The Collapse of China May Be Near

amoy

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Only pollyannas would believe a starving and illiterate populace is genuinely incorporated into the "Democracy". more likely they're mobilized only at the time of elections. Then most of time their voice is unheard of.

the economic structure of society, the real foundation, on which arises a legal and political superstructure
China economic growth slows to 18-month low in first-quarter | Reuters
(Reuters) - China's economy grew at its slowest pace in 18 months at the start of 2014, but did a touch better than expected and showed some improvement in March, suggesting Beijing will not rush to follow up recent steps to support activity.

Authorities have ruled out major stimulus to fight short-term dips in growth, signaling the slowdown was an expected consequence of their reform drive, even as some analysts think the economy will lose further momentum.

The economy grew 7.4 percent in the January-March quarter from a year earlier, the National Bureau of Statistics said on Wednesday. That was slightly stronger than the median forecast of 7.3 percent in a Reuters poll but still slower than 7.7 percent in the final quarter of 2013.

It was China's slowest annual growth since the third quarter of 2012, when the world's second-largest economy also grew 7.4 percent.

"The slowdown of China's economy is a reflection of a transformation of the economic mode," said Sheng Laiyun, of the National Bureau of Statistics.
 

cw2005

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I would refrain from using Pollyanna to describe Indians. Rather, in general, I would instead like to suggest happy-nature. At least this is the case applicable to my Indian acquaintance. While they dissatisfy with their leaders, feel the pressure from the competition of their neighbor and are impotent to change the current situation, they have no option but turn themselves into self-inducted hypnogenesis . In certain extent, the Chinese have similar symptom. People of these two countries have been shown that they are inferior to the developed world. Now they have a chance to catch up and they want to prove to the world that they could be the Uno. They simply selected different paths. Let them continue with their own paths.
 

Hari Sud

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Use as many statistics you like to prove your point. China is not heading for a fall. US and Europe has lost capability to manufacture the consumer goods. They have given it, lock stock and barrel, to China. Consumer goods are 80% of China's exports. US and Europe has INVESTED $800 billion in building Chinese factories. They are not about ready to give that sum up except in a war. That is unlikely to happen.

Hence China is not heading for a fall.

Once you loose that deep knowledge to manufacture the very basic consumer goods, which US has lost (you must thank President Clinton for that), it takes that much time to regain it. US will never spend that kind of money and time to regain it.

Also that cleverly made policy that all surplus Chinese export cash will be given back to US in worthless Treasury Bonds sale, China is in a catch 22 situation. It cannot recover its money without jeopardising its exports, hence exports would continue. That precludes chances of China collapsing.

Dream on!!!!
 
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@Hari

The manufacturing base in USA may never come back. It took 3. Get generations and millions
Of people using immigrant slave labor.
 
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roma

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Use as many statistics you like to prove your point. China is not heading for a fall. US and Europe has lost capability to manufacture the consumer goods. They have given it, lock stock and barrel, to China. Consumer goods are 80% of China's exports. US and Europe has INVESTED $800 billion in building Chinese factories. They are not about ready to give that sum up except in a war. That is unlikely to happen.
Hence China is not heading for a fall.
Once you loose that deep knowledge to manufacture the very basic consumer goods, which US has lost (you must thank President Clinton for that), it takes that much time to regain it. US will never spend that kind of money and time to regain it.
Also that cleverly made policy that all surplus Chinese export cash will be given back to US in worthless Treasury Bonds sale, China is in a catch 22 situation. It cannot recover its money without jeopardising its exports, hence exports would continue. That precludes chances of China collapsing.
Dream on!!!!
Are USA and europe so dumb as to invest in prc rather than in their own nations ?
i feel it is because the ultimate owner of the wealth of the labour generated still belongs to families in the usa and europe

The Concept of ownership of wealth has changed - from nations to family-groups ( Illuminati ? ) ? Just as in the
feudal days or like the Royalty of former Europe - where they married only amongst themselves and preserved their wealth ?
We seem to be returning to those days .

It's a concept that may not hold nor succeed in the longer term and i dont necessarily agree with it

Just an observation
 

Hari Sud

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Roma

The issue under discussion in China collapses.

US and Europe in mid eighties and nineties thought that they wish to be overlords controlling money. They wished that low tech items be manufactured cheaply elsewhere for them to buy. They invested heavily to relocate these industries to China. The latter was also bulwark against Russian power. Towards year 2000 onwards all calculation went wrong. US suffered a trillion dollar damage in twin tower collapse in New York and indulged in two wars which cost another trillion dollar. Hence US finances went bad. There is only one place they found money that is China. They encouraged China to generate more money to buy Tresury Bonds, in return they would continue importing goods from China. The forgoing also require money hence FDI continues.

Hence US and Europe may not be dumb but are stuck in an environment such that they are working to give China more and more advantage.
 

amoy

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Gearing Down Economic Growth http://english.caixin.com/2013-07-17/100556974.html
Bourses tumbled in June due to the liquidity squeeze, and there may be more bumps in the road as the cabinet attempts major restructuring


For most people who invested in the Chinese stock market, June was reminiscent of the market crash in September 2011. H-shares plunged 12 percent, and A-shares fell 16 percent to a three-year low.

While the recent liquidity squeeze seems to be largely responsible for the market panic, the debacle has sounded the alarm about the future trends of the country's economy.

The central bank did what was necessary to tame the reckless growth of off-balance-sheet numbers. The rapid expansion of the scale, complexity of financial products and maturity mismatch surprised even regulators. Left on its own, the risk of the situation spinning out of control will rise steeply.

However, I think that the severity of the problem has exceeded the central banks' expectations. The bank was initially very confident and assertive about its decision to hold back credit supplies. However, the pressure of tumbling stock and bond markets compelled it to loosen its hold on cash supply after a five-day deadlock.

The central bank's shifting decisions indicated its lack of confidence and understanding of the current market situation. After all, its primary responsibility is to maintain the stability of the financial market. The global market was negatively affected by the Federal Reserve's possible exit from quantitative easing, even after Ben Bernanke sent multiple signals to warn the market. Therefore, it could have been expected that a sudden tightening of liquidity would send the market into a panic, which in turn would force the central bank to change its policy.

The aftermath of the liquidity crisis reverberates in July because market expectations were fundamentally altered. The central bank seems determined to tame the growing off-balance-sheet operations, though it has made a few concessions.

We are not sure whether the M2 growth in 2013 will return to the target level of 13 percent, but the growth rate in the second half will certainly fall from the previous levels of 15 to 16 percent.

Under the circumstances, the fate of property developers and local government financing platforms is up in the air. The two sectors were most thirsty for funds throughout the first half of this year. The real estate sector can afford rather expensive loans because of its excellent sales performance in the second half of last year. Financing platforms have always been insensitive to interest rate fluctuations. As a major part of fixed investment, the manufacturing industry's demand for funds has been weak due to excess production capacity, a problem for which there is no fix in sight.

The real estate market was flagging anyways, even when the impact of the recent liquidity crunch was excluded. The hike in housing prices after June 2012 was partly driven by pent-up demand that had been accumulating since the last quarter of 2011. The housing policy introduced in March created uncertainties and released some of the future demand in advance.

We simply cannot imagine that property transactions will continue to be as strong as in the past few months. Continued housing price rises in first-tier cities are abnormal and will naturally fall.

However, under such a severe liquidity shortage, the extent of readjustment will be much more unpredictable since we already observed slight interest rate rises in mortgages and loans.

Under the premise of deleveraging, the growth rate of investment will certainly decline. Consumption will remain stable, but will not show substantial signs of recovery. Exports are likely to pick up due to the U.S. economic recovery, but falsified statistics and yuan appreciation will disappoint optimistic market expectations.

To sum up, China will undoubtedly gear down its economic growth rate as the cabinet strives to restructure and transform the country's economic growth model. A number of observers draw a parallel between the current status of the economy and that in 1998. I think China is facing far more challenges this time. The size of its economy is much larger than 15 years ago. As for internal reform, the resistance from various interest groups has been unprecedented.
 
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amoy

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@Hari Sud those days were gone - Chinese export oriented economy indeed is slowing down and the huge trade surplus is no longer sustainable with labor and other costs soaring plus the diminishing buying power of US+EU (meaning old model of Chinese keeping on buying in US T-Bonds with surplus will not work) . Labor intensive manufacturing is moving out, but not necessarily to India, instead many other destinations like Vietnam, Cambodia and even Bangladesh.

Closer Look: Signs China's Economy Transforming Linger behind Latest GDP Figure -
(Beijing) – The country's rate of GDP growth continued to slow, dipping to 7.4 percent in the first quarter compared to the same period of last year. The figure for the last quarter of 2013 was 7.7 percent.

The data was released by the National Bureau of Statistics (NBS) on April 16.

Economists from 14 financial institutions predicted in a Caixin poll that the figure would be 7.3 percent.

The central government set this year's GDP growth target at 7.5 percent, the same as last year. Premier Li Keqiang said a figure "slightly below 7.5 percent" could be still reasonable.

What is worth more attention than the growth rate is a change in the economy that other NBS data reflect. In 2013, the tertiary sector's contribution to total economic output exceeded that of secondary sector for the first time in modern Chinese history.

The latest results showed that services pulled ahead of production and construction even more, with the former accounting for 49 percent of total economic output in the first quarter. Last year tertiary sector's share of GDP was 46.1 percent.

The 49 percent figure is 4.1 percentage points higher than the output of the secondary sector. The growth rate of services was also the highest in the first quarter, at 7.8 percent. The growth rates for the primary and secondary sectors of the economy were 3.5 percent and 7.3 percent, respectively.
Also, because service providers employ one-third more workers than manufacturers, employment will be resilient.

The country's number of migrant workers – people leaving their hometowns to find work elsewhere – rose 1.7 percent in the first quarter, said Shen Laiyuan, the NBS' spokesman. He said employment was stable in the first quarter.

This explains why the central government has been cool to suggestions that it roll out stimulus policies to prop up the economy. Speaking at a forum on April 10, Li restated that the government values long-term, healthy development and will not resort to stimulus when the economy fluctuates.

But this does not mean the government can do nothing. It is worth noting that the economy is facing pressure to slow further. Quarter-to-quarter GDP growth has fallen since July. The value of GDP for the first three months of this year is only 1.4 percent higher than that for the fourth quarter of last year. This is the lowest growth rate since the beginning of 2013.

It will be necessary for the government to make some stabilizing moves, but they should suit a changing economy.

There have been calls for stimulus policies to enhance investment in infrastructure projects. But compared with 2008, when a 4 trillion yuan stimulus package was launched, China's infrastructure has come a long way. In fact, many regions have shown signs of overcapacity. Meanwhile, local government debt has soared, a development that had narrowed the room to maneuver for both fiscal and monetary policies.

The central government has resorted to measures such as optimizing budgets and speeding up the work on important projects. Some analysts say these measures are not enough, but they can be effective at cushioning the impact of slowing growth.

It has also moved to deepen reform by streamlining government administration, easing the tax burden on small and micro-businesses, and further opening up the service sectors. These measures may need to take some time to show results, but they are much more sustainable than infrastructure investment.

What matters most now is not a high growth rate, but the determination to follow through with reforms and rebalance the growth model. The shift in the economic structure has laid the foundation for more profound adjustment. More tough work remains ahead.
 
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trackwhack

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Is this mathematically correct?

India Current GDP - 4.75 trillion. If rupee corrects back to 40, does that change to 7.71 trillion? If so in 5 years will be 12.53 trillion compounded at 10% per year? Where am I going wrong?
 

Mad Indian

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Is this mathematically correct?

India Current GDP - 4.75 trillion. If rupee corrects back to 40, does that change to 7.71 trillion? If so in 5 years will be 12.53 trillion compounded at 10% per year? Where am I going wrong?
Would the exchange rate figure into GDP on PPP terms?:confused:
 

prohumanity

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"China will collapse..." That's a blatant exaggeration of reality. History review needed by those who predict collapse etc. In 1975 , Richard Nixon went to China and had golden handshake with Deng zio ping and made a deal that whatever Chinese factories will produce, US is going to buy it all. A huge foreign investment flooded in China after this deal. Manufacturing grew tremendously as US consumers were gobbling up cheap Chinese stuff. China made a lot of profit...a couple of trllion dollars..out of which China bought US treasury bonds to park about 1.3 trillion dollars( 2013 figures) In 2006, US consumer dropped due to housing bubble burst and Chinese were unable to sell stuff as US consumers went almost broke. Now, China can not sell all the US bonds as its currency, Yuan can go sharply up thus causing its stuff to be more expensive for West. China's economy is now crawling at snails pace and Prez. Xi and PM Li are running all around World to find places where they can invest this big stash(1.3 trillion $) If they are able to pull out of US bonds, dollar will depreciate . China will still survive but will have to go through deep recession for next several years. BUT, NO COLLAPSE.
 
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Collapse is possible many Chinese banks lent money backed by worthless us bonds
Chinese created a housing bubble and overbuilt.
 

CCP

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Collapse is possible many Chinese banks lent money backed by worthless us bonds
Chinese created a housing bubble and overbuilt.
1. if US bond become worthless means US is not long from disappear. That will be a great result for China, even we lost all the money.
2. In China, living area per person is still too low compare to most countries.
 
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1. if US bond become worthless means US is not long from disappear. That will be a great result for China, even we lost all the money.
2. In China, living area per person is still too low compare to most countries.
Currently there is no market for us debt, a trillion dollars is not something to lose
So easily. As long as USA maintains military superiority USA will never disappear.
 

CCP

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Currently there is no market for us debt, a trillion dollars is not something to lose
So easily. As long as USA maintains military superiority USA will never disappear.
1. If it is a bond then it will be repaid.

2. this not "a trillion dollars".
National debt of the United States - Wikipedia, the free encyclopedia
"As of January 2011, foreigners owned $4.45 trillion of U.S. debt, or approximately 47% of the debt held by the public of $9.49 trillion and 32% of the total debt of $14.1 trillion.The largest holders were the central banks of China, Japan, Brazil, Taiwan, United Kingdom, Switzerland and Russia.[58] The share held by foreign governments has grown over time, rising from 13% of the public debt in 1988[59] to 25% in 2007."

3.military superiority is built on a strong economy.
otherwise India should spend all its GDP to built its military.
 
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Oblaks

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China Property Collapse Has Begun

China Property Collapse Has Begun - Forbes

Nothing is going right for Hangzhou at this moment. Walmart will be closing its Zhaohui store in that city on April 23 as a part of its overall plan to dump marginal locations—about 9% of the total—in China.

Thanks to the world's largest retailer, another large block of space in Hangzhou, the capital of Zhejiang province, will go on the market at a time when there is generally too much supply. The problem is especially pronounced in the city's premium office market. Hangzhou's Grade A office buildings at the end of 2013 had, according to Jones Lang LaSalle, an average occupancy rate of 30%.
 

CCP

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LOL, Gordon G. Chang again?

Gordon G. Chang - Wikipedia, the free encyclopedia

Gordon Guthrie Chang
(Chinese: 章家敦; pinyin: Zhāng Jiādūn) is a lawyer, author, and television pundit, best known for his book The Coming Collapse of China (2001), in which he argued that the hidden nonperforming loans of the "Big Four" Chinese State banks would likely bring down China's financial system and its communist government and China would collapse in 2006.
 
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Dark Sorrow

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I don't know when PRC will Collapse but I can say one thing if PRC and India can sort their differences and come together we can together collapse Europe for sure.
 

Armand2REP

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Guangdong's 2013 GDP is 1020 billion USD,the 1st trillion dollar province for China。
Guangdong has greater than Greek debt levels and a fake GDP... not impressed with cooked books.


Sent from my iPhone 5S using Tapatalk 2
 

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