PRC Economy and Industry: News and Discussions

[sanjaykumar]

Hehehehe

[Katare]

Nuclear power plant are no more capital intensive than thermal power plants actually they are much less expansive if you consider the infrastructure required for digging the crap, hauling the crap and burning the crap. Anyhow capital is never a problem for a nation that saves 40% of what it produces.

No one needs to sustain 1 power plant a week forever, once you get to your goal you are developed and only need maintenance and marginal high value addition.

About massive dams and infra structure in Russia during early 19th century, you forgot the American investment in infra and dams that was many fold of any other nation in that time.

Well,

Your post is fun to read, very vitty and spiced with extra sarcastic humor! loved reading it!

[wlin]

That is what i have said long before in this forum. China's GDP is way underestimate. The service part only 35%. And if you been to China, you know it is BS. China still use Soviet style stats system so only industrial output account. For service, they just estimate one percentage and calculate it according to industrial and agriculture output.

In realitiy, Chinese leaders are more foucsed on industrial capacity. That is why Li said he only care about electricity consumption, rail cargo volume and bank lending. Keep in mind, China will have the biggest electricity consumption this year or next year.

I wonder how the commie drones on this forum will react to this
China's GDP is "man-made," unreliable: Li Keqiang

This deserves posting in full:

(Reuters) - China's GDP figures are "man-made" and therefore unreliable, the man who is expected to be the country's next head of government said in 2007, according to U.S. diplomatic cables released by WikiLeaks.

Li Keqiang, head of the Communist Party in northeastern Liaoning province at the time, was unusually candid in his assessment of local economic data at a dinner with then-U.S. Ambassador to China Clark Randt, according to a confidential memo sent after the meeting and published on the WikiLeaks website.

The U.S. cable reported that Li, who is now a vice premier, focused on just three data points to evaluate Liaoning's economy: electricity consumption, rail cargo volume and bank lending.

"By looking at these three figures, Li said he can measure with relative accuracy the speed of economic growth. All other figures, especially GDP statistics, are 'for reference only,' he said smiling," the cable added.

Li is widely expected to succeed Wen Jiabao as premier in early 2013, a position that will put him in charge of policy making in the world's second-biggest economy.

A news official in the Chinese foreign ministry declined to comment on the specific cable and referred to comments last week in which a ministry spokesman called on the United States to resolve issues related to the leaks.

A spokesman for the U.S. Embassy to China was not immediately available.

Chinese economic numbers, especially at the provincial level and lower, have long been viewed with suspicion by analysts.

"That China's GDP is not reliable, especially for local GDP, that is nothing new," said an economist with a foreign bank who requested anonymity because of the sensitivity of discussing top national leaders.

"Some of the volume data, such as power and rail freight and even (bank) credit, are interesting because there is less incentive to massage them at the local level. But they reveal only part of the truth, not the entire truth," he said.

"This would be a useful measure for steel and cement production. I'm not sure how well it would measure retail sales."

Li would naturally have been most interested in heavy industry in his stewardship of Liaoning's economy. The province is one of China's top producers of steel, petrochemicals and machinery.

STATS Skeptic

Li has also gone on the record before to ask for more from the government's statisticians.

During a 2009 visit to the National Bureau of Statistics, Li asked whether China calculated GDP on a monthly basis.

Li pressed on when he was told that data was gathered quarterly and that monthly calculations were difficult.

"Do Western nations make monthly calculations?" he asked, according the NBS website.

The U.S. embassy memo, sent on March 15, 2007, described Li as engaging and well informed. It said that he was trying to create a "harmonious society" by providing new housing to the poor and creating jobs for every household.

Li noted public dissatisfaction with education, health care and housing but said that official corruption was the biggest source of anger, the cable said.

He was reported as saying that the most effective way to combat corruption was to create transparent rules and to ensure adequate supervision, while also educating officials.

"Part of this education involves prison tours that force bureaucrats to visit incarcerated officials convicted of graft in order to witness first-hand the consequences of malfeasance," the cable said.

(Reporting by Simon Rabinovitch; Editing by Daniel Magnowski)

[Theo_Fidel]

The ponzi economy continues to inflate unabated.

http://blogs.forbes.com/robertlenzner/2 ... er-market/

Total bank loans in China are $7 trillion– greater than the US economy, which is triple the size of China. In other words China’s inflation might well be “significantly higher” than the 4.4% claimed. More like the 10% inflation in Chinese food prices or more.

http://online.wsj.com/article/SB1000142 ... 63306.html

Shadow Lending Hampers Beijing

In a report Thursday, Fitch Ratings estimated that China's banks already have blown past the 7.5 trillion yuan ($1.126 trillion) limit that regulators set on new local currency lending for this year and extended more than three trillion yuan in credit that hasn't been recorded on their balance sheets.

In total lending, that is largely unchanged from 2009, when China's banks led a massive expansion of credit—roughly doubling the volume of new loans from a year earlier—as part of a stimulus program to keep the economy humming during the global financial crisis.

"Lending has not moderated, it has merely found other channels," Fitch said in the report. That "helps explain why inflation and property prices are still stubbornly high, why [third-quarter] GDP growth was stronger than expected, and why Chinese authorities have voiced so much concern about further quantitative easing in the U.S."

The China Banking Regulatory Commission, China's bank regulator known as CBRC, couldn't be reached to comment.

The amount of loans treated this way is unclear because nobody centrally collates the data, and Fitch says its three trillion yuan estimate for off-balance-sheet credit is rough.

Even as Beijing has tried to ratchet back on its stimulus efforts, China's consumer-price index rose by 4.4% in October from a year earlier and food prices surged 10.1%. China's gross domestic product rose 9.6% from a year earlier in the third quarter.

Trusts have also become a major player in property development this year, after bank lending to the sector was curtailed by regulators wary of a bubble forming. According to data from the trusts' industry association, trust companies directed 320 billion yuan toward the property sector in the first three quarters of this year. That would add significantly to the 1.72 trillion yuan that banks have already lent to the sector, according to central bank data..

http://plus.cnbc.com/rssvideosearch/act ... layershare

Chanos on China today.

- They are building 14 million residences annually.
- Sales of units are flat and have been flat for 3 years.
- Construction is 60% of GDP growth. Incredibly exports is just 5%. They can't export their way out.
- Workers moving into cities can not afford residences being built.
- China govt has no experience handling bubbles.

[wlin]

Nuclear power in China has not been even started yet. The major reason they hold nuclear power build before is not because of money but because China can not produce the equipment yet. They have to import most of the equipment. It is like the high speed railway in early 2000. China got enough money to build HSR but spending money on 2000 will only benefit Japan and Germany. So they hold.

In nuclear power, China simply wants to repeat what they did on HSR. The effort is not very success so far because Railway Ministry got a much stronger leadership than nuclear power industry. So watch out for CPR1000 and CAP1400. If they are worked out, China will start building nuclear power station like mushroom.

Nuclear power plant are no more capital intensive than thermal power plants actually they are much less expansive if you consider the infrastructure required for digging the crap, hauling the crap and burning the crap. Anyhow capital is never a problem for a nation that saves 40% of what it produces.

No one needs to sustain 1 power plant a week forever, once you get to your goal you are developed and only need maintenance and marginal high value addition.

About massive dams and infra structure in Russia during early 19th century, you forgot the American investment in infra and dams that was many fold of any other nation in that time.

Well,

Your post is fun to read, very vitty and spiced with extra sarcastic humor! loved reading it!

[abhischekcc]

^wlin, I never said that Chinese GDP is underestimated - just that it is improperly measured.

At the individual business level, there is pressure to both reduce and increase the revenue level, so these pressures cancel each other to some extent.

However, the local government level, the pressure to show increase of GDP is enormous. Because the careers and lives of the officials depend on it. Because the myth of high GDP helps raise property prices on which the government's revenues depend, and because most of the businesses that party officials are involved in leach off these revenues.

That is why this game of musical chairs will continue as long as the music (liquidity) lasts.

[suryag]

If they are worked out, China will start building nuclear power station like mushroom.

Hope they dont go up in a mushroom

[ArmenT]

China sees inflation jump to 5.1%, a 28-month high

Inflation in China has risen to a 28-month high, sparking warnings of new interest rate rises.

The inflation rate, measured by the consumer price index, rose 5.1% year-on-year in November, an increase that was above market expectations.

On Friday, China had reported much stronger than expected export growth in November, adding to inflation fears.

Inflation has in the past caused unrest in China, where poor families spend up to half their incomes on food.

The government has said it will take strong action against anyone found to be manipulating food prices.

[ashi]

China's economy
Not just another fake
The similarities between China today and Japan in the 1980s may look ominous. But China’s boom is unlikely to give way to prolonged slump

http://www.economist.com/node/15270708

Scary stuff. However, a close inspection of pessimists’ three main concerns—overvalued asset prices, overinvestment and excessive bank lending—suggests that China’s economy is more robust than they think.

However, a close inspection of pessimists’ three main concerns—overvalued asset prices, overinvestment and excessive bank lending—suggests that China’s economy is more robust than they think. Start with asset markets. Chinese share prices are nowhere near as giddy as Japan’s were in the late 1980s. In 1989 Tokyo’s stockmarket had a price-earnings ratio of almost 70; today’s figure for Shanghai A shares is 28, well below its long-run average of 37. Granted, prices jumped by 80% last year, but markets in other large emerging economies went up even more: Brazil, India and Russia rose by an average of 120% in dollar terms. And Chinese profits have rebounded faster than those elsewhere. In the three months to November, industrial profits were 70% higher than a year before.

If China were as wasteful as Mr Chanos contends, its TFP growth would be negative, as the Soviet Union’s was. Yet over the past two decades China has enjoyed the fastest growth in TFP of any country in the world.

Some analysts disagree. Pivot, for instance, argues that China’s infrastructure has already reached an advanced level. It has six of the world’s ten longest bridges and it boasts the world’s fastest train; there is little room for further productive investment. That is nonsense. A country in which two-fifths of villages lack a paved road to the nearest market town still has plenty of scope for building roads. The same goes for railways. Again, a comparison of China today with the America of a century ago is pertinent. China has roughly the same land area as America, but 13 times more people than the United States did then. Yet on current plans it will have only 110,000km of railway by 2012, compared with more than 400,000km in America in 1916. Unlike Japan, which built “bridges to nowhere” to prop up its economy, China needs better infrastructure.

It is true that in the short term, the revenue from some infrastructure projects may not be enough to service debts, so the government will have to cover losses. But in the long term such projects should lift productivity across the economy. During Britain’s railway mania in the mid-19th century, few railways made a decent financial return, but they brought huge long-term economic benefits.

[vina]

Scary stuff. However, a close inspection of pessimists’ three main concerns—overvalued asset prices, overinvestment and excessive bank lending—suggests that China’s economy is more robust than they think.

I usually never comment on e-Con-O-Mist Toilet's articles, but however for a change.

If China were as wasteful as Mr Chanos contends, its TFP growth would be negative, as the Soviet Union’s was. Yet over the past two decades China has enjoyed the fastest growth in TFP of any country in the world.

Err. This is wisdom in hindsight. As long as the Soviet Union existed, and primarily in the 40s,50s, and 60s and until the early 70s (before the long lines before the GUM stores were exposed), the consensus was that the Soviet Union was a miracle economy like today's China and per Soviet Union statistics (like today 's Shanghai stats), they too had the highest TFP in the world then and probably ever in history. We all know how it ended and that when the forensics on it's carcass was done, people actually discovered the massive lies and cover up.

A country in which two-fifths of villages lack a paved road to the nearest market town still has plenty of scope for building roads. The same goes for railways.

Right.. 2/5ths of the villages have no paved roads and the villagers need a jalopy with decently motorable roads to take their produce to the nearest market town, and probably travel to the nearest rail head packed like sardines, but what does China build ? Gargantuan high speed rail lines which none of the villagers can afford to travel in (but on paper they will be part of the larger "metro" catchment areas and mathematically be able to wear a suit and carry a briefcase and go in to Shanghai in the morning for business and come back in the evening to have a toss in the hay with wife/girlfriend/mistress whatever) ..

Talk about misplaced and misdirected investments and waste. This can happen only in a totalitarian command economy state and that is exactly what is happening. In any civilized society, the village folks will vote the crap out of the govt day dreaming and living in a make believe world.

This reminds me of the cartoon about George HW Bush.. It is something along these lines.. The terrorists who attacked us came from and had bases in Saudi Arabia, Pakistan and Afghanistan, so we attack Iran, Iraq and North Korea in return. .

So 2/5ths of villages have no roads, but we will build massive show case infrastructure of 6 lane roads and empty ghost towns and maglevs and high speed trains. If this doesn't end in misery , I dont know what will.

Unlike Japan, which built “bridges to nowhere” to prop up its economy, China needs better infrastructure.

I just answered that part on the kind of infrastructure it needs and what gets built. Rather than 1 thermal powerplant a day, it is better to invest in building some 5 biogas digesters in nearly every small village in China. But hey, biogas digesters seem so down to heel and uncool. Let us build crap, burn crap and not give a crap (including buring more crap in digging and hauling that stuff across a continent sized country to burn that crap).

During Britain’s railway mania in the mid-19th century, few railways made a decent financial return, but they brought huge long-term economic benefits.

[/quote]

Right.. The railroad boom the tulip mania and most recently the internet backbone build out resulted in massive busts. The US really never recovered in good measure from the tech bust of 2001. They inflated another real estate bubble instead and lets see where that ends.

In fact, the killer app that came out of the Internet Bust, in Tom Friendman's words was India and it's services industry. Let's see what the Chinese investment bust spawns.

Those long term economic benefits comes about only when you have a system where those assets built at massive prices can be repriced and picked up at bankruptcy court. Consider Warren Buffet picking up internet backbone companies at pennies to a dollar and new viability calclations coming from that repriced asset.

So when are we going to see Chinese bust ups like Worldcom ($100b bust) Enron (another mega bust), or a Lehman (largest ever)..

Problem is, when Worldcom goes bust, US financial system is not threatened. But when Chinese railway minsitry and state govts go bust, the Chinese state is bust . And remeber, bankers will knock on your door to lend exactly when you don't need it. And at a hint of trouble they will flee like you have the plague.

For eg, next time the telemarketer calls you and tells you that they want you to give you a " personal loan" (unsecured) at attractive terms, tell them great, you want that loan very badly and right away and casually tell them that you are going to file for bankrputcy the day after and if they can process the loan that day itself , and let us see what happens to your loan.

[Theo_Fidel]

Vina,

That is exactly right. Democratic systems have the ability to blow off steam when the periodic bust occurs. Note the recent Republican and Democratic drubbings. Also the burst happens quickly in open societies. You have to remember how far the Soviet boom went before the bust.

At its peak the USSR produced ~ ..

1 Trillion tonnes of coal.
500,000 MW of electric capacity.

Here a soviet chart. Note the GDP growth number. Remember the USSR grew even faster in the 50's & 60's. This is the fate of all distorted economies.


Courtesy David Wilson The demand for energy in the Soviet Union

When the chinese people realize that they have been taken for a ride and the vast majority of their savings is worthless, we will have to see what happens. When deposit rates are 1.5% and inflation is 10% someone is getting screwed big time.

It is interesting they bring up Japan. All these questions were out there on Japan as well in 1985 it self. But it took till 1989 for the bubble to truly deflate. It is still deflating. Also all those comparisons with Britain and the US are wrong as both countries had growing populations. There were more people coming into the system all the time. China instead will be shrinking shortly. The population inflection point in Japan was 1991. The Inflection point for China is 2015-16.

It is odd that they bring up rural roads. I thought all those villagers were to be frog marched to the cities. Whyfor you need roads then. Another thing. Panda is still building 15 million apartments a year. Read somewhere that the govt is building 10 million new low cost apartments next year alone. This is not counting developers.

The economist also missed Chanos real observation of panda. Infrastructure/manufacturing spending is only 25% of investment. Almost all the remaining 75% is building construction. How do you divert the cash flood at this point, let alone into productive assets. The way to deflate this bubble is to reform the land ownership system. Terminate the 70 year leases and give ownership to the people, institute property taxes, take land sales away from the local authority, etc. See how panda never mentions this sort of stuff. In fact no one does. That should tell us something about its addiction. At some point when this happens the chinese peoples savings will be raided once more to pay for all this.

[Prem]

http://seekingalpha.com/article/241515- ... -bear-case
remain convinced we are witnessing a bubble of epic proportions which will burst – catching investors as unawares as the bursting of the Asian bubbles of the mid-1990s. Ignore these indicators at your peril.

~ Albert Edwards

Too Much Too Fast: In 2009, Chanos found out that China was embarking on 30 billion square feet of new construction, with a little over half of that allocated to new office space. That’s “a five-by-five-foot cubicle for every man, woman, and child in the country.”
60% of GDP: In a TV appearance this past Friday, Chanos pointed out that construction is 60% of Chinese GDP compared to only 5% for exports. That’s huge. “We’ve seen this movie before,” he says. “Whether it was Dubai a couple of years ago, Thailand and Indonesia during the Asian crisis of the late ’90s, or Tokyo circa 1989, this always ends badly.”
Empty Cities: There are, quite literally, entire cities in China that contain empty buildings. There are neighbourhoods full of unoccupied housing. There are office buildings and malls standing empty. Who will populate these ghost towns? Many of those who own these properties are investors, not residents.
Back in early August of this year, James Quinn wrote about China: The Mother of All Bubbles, pointing out that at the time, China had “65 million vacant housing units.” Mr. Quinn further notes that the “2.2 million square foot South China Mall, with room for 2,100 stores, sits completely vacant. The Chinese have taken the concept of “bridges to nowhere” to a new level.” He also offers this telling chart, comparing residential housing value relative

to GDP for the US, Japan and China[/quote]

[zlin]

Railway in P.R.China

[abhischekcc]

http://seekingalpha.com/article/241515- ... -bear-case
remain convinced we are witnessing a bubble of epic proportions which will burst – catching investors as unawares as the bursting of the Asian bubbles of the mid-1990s. Ignore these indicators at your peril.

~ Albert Edwards

Too Much Too Fast: In 2009, Chanos found out that China was embarking on 30 billion square feet of new construction, with a little over half of that allocated to new office space. That’s “a five-by-five-foot cubicle for every man, woman, and child in the country.”
60% of GDP: In a TV appearance this past Friday, Chanos pointed out that construction is 60% of Chinese GDP compared to only 5% for exports. That’s huge. “We’ve seen this movie before,” he says. “Whether it was Dubai a couple of years ago, Thailand and Indonesia during the Asian crisis of the late ’90s, or Tokyo circa 1989, this always ends badly.”

In the early 2000's, these figures were 40% each for FAI and exports. How far exports have fallen.

[amit]

Railway in P.R.China

Nice video but this is what happens when you start to believe in your own propaganda.

I do note in the five min video there was less than a minute of clippings of passengers inside the train. And those we saw were either foreigners or models! Where's the poor villagers from the 2/5th villages about whom the Economist gushed who are supposed to travel on these trains?

Or for the matter the common man who's supposed to travel on these trains and ensure a healthy RoI, which the Panda drones have been talking about on these pages?

Sorry all the video depicts is the already well known and acknowledge Chinese poweress of building mega infra - nevermind the viability of these infra.

Zlin, in case you didn't notice that's what is being questioned here viability not ability.

[DavidD]

Railway in P.R.China

Nice video but this is what happens when you start to believe in your own propaganda.

I do note in the five min video there was less than a minute of clippings of passengers inside the train. And those we saw were either foreigners or models! Where's the poor villagers from the 2/5th villages about whom the Economist gushed who are supposed to travel on these trains?

Or for the matter the common man who's supposed to travel on these trains and ensure a healthy RoI, which the Panda drones have been talking about on these pages?

Sorry all the video depicts is the already well known and acknowledge Chinese poweress of building mega infra - nevermind the viability of these infra.

Zlin, in case you didn't notice that's what is being questioned here viability not ability.

I think, as you said, it's just a benign propaganda piece. Heck, the video is directed by the most famous mainland Chinese director, Zhang Yimou! So just take it for what it is--something that looks pretty and impressive, as it's not meant to be a documentary.

[amit]

I think, as you said, it's just a benign propaganda piece. Heck, the video is directed by the most famous mainland Chinese director, Zhang Yimou! So just take it for what it is--something that looks pretty and impressive, as it's not meant to be a documentary.

Something that looks pretty and impressive.

Hat's off to you David. In one sentence (perhaps inadvertently) you described so much of what is going on in China today. Pretty and impressive but how useful? And what do the ordinary Chinese, who's money is paying for all the pretty and impressive structures think about them?

[DavidD]

I think, as you said, it's just a benign propaganda piece. Heck, the video is directed by the most famous mainland Chinese director, Zhang Yimou! So just take it for what it is--something that looks pretty and impressive, as it's not meant to be a documentary.

Something that looks pretty and impressive.

Hat's off to you David. In one sentence (perhaps inadvertently) you described so much of what is going on in China today. Pretty and impressive but how useful? And what do the ordinary Chinese, who's money is paying for all the pretty and impressive structures think about them?

I think you misunderstood me. I meant the video is meant to be pretty and impressive, not the things the video depicts(although they certain are pretty and impressive). As for your questions, they're very useful, and the ordinary Chinese love them

[amit]

^^^^^^

I'm sure the ordinary Chinese love the questions because they concern them. However, the pity is we never get to hear their answers, either here on BRF or in the media.

But let it be, getting OT.

[Christopher Sidor]

In China, Cultivating the Urge to Splurge from New York Times

....
....
Perhaps the most telling sign that China’s economic model is reaching its limits is a decline in its efficiency. To maintain 10 percent annual economic growth, it has had to invest more and more in roads, buildings and the like. In other words, the return on its investments has begun to fall, which is never a good sign. “We’ve got a problem,” Guo, the bank chairman, told me. “We realize this kind of growth is not sustainable. It’s not the kind of problem like a financial crisis. But if such inefficiencies accumulate for quite a long time, you reach the point where, suddenly, maybe things burst.”

During my recent stay in China, I came away, as many Westerners do, awed by the country’s accomplishments. Cities have sprouted from nothing, allowing peasants to leap a century of economic history in a decade. Rural areas have highways that are smoother than in many major American cities. One bullet train I took could cover the distance between New York and Washington in an hour. The United States is on course to have such a train approximately never.

But once you start to notice the signs of unsustainability, you start seeing them everywhere. Some highways are strangely empty. So are some buildings. When I tagged along with a group of American businessmen on a tour of what we thought was a new energy-efficient office building in Hangzhou, a coastal city a couple of hours south of Shanghai, we soon realized that it was — hard as such a thing may be to imagine — a sample office building. It had been built to show potential investors what their business might look like if it moved to Hangzhou.
....
....

There is also a take on the super-hot real estate market of China. But it is surprising the parallels that one finds in big cities of India like NCR, Mumbai, etc

....
This unsustainability is especially pronounced in the current real estate mania. Housing prices have been soaring, despite government efforts to cool the market. Relative to rents, housing prices in Beijing, Shanghai and Hangzhou are higher than they were in most any American city at the peak of our housing bubble.
...

And the article takes an indirect dig towards India too

Education has already played an underappreciated role in China’s rise. For decades, Chinese children have spent more years in school than their peers in other countries; among the world’s many cheap laborers, China’s have been uncommonly skilled. As Arthur Kroeber, editor of the China Economic Quarterly, says, “You can have a lot of cheap labor, but if that cheap labor can’t read, can’t follow instructions and is sick all the time, it doesn’t help you.”

The next step is to educate people not just for factory work but for the white-collar work that would be a growing part of a consumer economy. Much of that work requires a full high-school education, if not college too. Today 55 percent of China’s adult population has graduated from high school (compared with less than 10 percent in India).
....

This article is instructive for India too. We are dreaming of weaning away some manufacturing from China, without realizing the implied cost of such an act. And concentrating on manufacturing or exports will get India so far only. Are we aiming to become the Manchester of the 19th century or Detroit of the 20th century?

[abhischekcc]

India and China can sustain higher RE prices than US /Japan because we are younger countries with huge populations. The RE bubble in US/Japan occured at the fag end of their development stage. India and China re far from it.

I doubt that an RE bubble cannot be reflated in India and China.

-------

Re India's skill shortage:
People outside India (and even overpaid consultants inside India) do not understand the level of innovation (juggad) that takes place in the BOP of India. Anybody who has seen diesel based small genesets being used as engines for vehicles know what I mean. This is what keeps India's clock ticking.

This is something we do wayyyy better than the commons of China. And is entirely due to the love of education and knowledge in this country. It is one thing to spout statistics (and these do matter), and another to understand what is happening at the grass roots.
\

[Abhijeet]

Why are Indians better at jugaad than the Chinese? Do you honestly believe that Indians "love education and knowlege" more than the Chinese?

Although perhaps OT for this thread - is it really true that only 10 percent of adults in India have finished high school?

[Rishirishi]

If they are worked out, China will start building nuclear power station like mushroom.

Hope they dont go up in a mushroom

Frankly speaking, I think China has taken a very sensible approach towards development. They import the stuff, learn and copy, then only do they roll it out it mass scale.

Indian PSU suffer becasue of they way they are managed. But if the private sector was taken on board, maybe India could create world champions. Take power generation equipment. Tell L&T and TATA that GOI will purchase 200 billion dollars worth from them, if they can show that they master the tech.
The same could be applied in many other fields.

[shynee]

Shadow over Asia - An interview with Vitaliy Katsenelson

[RamaY]

[quote="zlin"]Railway in P.R.China

To me it looks like China is trying replace air-travel with high-speed trains. Is it because it cannot build planes?

[Rishirishi]

Railway in P.R.China

To me it looks like China is trying replace air-travel with high-speed trains. Is it because it cannot build planes?

I think that is very wrong. They build high speed trains, because they believe in clusters and connecting the country together. Weather it is good use of money can be discussed. Alternatively they could have spent the money to connect the villages with better roads or even built cheaper trains in more areas.

[wrdos]

High Speed Railway is not everything in China.

This year alone >8000km(= the total length of Japan) expressways have been opened in China. The country is building ordinary roads too; and the bulk is of course at the countryside, at a pace roughly 270km/day.

The original article of NY Times sure quoted a dated or wrong data. At the end of 2009, 95.8% villages are connected with the road network and 77.6% (I am sure it is already above 80% by today) villages are connected with a concrete/asphalt paved roads.

The Chinese plan is to connect EVERY village with concrete/asphalt paved roads by 2020. And as you know, the Chinese almost always achieve this kind of plans BEFORE the deadlines.

I think that is very wrong. They build high speed trains, because they believe in clusters and connecting the country together. Weather it is good use of money can be discussed. Alternatively they could have spent the money to connect the villages with better roads or even built cheaper trains in more areas.

[Hari Seldon]

The original article of NY Times sure quoted a dated or wrong data. At the end of 2009, 95.8% villages are connected with the road network and 77.6% (I am sure it is already above 80% by today) villages are connected with a concrete/asphalt paved roads.

The Chinese plan is to connect EVERY village with concrete/asphalt paved roads by 2020. And as you know, the Chinese almost always achieve this kind of plans BEFORE the deadlines.

wow. hyperimpressive, am sure.

So, after doing all that - connecting every village with paved roads and all, then what? When does internal/domestic consumption start matching upto even 25% of the built up capacity in practically every manufacturing sector one cares to name (and in particular in anything remotely related to construction)? Why does it persistently fail to match up? Records show it actually declined (consumption as % of gdp) only.

Anyway, the cheen story is interesting hajaar. Shall be watching closely. Only. Better to learn from china's takes and mistakes before we commit our own.

[wrdos]

- The Chinese car consumption was almost double the America's during the past November.
- Even in 2020, I guess the road density of America would be still higher than China's although the latter may own more cars by then

China has its problem with consumption statistics where the consumption data is from above mid size formal service sector only. It is the reason why the "consumption" in China is always low despite the fact that the country consume almost every item the most in the world.

From car, televisions, air conditioners...... to meat, vegetable, and cereal. Everybody is talking about China should consume more but nobody tells us what item should the Chinese consume more.

As for car, we don't need more than 3 years to consume more than the US and the EU combined.

wow. hyperimpressive, am sure.

So, after doing all that - connecting every village with paved roads and all, then what? When does internal/domestic consumption start matching upto even 25% of the built up capacity in practically every manufacturing sector one cares to name (and in particular in anything remotely related to construction)? Why does it persistently fail to match up? Records show it actually declined (consumption as % of gdp) only.

Anyway, the cheen story is interesting hajaar. Shall be watching closely. Only. Better to learn from china's takes and mistakes before we commit our own.

[Vasu]

Wrdos, whats the breakup of China's economy?

Service/Mfg/Agriculture

Organized/Unorganized

Small scale/Mid-size/Large cap

[Theo_Fidel]

Talk about boastful MoFo's. Pride cometh before the fall. 270 km/day ~ 100,000 km per year. Only.

http://www.businessinsider.com/pictures ... show-start

And Now Presenting: Amazing Satellite Images Of The Ghost Cities Of China

This one is called Zhengzhou.



Erenhot. Mongolia. Waiting for 2 Million to move there. I kid not. Mongolia.



Another one called Dantu. Empty for 10 years.



Kangbashi. City for 300,000. Empty.



Several more there. There mentions of people tracking hundreds of such cities. All with empty parking lots and streets.

[Singha]

I had seen a pic of a township in inner mongolia with roman style villas - Ordos ... its another name of Kangbashi
http://www.time.com/time/photogallery/0 ... 97,00.html

there has to be balance point somewhere between indian underbuilding/shoddy road work resulting in overpricing and chinese overbuild/unused capacity/good roads.

[wrdos]

Ordos　and South China Mall, both examples have been used for the past 2 years for so many times.

BTW, a new data just become available. Do you remember the recently opened Shanghai~Nanjing high speed railway? Mass media around the world were excitedly posting a picture showing only a single passenger in a coach, several months ago.

In Dec.11, the total users of the railway had reached 30milliion with in less than 6 months.

Do you know the Tokaido Shinkansen　of Japan? The world's earliest (46yr history) and most populous and profitable high speed railway, its annual users is around 80~90 million.

I had seen a pic of a township in inner mongolia with roman style villas - Ordos ... its another name of Kangbashi
http://www.time.com/time/photogallery/0 ... 97,00.html

there has to be balance point somewhere between indian underbuilding/shoddy road work resulting in overpricing and chinese overbuild/unused capacity/good roads.

[Theo_Fidel]

Singha,

I don't know what the balance would be but it all comes down to cost. In Indian cities such as Bangalore and Chennai even newer developments only reserve 20% or so space for roads and open space. I have evaluated sections of old Mylapore where the road space is down to 7%.

Cities in India are so packed together with narrow roads because it keeps costs down. To build like China has done, roughly 60%+ of the space has to be left for roads and medians, etc. Of course this means that the only thing you can build on the remainders is 30 storey + apartments and keep the costs down. The question will be, is this how you want to live. Give up your drive in garage, little garden, mango tree in the backyard to live 200 feet up in the air with neighbors blasting music all around. I think the Chinese are voting with their feet by refusing to occupy these monstrosities.

Also these apartments cost $300,000 on average. In India we live low to the ground. In Chennai you can build a 2000 sqft 2 storey house on about i ground (2400 sqft) in JJ nagar for around $75,000 or about 40 Lakhs. Much less in other areas. Even though land is much more expensive in India. This is more like how Europe lives. Low to the ground. Even our apartment complexes are rarely more than 3-4 storeys.

AFAIK so far only the US has been able to be this profligate with space. Even there the high rise mid towns with wide boulevards are mostly dying. Very picturesque but no one wants to live there. IMO China is copying all the worst characteristics of US town planning. They will come to regret this whole sale social disruption.

[amit]

I had seen a pic of a township in inner mongolia with roman style villas - Ordos ... its another name of Kangbashi
http://www.time.com/time/photogallery/0 ... 97,00.html

there has to be balance point somewhere between indian underbuilding/shoddy road work resulting in overpricing and chinese overbuild/unused capacity/good roads.

So a city with enough space for the population of San Diego simply built up without any one moving in?

In any other place in the world, residential constructions are partly financed by the advance down payments which people who will buy these houses will make. Also bank loans are released/collected on the basis of how much construction work is done, either in percentage terms like 20%-30% etc or on landmarks, like plinth level construction, roof, particular floor etc.

However, with no buyers yet construction of this scale can only happen with massive bank lending - someone has to pay for the raw materials used in the construction. This is another peep into the amount of NPA that is floating in the banking sector in China.

And no amount how Wrdos Bhaiya tries to deflect the discussion this point is going to come up again and again.

And yes Wrdos absolute numbers are meaningless. What you need to do is find out the percentage in terms of population size for the area served by the trains to find out how useful the project is.

You need to take the combined population of Tokyo and Osaka and then do a percentage with the 90 million travelers.

And then do the same with Shanghai and Nanjing.

Two things to notice. One is a higher percentage will mean more ordinary people are availing of the service and lower the percentage it would mean only the rich can afford the service.

And six months or 46 years don't make much of a difference. Assuming there's a need for people to travel between Shanghai and Nanjing (nobody, presumably would be taking a joy ride) people will take the train only after a cost:benefit ratio analysis vis a vis other modes of travel between the two cities. So, assuming prices are not cut, optimum capacity - or more accurately the sustainable capacity in terms of the number of people who want to take the ride - would be achieved pretty soon IMO.

[DavidD]

I had seen a pic of a township in inner mongolia with roman style villas - Ordos ... its another name of Kangbashi
http://www.time.com/time/photogallery/0 ... 97,00.html

there has to be balance point somewhere between indian underbuilding/shoddy road work resulting in overpricing and chinese overbuild/unused capacity/good roads.

Based on China's past experiences, by and large the previously "overbuilt" roads/buildings etc. will be occupied in a few years. I'm sure there's waste as well(like Ordos/Kangbashi), but the cost of that waste is easy to see. However, if you underbuild and hamper growth, it is also waste, but the cost of this waste is much more difficult to see.

A few years ago when Beijing built its 4th and 5th ring roads, many people criticized it as being useless. These days though, they're pretty packed with traffic. I used to live in Beijing right around the Summer Palace near the 5th ring about 15 years ago. Outside of my neighborhood, there was only one road--2 lanes, no markings, and few cars, so when I heard about the 5th ring going to that area, I thought it was a terrible waste too. When I visited my family last summer, the same road is replaced with a 4 lane highway interconnected with the ring roads, and it was JAM PACKED with cars.

[Katare]

Chinese Propaganda and western propaganda

Both side need to be careful in not getting taken for a ride.

Any comparision with USSR and China is meaningless as USSR did everythign behind iron curton and without the benefit of competition, ownership and openness.

Chinese economy is one of the most open, competitive and globalized economy with 10s of millions of visitors coming and going 2 trillion of trade and almost all of the world's major company present and competing there.

It does not matter if a project or a mall or few dozen buildings are failed projects or results of corruption. You have normalize those failed projects or empty buildings for how many were succesful or filled. if the ratio is profitable than its all good. No one get 100% success and there will be wastages, mistakes and such.

amit,

Why would an advrtisement should not look like that? It is not a documentary but an advertisement, also I see full platforms and ton of passenger getting on and off.

[amit]

amit,

Why would an advrtisement should not look like that? It is not a documentary but an advertisement, also I see full platforms and ton of passenger getting on and off.

Katare,

Good luck to you if you see full platforms and full trains, filled with ordinary Chinese folks, in the Bullet trains that were shown in the advertisement as you put it.

The objective of the post by zlin was to get exactly that kind of gushing admiration as reaction).

If you follow this thread regularly you'll see a pattern. Every time Chinese over building is brought up sooner or later one of our Chinese guests will try to turn the discussion to what they feel is one the pinnacles of their achievements that is the HSR network that is being rolled out.

Mind you I'm not belittling the achievements which are impressive by any yardstick. However, the point of discussion is whether it is sustainable.

And I disagree that there can't be a comparison between the Soviet Union and China. You point to the fact that almost all major companies are represented in China. However, have you paused to check what the common refrain is from these foreign companies? Everyone of them complain that it is very difficult to do business in China on their own and they need partners and in most cases the partners cannot be trusted with intellectual property.

Again mind you from a Chinese POV I don't blame them, they are perhaps doing right by China.

However, at the end of the day the stats put up by Theo speak for themselves. The current model where construction forms a huge chunk of the GDP is not a sustainable. That's the point that is being repeatedly hammered in here.

[Ambar]

Not taking sides here, but didn't many canal constructors,railroad and mining companies in US go bankrupt in the later part of 19th century? The point is, by the turn of the 20th century they left behind a shiny infrastructure that helped US achieve rapid industrialization. So we may very well see these construction/high-speed rail companies going bust in China, but they do prepare China for the long haul . Just my 2 cents.

[vina]

Not taking sides here, but didn't many canal constructors,railroad and mining companies in US go bankrupt in the later part of 19th century? The point is, by the turn of the 20th century they left behind a shiny infrastructure that helped US achieve rapid industrialization. So we may very well see these construction/high-speed rail companies going bust in China, but they do prepare China for the long haul . Just my 2 cents.

This part I already answered . Check this thread some two /three pages back. The Chinese system is different. There are a lot of hidden risks in the system which is consolidated into the good faith /paper printing ability of the Chinese govt.