PRC Economy - New Reflections : Dec 15 2011

[Singha]

maybe water flooded some of the windowless basements in beijing a lot of poorer people use as apartments.

[KSKumar]

Maybe. But, there were no road cave-ins and complete disruption of civic life over the next couple of days in Hyderabad, as the reports from Beijing indicate.

The areas that were inundated were the ones lying along the storm water canals that were encroached and a few areas that were on the tank beds, again encroachments.

The people in the low lying areas were quickly evacuated in Hyderabad as the waters surged, resulting in saving of many lives (the 11 dead was totally unnecessary - but that is a story for another day). How come this civic response was lacking in Beijing?

[arnab]

Surely Beijing knows the economic party can't last forever
by: Satyajit Das From: The Australian August 01, 2012 12:00AM

IF the old illusion about China was that it was growing strongly then the new illusion is that it has the resources to stimulate its economy to maintain that growth.
Almost all of China's growth since 2008 has come from government-influenced expenditure. The Chinese growth story is reminiscent of the debt-fuelled US economy after the recession of 2001-02. China's headline growth of 8-10 per cent has been driven by new lending averaging about 30-40 per cent of gross domestic product. Up to 25 per cent of these loans may prove to be non-performing, amounting to losses of 6-10 per cent of GDP. If these losses are deducted, then Chinese growth is much lower.

As growth slows, Beijing's options to re-ignite growth are increasingly constrained. The weakness of its major trading partners, the US and Europe, means China cannot rely on its traditional strategy: export demand to drive growth.

Domestically, the side-effects of debt-driven investment are now emerging, as asset bubbles in property and shares burst. Cash flows from many investments will be insufficient to cover all the debt, increasing non-performing loans in the banking system. Resolving the bad debts will absorb a significant portion of Chinese savings and income. China is also left with a legacy of low-return investment, for example in infrastructure, which will create a drag on growth.

Difficulties in rebalancing between consumption and investment also restrict China's options. The conventional view is China will be able to stimulate demand using its large foreign exchange reserves, large domestic savings and low levels of debt.

China's $3.2 trillion in foreign exchange reserves are invested predominately in US dollars, euro and yen, primarily in the form of government bonds and other high-quality securities. These assets have lost value through increasing default risk (as the issuer's ratings are downgraded) and falls in the value of the foreign currency against the renminbi.

Attempts by the Chinese to liquidate reserve assets would result in sharp falls in the value of the securities and a rise in the renminbi against the relevant currencies with large losses. The reserves force China to buy more US dollar, euro and yen securities to defend the value of the existing portfolio, increasing the size of the problem and the risks.

China will ultimately have to write off these reserves, recognising its losses. This equates to a real loss of wealth as China has issued renminbi or government bonds against the value of these investments.

China also has far greater levels of debt than commonly acknowledged, although the bulk is held domestically. The central government has a low level of debt, about $1 trillion (17 per cent of GDP). In addition, state-owned and supported entities have debt totalling $2.6 trillion (42 per cent): local governments about $1.2 trillion (19 per cent); policy banks $800 billion (13 per cent); Ministry of Railways $280bn (5 per cent); and government-backed asset management companies set up to hold non-performing bank loans $300bn (5 per cent). The total debt, about $3.6 trillion, is 59 per cent of GDP.

China's real debt level may be even higher. Victor Shih, an academic at Northwestern University in the US, calculated that local government debt may be $500bn (40 per cent) or larger than the official figure based on analysis of local government documents and ratings agency filings.

In addition, local governments have secured further lending commitments that have not been drawn down. The analysis does not take into account significant off-balance-sheet and unofficial lending activity.

The debt levels are exacerbated by what Michael Pettis in his book The Volatility Machine described as an inverted debt structure, where borrowing levels increase when the economy has problems. Irrespective of current moderate debt levels, when the economy slows, China's debt levels, both direct and contingent, will increase rapidly.

China also has limited flexibility in managing its currency. The renminbi has risen 30 per cent since Beijing adopted a policy of managed appreciation and revalued its dollar peg in July 2005. As growth and exports slow (the trade surplus has fallen to 2 per cent and foreign exchange reserves are falling), China would prefer to let the renminbi fall to cushion the adjustment.

In an US election year, the risk of trade protectionism and the prospect of being referred to the World Trade Organisation for currency manipulation limit China's policy flexibility.

The end of a cycle of debt and investment driven growth is typically disruptive. Japan's experience, which China has drawn on in shaping its economic model, is salutary. Japan grew by 10 per cent in the 1960s, 5 per cent in the 1970s, 4 per cent in the 1980s, and has remained stagnant since, adjusting to the deflation of its debt-fuelled bubble.

China's recent decision to lower its interest rates and ease lending restriction reflects increasing concern about its economic health and policy constraints.

It seems inevitable that China's growth will slow, with only the extent and speed in question. The real question is whether it can manage its transition to lower growth without social upheaval.

The ability of China to support the seriously compromised global economic and financial system is overestimated. At the Group of 20 meeting in Mexico, Chinese leaders repeatedly stressed that they were unable and unwilling to stimulate their economy to the extent being urged by developed nations because of China's own economic constraints.

As an old Chinese proverb, probably apocryphal, holds: "There is no feast that does not come to an end."

[Singha]

in china shipbuilders languish after bubble bursts. typical of factory owners to disappear into ASEAN/aus/canada/london
http://www.latimes.com/business/la-fi-c ... k=lat-pick

The bellwether industry's troubles have their roots in a shipping boom that started a decade ago. Global investors rushed to finance new vessels needed to haul coal and copper toChina'shumming factories and to transport finished electronics, toys and other exports out. China went from producing just over 100 vessels in 2002 to more than 1,000 in 2010, according to Worldyards, a Singaporean-based shipping industry research firm.
..............
Under central government guidance, China poured money into developing its shipbuilding and maritime logistics sectors, deeming them crucial for the nation's development.

China is home to six of the world's 10 busiest ports, including Shanghai, which is No. 1. The state-owned China Ocean Shipping Co. operates the globe's largest fleet of bulk carriers and fifth-largest fleet of container ships. China also dominates the manufacturing of cargo containers.

And it has edged out South Korea to become the world's largest shipbuilder. China commands nearly half the globe's market share for shipbuilding — more than five times the share it held 10 years ago, according to Worldyards.

China said this year that it aimed to nearly double its annual ship sales to $190 billion by 2015. The plan also calls for industrywide consolidation that will benefit big government-owned players such as China State Shipbuilding Corp. and China Shipbuilding Industry Corp., which combined to produce about one-third of the nation's shipping output last year.
................
Small and medium-size shipbuilders such as those that crowd the Yueqing coast have been hit the hardest. Some may have to destroy their ships to sell as scrap. Others have already chosen to get into the logistics business to recoup whatever losses they can. Among them, none has fallen further than Dongfang Shipbuilding Group.

The family-run shipper and manufacturer of mostly chemical tankers for European and Chinese customers was flying high last August. That's when it became the first Chinese shipbuilder to list on the London Stock Exchange's Alternative Investment Market, a venue for smaller companies.

But within months, Dongfang's position deteriorated. Customers canceled $52.6 million in ship orders. An additional $14.5 million in contracts were voided when buyers failed to provide advance payments, according to stock exchange filings.

Dongfang's chief operating officer and the chairman of its board resigned. Its shares in London were suspended in March. In early June, a consortium of banks, including Credit Suisse, seized seven of its vessels because of about $250 million in outstanding debt.

Today, Dongfang's Yueqing shipyard remains largely abandoned. Its three burnt orange gantry cranes stand idle over a pair of unfinished tankers covered in scaffolding. Chen Tongkao, the company's chief executive, hasn't been heard from publicly in months and is suspected of fleeing the country. Dongfang did not respond to repeated requests for comment.

"Bosses are running away," said Zhang Shuguang, a nearby manufacturer of ship rudders and propellers who has seen his orders reduced to a trickle in the last year. "Costs are so high and profits are so little. I don't think anyone wants to be in this business anymore."

[Singha]

fascinating article about the super rich and princes of china - they even hire body doubles to do jailtime!
http://www.slate.com/articles/news_and_ ... picks=true

The top one-tenth of 1 percent in China controls close to half of the country’s riches. The children and relatives of China’s rulers, many of whom grew up together, form a thicket of mutually beneficial relationships, with many able to enrich themselves financially and, if necessary, gain protection from criminal allegations.

[ashi]

Trade Gap Strains India-China Ties

With respect to China, India wants greater access for its "value-added products" and wants China to increase government procurement in sectors such as pharmaceuticals, Mr. Sharma said. India recently submitted a list of 916 goods that it believes China should purchase in larger quantities.

Meanwhile, Chinese goods are flooding Indian markets—from heavy industrial equipment to laptops to cosmetics. In a little more than a decade, China has moved from India's seventh-largest source of imports to its largest source, overtaking the U.S., Germany and Japan, according to Indian government data.

India is taking steps to curb that influx. The cabinet late last month approved a 21% tariff on imports of equipment for big power projects, a move aimed at protecting local manufacturers from Chinese competitors. Such protectionist moves have drawbacks, though. India desperately needs to boost power generation, as the massive outage this week demonstrated, and advanced Chinese technology—from boilers to turbines—is becoming increasingly vital to pull off the biggest power plant projects. China already supplies over 40% of India's power gear.

Louis Kuijs, an economist at the Fung Global Institute in Hong Kong, a think tank, says India's struggle to expand exports to China isn't the result of Chinese market barriers as much as India's inability to produce quality manufactured goods. "China has this overpowering manufacturing sector and it is hard for India to compete," Mr. Kuijs said.

It isn't just the amount of trade, but the composition of it that has India worried. China is exporting a wide variety of sophisticated products, which have higher profit margins and create more jobs at home. It exported $6.7 billion of telecom equipment to India in the fiscal year that ended March 31, 2011, including cordless phones, cellphones and cellular base stations.

The lion's share of India's exports to China, in vivid contrast, are raw materials. The top two products, copper and iron ore, combined for nearly half of India's $19 billion in total exports in the fiscal year that ended March 31, 2011.

Traders who once used to travel across India, sourcing products from small-scale manufacturers, now make regular trips to China to purchase their inventory.

Siddharth Kumar, whose family runs a major wholesale and retail operation in Sadar Bazaar, spends 15 days per month living in China's eastern city of Hangzhou, where he sources all sorts of goods—padlocks, wind-chimes, nail cutters, glassware. The Kumars were pioneers but now others have caught on to the opportunity.

"Whenever I go, I meet at least one hundred people from my own market," Mr. Kumar says. "Anything you can think of comes from China these days—that is how it is."

Indian firms have pressured their government to stem the tide of Chinese goods. Of India's 35 dumping complaints against Chinese firms in the past three years, the government has imposed new duties 22 times to protect Indian goods.

Many economists say protectionist moves by India will likely hurt India much more than China in the long run—depriving Indian firms and consumers of goods they can't find at home.

[shyam]

'US created the monster of China'

[ashi]

In India’s power crisis, China sees a business opportunity

[Suraj]

In India’s power crisis, China sees a business opportunity

Unfortunately, China has already ruined its reputation due to failure prone heavy electrical equipment supplied to the likes of Reliance Power. If anything, the title could be rewritten as 'In Chinese power companies' equipment failures, BHEL sees business opportunity'.

[ashi]

India Inc will never catch up with China

[saip]

India Inc will never catch up with China

Few years ago they said China Inc will never catch up with USA inc.

[ArmenT]

Typhoon Haikui strikes east coast of China

Chinese officials had relocated 374,000 people from Shanghai and 250,000 from Zhejiang, according to state-run newspaper China Daily.

Wonder how this is going to affect factories and manufacturing. This is Zhejiang province, which is one of the top 5 developed provinces of China.

[Rishirishi]

If what you are saying is true, then you will see capital leaving China in large scale. Already the inflation is hitting in. the costs are going up and the RMB cant be devaluated, of political reasons. Hence the factories are loosing the competative edge and a lot of the manufacturing is being moved. Quite a bit of it to places like Vietnam.

The worst thing that could happen is the property buble bursting, the demand from chinas uncompetative factories dropping and capital phlight. All at the same time.

[Kukreja]

Unlivable Cities
China's megalopolises may seem impressive on paper, but they are awful places to live.

http://www.foreignpolicy.com/articles/2 ... s?page=0,0

[Rishirishi]

Unlivable Cities
China's megalopolises may seem impressive on paper, but they are awful places to live.

http://www.foreignpolicy.com/articles/2 ... s?page=0,0

Sir, it depends what you compare it with. Chinease city may be seem horrible compared to Switzerland. But compare it from what it was, or cities like Mumbai or Delhi. There is simply no comparison.

[KLP Dubey]

Sir, it depends what you compare it with. Chinease city may be seem horrible compared to Switzerland. But compare it from what it was, or cities like Mumbai or Delhi. There is simply no comparison.

Did you read the article fully? I am not sure there are any cities in India worse than the "breathe-coal-dust-everyday" cities in China. A newly-married white guy I know decided to take a "backpacking tour" of China and India with his wife (although he could well afford a more "sanitized" experience). He told stories of the **absolutely filthy** food in China, dirty water (even bottled "mineral water" was unreliable), polluted air, etc etc. When he got to India - well, in his words: "it didn't look like much, but we got friendly people, fresh vegetarian food, and relatively clean air and water."

Many "second-tier" Indian cities are still very much livable and haven't gone the Mumbai/Bangalore way.

Namaskar,

KL

[svinayak]

I met a older couple in Indian Embassy and they had similar experience.
Worst food in China train and country side.

[amit]

Unlivable Cities
China's megalopolises may seem impressive on paper, but they are awful places to live.

http://www.foreignpolicy.com/articles/2 ... s?page=0,0

Sir, it depends what you compare it with. Chinease city may be seem horrible compared to Switzerland. But compare it from what it was, or cities like Mumbai or Delhi. There is simply no comparison.

Boss you need to frame the question properly. It's never a monolithic one-to-one comparison when it comes to cities. The experience in any city differs according your economic status and wealth. If you are a rich Chinese businessman with links with the princelings then your experience in Chinese cities, especially the tier one cities, would probably be better than Indian business moguls - heck even Mukesh Ambani gets caught in Mumbai traffic snarls - no wonder he prefers helicopters.

However, if you're a middle income professional with a fixed income or god forbid a member of the underclass proletariat then?

I would say Indian cities are more friendly, especially for the poor. There's no need for ID cards no locked in poor people neighbourhoods and food is cheap if you're willing to buy from the right place - more importantly less contaminated. And you can live anywhere you want to in anyway you want to. Find Mumbai too expensive? Then move to Pune or to some satellite town. No restrictions can come and go as you please and even work in Mumbai. Can Shanghai residents move to the suburbs and still maintain their residential permits under the Hoku system?

When a large portion of your people are either poor or middleclass these things do matter.

The problem is human nature is such that first impression, especially if they are grandiose make the most powerful impressions. The Chinese have understood that and hence their whole approach is to Wow! you with your first glimpse of Shanghai or Beijing from the window of your plane.

Remember that girl in college who was simply gorgeous but was a b!!ch at dates? Aren't you glad you didn't marry her!

Added later: One thing I admire about European cities that I've stayed in is the fact the gap between the quality of life on a day-to-day basis - in terms of the essential services and necessities - between the uber rich and ordinary people is very low. That's what it should be. Unfortunately both Indian as well as Chinese cities come up badly on this count.

[Rishirishi]

I have been to China at least a dozen or so times. Stayed in the best locations to filty industrial towns.

Verdict.
1 The posh areas compare to the best in the world.
2 The secondry locations are very much like small town India (as are the inner locations in the city). China is very nice from the main roads. The first lane of buildings will be painted and the gardens will look maintained. But go behind this, and you are imediately in small town India.

However:
1 There is a massive improvement in all services. Bus, train, main highways etc. There is plenty of electricity and water. There is a proper garbage collection system.

2 There is rapid change and improvements made.

But yes, there is no doubt, the air is polluted.

Sometimes I feel this thread should be callled "bash China" tread. It seems it only serves the purpose of finding what is wrong with China and signs of economical and political colapse. I too think the economy will colapse, but let us not loose the objectivity.

[Suraj]

Rishirishi: That's a point frequently made by Chinese and some Indian posters. Here's a response I made to it some months ago:

Asymmetry of information. Everything that happens in India, good and bad, gets press. The bad gets far more press because sensationalism sells in a free system with a free and competitive press needing to attract advertising dollars. The Chinese system enables it to project itself in the best possible light to the world, controlling information release in a manner no open society can, and project its good side while also controlling the discourse over its bad side. Therefore we will search for the bad and debate it on our terms, not the way China would like to ensure bad things about itself are discussed.

Nothing needs to be done when it comes to good news from China - they make it a point to report it as much as possible, as demonstrated by zlin's text-free pics/links posts. It's the bad that really takes effort to find and analyze.

[Theo_Fidel]

Rishi,

I agree that parts of China appear first world superficially. From what I saw a few years ago the maintenance was quite atrocious however.

Considering the entire land mass of China, what proportion do you think is First world?

[Vayutuvan]

Hot Money Turns Cold On Chinese Prospects

BEIJING—Investors and companies are increasingly pulling money out of China and its currency in a vote of concern over its growth prospects, a development that could hinder Beijing's efforts to spark a turnaround.

New data published by China's central bank Tuesday showed China's banks were net sellers of 3.8 billion yuan ($597 million) in foreign exchange in July, suggesting that China's exporters aren't converting their dollar earnings into yuan and some investors are taking funds out of the country.
...

[rsingh]

Unlivable Cities
China's megalopolises may seem impressive on paper, but they are awful places to live.

http://www.foreignpolicy.com/articles/2 ... s?page=0,0

Sir, it depends what you compare it with. Chinease city may be seem horrible compared to Switzerland. But compare it from what it was, or cities like Mumbai or Delhi. There is simply no comparison.

Sometime i wonder if you were ever in china. Not long ago you claimed that there are no English language schools in mainland Europe

[Theo_Fidel]

BTW what happened to our Panda birathers. It appears someone pulled the plug on their financing. Sad only. They were always good for a laugh.
---------------------------------

China corporate debt now 107% of GDP. Highest in world.

[subhamoy.das]

I am not able to understand one thing. If the Chinese are so good at manufacturing, where they can just get a sample of a complex system, be plane or a missile or a chip, and reverse engineer it, then why are they not able to sell these under their own brand names. Logically, the world should have been flooded with Chinese brands.

[amit]

Here we go again.

[amit]

I have been to China at least a dozen or so times. Stayed in the best locations to filty industrial towns.

Verdict.
1 The posh areas compare to the best in the world.
2 The secondry locations are very much like small town India (as are the inner locations in the city). China is very nice from the main roads. The first lane of buildings will be painted and the gardens will look maintained. But go behind this, and you are imediately in small town India.

However:
1 There is a massive improvement in all services. Bus, train, main highways etc. There is plenty of electricity and water. There is a proper garbage collection system.

2 There is rapid change and improvements made.

But yes, there is no doubt, the air is polluted.

Sometimes I feel this thread should be callled "bash China" tread. It seems it only serves the purpose of finding what is wrong with China and signs of economical and political colapse. I too think the economy will colapse, but let us not loose the objectivity.

Rishi,

Cities are living organisms not static things like say a computer or a plane. Hence when you talk about rapid change you have to add a caveat. At what cost rapid change? Are the changes wrought on Chinese cities, which have made most of them among the most TFTA cities in world in a few decades, done with the consensus of the people who live in these cities? People who live in them make the cities what they are otherwise every city would resemble a ghost town like Ordos.

For example remember the Pudong area in Shanghai? It used to be a sleepy little village/small town in the late eighties and early nineties. Then the CCP decided that they needed to build up the area and thus we had the well documented phase red crosses being marked on the doors of houses which some babu sitting in some remote office had decided to demolish for some bypass or multi-storied monstrosity. Now tell me were the votes and will of the folks who had been living in these houses for generations taken before the bulldozers came? No they were not consulted and so one month after the red crosses were painted at the dead of the night bull dozers came and too bad if these folks hadn't moved out, the buildings were raised to the ground sometimes with their belongings inside. And these folks were "rehabilitated" far away from Pudong - so the original inhabitants of posh Pudong were evicted and a new population filled their places. Instead of old houses you now had shinny building which brings out Wow from visitors such as you.

But spare a thought for the families which were evicted from homes they had been living in for generations. A similar move happened in Beijing when entire Hutong neighbourhoods, some of which have existed continuously for 1,000 years were demolished to build shinny new stadiums and roads in the run up to the Beijing Olympics.

The net result of all this building is a first world look and feel to Beijing and Shanghai but like I said what about the people, especially the poor people?

Contrast that with Mumbai. In some parts of Mumbai real estate prices match those of Manhattan. However, the city also houses Dharavi a place were less well to do folks who come to Mumbai to make their fortunes find shelter and can call home. Yet Dharavi is an eyesore and fhirangi people chi chi the fact that one of Asia's biggest slums exist in what is the financial capital of India.

Yet I feel the residents of Dharavi are more lucky that the erstwhile residents of Pudong. And you know what, almost every redevelopment effort/plan for Dharavi falls or stalls on the same problem, where to give these folks alternative housing. The red crosses don't work in Mumbai and elsewhere in India, if it had, given the value of the real estate on which Dharavi is sitting, it would have become comparable to the Pudong area in Shanghai. The folks of Dharavi have a say in their rehabilitation.

The say that folks of Dharavi and other stakeholders in different cities in India have in the way the city would be developed has resulted in poor infrastructure in Indian cities - and its not my intention to give some romantic justification for that. However, all this leads to the point I made earlier, for poorer, disenfranchised folks, Indian cities are more caring places than the Chinese cities are for the poor. And considering the fact that in both India and China an overwhelming proportion of people are poor, I think that's overall a good thing.

If you per chance see this as some sort of China bashing, well too bad my friend.

[ArmenT]

I am not able to understand one thing. If the Chinese are so good at manufacturing, where they can just get a sample of a complex system, be plane or a missile or a chip, and reverse engineer it, then why are they not able to sell these under their own brand names. Logically, the world should have been flooded with Chinese brands.

Not every modern product can be easily reverse-engineered by simply obtaining a sample, disassembling it, measuring all the parts and reproducing it. You need access to the original blueprints to be able to clone some products. Jet airplanes fall in this category, as do modern chips. Blueprints not only contain part dimensions, but also process instructions like heat treatments and metal treatments used, order of assembly of the parts, tools used for assembly, jigs, fixtures, materials used, assembly instructions, maintenance schedules etc. Without the original blueprints, getting all this information is literally many years of painstaking research.

I asked a prof of aerospace engineering this very question many years ago. His reply went something like, "A modern jet airplane is similar to a human body. If you think about how many hundreds of years people have been studying the human body, how come no one has managed to clone one yet without access to God's blueprints!"

[Austin]

And you know what, almost every redevelopment effort/plan for Dharavi falls or stalls on the same problem, where to give these folks alternative housing. The red crosses don't work in Mumbai and elsewhere in India, if it had, given the value of the real estate on which Dharavi is sitting, it would have become comparable to the Pudong area in Shanghai. The folks of Dharavi have a say in their rehabilitation.

The problem for Dharavi redevelopment is complex . I have been to that place quite a few times in past 20 years and things have changed a lot.

Now you can see many projects by builders or under government slum redevelopment scheme ...but many of the lands also belong to private owners and they are not willing to take the development thing forward for some reason or other.

There have been many cases of slum dwellers selling their flat for good amount they got under subsidy from government and then settling in a near by slum , many owners of slum are just illlegal ones and its not easy to vacate them.

Relocating these folks in parts is really not a problem as they move to transist camp or some alternate location but there are other issues some of which i have mentioned abovet that makes it complicated.

But yes that piece if land is a real gold mine sitting just around BKC if developed well into commercial and residential location it will be a real boon to the city in the long run.

[amit]

Austin,

I agree with what you say. The redevelopment of Dharavi is a complex issue and mostly OT on this thread. However my point in bringing up its example is to contrast the development path with what happened in the Pudong area of Shanghai, a similar piece of "gold mine" real estate.

The point is, whether we like it or not, the residents of a locality in Indian cities have a say in how their area gets developed, in China that doesn't happen, some CCP affiliated babu decides what will happen and that's it.

And that's why I think Indian cities, despite being ugly (in comparison to Chinese cities) and having poor infrastructure are more friendly places for poor people to live in as opposed to TFTA Chinese.

[subhamoy.das]

I am not able to understand one thing. If the Chinese are so good at manufacturing, where they can just get a sample of a complex system, be plane or a missile or a chip, and reverse engineer it, then why are they not able to sell these under their own brand names. Logically, the world should have been flooded with Chinese brands.

Not every modern product can be easily reverse-engineered by simply obtaining a sample, disassembling it, measuring all the parts and reproducing it. You need access to the original blueprints to be able to clone some products. Jet airplanes fall in this category, as do modern chips. Blueprints not only contain part dimensions, but also process instructions like heat treatments and metal treatments used, order of assembly of the parts, tools used for assembly, jigs, fixtures, materials used, assembly instructions, maintenance schedules etc. Without the original blueprints, getting all this information is literally many years of painstaking research.

I asked a prof of aerospace engineering this very question many years ago. His reply went something like, "A modern jet airplane is similar to a human body. If you think about how many hundreds of years people have been studying the human body, how come no one has managed to clone one yet without access to God's blueprints!"

I have passed through the finishing line of one of those II? engineering school in India and have spent close to 2.5 decades in the IT industry across the world. I am not boasting my resume here but just setting the context. I do completely understand that specs are a must to reverse engineer most modern products. What does not quite fit this theory is the fact that the CHINESE market is flooded with fakes of modern products which are supposed to be better than the original. So my observation was more from that angle that if the CHINESE do have access to the specs and are able to build things from the specs then what is preventing them to launch these products in other markets? If SAMSUNG can do a GALAXY on IPHONE then what is PREVENTING CHINA. Some thing is missing here.

[Rishirishi]

I have been to China at least a dozen or so times. Stayed in the best locations to filty industrial towns.

Verdict.
1 The posh areas compare to the best in the world.
2 The secondry locations are very much like small town India (as are the inner locations in the city). China is very nice from the main roads. The first lane of buildings will be painted and the gardens will look maintained. But go behind this, and you are imediately in small town India.

However:
1 There is a massive improvement in all services. Bus, train, main highways etc. There is plenty of electricity and water. There is a proper garbage collection system.

2 There is rapid change and improvements made.

But yes, there is no doubt, the air is polluted.

Sometimes I feel this thread should be callled "bash China" tread. It seems it only serves the purpose of finding what is wrong with China and signs of economical and political colapse. I too think the economy will colapse, but let us not loose the objectivity.

Rishi,

Cities are living organisms not static things like say a computer or a plane. Hence when you talk about rapid change you have to add a caveat. At what cost rapid change? Are the changes wrought on Chinese cities, which have made most of them among the most TFTA cities in world in a few decades, done with the consensus of the people who live in these cities? People who live in them make the cities what they are otherwise every city would resemble a ghost town like Ordos.

For example remember the Pudong area in Shanghai? It used to be a sleepy little village/small town in the late eighties and early nineties. Then the CCP decided that they needed to build up the area and thus we had the well documented phase red crosses being marked on the doors of houses which some babu sitting in some remote office had decided to demolish for some bypass or multi-storied monstrosity. Now tell me were the votes and will of the folks who had been living in these houses for generations taken before the bulldozers came? No they were not consulted and so one month after the red crosses were painted at the dead of the night bull dozers came and too bad if these folks hadn't moved out, the buildings were raised to the ground sometimes with their belongings inside. And these folks were "rehabilitated" far away from Pudong - so the original inhabitants of posh Pudong were evicted and a new population filled their places. Instead of old houses you now had shinny building which brings out Wow from visitors such as you.

But spare a thought for the families which were evicted from homes they had been living in for generations. A similar move happened in Beijing when entire Hutong neighbourhoods, some of which have existed continuously for 1,000 years were demolished to build shinny new stadiums and roads in the run up to the Beijing Olympics.

The net result of all this building is a first world look and feel to Beijing and Shanghai but like I said what about the people, especially the poor people?

Contrast that with Mumbai. In some parts of Mumbai real estate prices match those of Manhattan. However, the city also houses Dharavi a place were less well to do folks who come to Mumbai to make their fortunes find shelter and can call home. Yet Dharavi is an eyesore and fhirangi people chi chi the fact that one of Asia's biggest slums exist in what is the financial capital of India.

Yet I feel the residents of Dharavi are more lucky that the erstwhile residents of Pudong. And you know what, almost every redevelopment effort/plan for Dharavi falls or stalls on the same problem, where to give these folks alternative housing. The red crosses don't work in Mumbai and elsewhere in India, if it had, given the value of the real estate on which Dharavi is sitting, it would have become comparable to the Pudong area in Shanghai. The folks of Dharavi have a say in their rehabilitation.

The say that folks of Dharavi and other stakeholders in different cities in India have in the way the city would be developed has resulted in poor infrastructure in Indian cities - and its not my intention to give some romantic justification for that. However, all this leads to the point I made earlier, for poorer, disenfranchised folks, Indian cities are more caring places than the Chinese cities are for the poor. And considering the fact that in both India and China an overwhelming proportion of people are poor, I think that's overall a good thing.

If you per chance see this as some sort of China bashing, well too bad my friend.

Dude, we can rationalize what ever but the hard fact remains. Mumbai is a "septic tank" as described by a business persons wife. Chinease cities are much better managed and the people living there have access to basic facilities. Transportation is much better, both public and private. Housing is in oversupply, office space and industrial areas are available at a fair price. There is less petty corruption.

It is high time the Indians start to look them self in the mirror and admit how bad things are. India could have been far ahead of China, and it will have no problem catching up. India just needs a fair legal system a working administration. Sadly Indians are fooled into believing that they have democracy. Actually Indians usually have the choice of electing a thief, who will loot as much as possible while he can. Modi, Nitish Kumar, and a few other remain acceptions.

[Theo_Fidel]

So my observation was more from that angle that if the CHINESE do have access to the specs and are able to build things from the specs then what is preventing them to launch these products in other markets? If SAMSUNG can do a GALAXY on IPHONE then what is PREVENTING CHINA. Some thing is missing here.

I think the mistake you are making is in thinking all those look alike products are by a single manufacturer. It is not unusual to have 200 different companies cloning the same product. every Chinese company that tries to brand itself is immediately overwhelmed by the clone shops. Branding is only possible with intellectual protection. Forget products even Ph.D thesis's are being cloned and are overwhelming the university system.

[Theo_Fidel]

Rishi,

What portion of China do you think is First world. From what I saw in Wuhan I doubt it is more than 5%.

[vina]

Chinese Cars in Australia Recalled Over Asbestos

Oh well. That deadly lung cancer causing substance is found in Chinese cars, cloned or otherwise. Why in India, none of the vehicles contain asbestos and even stuff like brake pads have been asbestos free for a long time now over here..

Another great example of Chinese "plogress" of pushing dangerous toxic substandard junk at "CHINA pLICE"

[amit]

Dude, we can rationalize what ever but the hard fact remains. Mumbai is a "septic tank" as described by a business persons wife. Chinease cities are much better managed and the people living there have access to basic facilities. Transportation is much better, both public and private. Housing is in oversupply, office space and industrial areas are available at a fair price. There is less petty corruption.

It is high time the Indians start to look them self in the mirror and admit how bad things are. India could have been far ahead of China, and it will have no problem catching up. India just needs a fair legal system a working administration. Sadly Indians are fooled into believing that they have democracy. Actually Indians usually have the choice of electing a thief, who will loot as much as possible while he can. Modi, Nitish Kumar, and a few other remain acceptions.

Bhai saab,

Crapping about India in public while praising the heights of achievement of the CCP in China may make you feel good but amounts to zilch unless you can suggest how things can be remedied in India. Of course I'm presuming you're one of those Indians whom, as you've advised, have looked into the mirror and had their tubelights turned on.

When you say something like this: "India could have been far ahead of Chine and it will have no problem catching up".

You should be more specific on which areas India "could have been far ahead" and why you think "it will have no problem catching up". Unless you do that it just sounds like a huge motherhood statement.

I guess you should understand you're not the only one who's been to China. You should also understand there are folks who have devoted a considerable amount of both free time as well as professional time to analyse the phenomenon of China and the lessons that India can learn from that.

PS: I see you did not even understand the point I was making. This time (and for the last time) let me crunch it and put it in bold: The poor in Indian cities are better off than the poor in Chinese cities because they have a say in their future and possible development of their localities (the Pudong vs Dharavi comparison). So when a majority of your countrymen are poor, rather than uber rich, cities that are more poor-friendly, despite being ugly and infrastructure-wise underdeveloped, are better places.

[amit]

Rishi,

What portion of China do you think is First world. From what I saw in Wuhan I doubt it is more than 5%.

Theo,

Good question to ask. I would add: What percent of the Chinese population do you think have the purchasing power to partake these "First world" facilities?

[amit]

What does not quite fit this theory is the fact that the CHINESE market is flooded with fakes of modern products which are supposed to be better than the original. So my observation was more from that angle that if the CHINESE do have access to the specs and are able to build things from the specs then what is preventing them to launch these products in other markets? If SAMSUNG can do a GALAXY on IPHONE then what is PREVENTING CHINA. Some thing is missing here.

Boss,

What exactly do you mean "better than the original"? Let me give you one example. China has a huge production market of Swiss watch fakes. Heck there's even grades of fakes for the same watch brand at different price points. The highest level is the so-called "authentic fakes". So it's possible to have, say a Rolex Datona "authentic fake" which at first glance looks (to non-experts) an exact copy of the original maal. (Trust me I know, because I have this and other "authentic fakes" ). However, try going swimming with a authentic fake Daytona - trust me the end result is not going to please you. Again I speak from experience! Bottomline, Chinese fakes may look like the original maal but looks are not everything. Also remember its is relatively much easier to reproduce a watch at fake prices. It's less possible to do that with something as complex as a smartphone. In such gadgets a lot depends on how good and streamlined your supply chain is. Apple is what it is and give you products like they do because not only is it an innovative company, it also has what is probably the world best supply chain. So a Chinese company may be able to build a phone which externally looks like the iPhone but ask then to produce 30 million of these phones every quarter - without any significant quality issues - and then see what happens.

And yes your comment about Samsung can do a Galaxy on iPhone, is not exactly clear. Sounds almost like a comment from an Apple fanboy. :-0 Anyway OT for this thread.

[subhamoy.das]

So my observation was more from that angle that if the CHINESE do have access to the specs and are able to build things from the specs then what is preventing them to launch these products in other markets? If SAMSUNG can do a GALAXY on IPHONE then what is PREVENTING CHINA. Some thing is missing here.

I think the mistake you are making is in thinking all those look alike products are by a single manufacturer. It is not unusual to have 200 different companies cloning the same product. every Chinese company that tries to brand itself is immediately overwhelmed by the clone shops. Branding is only possible with intellectual protection. Forget products even Ph.D thesis's are being cloned and are overwhelming the university system.

So the Chinese actually created the CLONING frankestine and it is now out there to devour the master. It will be nice to watch out for a Huewie clone or a TCL clone or a Alibaba clone !! I can surely see patterns of this kind of frankestines in my local state ( Bengal ) run by autocrats and in the ruling DYNASTY party and how these frankestines eventually killed the master! Democracy is the root cause why Samsung can do a IPHONE or a Taiwan company can have a brand value but not a Chinese or a USSR or a North Korean company.

On a serious note: Do we know how many Chinese companies are there in the top 100 global brands ( not the fortune 500 or 1000 list ). I looked at such a list from 2009 and a quick glance did not reveal a single one but I could be wrong. It will also be interesting to see what percentage of the top 100 local brands of China are CHINESE.

[Virupaksha]

It will be tightly regulated as well. Wherever the communist elites have their hand in, I doubt that they will allow mango chinese to steal the pie.

All the cloners also need the blessings from the communist gods.