PRC Economy - New Reflections : Dec 15 2011

Theo_Fidel · Post by **Theo_Fidel** » 26 Dec 2012 12:47

Indian household sector savings are 22%-26% of GDP.
Panda Household Savings is 14%-16% of GDP.

So it is not even a fair fight.

The difference comes in government & corporate savings.

As Suraj has pointed out, Panda SOE, etc, kick out the farmer, repurpose the land, lease at exorbitant prices. This money comes back to the government and SOE's as savings.

The consumer spending data too is suspect, as I argued many times with Chola. Their consumer number includes the industrial/corporate purchase programs. The real number to focus on is private consumption. Here the number is 30%-32% of GDP and declining. This is the percentage paid out as wages. India's and most of the west is typically 60%-70%. Meaning more of income goes to wages and raising living standards.

It is a staggering direct confiscation of earnings to fund Panda overlord Megalomania. A monstrous in-direct tax. The question is if it is stable long run.

I have pointed out many times before that that the income levels are not there to support the maintenance effort needed to support those $300,000 to $400,000 type apartments. Not even close. Even the USA would not be able to sustain the maintenance effort necessary. It is likely much of this infrastructure will quickly start crumbling.
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The question of how they eat is simple, they do not. Most of the malls are empty and stores are abandoned. Both parents work and they have 1 Child who is invariably parked out in the countryside with Grandpa and Grandma. Even after that most are stuck with holes in the walls and are forced to live in 'traditional' housing, read as urban slums. There is an immense destitute class still out there in China. Roughly 300 million to 400 million strong who speak no English and barely scrape by. The Panda overlords have essentially scrubbed them out but every picture shows them. Just behind that 12' wall...... ..live the eaters of bitter tears...

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There is top 100-200 million class that has done very well. This is the group who go to USA and show of their money. Most Chinese do not live like that.

For instance there are 86 Million private cars in China. Considering most of those families have 2+ cars the actual numbers owning cars to total population is low.
http://chinaautoweb.com/2012/07/chinese ... 4-million/

At this stage of its development the vast majority of Chinese should be able to afford a car, yet they can not.

member_20292 · Post by **member_20292** » 26 Dec 2012 14:46

Indian household sector savings are 22%-26% of GDP.
Panda Household Savings is 14%-16% of GDP.
So it is not even a fair fight.

Any sources that show this please? As far as I know, both of them were in the 30% range.

The difference comes in government & corporate savings.

As Suraj has pointed out, Panda SOE, etc, kick out the farmer, repurpose the land, lease at exorbitant prices. This money comes back to the government and SOE's as savings.

This I agree with.

The consumer spending data too is suspect, as I argued many times with Chola. Their consumer number includes the industrial/corporate purchase programs. The real number to focus on is private consumption. Here the number is 30%-32% of GDP and declining. This is the percentage paid out as wages. India's and most of the west is typically 60%-70%. Meaning more of income goes to wages and raising living standards.

This means, that Panda consumers are worth 30% of a 10 trillion PPP adjusted economy.
This means they consumer 3 trillion worth of goods and services every year.

This also means that Desi consumers are worth 60% of a 4 trillion USD (PPP) economy, this means 2.4 trillion $ must be spent every year in goods and services.

But mostly, I find that the Chinese produce and consume many times more than the Indians.
All the stats you will find on wikipedia show that;
a. Apple and GMs largest markets are China. Not India. And this is not due to the love of Buicks either; the Maruti Suzuki of China is Volkswagen and not GM/Buick/Chevy.
b. Of course, 6 times more car production, many times more Prada , Gucci etc. sales. What fuels these CONSUMER goods sales? It cant be some SOE buying up Gucci and Prada for its own purposes, can it? Even though it might be plausible that SOEs are buying huge fleets of GM cars to service their own employees.

It just MIGHT be , that the biggest SOE there is, the CPC, with some 80 million members, and some 50 million Mandarin officials who rule China, may be solidly corrupt, and corrupt enough that they fuel the large amounts of consumer spending on luxury cars, purses watches and other sundries, as well as contribute to the monstrous emigration plus flight of capital of the wealthy chinese that we have read about recently.

I have pointed out many times before that that the income levels are not there to support the maintenance effort needed to support those $300,000 to $400,000 type apartments. Not even close. Even the USA would not be able to sustain the maintenance effort necessary. It is likely much of this infrastructure will quickly start crumbling.
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No, sirji, that is not a real 300000 USD apartment. That is just the inflated market price of that thing. In reality it would have been built for 50000 USD and its maintenance would be 500 USD per annum.

The question of how they eat is simple, they do not. Most of the malls are empty and stores are abandoned. Both parents work and they have 1 Child who is invariably parked out in the countryside with Grandpa and Grandma. Even after that most are stuck with holes in the walls and are forced to live in 'traditional' housing, read as urban slums. There is an immense destitute class still out there in China. Roughly 300 million to 400 million strong who speak no English and barely scrape by. The Panda overlords have essentially scrubbed them out but every picture shows them. Just behind that 12' wall...... ..live the eaters of bitter tears...

Same in India too. Drivers, maid servants etc. work in the city to support families in the villages.

But yes, poor Indians are not AS raped by the Indian govt. as the Chinese is.

There is top 100-200 million class that has done very well. This is the group who go to USA and show of their money. Most Chinese do not live like that.

For instance there are 86 Million private cars in China. Considering most of those families have 2+ cars the actual numbers owning cars to total population is low.
http://chinaautoweb.com/2012/07/chinese ... 4-million/

At this stage of its development the vast majority of Chinese should be able to afford a car, yet they can not.

[/quote]

True that.

subhamoy.das · Post by **subhamoy.das** » 26 Dec 2012 16:10

The conclusion we can draw, looking at these data points, is surely there is less inclusive distribution of consumption and that can be confidently be attached to lack of democratic system. China is supposed to be doing good in HDI but I would NOW take that with a pinch of salt. The credit card model is a perfect example of their consumption pattern. Per card transaction volume in China was multiples of 100s of Indian one but the number of folks with CC was half that of India. So basically a much smaller section of the population is hoarding the consumption of the entire country and giving an impression that ALL IS WELL. It is this skewed consumption pattern that top Chinese leadership was talking about - read corruption - which has the potential to send the party to the GUILLETIN.

Theo_Fidel · Post by **Theo_Fidel** » 26 Dec 2012 18:16

mahadevbhu wrote:Any sources that show this please? As far as I know, both of them were in the 30% range.

It is posted earlier in this very thread by me. You can look at India's on RBI site.
The thing to keep in mind is that the Panda overlords load pension schemes into savings while India does not. This should be worth 6% or so of GDP. Even without that Chinese household savings are less than Indian ones.

The conclusion Chola & I came to was that the Panda overlords chose winners and losers. The system chose cars and washing machines and A/C's as winners and dutifully the banks, SOE's and proles lined up to make it happen. It does not mean that all of them can now miraculously afford to own/insure/maintain $20,000+ cars.

mahadevbhu wrote:No, sirji, that is not a real 300000 USD apartment. That is just the inflated market price of that thing. In reality it would have been built for 50000 USD and its maintenance would be 500 USD per annum.

That is an interesting argument, but not valid. You must keep in mind that the inflated value has paid for all that cripplingly expensive infrastructure. Roads, waterlines, railways bridges, etc. This is not unusual as 60%+ cost of such urban apartments lies outside the apartment itself. Even if the value of the apartment declines the cost maintaining all that super expensive infrastructure does not. No they do not have income to pay for these games. As I said even the USA would struggle with its $45,000+ income level.

This is what turned Mumbai into such a hellhole with rent control. The money to maintain the infrastructure was no longer there.

P.S. there is no need to bring the equal-equal with India over the urban poor. The systems producing poor in the two countries are completely different and should not been put in the same sentence.

member_20292 · Post by **member_20292** » 26 Dec 2012 23:31

^^^^
1. So you're saying that the apartment choona, deewar, sariya labour might have been for 50,000 USD but the service roads and maglev leading to the apartment would add another 100000 to the implied cost of it, thus making it too expensive? This is apart from the inflation in price due to high demand.

2. How does one choose winners and losers in an economic system, and how does the support infrastructure change. For example, how does one choose Apple as the winner in the smartphone category in an entire country. [granted they have the incentive to do so, as most of it is made by foxconn in China]

3. Deal is this. The top Chinese CPC are very rich. I just read in the Chinese equivalent of the daily mirror, that the actress Zhang Ziyi of Crouching Tiger fame was charging CPC officials, 1 million dollars per night , for her services. The whoring did not raise too many eyebrows in China, but the fact that their were clientele willing to pay 1 million $ did. Frankly, WOW!

Rishirishi · Post by **Rishirishi** » 27 Dec 2012 07:45

1
Why has china got such a large middle class, sending kids to us universities, purchasing jaguars etc?
Simple reason; look in any corner of the world from a village in Bihar, mall in New York or the jungles in Africa. Most of the products will say "Made in China". When you produce that much you are bound to get some millionaires (factory owners, middle men, sub contractors etc. Now add the massive spending that the Chinese govt. is making). Hence you get a sizable population who earns top dollars.

The problem, wealth is build on some 50-80 million people living and working in slave like conditions.Any growth that takes place will divert away people, which is happening.

2
A sizable part of the economy is derived from construction, with is on steroids. Soner or later this will also end.

3
The Communist party knows very well that it has to deliver fast growth or face a massive revolt. People have grown used to growth and improvements. Recession is unknown to China. No one has ever experienced it. We all know a correction usually will follow growth.

To compete with China, India needs to address 2 main issues.
1
It has to build infrastructure. One way could be to tax the property value when infrastructure causes it. Example: If there is a metro line build, all property sale should attract a property tax, that contributes towards the metro. (just fair, as the infra structure spending has cased the value to increase). Build a 6 lane highway to Amritsar, but demand that all sale of plots with access to the road pay towards the construction.

2
A strong legal and regulatory regime. So that businesses can invest and grown in a predictable market condition.

India has several crucial advantages over China.
1) English is universally spoken, which is a great advantage.
2) It has an established legal system based on sound principles that are tried and tested. Just fund the courts better.
3) It has democracy, which reduces risk of revolt and revolutions.
4) India has many large business houses and a developed commerce system.

India has all it needs to become a developed nation. If only some of the gross mismanagement could be reduced.

sha · Post by **sha** » 27 Dec 2012 10:16

Deleted

vina · Post by **vina** » 27 Dec 2012 10:49

sha wrote:Some India people live in a world of their own making. Don't bother them. That makes their mind peaceful, though puzzling sometimes. Just take it as jokes.

Indeed. This might not be available to the CHinese behind the bamboo curtain. But look at how just the top 8 "Immortals" of the Chinese Party are Raping you, add to that the hundreds of underlings in the chain of command and their 2nd and 3rd gen. Not a pretty picture.

Here. Heir's of Mao's Communists rise to new capitalist Nobility
Think of it, while you are shilling for your 50 cents here and posting nonsensical posts, your overlords are buying million dollar homes in California, Vancouver and Australia and acquiring foreign passports and creating an exit route with a lot of looted wealth.

member_20292 · Post by **member_20292** » 27 Dec 2012 11:17

Thats true. And I believe that a lot of what is being said about the descendants of the Immortal 8, would be true of India too. Lots of politicians money in Swiss banks.

At the same time, there is a good atmosphere in the air in India, pollution is bearable, the economy is growing, and the government seems to be self correcting.

So, all in all, we seem to have a much healthier system than China does, and I believe, that in the long run, we shall have it reflected in the gdp per capita , standard of living indices as well.

Sri · Post by **Sri** » 27 Dec 2012 13:13

I think China is a great implementer. History is testimony for that. They take BIG decisions / chances and go about doing things with full gusto. For centuries they have seen this happening. I think Confucius philosophy is the reason for that (piety?). Also may be because of the quality of land and weather which has ingrained a very short time prospective on life (insecurity?). They didn't have the luxury of time to ponder over human values and rights. The name of the game was survival. look at the Anthropology of the Chinese. every 2nd or 3rd generation faced existential crisis... for centuries... Famine, floods and what not. On top of it really barbaric wars... Which caused annihilation of cities and sects at scale that will dwarf Hitler or any other western / indic menace many times over...

We Indic were saved by Vedic literature and philosophy. Indian armies to a large part didn't sack cities or merchant class our land is fertile and weather largely predictable. So unlike the Chinese we had the luxury of developing principles and ideas that last centuries. Which bear fruit over a period of time without rocking the boat.

Now consider everything the Chinese do in this light. They want good economy NOW. In Chinese mind the time for action is NOW. For that they have to beg, borrow or steal they would do that. Everything that happens in China good or bad has an inbuilt expiry. Chinese think of us as stupids by not making the most of what world has to offer today. They feel they are busy shoring up resources and wealth and Indian are sucking the thumb looking on ('very lazy' in words of a Chinese academic I met)

So it's pointless for us to debate on long term situation of Land, banks and companies in China. They don't care. They just want to work hard and by hook or by crook break the cycle of poverty... NOW

member_20292 · Post by **member_20292** » 27 Dec 2012 15:33

^^^ that is actually quite a perceptive post, regardless of the grammar. kudos.

sha · Post by **sha** » 28 Dec 2012 10:27

vina wrote:
sha wrote:Some India people live in a world of their own making. Don't bother them. That makes their mind peaceful, though puzzling sometimes. Just take it as jokes.
Indeed. This might not be available to the CHinese behind the bamboo curtain. But look at how just the top 8 "Immortals" of the Chinese Party are Raping you, add to that the hundreds of underlings in the chain of command and their 2nd and 3rd gen. Not a pretty picture.

Here. Heir's of Mao's Communists rise to new capitalist Nobility
Think of it, while you are shilling for your 50 cents here and posting nonsensical posts, your overlords are buying million dollar homes in California, Vancouver and Australia and acquiring foreign passports and creating an exit route with a lot of looted wealth.

Vina, I'm very grateful to your guys because I had a good time reading your posts. They refelected a mix of complacency, insularity, preconception and retard. Very funny, indded.

If you feel offended, please pardon me. As a matter of fact, I sincerely hope your guys will keep the way as you did.

JE Menon · Post by **JE Menon** » 28 Dec 2012 14:05

Sure sha. Im sure we will keep on as is. Clearly you, on the other hand, are plugged in, not just to the Chinese mindset but to the Indian one too. I hope there are hundreds of millions like you.

vishvak · Post by **vishvak** » 28 Dec 2012 14:21

Sha, you gotta be kidding. Instead of throwing light to information that indicates otherwise, you are changing goalposts.

Why not clarify that Chinese political situation is extremely ethical and transparent. That would invite appreciation, as against criticism now, for sure.

James B · Post by **James B** » 30 Dec 2012 20:21

Gas leaks after a sinkhole nearly 10 meters wide broke three gas pipes and a water pipe in Taiyuan, capital of Shanxi province, on Wednesday.

Arunkumar · Post by **Arunkumar** » 31 Dec 2012 00:01

From the top, the sink-hole resembles the shape of err....Derriere. Funny its caused by natural gas leak in the vicinity of a water pipe.

James B · Post by **James B** » 31 Dec 2012 01:21

In recent times there are multiple sinkholes like above in supel-dupel China

http://english.caixin.com/2012-08-31/100431609.html

ArmenT · Post by **ArmenT** » 31 Dec 2012 11:21

What causes such large sinkholes? Bad water drainage or leaky water pipes perhaps? Can some civil engineer explain please.

Arunkumar · Post by **Arunkumar** » 31 Dec 2012 13:29

I m un-civil engineer

, but i think these occur at places where underground leaking water pipes are present. Water percolates the mud and makes it soft causing the road above it to collapse.

krishnan · Post by **krishnan** » 31 Dec 2012 15:04

BTW why are the pipes so close to the ground, they are usual laid well below ,

VikramS · Post by **VikramS** » 01 Jan 2013 03:00

arvin wrote:I m un-civil engineer , but i think these occur at places where underground leaking water pipes are present. Water percolates the mud and makes it soft causing the road above it to collapse..

It is more like the rocks below are water soluble so the leaking water literally dissolves the ground underneath leading to the collapse.

These are common all over the world but typically after many years or decades of use

Don · Post by **Don** » 01 Jan 2013 06:19

http://ca.finance.yahoo.com/news/canadi ... nance.html

Canadian dollar stronger as China helps offset "cliff" worry
By Alastair Sharp | Reuters – 8 hours ago

TORONTO (Reuters) - The Canadian dollar strengthened slightly on Monday, with healthy Chinese manufacturing data taking some sting out of worries about the United States as politicians there hold last-minute talks to avoid a fiscal crunch of spending cuts and tax hikes.

A survey of China's vast manufacturing sector showed it had grown in December at its fastest pace since May 2011, pointing to a possible rebound after its slowest year of expansion since 1999. China's appetite for raw materials provides a boost to Canadian resource companies.

But Canada still depends most on the United States for its exports, meaning that the risk of a politically induced recession there weighs heavily on the currency.

"The No. 1 hurdle that investors are trying to get over is the fiscal cliff situation in the U.S.," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

U.S. politicians have yet to reach a deal to avert the "fiscal cliff" and have only a few hours of legislative time scheduled in which to act if an agreement materializes.

"Depending on how we clear that hurdle, successfully or not, that should set the tone for growth currencies and overall risk sentiment," Manimbo added.

At 9:47 a.m. (1447 GMT) the Canadian dollar was trading at C$0.9953 to the greenback, or $1.0047, compared with C$0.9965, or $1.0035, at Friday's North American close.

The Canadian dollar is likely to trade between C$0.9886 and C$0.9990, near its 100- and 200-day moving averages, Scotiabank analysts wrote in a note to clients.

The currency is in track to record a 2.1 percent gain against the U.S. currency.

The two-year bond was off 3 Canadian cents to yield 1.140 percent, while the benchmark 10-year bond fell 27 Canadian cents to yield 1.798 percent.

(Reporting by Alastair Sharp; Editing by Lisa Von Ahn)

Bade · Post by **Bade** » 01 Jan 2013 11:04

VikramS wrote:
arvin wrote:I m un-civil engineer , but i think these occur at places where underground leaking water pipes are present. Water percolates the mud and makes it soft causing the road above it to collapse..
It is more like the rocks below are water soluble so the leaking water literally dissolves the ground underneath leading to the collapse.

These are common all over the world but typically after many years or decades of use

Yes, it looks like a case of high pressure water pipes bursting underneath due to their poor quality. The broken pipes are visible in the pictures.

Theo_Fidel · Post by **Theo_Fidel** » 01 Jan 2013 17:24

If they are having a rash of these, it is more likely a case of inadequate compaction with very poor testing of materials/soil and quality control. The inadequate compaction causes the soil to compact under traffic putting pressure on the pipes that then leads to leaks and sub-soil erosion. A properly compacted 95% proctor density 3' sub-grade with proper bridging fill should subside less than 2 mm per year. Looking at the dimples visible in the asphalt it is obvious subsidence much much higher than this is going on. It should be noted that this happened at an intersection. This has been a recurring problem in Panda wonderland I have pointed out before. In their haste to build the Panda ding-dongs are cutting all the necessary engineering procedures and safe guards as optional. One way or the other they will pay for it. One hopes that they finally hire a good soils engineer to do a proper failure analysis and learn some lessons, rather than simply filling it in and pretending it never happened as seems to be Panda SOP.

chola · Post by **chola** » 01 Jan 2013 22:32

Theo_Fidel wrote:
The consumer spending data too is suspect, as I argued many times with Chola. Their consumer number includes the industrial/corporate purchase programs.

Theoji, I seriously don't think you have any idea what you are arguing for or against. Sales figures from the MNCs are the best numbers you can get for any economy. There are no mid levels babus from the chini, Indian or US for that matter putting into their greasy fingers.

Either an economy can support 2.5 million car sales for GM or it can't. It can either provide the revenue stream or it can't. Everything is money and that is the way things should be.

Theoji, if we follow your line of reasoning every time we look at chini sales figures then we would be no better than the pukes who cannot look at any figure from India with an unfiltered eye.

I can tell you that we are at the point where not only do the chinis hold the Fortune 500's balls as their main manufacturing site but also as their largest market. There are many desis in the US corporate landscape. We outnumber the chinis and chini-americans by 10 to 1 and we are not shy on pushing the virtues of Bharat.

But we are not pakis who will ignore numbers. The fact is we are on the cusp of the chinis overtaking the US domestic market in everything, not just cars. Every last one of the US, Japanese and European MNC worth its salt is already "pivoting" towards this eventuality. That includes the best Indian ones as well. Tata is pushing Landrover and Jaguar in chiniland instead of India because it can generate sales there. It is building plants there instead of India because it can generate sales there.

Generating sales give you power in the world's boardroom my friend. Unless we generate sales at the sale level we cannot command the same attention among the world's greatest companies.

Mahadevbhu's observations are entirely correct. You cannot generate sales that are equivalent of the $13 trillion US economy with consumers worth 30% of a 10 trillion PPP adjusted economy. These are not chini government issued bull manure figures. These are numbers from the sales and accounting departments of the world's largest MNCs.

Theo_Fidel · Post by **Theo_Fidel** » 01 Jan 2013 23:09

Chola good to have you back,

As always you remain a tireless google eyed advocate for the Chinese 'miracle'.

That is simply not what this thread is about. If you expect us to drop dead, hitch ourselves to the said 'miracle' and sing kumbaya, you are dead wrong. In fact there are numerous such puff piece websites all over the internets. Suggest you will find better reception there.

MNC are consistently wrong about everything. AFAIK in the long run they are always wrong. I think your opinions will go that way as well.

sanjaykumar · Post by **sanjaykumar** » 02 Jan 2013 00:05

There is a nuance to the automobile sales figures. China has been subsidising car purchase directly, off and on, as well as subsidising automotive production.

India has been extortionate in taxing both production and consumption.

China learnt long ago that the most efficient type of corruption is to licence productivity. The Indian system of corruption is still one of licencing scarcity.

chola · Post by **chola** » 02 Jan 2013 01:49

Theo_Fidel wrote:Chola good to have you back,

As always you remain a tireless google eyed advocate for the Chinese 'miracle'.

That is simply not what this thread is about. If you expect us to drop dead, hitch ourselves to the said 'miracle' and sing kumbaya, you are dead wrong. In fact there are numerous such puff piece websites all over the internets. Suggest you will find better reception there.

Yes Theoji, I am here to sing kumbaya and hitch myself to the Panda's "miracle."

One, I have no idea what the lyrics to kumbaya are. Perhaps you mistake me for someone from Goa. You brought up my name and yet you haven't the slightest understanding of what my arguments are.

Two, there is no "Chinese miracle" since it is the same well-worn path that Japan, Taiwan, South Korea, Hong Kong, Singapore, Thailand (do I need to go on?) had taken. If we had taken this path in the 1960s we would be four times the chini economy instead of the other way around.

Three, understanding an economy and being able to take advantage of it is not "hitching" oneself to said economy. The Euros, Americans, Japs, Koreans, Australians and the rest of the sundry East Asian and Western types do not worry about "hitching" themselves to each others economies. The best of the Indian companies do not either since Wipro, Infosys and the rest of our high flyers in the IT outsourcing department depend on American for about 70% of their revenues.

If the opportunity is there, take advantage of it.

And what is this thread about? For you to draw in a few 50-cent trolls? Or for us to actually discuss and start make sense of a major economy. In fact, it is not just a major economy for India. It is the most important economy we need to deal with barring the US.

MNC are consistently wrong about everything. AFAIK in the long run they are always wrong. I think your opinions will go that way as well.

Yes, multi-nationals get to be multi-nationals because they are consistently wrong. Yes Theoji, the world always rewards the company that always makes the wrong decisions.

chola · Post by **chola** » 02 Jan 2013 01:59

sanjaykumar wrote:There is a nuance to the automobile sales figures. China has been subsidising car purchase directly, off and on, as well as subsidising automotive production.

India has been extortionate in taxing both production and consumption.

China learnt long ago that the most efficient type of corruption is to licence productivity. The Indian system of corruption is still one of licencing scarcity.

Sanjay, subsidizing auto sales means that the economy still needs to produce enough wealth to subsidize the purchases.

Zimbabwe, Ghana and India cannot subsidize 18 million auto purchases because it would bankrupt their governments. It would bankrupt the chicommies too. Saying that the chinis have an 18 million car market because of subsidized sales is an easy answer but ultimately a lazy and logically impossible answer.

If you could subsidize cars why not subsidize wealth for everyone? Why not just hand out cash? You have to produce wealth to subsidize anything, especially something as expensive as a car. The GoI have enough trouble budgeting subsidies for electricity.

In the end, trying to parse sales figures is not as useful as knowing the market is there and taking advantage of it.

sanjaykumar · Post by **sanjaykumar** » 02 Jan 2013 04:14

To repeatedly observe that China is a larger market than India is somewhat trivial.

The 15% auto sales increase in 2010 over 2009 posted in the US to you perhaps means that the purchasing power/economy improved by an equivalent ratio. Please note that China and the US had inflection points in that year, for reasons quite divorced from the a booming economy. In fact the increases can be readily interpreted by even a casual observer as desperate measures, AKA stimulation.

Also I am sure you are aware of such:
http://www.oemol.com/info/detail/15-9186.html

Of course India chose a discredited economic model and has cleaved to it for far too long. Of course India could have done much better. But as they say in India, if my aunt had a d!ck, she would be a shemale.

vina · Post by **vina** » 02 Jan 2013 13:55

China learnt long ago that the most efficient type of corruption is to licence productivity. The Indian system of corruption is still one of licencing scarcity.

Yes.. That is an astute observation. Pretty profound and the truth. I would call it the "East Asian" model (worked wonderfully for So. Korea and earlier Japan and the Singapore and Malaysia). China just adopted it.

member_20292 · Post by **member_20292** » 02 Jan 2013 15:31

chola wrote: Two, there is no "Chinese miracle" since it is the same well-worn path that Japan, Taiwan, South Korea, Hong Kong, Singapore, Thailand (do I need to go on?) had taken. If we had taken this path in the 1960s we would be four times the chini economy instead of the other way around.

I like your posts, CHola, they actually focus the discussion on realistic monetary figures. Quite "padtha" system like.

Anyways. What is this East Asian formula? State directed chaebol / family /govt. in cahoots with chaebol, capitalism? Tax havens for big chaebol; and lots of outsourcing using cheap labour and good education and infrastructure?

If so, then India as a country has been lapped by China, and is nowhere, and will not get anywhere close to the gdp per capita of that country anytime soon; now or in the future.

member_20292 · Post by **member_20292** » 02 Jan 2013 15:43

chola wrote:
Theo_Fidel wrote: Generating sales give you power in the world's boardroom my friend. Unless we generate sales at the sale level we cannot command the same attention among the world's greatest companies.

Mahadevbhu's observations are entirely correct. You cannot generate sales that are equivalent of the $13 trillion US economy with consumers worth 30% of a 10 trillion PPP adjusted economy. These are not chini government issued bull manure figures. These are numbers from the sales and accounting departments of the world's largest MNCs.

Okay. Sales.

Now, lets assume GM is like equally by the Chinese and the Americans (maybe more by the Chinese

) and they sell equally to both countries.

Let that figure be 100 cars a year. (say)

100 cars a year is sold in a driving oriented country, with a gdp per capita of 48,000 USD and a total GDP of 14 Trillion USD.

The same 100 cars a year is sold in another country with gdp per capita of 8000 USD. This means that, at the very least, in the 8000 per capita country, there are those 300 million people with a per capita income of 48000 USD.
That makes those 300 million people equal to a 14 trillion USD economy. (PPP)

The remainder 1000 million people like to buy their own brands like Chery , Geely, etc...they dont buy GM at all.

They add up to another 14 trillion dollars, I would think.

Thus , the real GDP of China PPP is 28 trillion dollars PPP?

Or , another way of going about this back of this envelope calculation;

100 cars a year, in a 14 trn USD market, with 70% consumption equals 100 cars a year, in a “XXX” trn USD market with 30% consumption.
07*14=0.3*XXX
XXX=14*7/3
32 trillion USD .

Either ways, this figure seems to be close to 30 trillion dollars.

And if India reports the correct figures, then we are 4.5 trillion USD onlee.

What to do ?

chola · Post by **chola** » 02 Jan 2013 17:58

mahadevbhu wrote:
chola wrote: Two, there is no "Chinese miracle" since it is the same well-worn path that Japan, Taiwan, South Korea, Hong Kong, Singapore, Thailand (do I need to go on?) had taken. If we had taken this path in the 1960s we would be four times the chini economy instead of the other way around.

I like your posts, CHola, they actually focus the discussion on realistic monetary figures. Quite "padtha" system like.

Anyways. What is this East Asian formula? State directed chaebol / family /govt. in cahoots with chaebol, capitalism? Tax havens for big chaebol; and lots of outsourcing using cheap labour and good education and infrastructure?

If so, then India as a country has been lapped by China, and is nowhere, and will not get anywhere close to the gdp per capita of that country anytime soon; now or in the future.

The East Asian model is not really only East Asia but also post-war German.

1. Open to FDI (especially American)
2. Concentration on manufacturing
3. Hook into the global supply chain (basically being exports oriented)

and most importantly:

4. massive government support for infrastructure which enhances the first three.

I wrote about this earlier in the thread. Currency takes a long time to be accepted around the world, the US dollar and British pound had been built up over centuries so you need them to build your initial factories. Germany (and East Asia after her) took American FDI to jump start their economy.

The Gandhi clan was Soviet oriented and deliberately kept us out of the global supply with all the consequences we see today. The GOI can at least begin to alleviate that by opening up to FDI and supporting better infrastructure.

Theo_Fidel · Post by **Theo_Fidel** » 02 Jan 2013 17:59

Actually, Chola's case has always been that India too should throw what little money it has at the chinese 'miracle'. Because some how India will make more prosperity investing in Panda than it would investing in India. There is no acknowledment of the reality that India is severely short of investment capital and what little it has is invested at 12% interest rate vs the 0% interest wining Panda companies enjoy.

Chola is trying to promote the bandwagon effect and I'm still a bit dubious about his motives.

chola · Post by **chola** » 02 Jan 2013 18:19

mahadevbhu wrote:
Okay. Sales.

Now, lets assume GM is like equally by the Chinese and the Americans (maybe more by the Chinese ) and they sell equally to both countries.

Let that figure be 100 cars a year. (say)

100 cars a year is sold in a driving oriented country, with a gdp per capita of 48,000 USD and a total GDP of 14 Trillion USD.

The same 100 cars a year is sold in another country with gdp per capita of 8000 USD. This means that, at the very least, in the 8000 per capita country, there are those 300 million people with a per capita income of 48000 USD.
That makes those 300 million people equal to a 14 trillion USD economy. (PPP)

The remainder 1000 million people like to buy their own brands like Chery , Geely, etc...they dont buy GM at all.

They add up to another 14 trillion dollars, I would think.

Thus , the real GDP of China PPP is 28 trillion dollars PPP?

Or , another way of going about this back of this envelope calculation;

100 cars a year, in a 14 trn USD market, with 70% consumption equals 100 cars a year, in a “XXX” trn USD market with 30% consumption.
07*14=0.3*XXX
XXX=14*7/3
32 trillion USD .

Either ways, this figure seems to be close to 30 trillion dollars.

And if India reports the correct figures, then we are 4.5 trillion USD onlee.

What to do ?

Mahaji, in the end it is really that simple. In the corporate boardroom, if a market can support US sales numbers then you treat it as an US-sized economy and attack it as such.

This is happening not just at car companies like GM, Ford and VW but in everything else. Apple does it, so does Starbuck's and McDonalds. And foreign brand dominate the Chinese market too.

Hollywood last year took 55% of the chini market. Tell us that Mumbai could not at least make inroads here?

The US knew for a long time that the chinis lie about the size of their economy to game the system at the WTO and other organizations. Indians assume they lie to inflate because it pains the jingos. But inflating its economics stats gives the PRC no advantage. The Americans know the PRC lies to the small low side to gain breaks as a developing economy. It is all part of the same general deceptive set of trade practices that includes devaluing its currency.

So if we want this thread to be substantial then at the very least we need to understand the chini economy for what it is. We cannot trust PRC's numbers so we should depend on MNC sales figures. And those figures show an economy at as big as the one in the USA for nearly all products. This is an absolutely critical understanding for any company competing on the global stage.

Of course, if this thread is to simply bait trolls then ignore everything we said above and we can go on our merry way.

chola · Post by **chola** » 02 Jan 2013 18:32

Theo_Fidel wrote:Actually, Chola's case has always been that India too should throw what little money it has at the chinese 'miracle'. Because some how India will make more prosperity investing in Panda than it would investing in India. There is no acknowledment of the reality that India is severely short of investment capital and what little it has is invested at 12% interest rate vs the 0% interest wining Panda companies enjoy.

That was never my case, Theoji. In fact, I always made the case that India should be opened to FDI because it is piss-poor in capital. Either you are deliberately misstating my arguments or you are simply too new to economics to understand my points. I would give you the benefit of the doubt and assume it is the latter.

My case is that in a globalize economy, Indian firms need to attack the largest market bordering ours. It's that simple. You can export without investing a single dime in China. There are thousands of companies who do that in the US, an ocean away.

Chola is trying to promote the bandwagon effect and I'm still a bit dubious about his motives.

Yes, there is a bandwagon in BR of the great Chinese "miracle." Who are we kidding? The jingos dominate here. Of course you are dubious of my motives. You, like the mid-level babus, are dubious of anything you can't understand. FDI? No, Walmart is evil. Inanity.

Theo_Fidel · Post by **Theo_Fidel** » 02 Jan 2013 18:50

chola wrote: I would give you the benefit of the doubt and assume it is the latter.

Thanx. The condescension is quite entertaining.

I see the view from the island has not taught what a 25,000 foot mountain range is. Neighbors indeed...

member_20292 · Post by **member_20292** » 02 Jan 2013 21:51

Chola ji.... Much as your posts make sense... They need some hard figures to back them up. Also they are lecturing style...

member_20292 · Post by **member_20292** » 02 Jan 2013 23:13

Chola ji,

another question. Lets say I am ;

Case 1; A 2000 employee firm making iron and steel from chrome ore, having 5 arc furnaces. I sell raw material that goes into steel making to POSCO. How do I attack the Chinese market? My hands are already full with the POSCO orders, and finishing what I have. I have electricity trouble in my neck of the woods, and expansion is tough because of lack of money. So I cant export to China that easy. What would you suggest, I do? Start a stab-in-the-dark Shanghai office and then explore opportunities and then expand...??

Case 2; You are a young IIT +Ivy grad with a Materials Science (chips, nanotech) degree. You hear about the opportunities in China. How do you exploit them? By joining a company operating in China and asking to be posted there??? Learning CHinese online and then working in China by hook or crook?

TY.