PRC Economy and Industry: News and Discussions

harbans · Post by **harbans** » 29 Jul 2009 15:41

and the cancellation rate of some projects was as high as 125%.

I am 400% sure only that if a project has 100 apartments booked and all 'bookies' cancel the 100, the cancellation rate will be onlee 100%. But if it is 125% it means our the fliendry neighboulhood builder in Guangzhou sold 125 flats where onlee 100 were to be built..

vina · Post by **vina** » 29 Jul 2009 18:13

But if it is 125% it means our the fliendry neighboulhood builder in Guangzhou sold 125 flats where onlee 100 were to be built..

I guess they "overbook" , just like the airlines do, expecting a certain percentage of cancellation. Looks likes in these testing times, everyone canceled.

This is much better than the Hyderabad based crooks, who typically can sell a single house to up to 3 people minimum (real life experience)

Dilbu · Post by **Dilbu** » 29 Jul 2009 19:49

EU Imposes Tariffs on Imports of Steel Pipe From China

BRUSSELS -- European Union trade officials approved pre-emptive penalties on imports of steel pipe from China, a precedent-setting move that suggests the trading bloc is growing more protectionist in the face of the economic downturn.

Tuesday's vote by trade officials from the EU's 27 member states is significant, say trade experts, because they accepted an argument from steel producers -- including the world's largest by volume, ArcelorMittal -- that punitive tariffs are needed to protect them from the threat of underpriced imports from China.

After clearing procedural hurdles, the duties, which will range from 17.7% to 39.2%, are expected to take effect in October and last five years, EU officials said. Temporary duties of up to 24.2% have been in place since April.

Chinese officials say they are preparing a case at the World Trade Organization against the EU and the U.S. over steel tariffs. On Monday, the Chinese Ministry of Commerce issued a statement saying it was "gravely concerned" about antidumping duties on Chinese imports in the U.S. and the EU.

"If they impose the tax, that means we will lose the EU market," says Tan Ling, a manager for Hengyang Valin Steel Tube Co., which exports to the EU. The EU currently accounts for 5% to 10% of the company's sales, says Ms. Tan, who has been to Brussels several times to plead her case with EU officials. The company will try to compensate by exporting more to the Middle East and Africa, she says.

European consumers of Chinese steel imports also are upset at the new tariffs. "Consumers have to pay more because the market is protected," says Jan van Meever, the owner and CEO of Jan van Meever BV, a Dutch company that buys steel pipes from China and resells them in Europe. "It's just the way it is these days."

So much for expolting oul way out of recession.
And when push comes to shove, all that oiropean moral high ground and stiff upper lip on fair play etc on globalisation comes crashing down in a jiffy and its back to protectionism.

Kakkaji · Post by **Kakkaji** » 30 Jul 2009 01:41

How do you say 'bubble' in Mandarin?

Chinese stocks are on fire and banks are lending like there's no tomorrow. Sound familiar? But China needs to remain healthy. The U.S. can't afford for it to slump.

NEW YORK (CNNMoney.com) -- Is the Chinese economy in the same state as the American economy was in the summer of 2007? In other words, all pumped up and ready to pop?

If so, it might be time to learn how to say bubble in Mandarin. And that could be bad news for those hoping for a sustainable U.S. recovery.

China's economy is still growing rapidly. But some eerie similarities to the U.S. economy just before the credit markets started to unravel two years ago are starting to emerge.

Consider this. Before Wednesday's plunge, Chinese stocks had been racing higher -- the Shanghai Composite was up 16% in July alone. Last week, China State Construction Engineering Corp. went public and surged 70% in its first day of trading.

Now think back to July 2007 -- the Dow closed above 14,000 for the first time (it would peak in October).

Just as American banks once were, Chinese banks are being loose with credit.

According to figures from the People's Bank of China, China's central bank, banks made 7.37 trillion yuan ($1.1 trillion) in new loans during the first half this year.

By way of comparison, Chinese banks issued 4.91 trillion yuan in new loans during all of 2008. China's lending target for all of this year had been just 5 trillion yuan.

As such, there are reports that China's top banks may soon impose limits on new loans, which could lead to slower growth in China's economy.

The hefty loan volume is raising the specter of a potential bad loan bust in China, similar to the subprime nightmare that U.S. banks had to endure.

Now you might be wondering why this is a problem for the United States to worry about.

Well, China just so happens to be the largest holder of U.S. Treasurys, holding more than $800 billion worth as of the end of May. Busch speculates that if Chinese banks are suddenly hit with a wave of loan losses, China could try and shore up their balance sheets by selling U.S. bonds.

So far, China has continued to be a big buyer of U.S. debt. But Chinese officials have expressed increased signs of frustration about the mounting U.S. debt load.

At some point, China may move beyond just threatening talk and actually take action.

A China-led sell-off could cause bond prices to fall and interest rates to shoot higher. That could have disastrous implications on the U.S. economy since higher rates could cripple chances for a sustained recovery.

That's going to make it all the more imperative for U.S. officials -- most notably, Treasury Secretary Timothy Geithner -- to assure China that the United States is not going to dig itself too deep a debt hole. Geithner held talks with Chinese officials in Washington earlier this week about various economic issues.

Both Geithner and Chinese leaders said they are committed to global economic stability. That's a good sign.

"Talks were constructive. The best we could have hoped for is an agreement from China that the U.S. has done what it had to do and that we will get out of a deficit as fast as we can," said Carl Weinberg, chief economist with High Frequency Economics, a research firm based in Valhalla, N.Y.

What's more, Chinese Vice Premier Wang Qishan said that China would try and do more to boost domestic consumption of goods made in China so that it does not have to rely as much on exports to the United States.

That's a good sign since it should help to quash speculation that the United States and China could be headed toward a trade war.

"There were reassurances from China and the U.S. that they don't support protectionism. That would be bad and ugly and hurts everyone. Both are on the same side," Weinberg said.

Still, Busch is worried that the United States may not be able to exert that much pressure on China to do what it can to narrow the trade gap given that China has significant leverage with its Treasury holdings.

That means that the United States may have to put up with even more job losses in manufacturing to keep China happy. And that obviously poses its own problems for the U.S. economy.

"Allowing a large trade partner to be more competitive is in essence telling the manufacturing sector to take a hike. It's doing the opposite to encourage job creation," Weinberg said.

Weinberg argues though that China's threat to sell Treasurys is just a threat and that is not in China's best interests to do something that could lead to a prolonged U.S. economic slump. So he doesn't think the United States needs to appease China.

But at the same time, Weinberg said that it makes more sense for the United States to recognize that China is now a major part of the global economy. So the United States can not afford to have an antagonistic stance towards it.

"The most important thing we are learning is that China is a nation whose interests have to be considered. That's the new reality," he said.

Hari Seldon · Post by **Hari Seldon** » 30 Jul 2009 13:00

Chinese Workers Say Illness Is Real, Not Hysteria

JILIN CITY, China — Officials said that the convulsions, breathing difficulty and paralysis that affected more than 1,000 workers near a plant were mass hysteria.

Who would you believe - the pristine management and the even more noble Government or 'em hysterical workers? I have no doubt who the chindu and CPIM will believe, for example.

Verma · Post by **Verma** » 30 Jul 2009 16:42

G2 was born, USA and China will control the world.
http://www.treas.gov/press/releases/tg242.htm

svinayak · Post by **svinayak** » 30 Jul 2009 22:05

Verma wrote:G2 was born, USA and China will control the world.
http://www.treas.gov/press/releases/tg242.htm

This is the first time that US is involved in a new global financial framework. The earlier one was by British with the British trading system.

Hari Seldon · Post by **Hari Seldon** » 31 Jul 2009 08:38

Washington risks taking China too seriously (FT)

Hmmm, and that bugle is sounded by a UKstani writing in a UK rag. Apt. After all Great Britain would know a thing or 2 about being taken too seriously now, eh?

Katare · Post by **Katare** » 03 Aug 2009 00:42

Ban Barter: China threatens restrictions on food imports

Mr Scindia said in response to the extension of the ban on milk and milk products including chocolate and chocolate products from China till December 24, 2009, China’s quality supervision and inspection department had conveyed that it had encountered food safety problems in imported food products like seafood and sesame oil from India.

China warned that if India insisted on extending the ban on milk and milk products till the end of the year, it would also act on its concerns about the quality of imported food products from India.

India has imposed anti-dumping duties on Chinese products like yarns, fabrics, nylon tyre cord, colour picture tubes and some chemicals. It is also looking at imposing safeguard duties on Chinese goods.

Gerard · Post by **Gerard** » 03 Aug 2009 01:56

The China Bubble's Coming -- But Not the One You Think

Forget about a Shanghai stock bubble. The whole Chinese economy's getting ready to burst.

KarthikSan · Post by **KarthikSan** » 03 Aug 2009 02:49

Gerard wrote:The China Bubble's Coming -- But Not the One You Think
Forget about a Shanghai stock bubble. The whole Chinese economy's getting ready to burst.

Was that 13 storey building built on a few pillars and no real foundation? Seems like the best analogy to some of the world's modern e-Con-omies!

Sanjay M · Post by **Sanjay M** » 03 Aug 2009 11:51

China to Surpass US in Manufacturing Far Sooner Than Expected

shyam · Post by **shyam** » 03 Aug 2009 12:21

Don't these guys consider recent economic crisis when they make these linear projections?

Hari Seldon · Post by **Hari Seldon** » 03 Aug 2009 21:09

x-post from the perspectives thread.

Meanwhile old china hand Andy Xie calls its stock rally a bubble, again.

Chinese asset markets have become a giant Ponzi scheme. The prices are supported by appreciation expectation. As more people and liquidity are sucked in, the resulting surging prices validate the expectation, which prompts more people to join the party. This sort of bubble ends when there isn’t enough liquidity to feed the beast.

Liquidity isn’t a constraint yet. Even though loans grew by 24.4% in the first half or Rmb 7.4 trillion, loan-deposit ratio increased only to 66.6% in June 2009 from 65% in December 2008. It means that many loans have not been spent in real economic activities and have merely supplied leverage for asset market transactions. China’s property market is very similar to Hong Kong’s in 1997.

The origin of the asset bubble in China is excess liquidity as reflected in high level of foreign exchange reserves and low loan deposit ratio. The low interbank rate defines how serious excess liquidity s. The massive buildup of liquidity in China was due to weak dollar and strong exports. As dollar entered a bear market in 2002, China’s Rmb followed it down. The appreciation expectation drove liquidity to China. One fourth of China’s foreign exchange reserves could be due to this factor.

OK. So who exactly is andy xie and what are his credentials?

Many would argue that China isn’t experiencing a bubble. The high asset prices just reflect China’s high growth potential. One can never make an ironclad case to pin down an asset boom as a bubble. An element of judgment based on experience is inevitable when one calls a market boom a bubble. I have had a reasonably good record at calling bubbles in the past. I wrote my doctoral thesis arguing that Japan was a bubble in late 1980s, a long report at the World Bank in earl 1990s arguing that Southeast Asia was a bubble, research notes at Morgan Stanley in 1999 calling dotcom boom a bubble, and numerous research notes from 2003 onwards arguing that the US property market was a bubble. On the other hand I have never called something a bubble that turned out not to be a bubble.

I want to make myself perfectly clear on China’s asset markets today. They are a big bubble. Its bursting will bring very bad consequences for the country. However, as so many are enjoying what’s going on, I don’t think the government would act preemptively to eliminate the bubble. Indeed, many, if not the majority, in the policy circle argue that the bubble is good for reviving the economy. This sort of thinking seems to work because the dollar is weak, as the bubble can be revived with more liquidity when it cools off. When the dollar revives, China’s asset markets and, probably, the economy would have a hard landing. I hope that the people who advocate the benefits of the bubble would stand up then to accept the responsibilities for the damages.

link

Of course, std disclaimer holds. Take your own call. Caveat emptor.

Suraj · Post by **Suraj** » 04 Aug 2009 01:14

Chinese town sealed after pneumonic plague outbreak

Chinese health officials have sealed off a town in a sparsely populated area of north-central China to halt the spread of an aggressively deadly strain of plague.

As of Sunday, two men have died from the outbreak, and another 10 - most of them relatives of the first dead man - are under quarantine.

The disease is pneumonic plague, which the World Health Organization refers to as "the most virulent and least common form of plague." Pneumonic plague is a variant of the bubonic plaque - the Black Death - that killed an estimated 75 to 100 million people worldwide in the mid-1300s.

The two deaths from the current outbreak have occurred in the town of Ziketan in Qinghai province. Ziketan is huge: 3,000 square kilometers, according to Xinhua - over 1,150 square miles. Ziketan is in the Hainan Tibetan Autonomous Prefecture, and it has a population that's over 60 per cent ethnic Tibetan and just under 30 per cent Han Chinese.

Chinmayanand · Post by **Chinmayanand** » 05 Aug 2009 15:24

China Has Become A Giant Ponzi Scheme

Hari Seldon · Post by **Hari Seldon** » 05 Aug 2009 15:46

China’s growth figures fail to add up

China’s gross domestic product figures are among the world’s most closely watched since they can move markets or boost hopes of an imminent recovery.

But the latest set of first-half numbers provided by provincial-level authorities are far higher than the central government’s national figure, raising fresh questions about the accuracy of statistics in the world’s most populous nation.

GDP totalled Rmb15,376bn ($2,251bn) in the first half, according to data released individually by China’s 31 provinces and municipalities, 10 per cent higher than the official first-half GDP figure of Rmb13,986bn published by the National Bureau of Statistics.

Wow. So first half GDP is some $2.25T -> annual GDP is $4.5T? Its already bigger than japan then. No?

Anyway, am kinda pleasantly surprised that the discrepancy between the national and provincial figures is "only 10%". PRC can always trump an accusing hand at America that front-loaded its GDP some 20% on debt driven consumption alone. That is why folks now warn the US will take yrs to return to its 2007 output.

ashi · Post by **ashi** » 06 Aug 2009 10:16

China's Economy Will Surpass Japan's This Year
http://blog.newsweek.com/blogs/wealthof ... -year.aspx

The rise of China wasn’t new, either, of course. But the speed at which the shift is taking place, and the fact that China has remained so stable and prosperous while the financial crisis and recession has called into question Japan’s entire high-savings, export model is a huge blow to the Japanese. China is moving up the food chain faster than anyone thought possible, and even beginning to challenge Japan at the very core of its economy: high-end manufacturing.

So, what does it all mean for the U.S.? Politically, it means that we’ll move ever closer to China; they’ll be necessary for securing Asia in the future (Japan’s military budget has been flat for 20 years).

Hari Seldon · Post by **Hari Seldon** » 06 Aug 2009 11:48

The unthinkable is becoming reality.

IMVHO, there's every possibility that unkil and PRC will collude to split the world into respective zones of influence and agree to fight a new cold war via their proxies.

That way the mil-industrial complexes, big bankers and pseudo-jingo groups will all be happy to both get funding as well as a high-profile rational target.

PRC has emerged the clear winner in this round thx to the global economic meltdown. The risks that PRC's economic structure and plan carried (overcapacity + demand loss -> depressionary conditions -> social upheavals, unemp spiking etc) have been cleverly and clearly averted. Gotta hand it over to the chinis. They have pulled off a difficult one successfully.

svinayak · Post by **svinayak** » 06 Aug 2009 11:53

Hari Seldon wrote:The unthinkable is becoming reality.

IMVHO, there's every possibility that unkil and PRC will collude to split the world into respective zones of influence and agree to fight a new cold war via their proxies.

I had predicted this several years ago in this forum. Many scoffed. THis was the plan for a long time

Suraj · Post by **Suraj** » 06 Aug 2009 12:34

It's not clear how PRC or US have averted anything. Both are still facing significant challenges. The fact that the PRC reported strong GDP growth in the last quarter is tied to significant enhancement in speculative asset pumping and fixed asset investment. Further, the former USSR/US cold war dynamic doesn't quite work here for several reasons, primarily the economic bear hug between the two, and particularly that a massive component of Chinese currency reserves is comprised of IOUs of the US in US currency, not cash in their currency, or at least western commercial/commodity assets - the aborted Unocal and Rio Tinto deals showed the barriers in the way.

This '$2 trillion forex reserves' thing needs to be understood in the context of notional wealth - the trillion plus of IOUs they hold is worth so much because they are holding it. When they start selling it in any appreciable quantity, it will rapidly lose value. I think the grandly termed 'nuclear option' mentioned in this context is rather misnamed; it ought to be the 'paki option', i.e. 'do as I say or I'll shoot myself and splatter you with my brains'.

Personally I think these statements about the G2 dividing the world between them are rather premature. That's not to understate Chinese achievements; they are indeed very significant, and something I treat as a case study to learn.

Liu · Post by **Liu** » 06 Aug 2009 20:37

here shows you how efficiently and fast chinese can build constructions.

can you find anybody on the earth who can do the job better than Chinese?

it happened in a chinese grade B city ,Shijiazhuang city.
Feb 2009
http://farm4.static.flickr.com/3460/370 ... 1654_o.jpg

Mar 2009
http://farm4.static.flickr.com/3535/370 ... cb8f_o.jpg

Apr 2009
http://farm4.static.flickr.com/3464/370 ... 299e_o.jpg

May 2009
http://farm3.static.flickr.com/2484/370 ... 9534_o.jpg

Jun 2009
http://farm4.static.flickr.com/3520/370 ... 9e9f_o.jpg

Jul 2009
http://farm4.static.flickr.com/3434/370 ... 7725_o.jpg

Liu · Post by **Liu** » 06 Aug 2009 20:41

Hari Seldon wrote:The unthinkable is becoming reality.

IMVHO, there's every possibility that unkil and PRC will collude to split the world into respective zones of influence and agree to fight a new cold war via their proxies.

That way the mil-industrial complexes, big bankers and pseudo-jingo groups will all be happy to both get funding as well as a high-profile rational target.

PRC has emerged the clear winner in this round thx to the global economic meltdown. The risks that PRC's economic structure and plan carried (overcapacity + demand loss -> depressionary conditions -> social upheavals, unemp spiking etc) have been cleverly and clearly averted. Gotta hand it over to the chinis. They have pulled off a difficult one successfully.

today, case is that USA and China now are on the same bed and are bargaining how to expoit other countries ,especially those resource-abundent countries more efficiently!

Liu · Post by **Liu** » 06 Aug 2009 20:44

Hari Seldon wrote:China’s growth figures fail to add up

China’s gross domestic product figures are among the world’s most closely watched since they can move markets or boost hopes of an imminent recovery.

But the latest set of first-half numbers provided by provincial-level authorities are far higher than the central government’s national figure, raising fresh questions about the accuracy of statistics in the world’s most populous nation.

GDP totalled Rmb15,376bn ($2,251bn) in the first half, according to data released individually by China’s 31 provinces and municipalities, 10 per cent higher than the official first-half GDP figure of Rmb13,986bn published by the National Bureau of Statistics.
Wow. So first half GDP is some $2.25T -> annual GDP is $4.5T? Its already bigger than japan then. No?

Anyway, am kinda pleasantly surprised that the discrepancy between the national and provincial figures is "only 10%". PRC can always trump an accusing hand at America that front-loaded its GDP some 20% on debt driven consumption alone. That is why folks now warn the US will take yrs to return to its 2007 output.

so has been the case for decades.

in fact, the chinese center government distrust the data provided by local government very much .

most data publish by chinese center government are investigated directly by beijing,instead of a simply sum of data provided by local government.

Liu · Post by **Liu** » 06 Aug 2009 20:53

Suraj wrote:It's not clear how PRC or US have averted anything. Both are still facing significant challenges. The fact that the PRC reported strong GDP growth in the last quarter is tied to significant enhancement in speculative asset pumping and fixed asset investment. Further, the former USSR/US cold war dynamic doesn't quite work here for several reasons, primarily the economic bear hug between the two, and particularly that a massive component of Chinese currency reserves is comprised of IOUs of the US in US currency, not cash in their currency, or at least western commercial/commodity assets - the aborted Unocal and Rio Tinto deals showed the barriers in the way.

This '$2 trillion forex reserves' thing needs to be understood in the context of notional wealth - the trillion plus of IOUs they hold is worth so much because they are holding it. When they start selling it in any appreciable quantity, it will rapidly lose value. I think the grandly termed 'nuclear option' mentioned in this context is rather misnamed; it ought to be the 'paki option', i.e. 'do as I say or I'll shoot myself and splatter you with my brains'.

Personally I think these statements about the G2 dividing the world between them are rather premature. That's not to understate Chinese achievements; they are indeed very significant, and something I treat as a case study to learn.

case is that " if defeating your rival costs more than suborning your rivals, then it is always a better choice to suborn you rival"

now USA is suborning china and "G2" /"stakeholder" is just yankee's subornation.

Suraj · Post by **Suraj** » 06 Aug 2009 21:32

Liu wrote:here shows you how efficiently and fast chinese can build constructions.

can you find anybody on the earth who can do the job better than Chinese?

it happened in a chinese grade B city ,Shijiazhuang city.
Feb 2009
http://farm4.static.flickr.com/3460/370 ... 1654_o.jpg
Mar 2009
http://farm4.static.flickr.com/3535/370 ... cb8f_o.jpg
Apr 2009
http://farm4.static.flickr.com/3464/370 ... 299e_o.jpg
May 2009
http://farm3.static.flickr.com/2484/370 ... 9534_o.jpg
Jun 2009
http://farm4.static.flickr.com/3520/370 ... 9e9f_o.jpg
Jul 2009
http://farm4.static.flickr.com/3434/370 ... 7725_o.jpg

The efficiency with which the implementation was done is certainly impressive. Very nice 'set piece' moves to replace the grade level crossing with an overpass - techniques that Indian infrastructure companies would benefit from learning.

However, how can you close down such a significant intersection for 6 months ? I see no traffic diversions around the construction site. I'm sure the pictures of traffic backed up elsewhere looked less photogenic.

Liu · Post by **Liu** » 06 Aug 2009 21:56

Suraj wrote:
Liu wrote:here shows you how efficiently and fast chinese can build constructions.

can you find anybody on the earth who can do the job better than Chinese?

it happened in a chinese grade B city ,Shijiazhuang city.
Feb 2009
http://farm4.static.flickr.com/3460/370 ... 1654_o.jpg
Mar 2009
http://farm4.static.flickr.com/3535/370 ... cb8f_o.jpg
Apr 2009
http://farm4.static.flickr.com/3464/370 ... 299e_o.jpg
May 2009
http://farm3.static.flickr.com/2484/370 ... 9534_o.jpg
Jun 2009
http://farm4.static.flickr.com/3520/370 ... 9e9f_o.jpg
Jul 2009
http://farm4.static.flickr.com/3434/370 ... 7725_o.jpg
The efficiency with which the implementation was done is certainly impressive. Very nice 'set piece' moves to replace the grade level crossing with an overpass - techniques that Indian infrastructure companies would benefit from learning.

However, how can you close down such a significant intersection for 6 months ? I see no traffic diversions around the construction site. I'm sure the pictures of traffic backed up elsewhere looked less photogenic.

1.the intersecton was closed for only 4 monthes.

2.there were indeed traffic diversions there, but those traffic diversions were far away from the intersection.

3.in fact, the intersection is a part of the 2nd ringroad of Shijiazhuang city.

pgbhat · Post by **pgbhat** » 06 Aug 2009 22:26

Over 26,000 Indian business visas issued in China

New Delhi: India has issued over 26,000 business visas in China so far in 2009, parliament was told Thursday.
Minister of State for External Affairs Preneet Kaur said India had issued 26,014 visas till June 2009.
Last year, India had issued the largest number of business visas to Chinese nationals at 58,658, witnessing an increase of 21 percent from the previous year, the minister told the Rajya Sabha.
In fact, from 15,979 visas issued in 2004, there has been a 267 percent increase of business visas to Chinese nationals.

Katare · Post by **Katare** » 06 Aug 2009 22:29

Since late 1990s everyone has suspected that local Chinese province and municipal govt's overstate GDP numbers but in the end it turns out that figures were actually understated and needed massive revision of national GDP. Chinese economy has almost always been bigger 9and grew faster) than what has been reported in yearly figures. Chronic underreporting is a persistent issue in China, mainly because of its transition from command economy to market economy. It takes decades for official machinery and economy to become competent in efficient data collection on GDP growth.

A good example of blatant overstating GDP growth and size is Pakistan in Musharaff era. It started when Indian defense budget post Kargil became larger than their national budget. They simply revised their GDP up so they can raise more debt for national budget without affecting their macro indicators (debt/GDP etc) and ratings. Very next year they managed to have a national budget that was much bigger than Indian defense budget. Problem solved.

Hari Seldon · Post by **Hari Seldon** » 06 Aug 2009 22:44

Since late 1990s everyone has suspected that local Chinese province and municipal govt's overstate GDP numbers but in the end it turns out that figures were actually understated and needed massive revision of national GDP. Chinese economy has almost always been bigger 9and grew faster) than what has been reported in yearly figures. Chronic underreporting is a persistent issue in China, mainly because of its transition from command economy to market economy. It takes decades for official machinery and economy to become competent in efficient data collection on GDP growth.

Any sources, links, info pls? TIA.

Liu · Post by **Liu** » 06 Aug 2009 23:00

Hari Seldon wrote:
Since late 1990s everyone has suspected that local Chinese province and municipal govt's overstate GDP numbers but in the end it turns out that figures were actually understated and needed massive revision of national GDP. Chinese economy has almost always been bigger 9and grew faster) than what has been reported in yearly figures. Chronic underreporting is a persistent issue in China, mainly because of its transition from command economy to market economy. It takes decades for official machinery and economy to become competent in efficient data collection on GDP growth.
Any sources, links, info pls? TIA.

Chinese private enterprise always deliberately report "shrinked revenue" to local administrations ,just for less tax.
the current chinese tax system make chinese private economy easily hide their real revenue.
private economy occupy 50+% of chinese total economy,today.

Suraj · Post by **Suraj** » 06 Aug 2009 23:08

Oh, we do the same thing. Go to the average Indian store and they'll quote you a lower cash price (no tax) and a higher full retail price if you pay by credit/cheque etc, since such transactions can be recorded by the banks. The situation is even more pronounced in real estate deals, where there's a cheque and cash payment component. We all know we have a large parallel economy that probably rivals the real economy in size.

On another note, have you been to Shijiazhuang yourself ? It is the location of the Martyr's Memorial, where Dr.Dwarkanath Kotnis' tomb and memorial is located. Pictures or reports about that place would be very welcome, from an Indian perspective.

Katare · Post by **Katare** » 07 Aug 2009 00:25

Liu wrote:
Hari Seldon wrote:Since late 1990s everyone has suspected that local Chinese province and municipal govt's overstate GDP numbers but in the end it turns out that figures were actually understated and needed massive revision of national GDP. Chinese economy has almost always been bigger 9and grew faster) than what has been reported in yearly figures. Chronic underreporting is a persistent issue in China, mainly because of its transition from command economy to market economy. It takes decades for official machinery and economy to become competent in efficient data collection on GDP growth

Any sources, links, info pls? TIA.
Chinese private enterprise always deliberately report "shrinked revenue" to local administrations ,just for less tax.
the current chinese tax system make chinese private economy easily hide their real revenue.
private economy occupy 50+% of chinese total economy,today.

Liu
That happens everywhere and statisticians look at different data set to cover these loopholes.

Hari,

Please look up data on World Bank site etc for GDP growth rate revisions and recent base revisions to entire GDP which bumped it up further ~30%.

If they were lying about GDP growth data for past 20 years and on top of it revising it even further up, the truth would have caught up with them by now. Like it did with pakistan in 5 years, it doesn't pay to lie about growth or GDP year after year. Although Chinese govt may have indulged in "smoothing over" of growth rates for certain years/quarters

Suraj · Post by **Suraj** » 07 Aug 2009 06:03

xposted from PRC political news thread:
Build a bridge, pull it down, rebuild -- the Chinese way to ramp up GDP

An outspoken Communist Party official in China has confirmed long-held suspicions that GDP data was being massaged and exaggerated by regional party leaders to show higher economic growth, in the process "squandering social resources."

In a brutally honest and searing speech recently, Wang Yang, the reformist-minded party secretary of Guangdong province in southern China, laid bare the dishonest means party leaders at the provincial level were employing "to polish their numbers." Since Wang is one of the few provincial party leaders who is also a member of the decision-making central Politburo, his words -- and the fact that even the official media has reported them -- is being seen as a signal that Beijing is wary of the accuracy of GDP data reported by the provinces.

"Some of our GDP data sure looks rosy," Wang told party officials. "But they do not amount to growth of social wealth; in fact, social resources are beingwasted to show GDP growth." For instance, he said, provincial party officials build a bridge, which contributes to GDP; they then "dismantle" and rebuild the bridge, each time contributing to GDP. "We may have boosted our GDP this way, but this is a huge waste of social resources."

Likewise, he said, some regional governments registered GDP growth by encouraging "polluting industries", and then showed even higher growth by cleaning up the pollution.
Wang said that such practices, which went against "the laws of a market economy", were causing him deep disquiet. "Amidst the economic downturn, when everyone is eager to show 'rosy' numbers, all manner of backward productive forces are being revived," he said.

Party leader Wang argues that instead of artificially boosting GDP data, provincial leaders should focus on "restructuring and transforming" the industrial structure --- that is, move away from labour-intensive, low-technology, polluting and energy-inefficient industries.

Liu · Post by **Liu** » 07 Aug 2009 20:51

Suraj wrote:xposted from PRC political news thread:
Build a bridge, pull it down, rebuild -- the Chinese way to ramp up GDP
An outspoken Communist Party official in China has confirmed long-held suspicions that GDP data was being massaged and exaggerated by regional party leaders to show higher economic growth, in the process "squandering social resources."

In a brutally honest and searing speech recently, Wang Yang, the reformist-minded party secretary of Guangdong province in southern China, laid bare the dishonest means party leaders at the provincial level were employing "to polish their numbers." Since Wang is one of the few provincial party leaders who is also a member of the decision-making central Politburo, his words -- and the fact that even the official media has reported them -- is being seen as a signal that Beijing is wary of the accuracy of GDP data reported by the provinces.

"Some of our GDP data sure looks rosy," Wang told party officials. "But they do not amount to growth of social wealth; in fact, social resources are beingwasted to show GDP growth." For instance, he said, provincial party officials build a bridge, which contributes to GDP; they then "dismantle" and rebuild the bridge, each time contributing to GDP. "We may have boosted our GDP this way, but this is a huge waste of social resources."

Likewise, he said, some regional governments registered GDP growth by encouraging "polluting industries", and then showed even higher growth by cleaning up the pollution.
Wang said that such practices, which went against "the laws of a market economy", were causing him deep disquiet. "Amidst the economic downturn, when everyone is eager to show 'rosy' numbers, all manner of backward productive forces are being revived," he said.

Party leader Wang argues that instead of artificially boosting GDP data, provincial leaders should focus on "restructuring and transforming" the industrial structure --- that is, move away from labour-intensive, low-technology, polluting and energy-inefficient industries.

well, such are the inevitable case during the rapid urbanization and industrialization.

the same case happened once to USA ,EU and japan too.

but now it is turn of China.

BTW, do you know how Japanese RAMp up GDP in the depression in 1990s?

Japanese covered concrete on the bottom of all rivers in japan and made all rivers "artificial rivers".

Hari Seldon · Post by **Hari Seldon** » 07 Aug 2009 21:04

BTW, do you know how Japanese RAMp up GDP in the depression in 1990s?

Japanese covered concrete on the bottom of all rivers in japan and made all rivers "artificial rivers".

Yup. And during GDI, FDR famously had people dig holes and then fill them up, so urban legend goes. All so that they could be paid for labor.

So, US and Japan did it, it must be ok for PRC to copy the same, am sure.

Suraj · Post by **Suraj** » 07 Aug 2009 22:12

This 'US and Japan did it too' argument is absurd. It merely underscores the bizarre emphasis on showing numbers, at the cost of actual development, and that too in an economic downturn. Further, unlike the FDR dig-a-hole-and-cover programs that were tailored towards employment by avoiding just handing over cash and stoking localized inflation, the Chinese actions are geared towards building and destroying fixed asset infrastructure, which are commodity and capital intensive, so that they can plump more 'GDP' out of it, as opposed to some employment program that drives private consumption, but aren't nearly so capital intensive themselves. And lest you think this is merely an anti-China statement, feel free to browse through the last several years of Indian economy threads for criticism on our own NREGA program.

Hari Seldon · Post by **Hari Seldon** » 07 Aug 2009 22:33

And lest you think this is merely an anti-China statement, feel free to browse through the last several years of Indian economy threads for criticism on our own NREGA program.

The sarc tags were implied, suraj saar.

I'm as much a fan of PRC as abhishekcc is.

Suraj · Post by **Suraj** » 07 Aug 2009 23:35

Don't worry, I was responding to Liu's post

rsingh · Post by **rsingh** » 07 Aug 2009 23:56

apanese covered concrete on the bottom of all rivers in japan and made all rivers "artificial rivers".

Oh OMG...............power of propaganda. And the trust of educated Chinese in such absurd stuff. It remind me of USSR (1987) where it was a "known fact" that Winston Churchill used to eat monkey's brain while poor animal was kept alive under the dining table.