China May `Crash' anytime, Faber Says

[Armand2REP]

The least that can be said for now is that Chinas growth is unsustainable from an economic perspective, they can't remain at 10% forever, and even then that amount of growth is overly-inflated.

Chinese Economy: Fun Facts

1) China spends 21.3% of GDP on logistics costs, opposed to 10% in the West. It costs 6-8 RMB to move 1kg via land transport from Giuzho to Shanghai while it only costs 1.5 to fly the same load from Shanghai to New York.
2) 82% of the world's toll roads are in China which account for 50% of land transport costs
3) China spends average annually of $50 billion in fuel subsidies to keep a price of $1.05 p/l... could go as high as $66 billion this year.
4) Construction accounts for 60% of GDP while only 10% worldwide
5) Consumer spending has declined from 55% to 35% of GDP over the last 12 years
6) China produces 2.5 trillion cigarettes p/y for 400 million domestic smokers (25% world total)
7) CCP collects over 1 trillion RMB in taxes and profits from the tobacco industry p/y
8) CCP spends only 2% of GDP on healthcare watching 3 million with smoke related disease die p/y
9) China is the world's largest printer of money, doubles supply in 3.5 years
10) For every dollar printed, China must print another to buy $1 of FOREX by law
11) Land sales account for 3 trillion RMB government revenues last year
12) 65 million housing units (200 million people worth) sit empty

 

[jazzguy]

the last word is the truth.

In the coming decade, CHina would have to mass-induct cheaper labour from poorer countries,such as southeast Asia and South Asia.

People would have more and more chance to see Indian workers,sncurity or other blue-collars in China....

It's too bad that India Inc. can't use cheap Chinese labor for exporting to India anymore. It's high time for our mighty Indian companies to move their production lines out from China and to relocate them to US, where the labor cost is relatively low. With the production lines established in US by our mighty Indian companies, India can continuously enjoy the cheap products for next decade.

 

[badguy2000]

Chinese Economy: Fun Facts

1) China spends 21.3% of GDP on logistics costs, opposed to 10% in the West. It costs 6-8 RMB to move 1kg via land transport from Giuzho to Shanghai while it only costs 1.5 to fly the same load from Shanghai to New York.
2) 82% of the world's toll roads are in China which account for 50% of land transport costs
3) China spends average annually of $50 billion in fuel subsidies to keep a price of $1.05 p/l... could go as high as $66 billion this year.
4) Construction accounts for 60% of GDP while only 10% worldwide
5) Consumer spending has declined from 55% to 35% of GDP over the last 12 years
6) China produces 2.5 trillion cigarettes p/y for 400 million domestic smokers (25% world total)
7) CCP collects over 1 trillion RMB in taxes and profits from the tobacco industry p/y
8) CCP spends only 2% of GDP on healthcare watching 3 million with smoke related disease die p/y
9) China is the world's largest printer of money, doubles supply in 3.5 years
10) For every dollar printed, China must print another to buy $1 of FOREX by law
11) Land sales account for 3 trillion RMB government revenues last year
12) 65 million housing units (200 million people worth) sit empty

in a world...."the collapse of CHina is coming....." hahahaha

20 years ago, it cost much more to "move 1kg via land transport from Giuzho to Shanghai ",because there is no highway at all.

82% of the world's toll roads are in China ,and it account for 50% of land transport costs. but 50% of yearly additional expressways are also located in CHina too.

India has few roll road indeed, just as CHina did 20 years ago...but India also has few expressways,just as China did 20 years ago.

 

[Armand2REP]

in a world...."the collapse of CHina is coming....." hahahaha

What it does is raise alot of questions and points out some glaring facts about the Chinese economy

China spends $50 billion a year to subsidise fuel that is more expensive per litre than the US that has federal and state taxes on it. What is going on with Sinopec that it is so expensive? One answer is the cost of transportation. it costs so much in tolls that a trucker making 100k RMB only brings home 20k after expenses. Recent trucker riots saw that hit hard this week.

Looking at CCP revenue stream is a real wakeup call... over a trillion RMB in tolls. It is the largest nickle and dime scheme in the world. Over a trillion RMB from TOBACCO! 3 trillion RMB in land sales. Three of CCPs biggest revenue streams are under threat. They want people to quit smoking, they have pushed land sales to its limit, and truckers have rioted to the point CCP had to lower tolls. These are the cash cows that fund most of what the government does. I was about to say outside of exports, but the small surplus don't even come close to these cash cows. CCP wants people to smoke to death, have property prices through the roof, and have wall to wall traffic congestion. The only reason CCP starts to do anything about it is social unrest at the consequences.

Edit... nobody cares about your 20 year old outdated info. We are talking about TODAY.

 

[badguy2000]

What it does is raise alot of questions and points out some glaring facts about the Chinese economy

China spends $50 billion a year to subsidise fuel that is more expensive per litre than the US that has federal and state taxes on it. What is going on with Sinopec that it is so expensive? One answer is the cost of transportation. it costs so much in tolls that a trucker making 100k RMB only brings home 20k after expenses. Recent trucker riots saw that hit hard this week.

Looking at CCP revenue stream is a real wakeup call... over a trillion RMB in tolls. It is the largest nickle and dime scheme in the world. Over a trillion RMB from TOBACCO! 3 trillion RMB in land sales. Three of CCPs biggest revenue streams are under threat. They want people to quit smoking, they have pushed land sales to its limit, and truckers have rioted to the point CCP had to lower tolls. These are the cash cows that fund most of what the government does. I was about to say outside of exports, but the small surplus don't even come close to these cash cows. CCP wants people to smoke to death, have property prices through the roof, and have wall to wall traffic congestion. The only reason CCP starts to do anything about it is social unrest at the consequences.

Edit... nobody cares about your 20 year old outdated info. We are talking about TODAY.

you should have read the website of CHina's Ministry of Finaince,before you blah you clueless and cheap poinview.....
http://www.mof.gov.cn/zhengwuxinxi/caizhengshuju/
the detail of China's governmental revenue can be found easily there.

if you can not read chinese script,you could have read by by google translator......anyhow it is better than your imagination.

 

[Armand2REP]

And just where does any of that refute what I just said? Please read your crap before you post it.

 

[JAYRAM]

china is immitating the same japan of 1990's..

 

[no smoking]

Regarding moving out of China . When they were able to move manufacturing units from USA or Europe to china whats so difficult in moving out of China. It will be done in a phased manner .

Just a thought: Currently there is no other country could produce those products with lower costs than China. In india, vietnam, people earn only half of chinese workers' salary, but the total costs of most of products are still higher than produced in China. So, there is least motivation for those companies to move out.

Worst of worse is that there is no country could has the potential to produce at same level of cost as China in 10 years. Why? The scale!

There is no doubt you can find some skillful workers in South East asia or South asia. But what we need here for the transformation is probably three hundred millions above standard workers. No other countries could get so many workers in 10 years, even india.

There is no other country has a full industry chain ready for this move as what china had before 1980: from knife to bearing, from computer to motor. You may say these products were no better than shit. But china did have this industry system. What these foreign companies need to do is improving this system and built their factory based on this system. It is a lot cheaper than building everything from scratch.

There is no other country has been building an transportation system which is always beyond its industry demand. So, whenever and whereever you want to build your factory, you always find the road, port and railway are ready for you. You don't need to wait while waisting your money.

There is no other country could provide such a large market besides your factory. When foreign investors come in China, they saw a one billion customers market. Today, this market may not consuming all of their products, but it is growing at fast rate and it has a potential to become the largest one. So, the best choice is staying there and grow up with China.

So far, in developing countries, China is the only one could provide all of these. India has the potential to replace China after 10 years if indian can work harder than Chinese and throw more money into its fundation than CCP.

 

[no smoking]

you should have read the website of CHina's Ministry of Finaince,before you blah you clueless and cheap poinview.....
http://www.mof.gov.cn/zhengwuxinxi/caizhengshuju/
the detail of China's governmental revenue can be found easily there.

if you can not read chinese script,you could have read by by google translator......anyhow it is better than your imagination.

Badguy, just leave Armand2REP alone, this poor doesn't know anything detail about China. He is just another Gordon Chang.

 

[p2prada]

Both Anti-China as well as Pro-China debaters are swinging to their 2 extremes.

China will not crash in just a few months and nor will China grow at it's usual pace anymore.

China is curbing expenditure from now on, so your growth will only grow based on demand from now on, unlike before where you build the infrastructure first and then the market. This curbs inflation. So, your growth story is losing steam. However your growth has been impressive and you do have a big economy. Wonder if CCP is planning on reducing printing of notes as well to curb inflation. This way your economy can cross the US in the next 2 or 3 years in nominal GDP.

Considering China's growth mainly came from construction, this makes India's growth even more impressive which comes from consumerism and growth of other sectors like industry and mining. With our focus on industries right now, even we will have greater growth in another 3 to 5 years with industry growing at 12 to 15%. We will need massive investment in our agriculture sector to narrow the rich poor divide.

China will not be crashing any time soon. They are curbing on expenditure which will pretty much absorb any major fluctuations in the market. Even with lower growth projections the Chinese savings is growing. They are becoming more savy and are broadening their investments to other areas like Forex and Stocks and not just on real estate.

China is still a safe bet.

 

[AOE]

Yes those are certainly points worth considering Armand, Chinas boom as I said is very over-represented, their 64 million empty apartments at $70,000-100,000 a piece will probably give them the same crash that Japan experienced in the 90s (see Japans asset bubble).

 

[mileycyruslove]

there would be no empty apartments if the price is at $70,000-100,000 per piece. even the cheapest ones (usually less then 50 m2) are over 1,000,000 rmb

 

[badguy2000]

there would be no empty apartments if the price is at $70,000-100,000 per piece. even the cheapest ones (usually less then 50 m2) are over 1,000,000 rmb

the price depends on the location .....

 

[sayareakd]

BG buy gold, with all of your saying.

 

[Armand2REP]

Fitch downgrades China's yuan debt outlook to 'negative'

PARIS — Ratings agency Fitch on Tuesday downgraded its outlook on China's local currency debt rating from "stable" to "negative" as on concerns over a huge rise in potentially destabilising easy credit.

Fitch's rating for China's yuan-denominated debt rating currently stands at "AA-", four notches below its top classification.

Fitch's decision implies that it could, in the medium-term, decide to downgrade the rating of the local currency debt of the second largest economy in the world.

That is despite the fact that China holds the world's largest stock of foreign currency reserves, some $2.8 trillion at the end of 2010, according to Fitch, which makes it almost invulnerable to external shocks.

However, the ratings agency argued that "elevated credit growth, the sharp rise in real estate valuations, and more recently the emergence of inflation pressures have ... increased the risks to macro-financial stability."

Added to this scenario is the increased scale of sovereign contingent liabilities "arising from the banking sector and local governments."

The negative outlook "reflects concern over the scale of sovereign contingent liabilities and risk to macro-financial stability arising from the very rapid pace of bank lending in recent years, especially against the backdrop of rising real estate valuations and inflation," said Andrew Colquhoun, Head of Fitch's Asia-Pacific Sovereigns group.

"Fitch expects some sovereign support for the banking system will be required. Although the timing and size are difficult to predict," he added.

The ratings agency predicts a rise in bad debts in China over the next three years after unprecedented growth in recent years which took private-sector credit to around 140 percent of GDP last year.

"Concerns over the quality of much of that lending are compounded by the rapid increase in new 'off-balance' sheet channels of credit, for which disclosure is extremely poor," it said.

Fitch said it "sees a high likelihood of a significant deterioration in asset quality in the Chinese banking system in the next three years ... a rise in the non-performing loan (NPL) ratio to 15-30 percent could necessitate upwards of 10-30 percent of GDP in support for the system," it warned.

While the headline non-performing loan ratio stood at just 1.1 percent at the end of last year, "a more conservative classification" would put that figure at 6.0 percent already, it said.

That level nearly exhausts the agency's "estimate of the banks' own loss-absorption capacity," it added.

http://www.google.com/hostednews/af...ocId=CNG.9c5e7c22c603a45f186361b881bf9d3f.351

 

[badguy2000]

Fitch downgrades China's yuan debt outlook to 'negative'

PARIS — Ratings agency Fitch on Tuesday downgraded its outlook on China's local currency debt rating from "stable" to "negative" as on concerns over a huge rise in potentially destabilising easy credit.

Fitch's rating for China's yuan-denominated debt rating currently stands at "AA-", four notches below its top classification.

Fitch's decision implies that it could, in the medium-term, decide to downgrade the rating of the local currency debt of the second largest economy in the world.

That is despite the fact that China holds the world's largest stock of foreign currency reserves, some $2.8 trillion at the end of 2010, according to Fitch, which makes it almost invulnerable to external shocks.

However, the ratings agency argued that "elevated credit growth, the sharp rise in real estate valuations, and more recently the emergence of inflation pressures have ... increased the risks to macro-financial stability."

Added to this scenario is the increased scale of sovereign contingent liabilities "arising from the banking sector and local governments."

The negative outlook "reflects concern over the scale of sovereign contingent liabilities and risk to macro-financial stability arising from the very rapid pace of bank lending in recent years, especially against the backdrop of rising real estate valuations and inflation," said Andrew Colquhoun, Head of Fitch's Asia-Pacific Sovereigns group.

"Fitch expects some sovereign support for the banking system will be required. Although the timing and size are difficult to predict," he added.

The ratings agency predicts a rise in bad debts in China over the next three years after unprecedented growth in recent years which took private-sector credit to around 140 percent of GDP last year.

"Concerns over the quality of much of that lending are compounded by the rapid increase in new 'off-balance' sheet channels of credit, for which disclosure is extremely poor," it said.

Fitch said it "sees a high likelihood of a significant deterioration in asset quality in the Chinese banking system in the next three years ... a rise in the non-performing loan (NPL) ratio to 15-30 percent could necessitate upwards of 10-30 percent of GDP in support for the system," it warned.

While the headline non-performing loan ratio stood at just 1.1 percent at the end of last year, "a more conservative classification" would put that figure at 6.0 percent already, it said.

That level nearly exhausts the agency's "estimate of the banks' own loss-absorption capacity," it added.

http://www.google.com/hostednews/af...ocId=CNG.9c5e7c22c603a45f186361b881bf9d3f.351

well,
Lehman Brothers was sung highly of ,unitl its bankrupted....

BTW, USA was rated "AAA" until weeks ago....

 

[no smoking]

Yes those are certainly points worth considering Armand, Chinas boom as I said is very over-represented, their 64 million empty apartments at $70,000-100,000 a piece will probably give them the same crash that Japan experienced in the 90s (see Japans asset bubble).

Please let me know the location of this $70000-100,000 empty apartment. I will go to buy at least 3 as long as they are located in any city.

 

[Armand2REP]

Please let me know the location of this $70000-100,000 empty apartment. I will go to buy at least 3 as long as they are located in any city.

There are about a million of them in the new city of Ordos. That is about the price range.

well,
Lehman Brothers was sung highly of ,unitl its bankrupted....

BTW, USA was rated "AAA" until weeks ago....

Lehman Brothers wasn't a ratings agency. Paris based Fitch and New York based Moody's are the world benchmarks for national sovereignty ratings while S&P is leader in commodity trading forming The Big Three. France has AAA with a stable outlook to China's AA- with negative, France doing better than China...

 

[pmaitra]

Please let me know the location of this $70000-100,000 empty apartment. I will go to buy at least 3 as long as they are located in any city.

Assuming the response quoted below is authentic, I am assuming you would soon buy some flats soon. Please post some pictures of your apartment(s) when you do so.

There are about a million of them in the new city of Ordos. That is about the price range.

 

[badguy2000]

There are about a million of them in the new city of Ordos. That is about the price range.



Lehman Brothers wasn't a ratings agency. Paris based Fitch and New York based Moody's are the world benchmarks for national sovereignty ratings while S&P is leader in commodity trading forming The Big Three. France has AAA with a stable outlook to China's AA- with negative, France doing better than China...

Lehman Brothers was sung highly of ,unitl its bankrupted....

well, guy, Guangdong province is happily catching up with France