PRC Economy and Industry: News and Discussions

[Theo_Fidel]

Love them or hate them, we can surely use such trains in India to take some pressure off our already over crowded highways.

This is not true. These particular trainset are rarely over 8 coaches, esp. at faster speeds. Carrying capacity, while all seating is a ~800 persons. In sardine fashion ~ 1000 persons.

A single IR sleeper train has 24 coaches. Some recent ones even 26 coaches. Carrying capacity now is often in the 2000+ passengers range. All with sleeping accommodations.

Do we need faster trains. Yes.

Do we need uneconomic fashion statements. No.

[wrdos]

There are 2 types of high speed train sets in China, 8 coaches or 16 coaches. Particular for the CRH380A as we are talking about, the Chinese National Railway ordered 100 sets of 16-coach but only 30 sets of 8-coach.

Railway is an integration of rail, foundation, maintenance, operation and signal technologies, not only the trains. The high speed railways in China can send out trains every 3 minutes, and these trains run about 3 times faster than ordinary trains. Just calculate how many rounds 1 train set can run within a day, than you will know a high speed railway can deliver much much more passengers than an ordinary one.

BTW, passengers can stand on these trains too.
On the high speed trains of China, and Japan as well, some passengers do stand during the peak times.

Love them or hate them, we can surely use such trains in India to take some pressure off our already over crowded highways.

This is not true. These particular trainset are rarely over 8 coaches, esp. at faster speeds. Carrying capacity, while all seating is a ~800 persons. In sardine fashion ~ 1000 persons.

A single IR sleeper train has 24 coaches. Some recent ones even 26 coaches. Carrying capacity now is often in the 2000+ passengers range. All with sleeping accommodations.

Do we need faster trains. Yes.

Do we need uneconomic fashion statements. No.

[Theo_Fidel]

There are 2 types of high speed train sets in China, 8 coaches or 16 coaches. Particular for the CRH380A as we are talking about, the Chinese National Railway ordered 100 sets of 16-coach but only 30 sets of 8-coach.

No where in the world is there a 16 coach high speed train. May have been ordered, but it is not delivered. So I call BS on that one.

Also these are not commuter trains no way you have 3 minute buffer periods. Call BS on that as well.

Standing at 400 kmph. Holy Cr#p. Every emergency stop will be carnage.

In any case this is seriously OT. And I have violated my rule on engaging Panda trolls, so bye..

[wrdos]

Hehe, dear sir.

- 16 coach high speed trains are running between Tokyo and Osaka every hour, called as Shinkansen in Japan, and they have been running there for years.
- 16 coach high speed trains are running between Wuhan and Guangzhou every hour, and they have been running there for about 1 year
- 16 coach high speed trains are running on several other Chinese railways also, and for years
- I myself have been on 16 coach high speed trains more than 30 times, both in Japan and China

You need not to spend more than 1 min if you really want to find the truth.

And the Chinese high speed railways are not commuter trains, but

- Suitable for both 16 coaches and 8 coaches
- Designed shortest buffer time 3 minutes
- Highest operating speed 350km/hr, and 380km/hr from next year
- Total length longer than the combination of all the other countries

You have your full freedom to deny these facts but it will make no difference except for yourself.

There are 2 types of high speed train sets in China, 8 coaches or 16 coaches. Particular for the CRH380A as we are talking about, the Chinese National Railway ordered 100 sets of 16-coach but only 30 sets of 8-coach.

No where in the world is there a 16 coach high speed train. May have been ordered, but it is not delivered. So I call BS on that one.

Also these are not commuter trains no way you have 3 minute buffer periods. Call BS on that as well.

Standing at 400 kmph. Holy Cr#p. Every emergency stop will be carnage.

In any case this is seriously OT. And I have violated my rule on engaging Panda trolls, so bye..

[Theo_Fidel]

http://www.bbc.co.uk/news/business-11539561

Loans to China local authorities 'at risk'

In 2009, banks lent heavily to regional financing vehicles for construction.

It came after Beijing called for nationwide efforts to boost the economy.

However, the CSJ, citing a government investigation, says adequate repayments are being made on only 24% of the debt owed by these local government financing vehicles.

And about half of the total loans went to projects run by local authority investment vehicles that are now unable to fully meet their repayments.

These must now be covered by the local governments or with collateral.

And the final 26% of cash may never be repaid.

[zlin]

http://www.nytimes.com/2010/10/28/techn ... mpute.html

A Chinese scientific research center has built the fastest supercomputer ever made, replacing the United States as maker of the swiftest machine, and giving China bragging rights as a technology superpower.

Enlarge This Image


The Tianhe-1A computer in Tianjin, China, links thousands upon thousands of chips.

The computer, known as Tianhe-1A, has 1.4 times the horsepower of the current top computer, which is at a national laboratory in Tennessee, as measured by the standard test used to gauge how well the systems handle mathematical calculations, said Jack Dongarra, a University of Tennessee computer scientist who maintains the official supercomputer rankings.

Although the official list of the top 500 fastest machines, which comes out every six months, is not due to be completed by Mr. Dongarra until next week, he said the Chinese computer “blows away the existing No. 1 machine.” He added, “We don’t close the books until Nov. 1, but I would say it is unlikely we will see a system that is faster.”

[Rahul M]

Of course standard gauge at 1435mm. In fact almost 99% of Chinese railways are of standard gauge, with only a few and unimportant exceptions in remote areas.

Do those trains run on metre gauge or broad gauge tracks? Taking the perspective of the two guys in the picture, the rail tracks look a bit narrower than standard broad gauge. If that's the case the train compartments would be quite narrow I'd reckon.

However, that picture was taken with fish eye lens so it could be the perspective was distorted - which also could have resulted in the TFTA looking noses.

Maybe Wrdos can clarify?

amit boss, wrdos might be unfamiliar with Indian railways jargon which we use.
china uses standard gauge(1435 mm) mostly. IR uses broad gauge (1676 mm)

[SaiK]

oh yeah.. they did it like the olympics. kudos.

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Code: Select all

Made/Designed In USA

[starek]

Of course standard gauge at 1435mm. In fact almost 99% of Chinese railways are of standard gauge, with only a few and unimportant exceptions in remote areas.

amit boss, wrdos might be unfamiliar with Indian railways jargon which we use.
china uses standard gauge(1435 mm) mostly. IR uses broad gauge (1676 mm)

In China, if you talk about "broad gauge", it means USSR 1520mm gauge.

[starek]

Credit needs to be given where it's due for these new trains - to Bombardier Transportation:
Bombardier Zefiro
Bombardier Zefiro 380, a.k.a CRH380

In fact, there are 3 type of CRH380s.
CRH1-380(CRH380C) is Zefiro, made by Bombardier-Sifang in Qingdao.
CRH2-380(CRH380A) made by CSR Sifang in Qingdao.
CRH3-380(CRH380B) made by CNR Changchun and CNR Tangshan.
CRH380A and CRH380B are mixed Japan and Germany technology. For example, CRH380A are very similar with Shinkansen E2-1000, but it's bogie are same as Simens'.

[wig]

China embarks on first national census in 10 years, however the issue of levy of penalties is going to make the whole exercise a farce because this is going to be an invitation for bribes to change hands and reporting is unlikely to be objective- thereby defeating the very purpose of the census in the first place

The Chinese authorities are about to begin the country's first national census in 10 years.
More than six million workers have been hired for the huge task in the world's most populous country.
The authorities hope the census will clarify the number of migrant workers, which by some estimates is said to be more than 200 million.
Earlier this year, in a keynote speech, Premier Wen Jiabao said migrant workers needed better treatment.
One-child policy
The census is a mammoth undertaking - to account for every individual in a country with a population of more than 1.3 billion.
But that is the task facing the millions of census workers as they fan out across China.
The biggest challenge will be documenting migrant workers, who often have no fixed address.
In recent years tens of millions of Chinese have moved from the countryside to the cities in search of work.
But many of these workers have been marginalised and denied services.
It is also hoped that the census will reveal how many children there are in China, which is generally under-reported.
Because of the country's population controls, and the one-child policy, people often do not register extra children.
But the authorities now say that the penalties will be smaller if families come clean during the census.
And for the poorest families, they will be allowed to pay any fines through instalments.

http://www.bbc.co.uk/news/world-asia-pacific-11663349

[krisna]

China vs. India: An Investment Dilemma?

When we think about the two emerging giants of the East, historically most have gravitated towards China. About a year ago I invested a sizeable sum of my investment capital in India. Many people have since asked me why, as if I’ve committed a cardinal sin by breaking from conventional wisdom or thinking, but for me that was the primary factor prompting my decision in the first place

For many people, the crisp and modern infrastructure of China, along with the countries overwhelming ability to adopt new policy and practices at break neck speed, and with seemingly little effort, have been enough for them to park their money there. It is important to point out that this is merely window dressing and hides growing internal problems which we will explore later. Furthermore, China has always pumped a lot more money into its infrastructure, 11% of its GDP as opposed to 6% for India. Last but not least, it’s important to remember that China has roughly a ten year head start on India. It began its awe inspiring growth back in the early 80’s, India began in the 90’s.

It’s very true that China’s infrastructure and cities are far more advanced than India’s, as China’s economy has seen 9% GDP growth for the past 30 years, but India has never been far behind in terms of economic growth, averaging around 6-7%, and is pumping huge sums into developing its infrastructure. For me though, the Chinese economic model has reached its pinnacle and cracks are beginning to appear.

China has a very poor democratic track record, decision making is always done by central government and passed down to its tightly regulated state owned banks and businesses, which then obediently comply. The state is huge in China, which is a reminder of its Communist past. The advantage of this has always meant that China has been able to implement policy changes and huge investment initiatiatives with extreme efficiency, but huge sums of money are wasted amongst the bureaucracy and red tape.

Damn you again the democracy issue--

India by contrast has always been deregulated with decision making taken locally and democratically. This has meant that decisions often take a long time to be made, but all of India’s financial and Commercial Institutions are managed independent of central government. India’s largest companies today started out as small independent start ups. It’s no doubt a country that fosters, values, and indeed practices entrepreneurialism with great vigor. The advantage with this is that Indian companies utilize capital with far greater efficiency, with little to no waste. In stark contrast to it’s behemoth neighbor to the north

Damn you x 2

Essentially, India’s economic model has a great deal more in common with that of the West, particularly the United States. Think about it, it was a bunch of small businesses run by energetic and innovative entrepreneurs that propelled America along a trajectory which lead it to superpower status in a relatively short period of time. No reason it can’t happen again.

Hope for the future--

Although the figures in this table favor China, I strongly believe China is in for a rude awakening, and soon. I want to draw particular attention to the recent Global financial crisis of 2008. That crisis began in the U.S. and quickly emanated outward like a blast wave, to infect the rest of the world. As a result, India has surprisingly emerged from it and indeed dealt with it much better than China. Since the crisis Chinese stocks have performed poorly.

About 35% of China’s GDP stems from exports. With the West still in trouble, China has lost much of its growth over the past 2 years. India on the other hand has for the first time seen it’s GDP overtake China’s, growing 9.2% in 2010. India exports account for only 24% of its GDP and internal consumption accounts for a massive 57%. In China, internal consumption accounts for 35%. In other words, India will continue to grow whether Western consumers tighten their spending or not.

No wonder wen jiabo was heard saying if changes to remnibi occur it will increase social unrest indirectly hinting loss of CCP power. Also CCP trying to increase internal consumption to offset the export driven growth.

Furthermore, China has pumped huge sums of money into its economy, with it’s stimulus package constituting 6% of GDP, and India only 3%.

It should be noted also that China is facing an impending financial crisis of it’s own. During the past year or so, while the rest of the world has been tenderly licking it’s wounds from the great recession, Chinese banks have been loaning vast sums of money to Chinese consumers in an attempt to compensate for sluggish export sales. The Chinese government recently announced that 20% of all loans made will likely be non-performing. A more realistic number of 30% of loans turning sour could well bankrupt the entire banking system. Even conservative estimates have put bad loans at a staggering 8% of GDP, more than double what the savings and loan crisis amounted to in the United States. Food for thought indeed.

Authors crystal ball gazing into the future--

My money will be in India for the long term. I also believe, further to the observations above, China will cease to become an attractive destination for Western corporations looking for cheap labor, which has been the magnet for so long. I believe that China will be unable to keep its currency from appreciating for much longer and will see more internal pressure from unions for higher wages and better working conditions, as seen earlier this year. China is about to sail through some very choppy water.

Can this really occur??

[Theo_Fidel]

Authors crystal ball gazing into the future--
http://marketplayground.com/2010/10/31/ ... t-dilemma/

My money will be in India for the long term. I also believe, further to the observations above, China will cease to become an attractive destination for Western corporations looking for cheap labor, which has been the magnet for so long. I believe that China will be unable to keep its currency from appreciating for much longer and will see more internal pressure from unions for higher wages and better working conditions, as seen earlier this year. China is about to sail through some very choppy water.

Can this really occur??

Its just a blog pontificating. Almost all the numbers are incorrect. Lacks credibility. Even the analysis is very shallow and has no experience in India.

[Prem]

U.S. Lawmakers Request FCC to Review China's Huawei, ZTE
http://www.bloomberg.com/news/2010-10-2 ... risks.html

U.S. lawmakers asked the Federal Communications Commission to review the security risks of domestic companies ordering network equipment from China’s Huawei Technologies Co. and ZTE Corp. The Chinese companies are in "active" discussions to supply at least two U.S. companies, Sprint Nextel Corp. and Cricket Communications Inc., Senator Jon Kyl, an Arizona Republican, wrote in a letter co-signed by three other lawmakers yesterday. It’s at least the second time in two months that U.S. lawmakers have prodded the Obama administration to review the risks of buying Chinese telecommunications equipment. Eight U.S. lawmakers on Aug. 18 warned that a Sprint contract with Huawei would “undermine U.S. national security.”

[wig]

Looking for Investments, China Turns to Europe
But China had much greater ambitions. Greece is one foothold for China’s broad, strategic push into Europe. It is snapping up assets depressed by the global financial crisis and becoming a significant partner of other hard-hit European nations.

China is concentrating its efforts on ports in Greece and Italy and highways that link Eastern Europe to Germany and Turkey, and aims to secure larger infrastructure investments over time. It has provided billions of dollars in state financing for key public works projects that support Chinese state-owned companies and Chinese workers.

Such moves could give China a bigger presence in the European chain of distribution and production, while allowing it to build a track record of investments that it hopes will also encourage Europe to support its position on divisive currency issues and in trade disputes at the World Trade Organization.

For China, plowing a small but growing share of its more than $2.3 trillion in foreign currency reserves into European investments instead of low-yielding United States Treasury bills helps diversify its portfolio. Beijing also hopes that this kind of push helps reduce the international political pressure to raise the value of its currency.

“It’s not a coincidence that China is doing this,” said Jens Bastian, an economist at the Hellenic Foundation for European and Foreign Policy. “They have huge currency reserves, and these countries where they are going right now have a dying need for foreign investment.”

http://www.nytimes.com/2010/11/02/busin ... ml?_r=1&hp

[vina]

China is concentrating its efforts on ports in Greece and Italy and highways that link Eastern Europe to Germany and Turkey, and aims to secure larger infrastructure investments over time. It has provided billions of dollars in state financing for key public works projects that support Chinese state-owned companies and Chinese workers.

Yawn.. Good luck to the Chinese. The old saying, "A fool and his money are soon parted" is what comes to my mind.

In Vietnam, the idiot Americans thought that they could do with Arms alone what the French could not do with Arms AND brains and a colonial history of having ruled that country for nearly a century!.

The S. Europeans are past masters of milking the Eurozone and living of their "ruins" . Those Latin and "Romance language" belt (other than France) are great places to visit and live in, but a bottomless pit for investment.

The Chinese think they can succeed where the Europeans failed! Good luck. My prediction with these kind of things is ususally spot on. During the financial crisis, when the Middle Eastern, Singaporean and other Sovereign funds rushed to invest in the banks, I predicted they will lose their shirts. Well, no surprise , they did.

I predict the Chinese will lose their shirts in S. Europe, Africa, dodgy parts of Asia and all other "hello, whatisit'sname country and where on the map is it?" places. Jai Hu , Jai Wen, Jai Mao!

Comlade Mao, Lal Salaam!

[TonyMontana]

China is concentrating its efforts on ports in Greece and Italy and highways that link Eastern Europe to Germany and Turkey, and aims to secure larger infrastructure investments over time. It has provided billions of dollars in state financing for key public works projects that support Chinese state-owned companies and Chinese workers.

Yawn.. Good luck to the Chinese. The old saying, "A fool and his money are soon parted" is what comes to my mind.

...

I predict the Chinese will lose their shirts in S. Europe, Africa, dodgy parts of Asia and all other "hello, whatisit'sname country and where on the map is it?" places. Jai Hu , Jai Wen, Jai Mao!

China can't do anything right, uh? We must be the luckiest b@stards in the world to get to where we are today. Ever heard of strategic investments? Not everything is about money.

[vina]

China can't do anything right, uh? We must be the luckiest b@stards in the world to get to where we are today. Ever heard of strategic investments? Not everything is about money.

TonyMontana, my job for a long time was in "Strategy" and what that meant was listening deep and long to lots of brilliant , talented and successful folks who used to come up and say how their idea/product/service or how acquiring a particular company or its assets was the greatest thing ever and how they will do this and that and why the company should commit $XX '1000s/millions of capital , all right now, so that it is "strategic" and that the "immediate returns are not significant" , but in the "long term" it is a strategic bet and will pay off.

Whenever I heard the word "strategic", wont pay off now, but in the 'long term' it will, my eyes glaze over and the old saying "In the long run we are all dead" comes to my mind.

What I always did then was this. I ask them to come up with a business and financial plan , detailing what they will achieve in the first 3 years every quarter (and no, that is not financial numbers, but stuff like , I will have done this development, rolled this out for beta, done x no of pilots, got y no of customers to sign on for a beta, done z events, etc etc and I will start getting revenue numbers of $a after some b quarters). Once I ask them to do it and say that my hurdle rate given the opportunity cost is XX% and you should achieve XX+YY % to have economic value or there is no point on me going with your higher risk option and would rather do business as usual and say that I want you to put all this on paper and I will send it upstairs for senior mgmt approval, that is when the "Aha!" moment dawns.

After that I really dont hear "strategic", "long term","greatest idea", "we should acquire this company right now" any more. And yes, I can make those calls pretty well and I predict this. I was on the side of the Planning Ministry or whoever is the guy who signs off on this in the Chinese govt, I'd be extremely skeptical over anything coming out of it, though I would be loath to open my mouth, given it is the Chinese govt and opening my mouth could potentially see me in front of the firing squad, especially when extremely powerful political bosses and companies and agencies are involved in both personal and official capacity and will be loath to listen to any reason , well meaning or otherwise.

Anyway, "no skin off my nose" in English or "what goes my father's " in Inglees (which translates is as nothing that is mine/eventually mine involved/"goes"/lost aka I dont have a dog in this fight or in polite conversation, I have no stakes in this). So what if the Chinese lose their shirts. Good luck to them.

Jai Hu Gin Tao(nic) and Jai Mao (Ding Ding).

[DavidD]

vina,

You might be surprised at how much debate regarding all issues aside from political ones within the CCP.

Switching topics:

http://shadow.foreignpolicy.com/posts/2 ... free_trade

The results are even starker if you follow a Foreign Policy scorecard from late September. Max Strasser identified five races in the Midwest in which the trade critic played the "red-menace card" and linked his opponent to China trade. That particular Democrat fantasy team: Ohio Lt. Governor Lee Fisher (running for the Senate); Ohio Governor Ted Strickland (running to keep his job), U.S. Rep. Joe Sestak (running for the Senate in Pennsylvania); Lansing Mayor Virgil Bernero (Michigan gubernatorial candidate); and Illinois State Treasurer Alexi Giannoulias (running for the President Obama's old Senate seat). They were swept last night. 0 for 5.

Looks like the China criticism didn't work too well in this round of elections.

[Theo_Fidel]

A little dated but still fascinating to watch. Where do they get the money for this sort of fantasy construction. It baffles one.

How do they manage the cash flow for a $500 Million building sitting empty. Just the maintenance and debt repayment cost will be a 1/4 Million dollars every single day minimum. Yet they sit there empty.

This is now 60% of their GDP. Not growth. Total GDP.

[DavidD]

A little dated but still fascinating to watch. Where do they get the money for this sort of fantasy construction. It baffles one.

How do they manage the cash flow for a $500 Million building sitting empty. Just the maintenance and debt repayment cost will be a 1/4 Million dollars every single day minimum. Yet they sit there empty.

This is now 60% of their GDP. Not growth. Total GDP.

Can you provide some evidence to back up your claims, including the youtube video? I'm sure you saw the 60% GDP number brandied about, but how did they calculate that? Constructions accounting for 60% of the GDP is such a stupidly outrageous figure that I don't think anyone with any sense in economics will believe that. It sounds like some distorted figure politicians trout out during campaign season. As for the youtube video, does the guy who made it have any proof that they're actually complete and actually empty? Some definitely seem like they're still under construction.

[Theo_Fidel]

^^^^^

Troll Alert!

[wrdos]

It seems some friends here simply have no sense of numbers.

[Suraj]

Theo: Please go easy - it's a reasonable question to ask for more data

[Theo_Fidel]

Bah! Don't feed the trolls Suraj. They know where data is.



The National Real Estate Market In the Past Three Quarters

In the past three quarters, investment in real estate development totaled 3351.1 billion yuan ($504.2 billion), up by 36.4 percent year on year, of which, investment in residential buildings reached 2.35 trillion yuan ($353.7 billion), representing a 33.8-percent increase year on year and accounting for 70.2 percent of the investment in real estate development.

Newly built housing floor space stood at 1.19 billion square meters, up 63.1 percent year-on-year; and completed floor space reached 369 million square meters, climbing 10.4 percent year on year.

Floor space of commercial buildings sold surged 8.2 percent year on year to 632 million square meters.

Real estate development enterprise funds reached 5.05 trillion yuan ($759.8 billion), a year-on-year increase of 32.5 percent. Of the total, domestic loans amounted to 939.8 billion yuan ($141.4 billion), up 27.2 percent; utilization of foreign funds reached 45.2 billion yuan ($6.8 billion), increasing 26 percent; self-financing funds hit 1.91 trillion yuan ($287.7 billion), up 49.7 percent; and funds from other sources totalled 2.15 trillion yuan ($323.9 billion), rising 22.3 percent. Of the funds from other sources, deposits and advantage payments totaled 1.22 trillion yuan ($183.3 billion), increasing 18.7 percent; and personal mortgage loans stood at 639.1 billion yuan ($96.2 billion), increasing 19.6 percent.

[Theo_Fidel]

http://www.theepochtimes.com/n2/content/view/44697/

China’s GDP Obsession Has Its Flaming Coda
Bloodshed, poverty and unrest accompany imbalanced growth

In the three hours since the eviction team had showed up, Tang again and again tried to scare them away. “Go away! We can sit down and negotiate,” she had shouted repeatedly. She doused herself with gasoline several times, yelling “I’ll burn myself!”

But the team still broke into the house and watched Tang burn for 10 minutes before they put out the fire. Her home was torn down, and sixteen days later she died in hospital. Her ex-husband and six other family members were arrested for “violently resisting law enforcement.”

Under the intense pressure for GDP growth, and as state-owned enterprises fail, local governments have found land sales a source of quick revenue. In 2009, land sale revenue accounted for 4.4 percent of the GDP, according to official statistics. In some cities, up to 60 percent of government income came from land sales.

Soaring housing prices, a result of high land prices set by the government, has given rise to increasing disputes over land and housing compensation. City or suburban dwellers like Tang Fuzhen often find government compensation to be far from enough to purchase a comparable unit in the same area.

It is often worse in rural areas. According to Chinese labor authorities, more than 40 million farmers have lost land to building projects, and have become China’s most impoverished group. Over 60 percent of these farmers are jobless and receive no assistance.

In addition to those whose human rights have been trampled and finances infringed upon, the environment has also become a victim of the pursuit for high GDP growth. Authorities have been lenient to heavy polluters because of their contribution to the GDP, while natural resources have been exploited to support increasing production. The environmental impact has been devastating: According to a World Bank study, 16 of the world’s 20 most polluted cities are in China.

[Theo_Fidel]

http://articles.moneycentral.msn.com/In ... spx?page=2

Is China actually bankrupt?

China escaped the first stage of the crisis because the country's tightly controlled currency and stock markets, and its economy, had kept out hot money from overseas. China had built its export-led economy on domestic bank loans instead. The majority of bank loans, then as now, went to state-owned companies -- about 70% of the total, the Congressional Research Service estimated in a 1999 examination of the period.

Those loans were all that kept the doors open at many of China's biggest state-owned companies. In its review, the Congressional Research Service estimated that about 75% of China's 100,000 largest state-owned companies lost money and needed bank loans to continue operating.

By now, everyone who has a nickel in China, or a dime itching to get into China, knows that the country's banks went on a lending spree in 2009. On top of official government stimulus spending of $585 billion, banks, encouraged by the government, doubled their lending in 2009 to $1.4 trillion from the previous year.

(Please remember when judging these figures that China's economy was an estimated $4.8 trillion in GDP in 2009, according to the CIA World Factbook. Estimated U.S. GDP was about three times larger, at $14.3 trillion. So China's 2009 bank lending of $1.4 trillion would be equal to lending of $4.2 trillion in the United States, and China's $585 billion government stimulus package would equal a $1.7 trillion U.S. package, more than twice the $787 billion size of the U.S. stimulus package of February 2009.)

China's banks hit the ground running even harder in 2010, lending out an additional $309 billion in January and February. If the banks had continued at that rate, they would have passed the official lending ceiling of $1.1 trillion by August. (See my Jan. 14 column for more on the lending boom and its results.)

Local-government investment companies had a total of $1.7 trillion in outstanding debt at the end of 2009, estimates Victor Shih, an economist at Northwestern University and the author of "Factions and Finance in China." That's equal to about 35% of China's GDP in 2009.

In addition, banks have agreed to an additional $1.9 trillion in credit lines for local investment companies that the companies haven't yet drawn down, Shih says.

Together the debt plus the credit lines come to $3.8 trillion. That's roughly equal to 75% of China's GDP.

None of this, Shih points out, is included in the IMF calculation of China's gross-debt-to-GDP figure of 22%. If it were, the number would be closer to 100%.
Savings aplenty, but for whom?
Exactly how important is this number?

It depends on how many of those loans at local investment companies will go bad. Shih estimates that about 25% of current outstanding loans -- totaling $439 billion -- will go bad. (For comparison, remember that in the aftermath of the 1997 currency crisis, the newly established asset management companies swallowed $287 billion in bad loans.)

[DavidD]

I don't see any of them saying China's GDP is 60% constructions.

[harbans]

Me thinks that the tendency to just accuse folks asking for relevant data of trolling should be curbed a bit. While on my recent visits to China i did observe low occupancy in malls, office spaces, residential buildings roads etc, accurate figures are hard to come by. To get and try figure out a better picture, it's best defined by answering and substantiating it by whatever data is reasonably available than issuing unnecessary troll alerts. JMT/

[heech]

A little dated but still fascinating to watch. Where do they get the money for this sort of fantasy construction. It baffles one.

The good news is that we have an easy proxy for monitoring who's right about China. Keep your eyes open on returns frm Hugh Hendry's Eclectica fund (pictured in your Youtube video), as well as Jim Chanos Kynikos funds.

[Vasu]

U.S. Lawmakers Request FCC to Review China's Huawei, ZTE
http://www.bloomberg.com/news/2010-10-2 ... risks.html

U.S. lawmakers asked the Federal Communications Commission to review the security risks of domestic companies ordering network equipment from China’s Huawei Technologies Co. and ZTE Corp. The Chinese companies are in "active" discussions to supply at least two U.S. companies, Sprint Nextel Corp. and Cricket Communications Inc., Senator Jon Kyl, an Arizona Republican, wrote in a letter co-signed by three other lawmakers yesterday. It’s at least the second time in two months that U.S. lawmakers have prodded the Obama administration to review the risks of buying Chinese telecommunications equipment. Eight U.S. lawmakers on Aug. 18 warned that a Sprint contract with Huawei would “undermine U.S. national security.”

ZTE and Huawei rule the roost in India as well. Most of the communication networks in India are either run by them, or are in the process of being given to them. The traditional powerhouses in telecom infrastructure space were Alcatel Lucent and Ericsson, and both are losing out to the Chinese who can provide the same infrastructure at a very low price.

These two companies have been expanding very rapidly in Asia and Africa. I believe ZTE has over 2000 engineers/professionals on its rolls in India.

[Rishirishi]

You cant automatically apply all the western economic theory to China. The Chinease banks are all government controlled, as are most of the property developers. So let us say that Banks are not repayed. The government can simply forget about the loans. And do bear in mind, there are people who can occupy the flats. So what if they cant pay for them, they can still be gifted the flats.

I am not saying that China is not going to face problems. I am just trying to point out that things way work differently in China.

[Raghavendra]

Why crying?

[Theo_Fidel]

http://blogs.wsj.com/chinarealtime/2010 ... tion-boom/

A Speedbump in China’s Consumption Boom?

According to the latest figures for the first three quarters of 2010, per-capita consumption expenditure by urban residents was up 6.3% in real terms from the same period a year earlier. That’s quite a bit slower than the 10.1% rate at which spending was growing at this time last year, and even from the 8.7% in the first quarter of 2010. And while the bureau doesn’t break out the individual quarters, if you do the math yourself, you get the rather disappointing figure of 4.5% real growth in the third quarter.

In one attempt to bring clarity to the figures, the Bank of Finland’s institute did its own calculations to strip out seasonal fluctuations and inflation from the consumption data reported by the National Bureau of Statistics. They think that in quarter-on-quarter terms, growth in urban consumption has come down from over 2% in 2008 and 2009 and is now expanding by less than 1.5%.

Whatever one makes of the latest figures, it’s hard to see in them evidence of the transition to a consumption-driven economy that many analysts think China will be making. “Both empirical evidence and theoretical analysis suggest that the Chinese economy is at an inflection point beyond which consumption is likely to outperform strongly over the next decade,” Morgan Stanley economist Wang Qing writes in a new report.

Money supply growth. Interesting.

http://www.pbc.gov.cn/publish/html/2010s07.htm

[DavidD]

I don't see any of them saying China's GDP is 60% constructions.

How about answering my previous questions instead of trolling?

Which questions?

[wig]

EU threatens to block Chinese bids for public contracts

The European Union will block access for Chinese companies bidding for publicly funded contracts unless businesses from Europe get the same access in China, under new proposals tabled in Brussels as David Cameron held trade talks in Beijing.
Over the last eight years, China's public procurement market has tripled reaching a value of over £54 billion, according to The China Business Review magazine.

Karel de Gucht, the European trade commissioner, proposed "a tool whereby we can impose reciprocity" to ensure that China did not discriminate against foreign businesses while awarding government funded contracts.

"Imagine a Chinese company that participates in a bid, and on the other hand the same sector, or sub-sector, of public procurement is not open in China, then we could make an intervention," he said

http://www.telegraph.co.uk/finance/chin ... racts.html

[wig]

JCB boss takes a dig against 'unscrupulous' firms in China
The chairman of JCB has called for Government action on "unscrupulous Far Eastern" companies that have "copied" and "ruthlessly exploited" the intellectual property belonging to British companies.
said that JCB's machine designs have been "copied on many occasions by unscrupulous Far Eastern competitors". Sir Anthony added the "practice is now commonplace in many industries".
Sir Anthony, who said he has personally complained about the problem to Chinese premier Wen Jiabao, added: "It is just not acceptable that one company's research and development effort is ruthlessly exploited by another elsewhere in the world."

http://www.telegraph.co.uk/finance/chin ... China.html

however with most chinese manufacturing in the hands of the families of chinese political elite and a non existent judiciary -in the context of the judicial setup as we know it in India or western democracies - my humble opinion is that i do not see any respect for intellectual property rights in china within the present system. the families of the present top notch leadership appear to be the principal beneficary of the chinese economic boom

[ashi]

China trade surplus swells to $27.2 billion

http://money.cnn.com/2010/11/09/news/in ... /index.htm

China's trade balance, which measures the difference between the nation's imports and exports, increased to a staggering $27.2 billion in October, a 61% increase over the $16.9 billion surplus in September.
Imports rose 25.3% to $108.8 billion, while exports rose 22.9% to $136 billion for the month.

[wig]

China may be bigger economy than US within two years Here’s a finding that will have any red-blooded American spluttering into his cornflakes. According to the Conference Board, a highly respected economic research association, China will overtake the US as the world’s biggest economy by 2012, or within two years.

OK, so in dollar terms, that’s obviously not going to be the case. It will be a lot longer than two years before China overtakes the US on that measure. But in terms of purchasing power parity, according to the Conference Board’s latest world economic outlook, China is already nearly there, and by 2020 will have reached a size of output which is nearly half as big again as the US.

Here’s the Wkipedia link explaining what PPP is, but broadly speaking the idea is to measure output according to the volume, not the price of goods and services produced. The assumption made is that identical goods will have the same price in different markets. In practice, this is obviously not the case. A taxi ride in Beijing, for instance, will cost you approximately a tenth of what it costs in London. But it is essentially the same service.

In any case, in PPP terms, the Conference Board’s projections show China as 24.1 per cent of world output by 2020, and the US at just 14.8 per cent.

We all knew that the weight of economic growth had skewed dramatically since the crisis from advanced to emerging market economies, but many in the West don’t yet seem fully to appreciate the speed with which economic and geo-political power is shifting. This is a truly seismic change. How these once irrelevant economies choose to use their new found power is the overarching question of our times.

http://blogs.telegraph.co.uk/finance/je ... two-years/

[Prem]

China Tightens Bank-Credit Rule
http://online.wsj.com/article/SB1000142 ... 10130.html

BEIJING—China's central bank said Wednesday it will raise banks' reserve requirement ratio by half a percentage point from Tuesday, the fourth such increase this year, as concerns about excessive liquidity increase. The tightening comes after China reported its biggest monthly trade surplus in three months for October, and as the U.S. Federal Reserve's move to inject cash into its domestic market adds to concerns about an .