China Economic Stress Watch

[sanman]

Gain of function research was funded by the US, the L4 bio lab was built with help from France and others. The early outbreak cases in Wuhan were geo mapped and they were clearly very dense along the metro line connecting the damned lab with the city center. All this is public knowledge since a few years, only the media chooses to ignore it and the US even under trump didn't do much apart from shouting "Chaineesee virus" because the fingers would again point back to US & EU for ToT and funding it.

Very quickly Trump & US Pharma co.s saw a huge opportunity to make billions at warp speed and no one cares anymore. Ursula ordered over 4 billion vaccine doses for a cool 80B$ at 25% over the list price (nearly 20$ a pop), and no one knows how many were destroyed past expiry date since the opaque contracts forbade all donations to anyone outside the EU.

Karma has come back and bit China in the ass and torpedoed their economy, their Pharma, vaccine and API exports took a big reputitional hit, apart from millions of deaths that China & the G7 want to gloss over and forget.

The surprising and amazing winner of this dangerous and sad episode is INDIA ! Jai Ho !!

But while US media may have an interest in ignoring these scandalous origins of COVID -- what the hell is keeping our own Indian public officials and Indian media from exposing all these stunning things??!

We lost at least 600,000 people in the pandemic. How the hell aren't we taking up this matter of COVID origins more loudly?
We made noise after Union Carbide disaster in Bhopal, but we're quite silent about assigning blame for COVID. What gives?!

[Cyrano]

Pre-Covid many in the Indian Govt - both elected and career officials, were still under the belief that the west can be trusted (at least to some extent) to walk its own talk on rules based order and human rights. Many observers and analysts also held that belief that if these countries could not be trusted, why would so many qualified Indians line up in front of their consulates for visas? Thats broadly the difference many Indians made and still make between the west and China.

West = lets you come in for education, work, lets you settle, some can even become 1st world citizen there and leave behind the 3rd world shithole countries forever and breeze through the airports of the globalised world with a spanking new passport. China does offer some business opportunities but India in the past was in no position to really exploit them like the west did, and as country, it has none of that attractiveness for immigrants. Funnily, during covid time, the GoI had to bring back few tens of thousands of young Indians from china (and later from Ukr!), surprising themselves. But thats still a very small fraction of the Indian students, business people and workers abroad, a lot of them, especially the highly educated people with good incomes and growing influence are all in the G7/NATO west.

After the west laid bare its moral nudity in all its splendour during covid, and China was clearly exposed as a cess pit moat that protects Chateau CCP, and on top of being the virus spreader chose to attack India along the LAC, most in the Govt and outside woke up to this REAL two front situation ie India cannot trust the east nor the west. If any had some residual illusions, the Ukr war and its fallout shattered them, and left no doubt that the west remains an imperial and predatory force and china remains in a middle Middle Kingdom with Elevenly Mandate mindset.

All this has sunk in into contemporary Indian consciousness especially over the last couple of years - I mean look at how different our foreign policy has been in outlook and most importantly in action between pre-Modi era (anyone remember SM Krishna and Salman Khurshd's achievements as EAMs ?) and Modi's first term as PM with Sushma Swaraj ji who revitalised the ministry and his second term with Dr SJ as the EAM has totally transformed it and made it into a force to reckon.

The timing of these events and the change of govts is really miraculous and for once the expression the "stars have aligned" cant be more apt.

Coming back to you question, why doesnt India go after the east and the west? But it is doing exactly that, though not in the form you expect. Atmanirbhar, global south, brics, SCO, Quad, G20 and UN ityadi are all forums for India to get stronger, make friends and make unfriendly forces go after each other.

That, I'm sure you'd agree, is a better strategy than India visibly and vocally going after the east and west only to make them unite against India. Which they perhaps will at some point of time in the future, but by then India would have upgraded itself into full beast mode

Its a very different world than the one in 1981 IIRC which the Bhopal tragedy occurred. That was a one off incident, the current events are anything but.

[Cyrano]

Another take:

[kancha]

Reuters: Part of China's economic miracle was a mirage. Reality check is next

The failure to restructure the world's second-largest economy has raised critical questions about what comes next for China.

While many analysts see a slow drift towards Japan-style stagnation as the most likely outcome, there is also the prospect of a more severe crunch.

"Things always fail slowly until they suddenly break," said William Hurst, Chong Hua Professor of Chinese Development at University of Cambridge.

The pandemic, a demographic downturn and geopolitical tensions have exacerbated all these problems to the point that the economy has found it hard to recover this year even as China reopened.

"We're at a moment when we are seeing some structural shifts, but we should have seen these coming," said Max Zenglein, chief economist at MERICS, a China studies institute.

"We're just beginning to be confronted with the reality. We're in untested territory."

[ramana]

Headline is typical boius Western psy-ops.
The proposition right now is Chine glides slowly to settle down.or explodes with big bang.
Currently XJP is still in control and can pilot soft landing.
West want a crash and burn!

[yensoy]

Those following the economic developments in China would notice that there is a lot of new bond issuance of toxic assets/debt. I always wondered which idiots would willingly buy those bonds. Turns out that apart from unnamed sovereign entities which will be forced to buy the bonds, Hong Kong's vast riches are being used here - via a required investment into Chinese assets for all provident fund depositors (i.e. everyone who is employed in HK). I think it will be more widespread and HK will get eviscerated to pay the devil. Macau would also be a fat target and if not, it will only be because of vested CCP interests in that "autonomous" region.

There will be no crash & burn. All that is wishful thinking/fear mongering.

[chetak]

Headline is typical boius Western psy-ops.
The proposition right now is Chine glides slowly to settle down.or explodes with big bang.
Currently XJP is still in control and can pilot soft landing.
West want a crash and burn!

sirji,

Though crash they may not, a lot of the west will definitely burn to some degree, as many of their critical supply chains, as also their investments in cheen may turn sour, and maybe go up in smoke

the goras have no real legal protection that covers their assets in cheen....

[Cyrano]

Chetak saar,
But they do ! Thats what all the sabre rattling over Taiwan is for. Arm twisting China to not dare nationalise those companies until they can complete the decouple. Next potus will have to do that no matter who it is. The Ukr was has been an unnecessary distraction with no RoI.

[bala]

The protest waves (at least 741) across China are increasing. Many workers haven't been paid wages for the past few months. There is marked difference between what the CCCP is saying versus what is happening on the ground. Many signs ask for food. Take a peek into the YT..
https://www.youtube.com/watch?v=c2_0CtJUDH4

[chetak]

Chetak saar,
But they do ! Thats what all the sabre rattling over Taiwan is for. Arm twisting China to not dare nationalise those companies until they can complete the decouple. Next potus will have to do that no matter who it is. The Ukr was has been an unnecessary distraction with no RoI.

Cyrano ji,


the ukr agenda has a commie ROI. They have set up toolkits for India too and that's why they all want Modi out

The fool amriki public should have just left trump to complete his second term but the commies wanted him out at all costs

[sanman]

[S_Madhukar]

Is covid the trauma behind deflation ?



Separately I can see quite a bit of investment coming into India ETFs this year, money will follow where animal spirits are high

[SRajesh]

https://www.deccanherald.com/business/a ... bs-2677006
Is this Emperor's way of saying thank you to Foxcon and Apple!!

[sanman]

[sanman]

[Cyrano]

https://wccftech.com/qualcomm-2024-loss ... rin-9000s/

Huawei is trying to bounce back...

[bala]

No More Foreign Orders, as the Global Supply Chain Exits China.



Historically, summer and fall is when China's manufacturing sector prepares intensively for the American holiday shopping season. Orders flood factories from the Yangtze River Delta to the Pearl River Delta. However, this September, this dynamic industrial zone has fallen eerily silent.

In past years, a Dongguan supplier, striving to meet Amazon's demands, would initiate vast hiring drives. Yet, this year, they've maintained a minimum wage of $2.19 without any new hiring. By comparison, in 2019, Foxconn in Zhengzhou, while catering to Apple, offered summer temps a wage of $4.50, which has now declined to $2.30.

When a big economy enters into recession, it may take decades to get out of recession, especially without foreign investments. America can move manufacturing from China to South East Asia and India without having any impact. China can't offshore jobs to take advantage of cheaper labor because then they would lose their own jobs. Automation is happening everywhere in the manufacturing arena. The whole world now wants to avoid china for it's aggressive, expansionist attitude. The other factors are China has antagonized the rest of the world starting with COVID, then the debt trap for many nations, aggressive posture everywhere, maps that have turned neighbors into enemies and the iron-fisted policies for its own people.

[R Charan]

India’s G20 Win Shows US Learning How to Counter China’s Rise

Xi Jinping’s decision to stay away from this weekend’s Group of 20 summit may have been intended to deny India its moment. Instead, Prime Minister Narendra Modi – along with the US and Europe – figured out how to more effectively counter China on the world stage.

Fellow G20 nations hailed India’s success in reaching an agreement on a joint communique that remained in doubt just days before world leaders gathered for their most significant annual diplomatic event. Apart from finding consensus on Russia’s war in Ukraine, the most difficult issue, they also elevated the African Union as a full G20 member and took action on issues like climate change and debt sustainability which are priorities of emerging markets.

https://www.defencenews.in/2023/09/indi ... inas-rise/

[R Charan]

China’s arms exports face sharp decline due to defective quality, unreliable performance: Analysts



Beijing: China’s arms exports have declined due to poor quality, and weak and inconsistent performance, which puts buyer countries in peril. In the last decade, China’s weaponry exports have dropped by nearly a quarter, according to a report by the Directus.

Furthermore, China’s People’s Liberation Army (PLA) is plagued by the issue of low-quality weapons.

According to the Stockholm International Peace Research Institute (SIPRI), China’s arms shipments fell 7.8 per cent between 2016 and 2020 when compared to the preceding five-year period.

Its global market share has shrunk from 5.6 per cent to 5.2 per cent. Demand for Chinese weaponry increased since they were less expensive than competitors’ offerings.

It began to contract, however, after the Chinese armaments failed to perform as promised. “China attracts customers for its military equipment with cutrate pricing and financing, but there are hidden costs — especially when gear malfunctions,” said Cindy Zheng, a researcher at the think tank RAND Corporation. “A lack of technological compatibility with the Chinese military equipment can prove particularly expensive,” the researcher added, according to Directus.

China supplies weapons to over 53 nations, most of which are not markets for big arms suppliers such as the United States or France. 34 Pakistan, Myanmar, Bangladesh, and African and Middle Eastern countries are major importers of Chinese armaments.

According to Alexander Vuving, professor at the Daniel K Inouye Asia-Pacific Centre for Security Studies, the topic of problems in Chinese military gear has been emphasised.

“China-made weapons are not just technologically inferior, they also remain untested on the battlefield,” he said.

Full Analysis

[bala]

A good review of China's Faltering economy by Christina Chen of Taiwan.

Post covid the GDP growth is on a downward slide. Global demand for China's export is down. Consumer confidence is down. Youth unemployment is on the rise. Yuan has weakened. Why the economic stagnation? Basically china has reached the middle-income trap. State capitalism system is enforced, at the expense of private sector. Increasing control of the economy by the party, CCCP. Leadership of Emperor Eleven is suspect, many crackdowns, many desertions at the top (Foreign minister, Defense minister, Rocket forces chiefs). Real estate which is 30% of GDP is crumbling big time. There is overcapacity everywhere and people cannot afford ownership.

All recent attempts to boost the economy have failed. The impacts of economic stagnation are showing. Domestic discontent is rising and there are challenges to leadership. When economic things were great, people were going about their business without dissent. However with more economic woes people are disgruntled. There are now openly defying authority, people at the top know the situation and are escaping China. Many chinese in foreign nations are withdrawing their money from China (Western Union is very busy transacting such transfers). External challenges are mounting. The US is increasing its controls on technology. Despite China claiming to be self sufficient in high tech things are very shaky. Its defense export of planes like JF-17 are being trashed by customers since they don't work properly. Many things of China origin are of dubious quality.

[ramana]

I miss chola.

[sanman]

Look at that falling graph line:

[Anoop]

https://youtu.be/meJItedDm2Y?feature=shared

A look at the interplay between population decline and economic downturn. What I found interesting is the almost perfect storm of factors that underpinned population decline - (a) lack of accounting for already declining fertility rate in the 1970s even before the 1 child policy was formalized, (b) ignoring the effect of higher living standards on population growth (c) effect of one child policy on skewed gender ratio and hence the need to further increase wealth to find a mate and (d) overestimated population before the course correction was started.

[Anoop]

https://youtu.be/fGG-qfCUO5A?feature=shared

Another sign that the liquidity crunch is hitting banks and personal deposits.

[sanman]

[KL Dubey]

^^After perusing all treatises and manuals authored by Sun Tzu, Chairman Mao, Chairman Deng, etc to understand Chairman Xi's declaration, I conclude that Shanghai Statistics will reach a whole new level.

[sanman]

Someone makes counterargument against Peter Zeihan's predictions of China's demise:

[drnayar]

This thread needs to be more balanced and more focussed on actual data and metrics. Like it or not China looks to be on track to become the largest economy by 2035

https://time.com/6297539/how-india-econ ... urpass-us/

India was the world's largest economy for a staggering 1500 years

With its economy already 70% of the U.S. and growing at more than twice the latter's rate, China is poised to become the world’s largest economy between 2035 and 2040

The good news for India is that during the 15 years preceding COVID-19, the country sustained a real GDP growth rate of 8% compared with less than 2% for the U.S. If India can keep this up for the next two decades and grow 5% a year thereafter while the U.S. maintains its growth rate of 2%—two scenarios that are possible, if not likely—it would overtake the latter by 2073

[KL Dubey]

This thread needs to be more balanced and more focussed on actual data and metrics. Like it or not China looks to be on track to become the largest economy by 2035

The problem in case of China is that the data and metrics released by IMF, WB etc are based on Chinese sarkar data, which are faked. Multiple studies (some discussed in BRF) have shown that PRC economy (on exchange rate basis, not PPP) is about half the size of what is reported. That is still pretty large, but this figure has ballooned over the years because of false growth rates. The projected growth rates going forward also seem unrealistic or following the same fakery.

In summary - China is a big economy, but it won't be the largest in 2035 on exchange rate basis. It might be, on PPP basis.

[A_Gupta]

https://youtu.be/08GJ3V72aMU?si=Yq9ZIzoH4sS3rM-q
CHINA Property Market Starts to Collapse as Evergrande is Forced into Liquidation by Hong Kong Court

The expected problem is that China will not let the mainland assets be liquidated for the Hong Kong court proceedings and the benefit of international creditors; and this will make investors very wary of investing in China.

[sanman]

Peter Zeihan gives a cogent analysis of China's economic/political unraveling

https://www.youtube.com/watch?v=JD3m6U6g53k

[A_Gupta]

https://youtu.be/p3Gzaf3S3bU?si=5RcYEXk929jn7lKs

China’s aviation industry woes.

[SRajesh]

May I ask what will be implications of Chinese meltdown on :
1. Global Economy
2. EU economy given the esposure of some of the countries
3. Global security if there is severe instability and chaos ensues
https://www.scmp.com/economy/china-econ ... e=homepage
https://www.scmp.com/news/china/science ... e=homepage
https://www.globaltimes.cn/page/202402/1306795.shtml
https://www.globaltimes.cn/page/202402/1306787.shtml

[A_Gupta]

Is there a black market for US dollars vs Chinese Yuan; and if yes, what is the black market rate compared to the official exchange rate?

[A_Gupta]

Bing CoPilot said:

Is there a black market for Chinese renminbi?

According to some sources, the black market exchange rate for the RMB is typically higher than the official rate, meaning that people can get more foreign currency for their RMB on the black market. For example, as of February 7, 2024, the official exchange rate for 1 RMB was 0.15 USD, while the black market rate was 0.17 USD2. This means that people could get 13.3% more USD for their RMB on the black market. The black market rate may vary depending on the location, the amount, and the availability of the RMB.

For comparative purposes:
Is there a black market for the Pakistani rupee?

For example, as of February 25, 2024, the official exchange rate for 1 PKR was 0.006 USD, while the black market rate was 0.007 USD3. This means that people could get 16.7% more USD for their PKR on the black market. The black market rate may vary depending on the location, the amount, and the availability of the PKR.

So perhaps this is CoPilot's imagination (It isn't yet February 25, 2024).

But if the gap between the official and black market rate for the RMB can be monitored, that would be a good gauge of where China is headed.

[A_Gupta]

https://www.youtube.com/watch?v=6IeObMDIZY4

From the transcript, cleaned up a bit:

3:35
two from Financial Times written by Ruchir Sharma. In one of those Ruchir Sharma articles, we get the nugget that the Chinese can at this point near in the foreseeable future can give up the idea of becoming an economy bigger than America's as a fantasy.

Until a few years back everybody seemed to believe that the Chinese will outstrip America in the size of their economy and this will happen not just in our lives but probably in our youth and in our middle age, whatever stage of life we were in. That's unlikely to happen because as he points out in his 10 trends for 2024 is that the Chinese economy had gone up to 76% of American GDP in 2021, and at that growth rate because there was a growth differential between China and America -- America wasn't growing that fast the Chinese might have had an opportunity of overtaking America but two things happened. One the American economic growth picked up that is something that people don't give Joe Biden the credit for even in America, but the American economic growth picked up and at the same time Chinese economic growth declined.

So 2021 China was 76% of America's GDP today they are 65% of America's GDP and given the growth rates now and given the base at which the American economy starts compared to the Chinese economy this gap is not likely to narrow, this gap is
likely to increase.

{In 2023 the global economy grew} by $8 trillion over the previous year, of this 45% went to America ...

----

Just want to point out for the idiot YouTubers who yak about de-dollarization and those that follow them - 45% of $8 trillion is almost the size of the Indian economy at exchange rate. Just as India grows by one Pakistan economy per year, the US, in a good year, grows by one India at exchange rates. India needs to work hard and stay the course, for the next 30 years. I have no doubt that India is on the right track; but it is at the beginning of the race course, not even midway.

[A_Gupta]

A good article on the problems facing China.
https://carnegieendowment.org/chinafina ... kets/91161

For those who just want a summary:

Can China really account for 38 percent of global investment while its economy comprises just 21 percent of global GDP and 15 percent of global consumption? Every $1 of investment has required approximately $3 of consumption globally to sustain it during this century. In China, however, $1 of investment is balanced by only $1.30 of consumption. If the global relationship between consumption and investment held over the next decade, an increase in the Chinese share of global investment from 32 percent today to 38 percent in a decade would require that the rest of the world disinvest to accommodate China’s domestic imbalances.
....
....
If China is to maintain high growth rates over the next decade but is unable to do so while maintaining its high investment and manufacturing shares of GDP, the only alternative requires that it sharply raise the consumption share of its GDP.
....
....
To put it another way, if China wanted to maintain GDP growth rates of 4–5 percent, Beijing would have to engineer policies that caused consumption to grow by at least 6–7 percent a year, with investment growing at roughly 1 percent annually.

...
...
With investment growth slowing, which means fewer jobs building bridges, train stations, and apartment complexes, the only way to accelerate consumption growth sustainably is to get household income growth to accelerate through transfers—either directly (such as through wages and other income) or indirectly (such as through a stronger social safety net).
....

The problem with transfers is that they must be paid for, and there are only three sectors that, in theory, can meaningfully pay for them. One sector that can pay is the rich, who consume a much lower share of their income than ordinary households.
...
A second sector that can be forced to pay is the business sector. For example, businesses can pay for these transfers in the form of rising wages, higher taxes, a strengthening currency, or higher borrowing costs (if these are matched by higher deposit rates for household savers). The problem is that with China’s manufacturing competitiveness based primarily on the very low share of income Chinese workers retain relative to their productivity, this would seriously undermine Chinese manufacturing.
...
The only other sector that can pay is government. There are in fact two levels of government in China: Beijing and local governments. Given the structure of payments and social transfers in China, along with Beijing’s explicit refusal to absorb the various debt and adjustment costs, it is very unlikely that Beijing will be willing to take on the full costs of transfers, which would require mainly central government borrowing.

That leaves local governments as the sector most likely to absorb the costs. By my calculations, if Beijing forced local governments to transfer roughly 1.5 percent of GDP every year to households, it would be possible to drive the growth in both household income and household consumption to around 7 percent annually.
...
But transferring such a large share of local governments’ assets won’t be easy. Such substantial transfers would be politically contentious and require a transformation of a wide range of elite business, financial, and political institutions at the local and regional level. After all, if China’s economy has been structured around four decades of direct and indirect transfers from households to subsidize manufacturing and investment—in the form of easy and cheap credit, weak wage growth, an undervalued currency, excess infrastructure spending, a weak social safety net, and other explicit and implicit transfers—it would be very surprising if China’s manufacturing competitiveness and its ability to engage in massive infrastructure spending weren’t also profoundly structured around these transfers.

IMO, being a democracy can save India from such a fate, because the result of economic growth has to show up in the well-being of households, that is the only politically viable way in a democracy.

[sanman]

The surprising and amazing winner of this dangerous and sad episode is INDIA ! Jai Ho !!

We (officially) lost over 500,000 people to COVID -- how is that a win?

[hgupta]

https://www.youtube.com/watch?v=6IeObMDIZY4

{In 2023 the global economy grew} by $8 trillion over the previous year, of this 45% went to America ...

----

Just want to point out for the idiot YouTubers who yak about de-dollarization and those that follow them - 45% of $8 trillion is almost the size of the Indian economy at exchange rate. Just as India grows by one Pakistan economy per year, the US, in a good year, grows by one India at exchange rates. India needs to work hard and stay the course, for the next 30 years. I have no doubt that India is on the right track; but it is at the beginning of the race course, not even midway.

lol and how much of this is due to inflation? Has actual productivity increased or it’s just mostly inflation? Remember that the dollar is pretty much the global currency so US gets to import its inflationary pressures when it engages in massive monetary capital injection measures.

And don’t forget that US has the largest debt in the world which is 130% of its GDP.

[A_Gupta]

> And don’t forget that US has the largest debt in the world which is 130% of its GDP.

No, Japan and Italy exceed the US in the major economies.

> Has actual productivity increased or it’s just mostly inflation?

Actual productivity.