PRC Economy - New Reflections : Dec 15 2011

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Hari Seldon
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Hari Seldon »

Anyone here heard of zoomlion? Well, now you have... so what' with a zooming lion, you might say... well, well, a non-unique biz model for one that is unique only in its scale....move over lucent, norel, enron and worldcom, zoomlion is here to enter the history books....

The looting of china (no less)

sample some sacrilegious excerpts...
Zoomlion, the concrete and industrial machine giant is seeking Rmb140bn ($22.5 billion) in fresh credit, fuelling fears the company is at the centre of a growing debt bubble. Zoomlion only has a market capitalization of $12.5 billion and is one of the most shorted stocks on the Hong Kong market with over 30% on loan at any one time to short-sellers. [..]

Zoomlion has an interesting business model, it is similar in many of ways to Caterpillar, except whereas Caterpillar report falling sales, Zoomlion reports astounding sales growth with a fivefold increase in revenue since 2007. Zoomlion customers sometimes buy ten concrete mixers when they planned to initially by one or two. They have a perverse incentive to buy more than they need because these concrete trucks are purchased via finance packages supplied by Zoomlion.

Then the machines can be garaged and used as collateral to borrow further funds from other lenders. Zoomlion continues to grow while cement sales have plunged. In May, cement output increased 4.3% YoY, down from 19.2 per cent recorded last year. Zoomlion’s new debt of $22.5 billion buys roughly 900,000 trucks which could produce enough concrete (at six loads a day) to build over thirty Great Pyramids of Giza a day .
And we know what happened to the pyramid builders anyway....

Oh, by the way, seems like zoomlion's zooming and leonine biz model ain't unique at all, even for scale, in mighty PR china....
Every sector is infected with these kinds of perverse business practices, steel traders used loans meant for steel projects to speculate in property and stocks , it has been common (apparently) for steel traders to secure loans to buy steel then use this same steel as collateral to borrow funds to invest in property development and the stock market. In many ways this is the steel version of the Zoomlion model. A fundamental foundation of any lending market is the ability of the lender to ensure title and guarantee ownership of collateral. [..]

The current political leadership of China represents the greatest looting of a country by the political class ever seen in history. In the Hurun Report released in March 2012—the richest 70 members of the government have a net worth of $89.8 billion, an average of over $1 billion each. This compares to $7.5 billion for the 660 for the US government, an average of $11 million each.
I disagree with the bolded part. The loot and pillage of India over a period of roughly 1000 yrs by phoren invaders is by far the worst looting of a once prosperous land in human history..."sigh". But I digress. back to mighty noble PRC....

TAE's Ilargi sums it all up accurately and poignantly, must admit, despite myself...
So on the one hand, we have companies guaranteeing each other's debt (loans), and on the other hand, we have companies buying excessive numbers of equipment, which they pay for with loans provided by the suppliers on condition excessive numbers are bought.

That equipment is then used as collateral to secure more loans. Large parts of these loans are then used to speculate in real estate markets. In both instances, and don't let's forget the overlapping ones where both schemes are combined, we are talking about absolutely virtual money. Are these incidents perhaps? I find that hard to believe in view of how Chinese society is organized: major profits will attract major attention, a pyramid of perfect dimensions.

Charles Ponzi, eat your heart out. You may have been a fine crook, but you never even dreamed of operating on this scale. When these guys are done, they’ll leave nothing but a shell of a country behind. The Chinese elite has amassed far more in wealth than all the country's vaunted foreign reserves put together. That is something people all over the world need to very seriously think about.

For now, though, the only true Chinese leader is Pon Zi. Whose inevitable successor will be Domi No.
Read and be admiring and awed, fellow countrymen!
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by anishns »

Image

Han chinese indeed :rotfl: :rotfl: :rotfl: :((
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by zlin »

Deleted
Last edited by Suraj on 11 Jul 2012 11:23, edited 1 time in total.
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by wong »

anishns wrote:Image

Han chinese indeed :rotfl: :rotfl: :rotfl: :((
Red Bull was invented by Chaleo Yoovidhya, a recently deceased ethnic Chinese immigrant in Thailand.
He was Thailand 3rd richest man.

I wouldn't claim false credit like the Chinese created Silicon Valley or discoverred the Higgs boson god-particle. As a matter of fact I had dinner with my father this evening, a high energy theoretical physicist, and told him the Indian government issued an official announcement claiming credit for the Higgs boson. My father's response was Bose wouldn't even have really known what the Higgs boson was. Funny. Before you slam my father, he has a PhD in this field from a top 2 school and post-doc with a Nobel laureate.
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Singha »

didnt know zoomlion was a cheen co. they have sold a lot of overhead cranes to construction sector in india of this type
https://web.tradekorea.com/upload_file2 ... co_com.jpg
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Raja Bose »

wong wrote: As a matter of fact I had dinner with my father this evening, a high energy theoretical physicist, and told him the Indian government issued an official announcement claiming credit for the Higgs boson. My father's response was Bose wouldn't even have really known what the Higgs boson was. Funny. Before you slam my father, he has a PhD in this field from a top 2 school and post-doc with a Nobel laureate.
Uh....firstly, the Government of India would never issue an official announcement claiming credit for the Higgs Boson - they are not the government of PRC.

BTW, do you really want to keep making an utter fool of yourself in this public forum? :rotfl: Higgs Boson is simply one type of Boson. Without the concept of Boson and Bose-Einstein statistics, there would be no Higgs Boson. Where do you think the name Boson comes from? It comes from the name of Satyendranath Bose, born, brought up, worked, lived and died in India (unlike the long list of 'ethnic Chinese' you are posting, who have no tangible links to China whatsoever).

BTW that Bose I mentioned above, was my grandfather's PhD advisor and at one point my grandfather himself worked with Einstein on stuff related to bosons while visiting the Institute of Advanced Studies in Princeton. So I am sorry to say that either you are lying or your father doesn't know what he is talking about - which is sad if as you claim, he is a PhD from a top 2 school and a post-doc with a Nobel laureate and must have an upper hand in all things Physics. BTW in university, I studied under a Fields Medalist and was mentored by him - that doesn't make me an expert in all things mathematics.

Thank you Mr. Drone, come again. :mrgreen:
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Singha »

well I saw his post and knew that you were on the inbound track with heavy ordnance looking at my 360 shaanxi "green teapot" aesa display :mrgreen:

so I switched over to other targets using my omnirole mission-suite and kept going....
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by vina »

wong wrote:I wouldn't claim false credit like the Chinese created Silicon Valley or discoverred the Higgs boson god-particle.
Oops! Won't Uncle Mao and his "dialectical materialism" have a few things to say about this. Off you go, marched off to the Gulag & Re Education camp and hard labor to learn the virtues of socialist labor and thought! :mrgreen:

BTW, I am sure, you have earned enough 50cents for your post for the night. So until you sober up tomorrow, bye bye.
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by ArmenT »

wong wrote:^^^^
Vina, that's not true. Norinco AK47s are sought after in the US because of their quality and because they've become rare.
Norincos are pretty decent quality, I'll grant that. Their products are not the cheapest around, but they're decent value for money. People don't go about seeking them like you claim though. But you didn't mention the reason why Norincos are rare in the US. You want to tell us the gory details of Operation Dragon Fire? No worries, I will:
Importations of most Norinco firearms and ammunition into the United States were blocked during the Clinton Administration in 1993 under new trade rules when China's Most Favored Nation status was renewed. Concerns about their use by criminals in inner cities was the main reason put forward for the prohibition. The prohibition did not apply to sporting shotguns or shotgun ammunition however.

In 1994, some employees of Norinco came under federal investigation from both the FBI as well as the ATF after a successful sting dubbed "Operation Dragon Fire." In May 1996, in what was called "the largest seizure of fully operational automatic weapons in U.S. history," 14 individuals and an Atlanta, Georgia company were indicted for the unlicensed importation and sale of 2,000 Type 56's into the United States. U.S. Customs agents posing as arms traffickers convinced a group of Chinese arms dealers, including three Norinco representatives, that they were in the market to buy guns for drug rings and street gangs. "The defendants offered the government undercover agents more sophisticated weapons, including hand-held rocket launchers, mortars, anti-aircraft missiles, silenced machine guns and even tanks," said Wayne Yamashita of the U.S. Customs Service. The Customs Service discovered during the investigation that these weapons were bound for Oakland, California street gangs. According to an affidavit signed by two of the undercover agents involved in the investigation, representatives from Norinco offered to sell urban gangs shoulder-held missile launchers capable of downing a large commercial airliner.

In August 2003, the Bush Administration imposed sanctions on Norinco for allegedly selling missile-related goods to Iran. While not formally joining the multinational effort to restrict the proliferation of missiles, China did promise in 2000, not to assist in any way the development by other countries of MTCR-class missile technology. Neither the Chinese government nor Norinco has denied doing business with Iranian companies, although they did deny that it was for missile related purposes at the Shahid Hemmat Industrial Group, Iran's key manufacturer of ballistic and non ballistic missiles. Norinco has called the sanctions "groundless and unjustified" and "entirely unreasonable."

These sanctions led to a prohibition on imports into the US of the remaining types of firearms and ammunition not covered by the 1993 ban.
http://en.wikipedia.org/wiki/Norinco#Co ... ted_States
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Singha »

>> representatives from Norinco offered to sell urban gangs shoulder-held missile launchers capable of downing a large commercial airliner.
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by ArmenT »

^^^
Norinco is not just an arms manufacturer. They also make machinery, vehicles etc. Incidentally, they were also involved in the project to build local trains in Pakjab in 2011. Somehow that project ran into some controversy about the financial arrangements, so I believe that the work has stopped for now:
http://epaper.pakistantoday.com.pk/E-Pa ... 3/detail-3
http://epaper.pakistantoday.com.pk/E-Pa ... 3/detail-3

Though the Pakis seem to suggest that Norinco is making some extortionist demands for their work, I think I'd side with the Chinese on this issue. They aren't doing the work for free and they want to make sure that the Pakis have funds to pay for the work before starting on it.
Last edited by ArmenT on 11 Jul 2012 12:26, edited 2 times in total.
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Raja Bose »

Armen mullah, ouch! :lol:
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by vijh »

Don't know if this has been posted before. Quite amazing.

http://www.cracked.com/article_19742_th ... iting.html
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by vina »

Okay guys. After some comic interlude by Wong and his fellow drones about Jimmy Choo and Wong's Physicist father (who we are assured graduated/researched Physics in a top "2" school), lets get back to regular programming on the Chinese economy.

All indications are that the Chinese economy is in deep doo doo. The demand from europe has nearly collapsed (USA is now China's top export destination), industrial output is shrinking and the private sector is seeing deep pain (the SOEs are getting bailout money). The 600 odd billion stimulus in 2008/09 has now clearly been wasteful spending. Domestic demand is nowhere going to make up for the collapse in demand overseas, and capital spending /investments which is a significant part of China's growth engine has ended up creating massive excess capacity in industry after industry (windmill, shipyards, steel, cement, you name it..) and all are hurting deeply.

And now true to form, China has "sanctioned " two more steel mills for $20b. Now you have to scratch yourself. With such a massive overcapacity and impending collapse, no "rational" investor in any civilized economy will pour $20b into steel mills at this time! Oh well, what can I say. Only in China I suppose.

China is betting all on demand revival from the US and Europe. It cannot get away from the "export opium" addiction without serious fundamental changes, which the Commies simply cant do without cutting their own leg.

Very interesting times. And oh, public pressure and outcry is forcing the govt in India to get it's act together and something will happen. What about China. Can you write about the true state of the economy there, can you contest the "official figure" (in fact now the electricity companies have been ordered to give out rosy pictures of electricity demand, which is a strong proxy for the Chinese economy, more than actual reported numbers). Can anyone call out the naked emperor and his cooked up numbers without being marched to the Gulag.
Theo_Fidel

Re: PRC Economy - New Reflections : Dec 15 2011

Post by Theo_Fidel »

This is a sign that domestic demand is NOT rising. A bad indicator for the Chinese economy. In effect it is flying on one engine, exports. The world does not need more Chinese toys.
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by vina »

China 50 Cent Feud leads to a rumble
China’s 50-Cent Feud Leads to a Rumble
By Adam Minter - Jul 12, 2012

At 1 p.m. on July 6, two well-known Chinese microbloggers arrived at the south gate of Beijing’s Chaoyang Park to settle their differences. The encounter was publicly pre-arranged on Sina Weibo, China’s most popular microblog.

No (uniformed) police arrived, despite the fact that in the 48 hours after the challenge was issued and accepted, the event's details were re-tweeted thousands of times on Chinese microblogs.

It was an inevitable clash, with the parties representing either side of China’s deepest online partisan divide: those who allegedly blog on behalf of the government and those who allegedly debate free of any taint. The former group is known pejoratively as “the 50-Cent Party,” or 50-Centers, an Anglicization of the .5 yuan ($0.08) fee they are rumored to receive for each pro-government post or tweet. (Though the name has stuck, several government agencies have denied that this is their actual salary.) One doesn’t need to be in the employ of the government to be a 50-Center -- it’s enough to simply act like it :) . Of those who act like it, few are more reviled than Wu Danhong, a 33-year-old professor at Beijing University of Political Science and Law, who blogs under the handle Wu Fa Tian and denies he's paid by the government. Even the pro-government Global Times newspaper publishes the sneering occasional nickname China’s microbloggers have given Wu: “chief representative" of the 50-Cent Party.

Wu takes every opportunity to defend or rehabilitate the government or to advance a pro-Party line. Last year, he helped form an online Anti-Rumor League primarily concerned with debunking antigovernment gossip :lol: :lol: . More recently, he questioned the widely-circulated suggestion that 30 million Chinese people died of starvation during Mao’s Great Leap Forward in the late 1950s and early 1960s. He went so far as to set up a poll where netizens could vote on a variety of mortality estimates.

And then, early last week, he aggressively supported the construction of a controversial copper and molybdenum refining plant. Concerns about pollution sparked protests in Sichuan province, and by mid-week, the local government gave in and halted construction. That still didn’t erase the memory of Wu’s tweets, one of which pointed out that copper and molybdenum occur naturally in the human body, and thus maybe the copper-molybdenum plant wouldn’t be a polluter, after all :shock: :shock: .

Wu’s support for the refinery caught the attention of Sichuan TV reporter Zhou Yan, who had recently gained a following for her empathetic coverage and tweets about the protests. In a set of tweets that quickly escalated into insults, she and Wu attacked what they characterized as each other’s ignorance. The exchange (many tweets have since been deleted, making the full narrative difficult to reconstruct) culminated on July 5, with the two parties agreeing to settle their differences in Chaoyang Park.

It is not clear what precisely was to be accomplished in Chaoyang Park. Zhao doesn’t indicate much more than a desire to do something about Wu’s “big mouth.” Wu is not so restrained. Tweeting on his Sina Weibo account shortly after accepting the challenge to the rumble, the professor announced: “Let the scum take heed: law-fearing people aren’t alone anymore and those who break the law have reason to fear.”

If Zhou was intimidated by Wu’s antics, she did not cower. According to a video of the entire encounter (there are several others that offer different angles) that has circulated widely on the Chinese Internet, she showed up at the south gate of Chaoyang Park with what appear to be some 20 friends to back her up. Wu, on the other hand, seems to have arrived with two friends (at least, that’s how many people whisk him away at the end of the video) -- not a very scholarly approach to gang warfare.

Perhaps emboldened by her sizable posse -- and the dozens of cell phone cameras deployed in and around the perimeter of said rumble -- the diminutive Zhou attacks with her umbrella (which she then flings aside) and then slaps the professor on the face. He responds with a slap at her midriff before somebody pulls her away.

What happens next is a matter of controversy. In some videos, an unidentified man in a white shirt appears to rush up and strikes Wu so hard he hits the ground -- though other camera angles -- and bloggers -- suggest Wu took a melodramatic dive. Nobody, however, disputes how this opening round is finished off: Somebody rushes up and lands a kick on the 50-cent professor’s rear end :lol: :lol: :lol: .

At this point, Wu’s friends -- if they can be called that -- decide to step in and protect him. The rumble evolves into a debate on Wu’s ethics, Zhou’s ethics and whether morality trumps the law -- all salted with a rich selection of Beijing profanity.

This goes on for over 10 minutes until, quite suddenly, a bearded gnome-like figure -- better known as the artist, activist and provocateur Ai Weiwei -- enters the picture and makes a grab for Professor Wu’s ear :mrgreen: :mrgreen: . The crowd howls, delighted at the appearance of the international celebrity, and then does its best to restrain him from taking off Wu’s head. It’s not easy: Ai raises his arm, threatening to tomahawk the spectacled professor with what looks like a smart phone. When he realizes he can’t get close enough to do it, he breaks away from his impromptu guards, makes an end run around the crowd and dashes after Wu, who is in full retreat with his friends. Ai is twice restrained in the process.

Ai, too, has a history with Wu Danhong and the 50-cent crowd. Last August, after Ai was released from an 81-day detention for alleged tax evasion (though it was widely believed to be in connection with his activism and recent protests), Wu offered an interview to the Global Times, the nationalistic offspring of the official Communist Party mouthpiece, People’s Daily. His quote, and the paper’s commentary, was consistent with what other 50-Centers were saying -- and continue to say -- about Ai:

‘Ai's case has been used by the Westerners,’ Wu Danhong, an assistant professor at the China University of Political Science and Law, told the Global Times. Wu is another critic who says Ai may be in cahoots with an unseen international conspiracy. ‘By condemning China's repression of dissidents in the name of democracy, foreign countries that don't want a stronger China intentionally attempt to descend China into turmoil by hyping Ai's case.’

Was that the reason Ai looked ready to rip off Wu Danhong’s ear? There’s no way to tell. Nonetheless, when interviewed this week by the U.K.’s Daily Telegraph, Ai downplayed his role in the fight (to the point of contradicting video evidence): “I’m not the kind of person to beat people up.”

For all his antics, Ai is obviously aware that many of his supporters -- especially overseas ones -- will be uncomfortable with evidence that he behaved violently toward one of his critics. That is not, after all, how internationally renowned dissidents are supposed to go about their business. A brief scan of the thousands of tweets on Sina Weibo in the wake of the park incident (it's been a top trending topic for most of the last five days), reveals a Chinese public willing to forgive this transgression, if only because it involves Wu Danhong. “Beating someone up is wrong,” tweeted a microblogger in Hangzhou, an affluent city in Zhejiang province. “But beating up Wu is an exception. Fatty Ai [a nickname used for Ai because his name is a censored term on Sina Weibo] is so handsome.” A microblogger in Fujian province echoed that sentiment: “Fatty Ai looked so happy, but beating others is not right. Of course, if you want to beat him [Wu], that’s OK.”

Still, neither China’s microbloggers, nor its newspaper editorialists, view this incident positively. In a Tuesday editorial, Cao Lin, the independent-minded chief commentator for Beijing-based China Youth Daily, sees it as the inevitable outcome of a divided society:

First, the problem is a breach in the social fabric, and Weibo is just an amplifier of it. Hostility was fomented online and then came to life in reality. The gap between rich and poor, the different class positions, different ideological positions, and identities were divided and then sharpened into irreconcilable differences. The two parties have obviously different class positions, factions, and viewpoints. They didn’t fight for themselves, but for the factions they represent.

For now, the only faction that appears to have suffered from the battle is the one represented by Zhou Yan, the journalist. According to the Beijing Cream blog, she’s rumored to be spending five days in detention. Meanwhile, Wu Danhong remains free to tweet. As for Ai Weiwei, he was last seen Friday afternoon, taking a stroll in Chaoyang Park.

(Adam Minter, the Shanghai correspondent for the World View blog, is writing a book on the global recycling industry. The opinions expressed are his own.)

To contact the author of this blog post: Adam Minter at ShanghaiScrap@gmail.com.
Ah. Nothing is real in China. Everything is choreographed. This entire episode reeks of " China is the gleatest , we can see the gleat warr from space so clearly," all this while the rocket is still on the lauch pad , or the girl in the Olympics lip synching .
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Austin »

China economic growth slows to 7.6% in second quarter
China's economy grew at its slowest pace in three years as investment slowed and demand fell in key export markets such as the US and Europe.

Gross domestic product rose by 7.6% in the second quarter, compared with the same period a year ago. That is down from 8.1% in the previous three months.

In March, Beijing cut its growth target for the whole of 2012 to 7.5%.

China accounts for about a fifth of the world's total economic output and any slowdown may hamper a global recovery.

At the same time, many of Asia's biggest and emerging economies are becoming increasingly reliant on China as a trading partner.

"China has been a big factor for the slowdown in Asia this year," said Tai Hui from Standard Chartered Bank in Singapore.

He added that if China cannot pick up growth in the second half of the year then "that's going to mean a very difficult second half for a lot of the manufacturers in this region".

Spurring growth


However, despite Friday's slower growth figures many analysts tried to allay fears of a so-called hard landing in China's economy and its subsequent impact on the rest of the world.

"If you get a drop in the growth rate of 1 percentage point per annum, that's not a lot in terms of the world gross domestic product," Edmund Phelps, a professor of political economy at Columbia University and a Nobel prize winner, told the BBC.

He added that China had a lot of ammunition to counter the slowdown, some of which it has already started using because of the patchy recovery in the US, and the ongoing debt and economic issues in the eurozone.

China's central bank has cut the amount of money banks must keep in reserve in order to boost lending, and it recently cut the cost of borrowing twice in one month.

Earlier this week, Premier Wen Jiabao said that boosting investment would also be crucial for stabilising growth, fuelling expectation that more state-driven stimulus measures are on the way.

"Now that China's growth is slowing, there are calls for yet another stimulus," said Edward Chancellor, global Strategist at investment management firm GMO.

Slowdown


But analysts warned that China's growth problems may not be solved by a simple injection of capital and a new round of government spending, especially as many of today's issues can be traced back to the way the country tried to kick start growth after the global financial crisis in 2008-2009.

At the time the central government began pumping huge amounts of money into the economy, mainly on infrastructure and construction spending.

This led to excess capacity, a surge in property prices and an increase in consumer costs and inflation.

Faced with these problems and amid fears that the economy may be overheating, policy makers decided to implement measures to curb lending and slow inflation.

Those steps, along with a drop in demand for Chinese goods from key markets such as Europe and the US, have caused the most recent cycle of slowing growth.

GMO's Mr Chancellor warned that if the new calls for capital stimulus were heeded then China would end up with "more industrial over capacity, more bridges to nowhere, more empty airports and hundreds more miles of ludicrously uneconomic high-speed rail
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Shankas »

China Economic Data Questioned As Electricity Use Slows
The figures that go into China’s gross domestic product are “man-made” and “for reference only,” Li Keqiang, then a regional Communist Party head, said in 2007.
China’s registered urban unemployment has moved between just under 4 percent and 4.3 percent for the last decade, while electricity consumption has slowed much faster than growth in official GDP when it normally should move more in tandem. That has stirred speculation GDP figures are being skewed upward in the run-up to a leadership transition this fall.
“Out of the black box comes a number, and that number doesn’t always line up with the other numbers,” says Andrew Batson, Beijing-based research director at macroeconomics consultant GK Dragonomics. “I wouldn’t be surprised if the GDP numbers this year are smoothed.”

One legacy of the planned economy is that bureaucrats are given targets by the central government for everything from steel production to harvests and local GDP. These same officials traditionally have been promoted on their success in making their numbers.

“We have a saying in China: The cadres produce the data, and data produces the cadres,” said Jin Yongjin, a professor of statistics at Renmin University in Beijing.
Today’s National Bureau of Statistics report showed China’s growth slowed for a sixth consecutive quarter as trade and manufacturing decelerated. Last quarter’s 7.6 percent growth rate compared with an 8.1 percent expansion in the previous period and the 7.7 percent forecast by economists.
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by vina »

GMO's Mr Chancellor warned that if the new calls for capital stimulus were heeded then China would end up with "more industrial over capacity, more bridges to nowhere, more empty airports and hundreds more miles of ludicrously uneconomic high-speed rail
Ah.. But we were assured here by our dear friends from the PRC that the highspeed rails were running packed to the rafters, there were traffic jams galore in all the new roads and bridges and that air traffic has grown exponentially etc, all backed by statistics.

Surely, you lie!
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Raja Bose »

:rotfl: I hope our comrade wong is not Professor Wu! Maybe the reason he is absent from the forum is not becoz he got a virtual a$$ kicking here but that he got one from Fatty Ai in real life. :mrgreen:
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Yagnasri »

If the imports are for domestic consumption then slowing mean growth is slowing. If they are for reexport then exports are also slowing. So increase in surplus means China is slowing and no domestic consumption growth is there. Further with EU and US in Deep S**t no chances of exports "interesting times?"
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Katare »

Slowdown in China's GDP growth was prescribed, desired and planned by Chinese planners and it does not look any different than what we are seeing in India or else where in the world.

New steel mills will replace old socialist era inefficient mini-mills that are being phased out to reduce energy density of per unit GDP output.

Declining electricity production/consumption is due to 4% drop in GDP growth rate. Also in recent past electricity consumption and production has grown at much faster rate than usual, so some over capacity is being used up now, which is a normal process. As Chinese economy matures and technology infusion continues, people will use less energy for same output so it can't be a conclusive proof of looming disaster. In India we only plan for 6-7% growth in electricity generation for 8-9% GDP growth.

People have used these fluctuations in electricity production/consumption data to predict apocalypse for chinese economy before but they were proven wrong.

Import/export numbers also look OK and reflect the reality of slowing domestic and international growth. Just a slowdown in western economies is not enough to replace Chinese exporters as preffered source, they will retain their market share.
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by member_23626 »

Katare wrote:Slowdown in China's GDP growth was prescribed, desired and planned by Chinese planners and it does not look any different than what we are seeing in India or else where in the world.

New steel mills will replace old socialist era inefficient mini-mills that are being phased out to reduce energy density of per unit GDP output.

Declining electricity production/consumption is due to 4% drop in GDP growth rate. Also in recent past electricity consumption and production has grown at much faster rate than usual, so some over capacity is being used up now, which is a normal process. As Chinese economy matures and technology infusion continues, people will use less energy for same output so it can't be a conclusive proof of looming disaster. In India we only plan for 6-7% growth in electricity generation for 8-9% GDP growth.

People have used these fluctuations in electricity production/consumption data to predict apocalypse for chinese economy before but they were proven wrong.

Import/export numbers also look OK and reflect the reality of slowing domestic and international growth. Just a slowdown in western economies is not enough to replace Chinese exporters as preffered source, they will retain their market share.
Even if they don't their statistics will assure us they are shinig/lising/glowing for the near future, with more chin lising farticles... good to see a well wisher from our side...
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Theo_Fidel »

Katare,

No one is predicting collapse for China. Everyone however knows that some point they will pay the toll to the economic gods and return to a 3%-4% long term trend growth. This is normal sustainable growth rate. In normal circumstances they would have returned to that by now, all this frantic wriggling when skewered on economic reality is a means to avoid this turning point.

At this turning point Panda wonderlands contract with the Chinese people will run out and the CPC will be taken down in short order, even the CPC understands this, hence the loot and scoot, nanga official stories. This is the sum total of the game and question is how much the CPC is willing to debt load and bankrupt the country before it joins history.
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Katare »

Theo,

China still has ways to go before it runs itself out of the developing country dividend zone. That usually happens around $15-25K per capita income levels. I can see Chines growth gradually coming down from double digits to 7-8% for next decade or two and than finally settling to 3% when no external inputs (technology, capital, business models etc) are available and most of the infra is developed.

The risk of political implosion is very real which can render all projections useless and Chinese would have to work on that front too. I don't think Chinese govt is majorly communist in it's economic outlook or strictly authoritarian in a way USSR was. There is no iron curtain, it is one of the most visited country and it's citizens are free to travel out of country at will. They welcome foreign business, capital and promote their businesses to go out too which makes it a reasonably open society/country for business.

Non-business part of the politics of CCP is something that will remain a large risk on Chinese economy and I do not have good understanding of how it will fare in near future or where it's going. It is probably not a right place to discuss that part here either.
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Hari Seldon »

katare san,

There're other countries out there with the right demographic mix for a developing country dividend (Pakistan, anybody?) but alas, as we already all too well know, demography isn't destiny when it comes to positive possibilities.

As for capital, can't say there're too many countries out there flush with capital but what else would the emerged world do when their base central bank rates are kissing zero and zimbly refuse to get up from their shashtanga posture? So yes, capital flow can be assured for PRC at least somewhat and to an extent that returns can be reasonably made. However, with rampant mal-reporting of numbers as well as capital outflow curbs, its anybody's guess how many firms have made money in PRC or reasonably can expect to do so.

Overall, agreed with your thesis that PRC has easily 10-15+ yrs of growth steam left in its engine compartment. Should they crack the $15k per capita ceiling, I'd be overmajorly impressed and all this trash-talk of instability, 'fundamental freedoms', implosion, CCP looting, cronyism etc will cease to matter. Like I said, time will tell only. Let's wait and watch (as if we had any other option).
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Katare »

Hari,
Nothing is assured in future for China or anyone we can only make projections. And yes inputs are available to all but only a few can make good use of them, Pakistan is not in any situation to use any of it's advantages.

I am not sure that demographic dividend is such a big deal, at best it may add 1 or 2% to an already fast growing economy that can generate enough opportunities for it's growing labor force.
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Theo_Fidel »

Even getting to $15,000 has proven a struggle for state manged economies. People tend to forget that Malaysia and Thailand both got stuck in the $10,000 range. IIRC Malaysia hit the $12,000 per capita range way back in 1995. Since then it has drifted to about $15,000 despite the government goosing the economy with petro dollars. Brazil, Argentina, Mexico, Turkey, Russia, etc all hit that $8,000 to $10,000 barrier and rapidly returned to 2%-3% growth.

I don't for a second think that China has 10 -15 years left. The economy is seriously out of kilter and is struggling to hold up a $5,000 per capita GDP. The consumption data is telling us that the average Chinese is still only making 30% of that or about $1,500 per annum. The pearl delta folk are at the high end, yes, even the Fox Conn folk. At such a low consumption rate the Chinese people can not afford the country that has been built for them. They simply can not pay for it. China needs American cash to pay for the High speed boon doggle and the vast residential estates. I doubt the locals can even afford the maintenance costs which usually run in the 10% per annum range.
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I disagree that the demographic dividend is not important. Our psychotic neighbors the Pakis do not get it because some of their data shows that their literacy is actually declining. Esp. amongst key groups like women. In India literacy is increasing and we are only just beginning to benefit from our dividend. Loog at the charts below. Notice how the Chinese boom coincides perfectly with the Chinese dividend. The Chinese dependency was an incredible 7 workers to 3 dependents at the peak.

The key effect of low dependency ratio is savings. As India's dependency ratio declines savings both fixed, capital and liquid will rise dramatically.

Image
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by PratikDas »

Every time the US economy needs a kick, they start a war. Will China do the same then in true copy-paste fashion?
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Christopher Sidor »

The mismatch between electricity generation growth and GDP growth is a just a red herring. Even in India our electricity generation has lagged far behind our GDP numbers. Yet nobody claims that Indian economy has not grown quite well.

What Chinese have to worry about is that most of their factories are made to service demand overseas, mainly in North Atlantic region. America's growth has been an anemic 2% approximately, since 2008. Europe will have approximately zero growth in 2012. There is talk of a coming recession in 2013 especially in US. With a country whose economy depends on exports, close to 35%, and has been lead by fixed-investment these are bad news. Retooling Chinese factories to focus on domestic demand requires time. Also what is required is a domestic market big enough to buy the products from these retooled factories. This even ignores the fact that manufacturing will seek the next cheapest cost base, like vietnam, bangladesh, etc.
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Gus »

Katare wrote:Slowdown in China's GDP growth was prescribed, desired and planned by Chinese planners .
Well these guys say that the uber planners were aiming for something else

http://mobile.businessweek.com/articles ... e-stimulus
The slowdown continues despite increasingly aggressive growth-boosting measures taken by Beijing. China’s central bank cut interest rates twice in the last month-plus and has reduced bank reserve requirements three times since last Novembe
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Katare »

The official targeted growth rate was set at 7.5% IIRC.
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Austin »

Once the US and European market pickup the Chinese growth rate will pick up too but till such times they will have to depend on internal consumption how that will shape up needs to be seen.
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Austin »

ADB lowers China's 2012 growth prediction
BEIJING, July 12 (Xinhua) -- The Asian Development Bank (ADB) on Thursday lowered its prediction for China's economic growth to 8.2 percent in 2012 and 8.5 percent in 2013, although a bank official said a hard landing is unlikely.

The ADB made the revised prediction in the newly published Asian Development Outlook Supplement. The agency predicted in April that China's gross domestic product would increase by 8.5 percent in 2012 and 8.7 percent in 2013.

The ADB said China has seen a fall in net exports, industrial production and fixed asset investment, although government spending on health, education and large infrastructure projects are expected to boost the economy.

As the country moves to a more sustainable growth model, growth may slow down more than expected, said the report.

"In this case, we're still confident that there will be no hard landing for China's economy," Robert Wihtol, director-general of ADB's east Asia department, said Thursday.
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by vina »

Once the US and European market pickup the Chinese growth rate will pick up too but till such times they will have to depend on internal consumption how that will shape up needs to be seen.
Those kind of structural things are not like a on/off switch for you to flick and things happen instantly.

This sort of assumes that Europe will be out of the woods soon. How soon is "soon"? Japan has not recovered YET after the late 80s collapse. Everyone thought US will come back roaring in 2 to 3 years (including the Babu Dorks in India) and the Chinese spent like there was no tomorrow (ok, threw money down the drain like there was no tomorrow), and see what happened. The US is still in trouble and EU looks like going down the toilet!
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Austin »

China's int'l investment position reaches 1.79 trln USD
BEIJING, July 13 (Xinhua) -- China's net international investment position at the end of March reached 1.79 trillion U.S. dollars, the State Administration of Foreign Exchange (SAFE) announced Friday.

The net international investment position measures the difference between a country's external assets and liabilities.

At the end of March, China's external financial assets totaled 4.89 trillion U.S. dollars, while its external financial liabilities stood at 3.1 trillion U.S. dollars, the SAFE said in a statement on its website.

The country's reserve assets exceeded 3.38 trillion U.S. dollars at the end of March, accounting for 69 percent of its external financial assets, according to the SAFE.

The country's outbound direct investment in the financial sector hit 379 billion U.S. dollars, accounting for 8 percent of external financial assets; portfolio investments reached 270.3 billion U.S. dollars for six percent, while other investments hit 859.5 billion U.S. dollars for 18 percent, the statement said.

At the end of March, foreign direct investment in China exceeded 1.85 trillion U.S. dollars, accounting for 60 percent of the country's external financial liabilities. Foreign portfolio investments reached 289.2 billion U.S. dollars and other investments hit 959.2 billion U.S. dollars.
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by Austin »

vina wrote:Those kind of structural things are not like a on/off switch for you to flick and things happen instantly.
Ofcourse its not a on/off switch but then there is no better incentive to do those kind of structural changes then a lower revenue from export which impacts the economy .....if exports do no pickup in the way they would want to see then they would be forced to look home and make the right changes or atleast try earnestly then they would ever have done , it may be a blessing in disguise.
This sort of assumes that Europe will be out of the woods soon. How soon is "soon"? Japan has not recovered YET after the late 80s collapse. Everyone thought US will come back roaring in 2 to 3 years (including the Babu Dorks in India) and the Chinese spent like there was no tomorrow (ok, threw money down the drain like there was no tomorrow), and see what happened. The US is still in trouble and EU looks like going down the toilet!
How soon is a billion dollar question could be next 6 months could be 4 years .....but considering the fact that without EU and US growing all major economies will be impacted including ours there is little option but to make sure economy grows .....its matter of survival for everybody.
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Re: PRC Economy - New Reflections : Dec 15 2011

Post by chola »

Theo_Fidel wrote:Even getting to $15,000 has proven a struggle for state manged economies.
State managed economies are inevitably inefficient and weak. That is the frightening part about the chinis. The fact that they've lapped us three times over while it is still a communist dictatorship.

The really dhoti-shivering will come if and when the PRC becomes like a Taiwan, Japan or Hong Kong. I can only hope that the CPP hangs on. We get a transition like Taiwan had then we will never catch up.
The consumption data is telling us that the average Chinese is still only making 30% of that or about $1,500 per annum. The pearl delta folk are at the high end, yes, even the Fox Conn folk.
Unfortunately, that is not the data we see from the MNCs. You are talking about an economy that consumes in trackable goods (i.e. sales of multi-national brands) between 10 to 20 times that of India. You look at things like Dior, BMW or even KFC, the chinis are not struggling to consumes anything.


The chini's companies problem is not the market but their market share. If given a choice, the chinis would buy foreign. That includes foreign brands who make their products in China.
At such a low consumption rate the Chinese people can not afford the country that has been built for them.
One, there is no such thing as "afford" in a communist nation that can nationalize anything and everything. The problem is getting things built. Once things are built, then they can be used.

Two, if they cannot afford then the MNCs would not be in such a big way.

Trust no government data -- good or ill. Trust only sales. If you can sell something and you have it in your books then that is the only thing you believe. So believe me -- no, not me but MNC data. We simply cannot ignore the fact that there are record sales of GM and Apple in chiniland during this year of so-called economic hardship.
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