PRC Economy and Industry: News and Discussions

sanjaykumar · Post by **sanjaykumar** » 26 Nov 2010 06:32

Well China has had premature deaths from starvation and malnutrition as well as...ahem...man-made causes until only a generation back...

Kerala is a relatively poorly industrialised state in S.W. India-it has a life expectancy of 75 years.

vina · Post by **vina** » 26 Nov 2010 08:12

You refuse to work with actual numbers, and in any case you refuse to recognize any number coming out of China anyway, so we'll just have to agree to disagree.

On the contrary, I did and actually said how I would do it. I would deal with it the same way I see a proposal with "projections" on it. Be very skeptical of the revenue, ie, assume a best case of 1/2 to 2/3 of the projections and if it is a "hockey stick" like projection with little or no revenue in the first 2 to 3 years and the bulk of the value after 8 years and later, I would discount it even further (the uncertainties increase with time). I have been in the game far too long to be suckered by these "hockey stick" projections (remember internet companies and how in the "long run" all of them would make gazzlion dollars, well 99% of them went bust).

Go on, take the published figures you quoted, discount revenues by 50% , bump up your costs by 35% or so (which is the min, because it is China, if it were India, I would do it by 50%min and if it is a 5 year project, bump it by by 100 % or so) and see if the project even breaks even. Then do a +20% to -20% sensitivity analysis around that point. Then come back and tell me if the project makes sense.

I suspect it wont,it looks like it wont off the bat , given the "hockey stick" nature of the projections and the huge debt load and I wouldn't give such a project a second glance, unless there is some deep strategic justification beyond this specific project (I would take a muck longer look at the Qinghai-Lhasa railway link for eg).

So all in all, as a stand alone investment, this HSR is a massive dud. It is the $4b (or was it $6b) or whatever Shanghai Maglev mutliplied by some 40 times (someone dropped the $150b rollout cost ). Once you build out duds like that, there is no remedy for that sin.

Instead of building Maglevs, Chinese could have considered better alternatives. Coal gassification, building pipelines, consolidating the small subscale power plants into larger modern ones at pit heads etc.

HSRs are viable (from real world experience) largely between Metro Regions (what you finessed as "City like") with 3 hrs running time at max, beyond which HSR loses to airlines. W.Europe & Japan with the shorter distances and population densities, are the sweet spot. In the US, it is the East Coast corridor (DC-NY-Boston). A system like say NYC- Chicago makes no sense whatsoever.

China too is a big country.. Something like Guangzho-Beijing is simply dumb. Shanghai-Beijing too is probably too far for HSR.

Well, some Chinese fan boy posted that China is soon going to run trains in vacuum tunnels at super high speeds. Well, what can I say to such stuff other than, hello, such a thing already exists. It operates at speeds just below the speed of sound in near vacuum, doesn't need rails or anything, no need to build tubes which you need to maintain at vacuum and has been in operation for nearly a 100 years. Guess what that is ? (hint : a certain Orville and Wilbur wright invented them)

DavidD · Post by **DavidD** » 26 Nov 2010 19:08

vina wrote:
You refuse to work with actual numbers, and in any case you refuse to recognize any number coming out of China anyway, so we'll just have to agree to disagree.
On the contrary, I did and actually said how I would do it. I would deal with it the same way I see a proposal with "projections" on it. Be very skeptical of the revenue, ie, assume a best case of 1/2 to 2/3 of the projections and if it is a "hockey stick" like projection with little or no revenue in the first 2 to 3 years and the bulk of the value after 8 years and later, I would discount it even further (the uncertainties increase with time). I have been in the game far too long to be suckered by these "hockey stick" projections (remember internet companies and how in the "long run" all of them would make gazzlion dollars, well 99% of them went bust).

Go on, take the published figures you quoted, discount revenues by 50% , bump up your costs by 35% or so (which is the min, because it is China, if it were India, I would do it by 50%min and if it is a 5 year project, bump it by by 100 % or so) and see if the project even breaks even. Then do a +20% to -20% sensitivity analysis around that point. Then come back and tell me if the project makes sense.

I suspect it wont,it looks like it wont off the bat , given the "hockey stick" nature of the projections and the huge debt load and I wouldn't give such a project a second glance, unless there is some deep strategic justification beyond this specific project (I would take a muck longer look at the Qinghai-Lhasa railway link for eg).

So all in all, as a stand alone investment, this HSR is a massive dud. It is the $4b (or was it $6b) or whatever Shanghai Maglev mutliplied by some 40 times (someone dropped the $150b rollout cost ). Once you build out duds like that, there is no remedy for that sin.

Instead of building Maglevs, Chinese could have considered better alternatives. Coal gassification, building pipelines, consolidating the small subscale power plants into larger modern ones at pit heads etc.

HSRs are viable (from real world experience) largely between Metro Regions (what you finessed as "City like") with 3 hrs running time at max, beyond which HSR loses to airlines. W.Europe & Japan with the shorter distances and population densities, are the sweet spot. In the US, it is the East Coast corridor (DC-NY-Boston). A system like say NYC- Chicago makes no sense whatsoever.

China too is a big country.. Something like Guangzho-Beijing is simply dumb. Shanghai-Beijing too is probably too far for HSR.

Well, some Chinese fan boy posted that China is soon going to run trains in vacuum tunnels at super high speeds. Well, what can I say to such stuff other than, hello, such a thing already exists. It operates at speeds just below the speed of sound in near vacuum, doesn't need rails or anything, no need to build tubes which you need to maintain at vacuum and has been in operation for nearly a 100 years. Guess what that is ? (hint : a certain Orville and Wilbur wright invented them)

Hey, care to do a similar analysis of every single project the Chinese have completed over the past few decades? Somehow, I get the feeling that by discounting 50% of revenues and increasing 30% cost, they'd all be predicted by you to be a "hopeless dud". It's really quite a miracle that China is not bankrupt yet, but I guess it's coming up soon, right?

I have my own analysis too. I believe the Chinese are very cautious and don't like to show off, so I'd bump the revenue by 612% and decrease the cost by 93.7% I wouldn't be surprised if they've paid off the debt by the 2nd week that line opened

Judging by your comments, I can see why India's infrastructure is so poor. After all, it'll just bankrupt India! Instead, let's build more power plants, because obviously, with more power generators, you'll certainly alleviate congestion on the roads.

Sorry for the sarcasm, but there's really no way for me to refute your arguments since they're backed up purely by your beliefs and not by veritable facts. On the other hand, your argument regarding airlines does make sense. It wouldn't be profitable at all to have a line running straight from Guangzhou to Beijing, but the thing is, it doesn't run straight there. The line will pass through many major metropolitan areas including Changsha(pop: 6 million), Wuhan(pop: 9 million), Zhengzhou(pop: 7 million), and Shijiazhuang(pop: 9 million), plus many other million+ sized cities. It makes little sense for anyone to actually ride the train all the way through from Beijing to Guangzhou, but that's not the reality on the ground is it?

A couple more things, SW is a great airline, probably the best if you've got the choice, but 1)The price you quoted is a special price, and 2)Many airlines are not like them. For one, most airlines make you pay for checked-in luggage. Even SW makes you pay an extra $50(!!!) for overweight luggage. On a train, you can carry as much you want, and that could certainly result in huge savings. Two, as someone has already mentioned, the price rises sharply when you get above economy class. The same is not the case with Chinese HSR's.

The bottom line is that HSR's all over the world generate profits, so it boggles my mind why you'd think it's impossible for China's HSR system to generate profit given its extreme population density.

vina · Post by **vina** » 26 Nov 2010 20:46

DavidD wrote:Hey, care to do a similar analysis of every single project the Chinese have completed over the past few decades? Somehow, I get the feeling that by discounting 50% of revenues and increasing 30% cost, they'd all be predicted by you to be a "hopeless dud".

Do yourself a favor and just sit through the commentary and growth projections of the companies in the Shanghai index, and put $1000, in each stock of the Shanghai index and assuming that the market discounts the future P/E at the exact same ratio (to even out systemic events like sector and index re-rating and making it purely stock specific/systematic), you will have the EPS for the year based on every company's projections and then at the end of the year, compare what you will have actually made and what actually comes about and you will be surprised.

In fact, Index funds should be the easiest game in town, just follow the index by putting the money in the same weightage as the index. Guess, what is the % of fund managers who actually come anywhere close to the performance of the index (and this is both active and passive guys). If you are going to come up with some expected value based on the projections of individual components of the Shanghai index, well, good luck to you.

Yes, the Chinese growth story until recently was the Pearl River Delta story. That has changed to the Shanghai model, which is govt led and govt directed, backed by the limitless paper printing ability of the CHinese state. Any weakness and trouble that comes can get postponed for a long time and will not be apparent. But when it comes, it comes swiftly and without warning. Beware.

Instead, let's build more power plants, because obviously, with more power generators, you'll certainly alleviate congestion on the roads.

Err. You just shot yourself in the foot here.

. Most of your fellow Chinese posters here after boasting about the humongous amounts of coal that China burns and how the railroad is packed to the gills because of the close to a billion tons or whatever of coal they carry , justified HSR because it will move the entire passenger traffic off the normal railroads! That is why I pointed out saner options like coal gassification, pit head large power stations etc and ultra HVDC,so that you dont have to transport coal, you free up capacity and make rational choices. Oh no, it was a political project , a pissing contest aimed at the japanse, taiwanese and S. Koreans. You have HSR, so have we. Ours is just bigger and longer. Stuff from such motivations are usually terrible in economic logic and end in grief

svinayak · Post by **svinayak** » 27 Nov 2010 05:16

To Those Who Think India will be a poor country, see this video

DavidD · Post by **DavidD** » 27 Nov 2010 09:20

vina wrote:
DavidD wrote:Hey, care to do a similar analysis of every single project the Chinese have completed over the past few decades? Somehow, I get the feeling that by discounting 50% of revenues and increasing 30% cost, they'd all be predicted by you to be a "hopeless dud".
Do yourself a favor and just sit through the commentary and growth projections of the companies in the Shanghai index, and put $1000, in each stock of the Shanghai index and assuming that the market discounts the future P/E at the exact same ratio (to even out systemic events like sector and index re-rating and making it purely stock specific/systematic), you will have the EPS for the year based on every company's projections and then at the end of the year, compare what you will have actually made and what actually comes about and you will be surprised.

In fact, Index funds should be the easiest game in town, just follow the index by putting the money in the same weightage as the index. Guess, what is the % of fund managers who actually come anywhere close to the performance of the index (and this is both active and passive guys). If you are going to come up with some expected value based on the projections of individual components of the Shanghai index, well, good luck to you.

Yes, the Chinese growth story until recently was the Pearl River Delta story. That has changed to the Shanghai model, which is govt led and govt directed, backed by the limitless paper printing ability of the CHinese state. Any weakness and trouble that comes can get postponed for a long time and will not be apparent. But when it comes, it comes swiftly and without warning. Beware.

Instead, let's build more power plants, because obviously, with more power generators, you'll certainly alleviate congestion on the roads.
Err. You just shot yourself in the foot here. . Most of your fellow Chinese posters here after boasting about the humongous amounts of coal that China burns and how the railroad is packed to the gills because of the close to a billion tons or whatever of coal they carry , justified HSR because it will move the entire passenger traffic off the normal railroads! That is why I pointed out saner options like coal gassification, pit head large power stations etc and ultra HVDC,so that you dont have to transport coal, you free up capacity and make rational choices. Oh no, it was a political project , a pissing contest aimed at the japanse, taiwanese and S. Koreans. You have HSR, so have we. Ours is just bigger and longer. Stuff from such motivations are usually terrible in economic logic and end in grief

Great, so China will fall some day. I'm sure it will fall some day too, nothing lasts forever. What a wonderful prediction, thanks Nostradamus. Relieving coal transport will help, but you'd be a fool to think that it's enough. Here's an advice for you, flip back some pages and look at your past predictions. You'll soon realize just how little you know.

shyam · Post by **shyam** » 27 Nov 2010 11:27

DavidD wrote:What a wonderful prediction, thanks Nostradamus.

OT. Why this obsession with western preachers among Chinese? I consider Nostradamus predictions as bogus. So called his writing are in a cryptic form, and nobody has interpreted those predictions in advance correctly. All I have seen is that people claim that something had been predicted by Nostradamu after some event occurs. I would consider this as another bogus thing to fool people.

Theo_Fidel · Post by **Theo_Fidel** » 27 Nov 2010 11:54

This one is called Chenggong.

http://blogs.worldbank.org/transport/ri ... ghost-town

Rise of the Chinese Ghost Town

Chenggong springs from a typical development pattern seen throughout the country – cities that are rapidly growing in population and becoming increasingly congested develop satellite towns far from the urban core, relocating university, government, or other uses to kick-start the new town’s development. It is hoped that these new towns will, in addition to alleviate urban congestion, spark further in-fill development in the expanse of farmland that sets the new town apart from the city center – a kind of pre-planned suburban sprawl. Funding for these new towns comes from the difference paid to compensate farmers to relocate (a calculation based on potential agricultural yields) and the substantially higher revenue generated from leasing the same land to developers.

In other words, '..the farmer, he eat bitter tears.'.

The landscape is characterized by long, 450-meter blocks, gated communities with limited access points, expansive intersections that may be challenging to cross on foot, and a segregation of uses that may require residents to travel great distances to work, buy rice, and to go out for romantic dinners – and compete with other residents for road-space, since the mega-block urban design requires everyone to funnel into the exact same roads. My gut tells me this is a worrisome pattern -- though, I haven't seen traffic forecasts or density plans, so I cannot say for certain what will come to be.

What you cannot see in these images are the new light rail stations (not supported by the Bank) that seem to be placed at a distance from development, in the center of an eight-lane boulevard that can only be safely crossed by bridge. I undestand the stations will not accomodate substantial scooter or bicycle parking, which means they would only be accessible by bus -- I hope this is not the case, where every light rail trip will require at least one transfer…we will see what happens.

Theo_Fidel · Post by **Theo_Fidel** » 27 Nov 2010 12:09

Another one. This one called Thames town. Apparently 1 of 9.

http://www.cnngo.com/shanghai/play/shan ... own-327844

Shanghai Thames Town: A little piece of England in China

Tucked away near the last stop of Line 9, the satellite settlement of Thames Town opened in 2006 as part of Shanghai’s One City, Nine Towns program, with low-rise apartments and gated complexes designed to house 10,000 residents. Despite an intensive marketing effort (including a beauty pageant), the community failed to take off, and what’s left is a ghost town -- and an ideal place for a quiet afternoon stroll.

Theo_Fidel · Post by **Theo_Fidel** » 27 Nov 2010 12:35

NSFW!

http://www.dailymail.co.uk/news/worldne ... opens.html

This investment turned out to be as risky as it was risque.

A sex theme park that featured explicit exhibits and sexual culture is being demolished before it can even open, a government spokesman in southwestern China said.
The park, christened 'Love Land' by its owners, went under the wrecking ball over the weekend in the city of Chongqing, said the spokesman.
The spokesman refused to give the reason for the demolition or other details.
However, photographs of the adult-only park had circulated widely on the Internet over the weekend, prompting widespread mockery and condemnation.

DavidD · Post by **DavidD** » 27 Nov 2010 14:02

Marten wrote:DavidD, you are welcome to not respond. Stop posting personal attacks. You have gone far enough on enough occasions. Post an apology or stop posting your puerile attacks.

Fair enough, I apologize for the personal attacks. In my defense, his argument is that his beliefs are based on...well, his beliefs, so I had no choice but to question his credibility.

krishnan · Post by **krishnan** » 27 Nov 2010 14:25

Check google images for "Love Land" and you will known why they demoing it. Should have named it p0rn land

DavidD · Post by **DavidD** » 27 Nov 2010 16:48

krishnan wrote:Check google images for "Love Land" and you will known why they demoing it. Should have named it p0rn land

OMG

I can't believe it was built in the first place!

amit · Post by **amit** » 27 Nov 2010 16:59

Theo_Fidel wrote:Another one. This one called Thames town. Apparently 1 of 9.

http://www.cnngo.com/shanghai/play/shan ... own-327844

Shanghai Thames Town: A little piece of England in China

Tucked away near the last stop of Line 9, the satellite settlement of Thames Town opened in 2006 as part of Shanghai’s One City, Nine Towns program, with low-rise apartments and gated complexes designed to house 10,000 residents. Despite an intensive marketing effort (including a beauty pageant), the community failed to take off, and what’s left is a ghost town -- and an ideal place for a quiet afternoon stroll.

It's a measure of how the CPC has destroyed the rich cultural ethos of the Chinese that party bosses have to go all around the world and look at quaint building styles in Europe and elsewhere to get inspiration for town building, little realising the history which led to those particular styles of building.

And these CPC bosses and their drones are claiming the legacy of the old Chinese culture to state that they are the natural hegemon of East Asia!

wig · Post by **wig** » 27 Nov 2010 21:09

very interesting article from Japan Online a japanese publication on what the chinese term as middle class and just what it can afford. the persons benefitting appear to be people related to communist party high ups. everybody else seems to be struggling
worth reading thoroughly. i for one feel that this is as close to the truth as it can be
http://search.japantimes.co.jp/cgi-bin/ ... 122a1.html

SENTAKU MAGAZINE
Japan shouldn't bet farm on China's 'middle class'
Many Japanese corporations are pinning their hopes on what they see as the expanding "middle class" in China, which they think will offer a huge potential market for their products. In reality, that class is a mirage created politically by the Chinese Communist Party and is on the verge of disintegrating.

The middle class in China began to show its presence around 2005 and has consisted of those in managerial posts at state-owned enterprises, financial institutions and subsidiaries of foreign companies, as well as those who operate their own information technology venture businesses. They were known for spending their money on plush condominiums, expensive automobiles, traveling abroad and playing golf.

Since around 2008, real estate prices have shot up so high that the price of a condo in Beijing, Shanghai and Guangzhou now is 30 to 50 times the annual income of those in the middle class.

Further aggravating the situation has been a sudden drop in the stock market. The SSE Composite Index of the Shanghai Stock Exchange, for example, fell from a peak of more than 6,000 in autumn 2007 to around 3,000 at present.

What exactly is the size of the middle class in China? One answer to this question is given by the Chinese Academy of Social Sciences, a government-affiliated think tank. It says in its report that 23 percent of the total population belongs to this category. This means about 300 million out of the population of 1.3 billion, some 2.7 times the size of the middle class in Japan, estimated at 110 million.

Marketing experts point out, however, that there is a big mathematical trick in the statistics announced by the academy, which defines the middle class as those who earn more than 6,000 yuan (about ¥80,000) per month. With that monthly income, one can barely survive in big cities like Beijing or Shanghai, let alone enjoy life as a big spender.

There are two reasons why the Chinese government has artificially blown up the size of the middle class. One is to drive home to Chinese people that the government's economic policies have been highly successful. The other is to give foreign corporations high expectations about China's markets.

It is true that consumption in China has been on the rise, as evidenced by the 18.3 percent year-on-year increase in the first nine months of this year. This figure, however, was much lower than the 24.5 percent increase in investments by the government and state-owned corporations in fixed assets.

Another important factor that must not be overlooked is the fact that nearly half of retail sales in China is accounted for by the money spent on housing. The China Real Estate Research estimates that, in 2009, sales of new and used houses were valued at 5.7 trillion to 6 trillion yuan, which represented a substantial portion of the overall retail sales, which stood at 12 trillion yuan.

Given the steep rise in the prices of newly built condominiums, it would be a gross mistake to jump to the conclusion that the purchases of durable consumer goods are rising by double-digit percentages.

Although home electric appliances and automobiles are growing in sales, that has been due primarily to subsidies provided by the government to encourage purchase of eco-friendly cars and to boost sales of home electric appliances in farming regions.

Observers point out that during the past decade, the overall expansion of consumption in China has been brought about by wealthy people (numbering 70 million to 80 million) who have connections with the Chinese Communist Party. They have become even wealthier, while the so-called middle class has continued to struggle.

This observation is substantiated by the fact that the Gini coefficient in China has shot up to 0.5. This coefficient shows how equally or unequally income is distributed within the country, with the value of zero expressing total equality and a value of 1 maximal inequality. Had the middle class grown as claimed by Beijing, the Gini coefficient could not have gone as high as 0.5.

Another factor that has been working against the middle class is the sluggish performance of corporations in the private sector. Since the spring of this year, factory workers have held a series of strikes in many parts of the country to protest low wages. Management cannot afford to comply, however, because a majority of the privately owned enterprises in China are not at a technological level of high added value. So, they are forced to sell a large volume of merchandise at low-profit margins.

Many companies are making only 2 to 3 percent profit on sales and have been hit especially hard by wage hikes and the recent rise in the value of the renminbi currency.

The plight of the private sector is also reflected in the growing number of new college graduates who are unable to find jobs. Even though the overall economy is registering double-digit growth, only about 40 percent of those about to finish college are said to have found jobs. This is much worse than in Japan.

The Chinese Communist Party has long thought that an affluent middle class is indispensable for securing social stability. But the demographic composition of the population has made this target infeasible. Whereas in the industrialized nations, social stability was attained by building a middle class covering 70 percent of the population, China has had to look after 720 million farmers.

Since there are more farmers in China than farmlands can accommodate, many have had to seek jobs as migrant workers in urban areas. In the postwar Japan, the government adopted a fiscal policy designed to elevate farmers to the middle class. Farmers in China are so numerous that the government would find it impossible to do this.

Even if China succeeds in establishing a middle class, its members will account for only 20 percent to 30 percent of the population. Rather than becoming the dominant group in the country, the nascent middle class in China is struggling to survive. Japanese companies would be taking a big risk in betting that the Chinese middle class will continue to expand and prosper and thus create a substantial market for consumer goods.

vina · Post by **vina** » 27 Nov 2010 21:50

Here's an advice for you, flip back some pages and look at your past predictions. You'll soon realize just how little you know.

Actually my "predictions" have been pretty spot on, especially the macro econ related ones. I can justifiably point out to calling the peak of the Indian stock market in 2008/09, the mortgage collapse in the US and also said this. This global imbalance of credit growth explosion (China exports to the US, then recycles the dollars back to the US treasury keeping US interest rates low and Chinese currency weak..the business model that the Japanese had to give up in 1989 but which the Chinese and the rest of East , S.E Asia and Middle East still are dependent on), cannot continue. The US has reached the limits of it's credit capacity and if you continue much further you expose yourself to serious US credit risks way beyond what can be sustained (even if the current level itself is largely unsusntainable).

The Chinese consumption is underdeveloped and cannot sustain the industrial output of China. The Chinese fan boys in this thread responded that China will develop it's internal market. Yes, it will and it has to , there is no alternative to that . But keep in mind, selling to millions of impoverished peasants and some psuedo middle class who would be "poverty levels" in the current marketc China caters to calls for a diffrent business model , fundamentally different economics and mental makeup and a level of profitability that must be self sustaining and able to fund all claims to factors of production.

Based on that, I make the following predictions.

1) China has gone past the hump as far as growth rates go. I doubt the 10%+ Chinese growth rates can be sustained for another decade. At best you are looking at 5 more years before the growth starts converging to "developed economies" / secular growth rates of 2 to 3% (the demographics, the macro scene, everything points that way).

2) With the govt dominated structure of the Chinese economy with SoEs, the value addition overall of Chinese economy , especially in exports and it's profitability overall of exports will continue to be abysmal. Yes. The dominant theme of China will continue to be the "China Price", but that too will not be very attractive going forward, given the rising exchange rate and inflation expectations.

3) The Chinese let off the pressure in their system by having "migrant workers" moved from Country side to City/ factories. But as the "migrant workers driven", low wage, low cost, high volume, barely break even margins kind of industry becomes unsustainable, I wonder what will happen to the next generation of rural workers. China still has far far surplus rural folk than can be accomodated on the land. What will they do I wonder. Even the current system of Hukou based rural /urban business means that the "migrant workers" and not citizens in the larger sense but more guest workers, who need to go back home, once thier employment is over. What will happen to their children ?

4) Tough times ahead sir. Next 25 years after 2015 are going to be tough, especially when the US get's it's economy going again and are in a strong enough position to stare down the Chine on currency. It aint going to be pretty. If Japan stagnated in 1989 with $30,000 odd per capita, China is going to stagnate at around 2015 to 2018 with around $10K-$12K per capita (today's dollars)

abhischekcc · Post by **abhischekcc** » 27 Nov 2010 23:27

There IS an internal option that CCP can use, if economic growth fails to deliver development to the poor. That is, blame the economic reformers for all the ills, cut off visible consumption from the economy, and go back to the 'iron rice bl' system of communism. It will require an intra party coup by the hard line socialists, which will be backed by the PLA. Do not assume that this impossible. Neither the socialists (who are marginalized by the current market led growth) nor the PLA (which sees economic and political reform as leading to loss of internal control and eventually external control as well) are really comfortable with the economic reforms. They are quite only because it delivers results.

Such internal coups have happened in the past in China and are part and parcel of communist/one-party systems.

shynee · Post by **shynee** » 28 Nov 2010 04:42

No one home - Geoff Dyer

Theo_Fidel · Post by **Theo_Fidel** » 28 Nov 2010 07:51

Another one. Called perfume city. Phase 1 empty but phase 2 construction ongoing..

http://www.onasia.com/system/compview.a ... 0296511.50

Beijing, China - 17 Jul 2010. Perfume City, a nordic style town in Huairou district. Despite the very low occupancy of the finished phase 1, the construction continues. Will it burst? And when? While the analysts are engaged in a fire-hot discussion on the future of real estate in China the mystery remains, is it a bubble? A big or a small bubble? And will it affect the weak Chinese banking sector? The reality on the ground is confusing. In the capital Beijing, as in the other metropolises as Shanghai and Guangzhou, sales are going down but prices are going up. Big shopping malls are empty, dusty and full of "opening soon" boards. But new, enormous malls are coming up, almost every week. In some places, demand from the upper middle class is so hot that it cannot be satisfied, while for others speculators keep driving up prices for land, luxury apartments and villas that are now left empty. Economists say that with few other investment options in an economy that is still closed, investors are forced to put a big chunk of savings into real estate. In the last few years, they add, China has escaped the consequences of the international crisis with the "Cheap money" policy that has made builders happy. But this policy is over and has left the banks overloaded with bad debts.

Yet one more. Stephen hall building. Supposedly 40% sold.

Linked Hybrid or Grand Moma is one of the world's largest socially and environmentally aware residential projects, designed by Steven Holl Architects.

Nice picture. Guess he is supposed to move in next week..

This is scary folks. You know I've always been glib about this. But I could go on page after page of empty developments. I really staggers me now..

The other odd thing most of the rural folk are busy upgrading their housing. They are NOT moving to the cities.

http://chinadigitaltimes.net/2010/09/ch ... g-the-way/

In villages, also, there is unceasing real estate activity. Mud shacks are being replaced by sturdier, more comfortable, bigger houses that lack any rural charm. Fashion changes in architecture as in any other field so the trend of covering outer walls with bathroom-like white or blue tiles is finally, thankfully, on its way out, making way for a lot of cutesy pastels in towns and exposed red bricks in the villages (you can pretty accurately guess the financial situation of a rural family or estimate how much someone has saved working in Shenzhen just by looking at the size and outer walls of the house they are building. If savings went well, it’ll be colorful panels. The less fortunate will have to do with exposed bricks or just exposed concrete).

Raghavendra · Post by **Raghavendra** » 29 Nov 2010 09:19

China's stock fraud totals $30 billion
http://timesofindia.indiatimes.com/busi ... 001612.cms

shynee · Post by **shynee** » 29 Nov 2010 10:33

Born In The U.S.A.? Some Chinese Plan It That Way

amit · Post by **amit** » 29 Nov 2010 15:26

China's construction and real estate sectors are like the HSR trains the Chinese drones like to brag about on this forum. CCP thought that the HSR was a nice way to go from turd world to world superpower at high speed. Great plan but the only problem is they forgot to put in a braking mechanism into this HSR. And so it rolls along at high speed and the only way its going to stop is when it crashes into something.

The aftermath won't be pretty because it's a HSR with 1.3 billion people inside it - people who's life's savings paid to build it.

Theo_Fidel · Post by **Theo_Fidel** » 29 Nov 2010 20:37

http://www.telegraph.co.uk/finance/news ... burst.html

China as the next 'enormous credit bubble' to burst

In the presentation, which amounts to a devastating attack on the prevailing belief that China is an engine for growth, the financier argues that "inappropriately low interest rates and an artificially suppressed exchange rate" have created dangerous bubbles in sectors including:

Raw materials: Corriente says China has consumed just 65pc of the cement it has produced in the past five years, after exports. The country is currently outputting more steel than the next seven largest producers combined – it now has 200m tons of excess capacity, more that the EU and Japan's total production so far this year.

Property construction: Corriente reckons there is currently an excess of 3.3bn square meters of floor space in the country – yet 200m square metres of new space is being constructed each year.

Property prices: The average price-to-rent ratio of China's eight key cities is 39.4 times – this figure was 22.8 times in America just before its housing crisis. Corriente argues: "Lacking alternative investment options, Chinese corporates, households and government entities have invested excess liquidity in the property markets, driving home prices to unsustainable levels." The result is that the property is out of reach for the majority of ordinary Chinese.

Banking: As with the credit crisis in the West, the banks' exposure to the infrastructure credit bubbles isn't obvious because the debt is held in Local Investment Companies – shell entities which borrow from Chinese banks and invest in fixed assets.

Mr Hart reckons that "bad loans will equal 98pc of total bank equity if LIC owned, non-cashflow producing assets are recognised as non-performing.

As a final blow, Mr Hart says that the market belief that the Chinese government has "ample resources" to bail out its banks is flawed.

I think this is the key point. Chinese accounting is no different from Enron. The 'Local Investment Companies' are no different from the 'Raptors' Enron used to hide debt.

Corriente's analysis of the ratio of China government debt to GDP comes out at 107pc – five times higher than official published numbers. The hedge fund says this number uses "conservative assumptions" and the real figure could be as high as 200pc.

http://www.theepochtimes.com/n2/content/view/46636/

From soybean, ginger, garlic, to cotton and sugar, surging prices have struck one product after another since the beginning of the year. The China Securities Journal described cotton prices in October as “crazy.” Cotton has increased 93 percent compared with the same period last year.

Recently released data by the Ministry of Commerce shows that wholesale prices for 18 kinds of popular vegetables have increased 62.4 percent on last November.

Wu Fan, editor-in-chief of China Affairs, believes the current inflation is due to the extremely loose monetary policy previously adopted by Beijing to stimulate Chinese economic growth; he believes the purpose of current media reports is to shift public attention and resentment from this fact.

He cites official data which shows that, ten years ago, China’s Gross Domestic Product was one and a third trillion U.S. dollars, while the country’s broad money supply (meaning the amount of money in circulation) was about two trillion. This amount nearly equals 670 billion dollars beyond China’s total GDP.

Comparing 2009’s figures in dollars, China’s GDP was about five trillion with a money supply of nine trillion, four trillion dollars of excess money supply over production; in other words, much more money than needed has been in the economy.

The gap between money supply and GDP continues to increase. According to China’s National Bureau of Statistics, that gap rose to a US$6.44 trillion by the end of last quarter. At the same time, the Bureau recorded the highest Consumer Price Index increase in almost two years, with the overall cost of food eight percent higher than in September 2009. These basic facts are the reasons for China’s inflation, Wu says.

The lower and middle classes have the roughest time during inflationary periods, Cheng says, as their living standards decline most immediately. Getting three square meals a day becomes difficult, let alone meeting the rising costs of water, gas, electricity and rent—not to mention medical care and child education costs. People can’t stop the trend, Cheng says; “They can only be victims.”

China’s official and monied classes obtain most of their wealth from their proximity power, control of resources, and market monopolies. They can also speculate. If savings shrink, they can dabble in real estate; when housing prices stall, they can move to gold; and if things don’t work out in China they can transfer their families and assets to Europe, America, or Australia—millions are already in the process of precisely that.

Where is RM when you need him. Talk about economic mismanagement.

wrdos · Post by **wrdos** » 03 Dec 2010 11:48

486.1km/h, new speed record at Beijing~Shanghai High Speed Railway.

http://english.cri.cn/6909/2010/12/03/2681s608353.htm

http://news.xinhuanet.com/fortune/2010- ... 39_21n.jpg

The train CRH380A, which hit a speed of 486.1 kms per hour on the tracks between Zaozhuang City of Shandong Province and Bengbu City in eastern Anhui Province, stops at Xuzhou East station in east China's Jiangsu province on Dec 3, 2010. [Photo: Xinhua]

China's high-speed train on Friday broke a world operation speed record during its trial service on a segment of the Beijing-Shanghai high-speed rail line.

The Ministry of Railways says the train, CRH380A, hit a maximum speed of 486.1 kilometers per hour on its run between north China's Zaozhuang city and Bengbu in the south.

The previous world record was also set in China in September, when a train on the Shanghai-Hangzhou line clocked 416.6 kilometers an hour.

Suraj · Post by **Suraj** » 03 Dec 2010 12:00

Congratulations to the Japanese and Germans for creating such excellent technology, and to the Chinese for screwing the pieces together

DavidD · Post by **DavidD** » 03 Dec 2010 13:06

China attempting to move up the value chain:

http://www.chinadaily.com.cn/china/2010 ... 648336.htm

BEIJING - China is considering investments of up to $1.5 trillion over five years in seven strategic industries, sources said, a plan aimed at accelerating the country's transition from the world's supplier of cheap goods to a leading purveyor of high-value technologies.

Analysts expressed scepticism at the sheer amount of money - it equates to about 5 percent of China's gross domestic product on an annual basis - but said that the eye-popping headline figure was an indication of the government's determination to catalyse a structural shift in the economy.

The targeted sectors include alternative energy, biotechnology, new-generation information technology, high-end equipment manufacturing, advanced materials, alternative-fuel cars and energy-saving and environmentally friendly technologies

vina:

I'm actually not in complete disagreement with your predictions, though I feel that you didn't go "macro" enough with your analysis. In the grand scheme of things, no bubble can stop the momentum of 1+ billion hard working people industrializing and raising productivity, and the same goes for India. I'm pretty busy right now so I don't have the time to write a detailed response, I'll get back to you later on that.

amit · Post by **amit** » 03 Dec 2010 13:26

DavidD wrote:China attempting to move up the value chain:

http://www.chinadaily.com.cn/china/2010 ... 648336.htm

BEIJING - China is considering investments of up to $1.5 trillion over five years in seven strategic industries, sources said, a plan aimed at accelerating the country's transition from the world's supplier of cheap goods to a leading purveyor of high-value technologies.

Analysts expressed scepticism at the sheer amount of money - it equates to about 5 percent of China's gross domestic product on an annual basis - but said that the eye-popping headline figure was an indication of the government's determination to catalyse a structural shift in the economy.

The targeted sectors include alternative energy, biotechnology, new-generation information technology, high-end equipment manufacturing, advanced materials, alternative-fuel cars and energy-saving and environmentally friendly technologies

Sounds impressive until you consider the fact that no amount of money can kick start innovation, something that is needed in large dollops in all the industries listed. The US, Germans and to a lesser extent the Japs are good at this because they spent several decades perfecting a culture that supports and encourages innovation.

But the Chinese? A straight jump from low cost manufacturing to innovation driven technologies by throwing in dollars?

Hmmm it will be interesting to track the progress in this. If the CCP can pull it off then hats off.

Meanwhile another $1.5 trillion will be floating in the economy - I can bet all the factories, headquarters, buildings for the companies who will be operating in these industries will be world beating in terms of size, design and looks!

wig · Post by **wig** » 03 Dec 2010 14:41

i wonder who they are

China has the third largest number of dollar millionaires in the world after U.S and Japan with the number touching 6.70 lakh in 2009, an increase of 60 per cent compared to the previous year.

China already has the second highest number of billionaires.

A study by the Boston Consulting Group (BCG) said at the end of 2009, China had 6,70,000 households with more than USD one million wealth, up 60 percent from the same period in 2008.

The country's composite wealth grew by about 28 percent to about USD 5.4 trillion during the end of 2009.

"The fast increase is driven by China's strong economic growth, the rise of private-sector enterprises and the development of capital markets," state run China Daily quoted Frankie Leung, partner and managing director of BCG as saying.

http://www.ptinews.com/news/1162521_Chi ... the-world-

amit · Post by **amit** » 03 Dec 2010 15:16

wig wrote:i wonder who they are

China has the third largest number of dollar millionaires in the world after U.S and Japan with the number touching 6.70 lakh in 2009, an increase of 60 per cent compared to the previous year.

China already has the second highest number of billionaires.

A study by the Boston Consulting Group (BCG) said at the end of 2009, China had 6,70,000 households with more than USD one million wealth, up 60 percent from the same period in 2008.

The country's composite wealth grew by about 28 percent to about USD 5.4 trillion during the end of 2009.

"The fast increase is driven by China's strong economic growth, the rise of private-sector enterprises and the development of capital markets," state run China Daily quoted Frankie Leung, partner and managing director of BCG as saying.
http://www.ptinews.com/news/1162521_Chi ... the-world-

Wig,

That's one of the world's worst kept scerets. They are the friends and relatives of CPC honchos. I suppose they are millionaires and not billionaires is because they are part of the extended family and not immediate family.

shynee · Post by **shynee** » 03 Dec 2010 22:10

Andes Villagers Resist China's Claim on $50 Billion Mine

Prem · Post by **Prem** » 03 Dec 2010 23:22

China to Tighten Monetary Policy in 2011
The Politburo decided that China's monetary policy should shift "from relatively loose to prudent next year," The New York Times said, citing a report in state news agency Xinhua. The Politburo is an elite nine-member team at the top of the political hierarchy. Chinese inflation hit an annual rate of 4.4% in October, the highest in more than two years. The country's rapid economic growth and growing consumer spending have helped to stoke price increases. Authorities have raised the benchmark lending rate and bank reserve requirements in an attempt to cool spending and head off a potential credit bubble.

http://srph.it/gZcDUX

zlin · Post by **zlin** » 04 Dec 2010 04:11

Suraj wrote:Congratulations to the Japanese and Germans for creating such excellent technology, and to the Chinese for screwing the pieces together

Hope you can like this episode of "Discovery channel, Man made wonder"

http://www.56.com/u88/v_NTY5MDI0NjE.html

Prem · Post by **Prem** » 05 Dec 2010 00:41

http://www.american.com/archive/2010/de ... d-in-china
China is implicated in key fake-drug rings recently broken up across the Middle East and Latin America. Beijing must do more to clamp down on the entire fake industry, which flourishes within its borders.

Chinese manufacturers are faking drugs, endangering patients' lives, and undermining legitimate brands, especially those from India. Indian companies provide vast amounts of generic drugs to mid-income and developing nations. By some estimates, 80 percent of HIV drugs for the developing world come from India, and probably half the antimalarials and antibiotics, too. Since Indian generics dominate many therapeutic categories of these markets, it is not surprising that they are the ones faked. From the counterfeiters' perspective, faking Indian drugs makes sense. Even in those categories where Indian products do not dominate the market, they may still be copied. In part this is because Western brand owners are more likely to go after those faking their brands, whereas Indian drug makers have smaller margins and hence spend less on brand enforcement.Paul Orhii leads Nigeria's anticounterfeit drug agency and has seen this problem up close. He told us recently of the astonishing Chinese criminal counterfeiting drug networks his teams had unearthed.

Chinese gangs do not discriminate—every major drug company and every country has probably had drugs faked by the Chinese. China is implicated in key fake-drug rings recently broken up across the Middle East and Latin America. In fact, Chinese operators will fake in or for any location and they will fake anything popular. Take Artesunat, the brand of a Vietnamese antimalarial made by the Ho Chi Minh–based company Mekophar Chemical Pharmaceutical, which is also widely faked. Ongoing research shows that fake Artesunat was found in Nigeria, Ghana, Kenya, Uganda, Tanzania, and Thailand; and it was all the handiwork of Chinese counterfeiters.
Beijing must do more to clamp down on the entire fake industry, which flourishes within its borders.

jamwal · Post by **jamwal** » 05 Dec 2010 01:12

Are the drugs completely dud or just cheaper versions of the original ?
What kind of sub-human will fake life saving drugs !!

Theo_Fidel · Post by **Theo_Fidel** » 05 Dec 2010 03:22

That is just insane. Why isn't inflation decimating the chinese saving? Or is inflation seriously understated.

Just to give an idea that is enough currency to give every many woman and child in china about $8000 in currency notes. Or about 4 years wages.

http://www.economist.com/blogs/freeexch ... _inflation

But despite its best efforts, the Fed has only succeeded in raising America’s broad money supply (as measured by seasonally-adjusted M2) to about $8.8 trillion. China’s central bankers, on the other hand, have increased China’s M2 to almost 70 trillion yuan, or $10.5 trillion. As Mr Kroeber points out, China has a greater quantity of money circulating in an economy a third of the size. Who is calling whom easy?

TonyMontana · Post by **TonyMontana** » 05 Dec 2010 07:06

The Chinese invented paper money. Fiat currency. This is old game to us. The Europeans hates the jews. Clearly, they haven't met enough Chinese.

We will decimate the European centric global banking system and subject our own version of international trade.

The rise of the 4th Golden Age is a certainty.

SaiK · Post by **SaiK** » 05 Dec 2010 08:04

http://timesofindia.indiatimes.com/arti ... 040940.cms
near 500km per hour!

sanjaykumar · Post by **sanjaykumar** » 05 Dec 2010 08:26

The rise of the 4th Golden Age is a certainty.

Yes by Chinese standards.

jamwal · Post by **jamwal** » 05 Dec 2010 11:10

TonyMontana wrote:The Chinese invented paper money. Fiat currency. This is old game to us. The Europeans hates the jews. Clearly, they haven't met enough Chinese.

We will decimate the European centric global banking system and subject our own version of international trade.

The rise of the 4th Golden Age is a certainty.

Yea, an age of poisonous milk, fake medicine, crappy electronics, toxic toys, 100s of extinct species, millions of people stripped of their basic rights, govt. sponsored theft and all around fudging and cooking up of account books.
Everything yellow is not gold.

Rony · Post by **Rony** » 05 Dec 2010 23:12

TonyMontana wrote:The rise of the 4th Golden Age is a certainty.

When was the first, second and third golden ages ?