for India to affect global markets the way we saw chiniland did during the past several weeks, we have to buy in the same raw numbers they do. It is that simple.

Theo_Fidel
BRF Oldie
Posts: 7613
Joined: 31 Mar 2006 02:15
Location: MO,US,NCJ TN

Re: PRC Economy - New Reflections : April 20 2015

Postby Theo_Fidel » 15 Sep 2015 00:03

Nope it tells you nothing at all. Look at that chart and tell me what it tells you about the last 70 years. Bup kiss....

Image

chola
BRF Oldie
Posts: 2857
Joined: 16 Dec 2002 12:31
Location: USA

Re: PRC Economy - New Reflections : April 20 2015

Postby chola » 15 Sep 2015 00:24

Theo_Fidel wrote:Nope it tells you nothing at all. Look at that chart and tell me what it tells you about the last 70 years. Bup kiss....


It tells me everything. Japan was poor until the 1960 and then its sales shot up. Korea was p1ss poor until the 1980s and then ITS car sales shot up. China went from sh1thole to passing the US as a car market AND overall economy in 2010.

Around 2008, Arvind Subramanian began postulating that China was already the world's largest economy. He made Wall Street billions by forcing the Fortune 500 to look at China as a consumer market the same size as the US.

He is one of the greatest economic minds in the world today and I'm not saying that just because he is the current chief economic advisor of India. I'm saying that because he is a Tamil.


Return to “Technology & Economic Forum”

Who is online

Users browsing this forum: No registered users and 17 guests