China's (US$8,480) nominal per-capita GDP surpasses Mexico (US$7,993)

[Martian]

Apparently you don't understand what a write-off is. That refers to tax write-offs when companies suffer losses. When you are the government that collects taxes there is no one to write it off to. The people who pay the taxes are the ones who pay the losses.

No. You do not understand the concept of a government owing money to itself.

Let me explain it in simple terms.

Assume you create a company. Let's call it Steel Inc. You loan $1,000 to Steel Inc.

Steel Inc. now has $1,000 of debt and it uses the money to create a steel business by buying steel manufacturing equipment.

Over time, you loan more and more money to Steel Inc. Is Steel Inc. bankrupt? No, you own Steel Inc. and it doesn't have to repay its debt.

Similarly, the Chinese government has loaned billions of Yuans to its steel companies. Are the Chinese steel companies bankrupt? No, the Chinese government will never call in the loans to itself.

Do you understand now?

A transaction where the lender and lendee are the same entity is not a normal bank-debtor situation. In the unusual case of the Chinese government and SOEs (state-owned enterprises), the bank and debtor are the same entity. The assets on the Chinese government's ledger cancels out the debt on the SOEs' books. The net debt is ZERO.

This concept is not hard to understand. Otherwise, the Chinese steel companies would have defaulted on their debt a long time ago. Why haven't they? BECAUSE...the debt doesn't have to be repaid. Duh!

 

[badguy2000]

nominal per-capita GDP of PR. China always misguides lots of people,because CHina is so large and unbalanced.


1. coastal China,such as Pearl Delta,Yangtse Delta ,in fact are already as rich as quasi developed economies such as S.korea/Taiwan/Portugal,if not richer/more developed.

people's real life quality/infrastructure there is much better than mid-income economies like Mexico/Brazil/Iran.

in fact, even Taiwanese real income is less than one in coastal belt of mainland CHina, that is why so many Taiwanese youth are rushing there for better salary.


2. most of inland CHina is typical mid-income economies like Iran/Turkey.

3.a few lonely corners of CHina,are still as undeveloped as typical 3rd world.

or course, those corners are usually boundary belt/rural areas/lonely mountainous areas full of minority tribes.
Chinese government now trys to help people there out of poverty by moving them out and relocating them or developing tourism there.

4.Most bluecollar employees all over CHina earn 3000-5000RMB(500-800USD)/month,whether they live in costal area or inland.

those hard/tough sweat_jobs such as workers in construction sites usually earns much more( usually 10000RMB+(1700USD)/month or more)

And the whold China is short of bluecollar labour seriously ,so their salary is rising rapidly(it was usually only 1000RMB(120USD)/month 15 years ago) .


5.the salay of whitecollar employees varies much in CHina.

the one in costal CHina often is even more than that in Taiwan(The take-home salary of most Taiwanese is about 800-1100USD(25-35K taiwan Yuan)/month).

So, many taiwanese youth rush to mainland CHina for better salary now. the starting take-home salary of Taiwanese youth is usually about 800USD(25K taiwan Yuan and rises of salary are almost equal to coastal Mainland,but the rises of salary are much easier/more frequent in mainland CHina than Taiwan .

the one in inland CHina is quite close to that of bluecollar,that is to say,3000-5000RMB(500-800USD)/month.


6.industry prouducts are usually much cheaper than most mid/low income economies like russia/mexcio/brazil/Iran/India,simplely because CHina is now the world workshop.
but raw resources(oil/ores) and some agriculture products(fruits/meats) are usually more expensive in CHina than other countries.

 

[ezsasa]

No. You do not understand the concept of a government owing money to itself.

Let me explain it in simple terms.

Assume you create a company. Let's call it Steel Inc. You loan $1,000 to Steel Inc.

Steel Inc. now has $1,000 of debt and it uses the money to create a steel business by buying steel manufacturing equipment.

Over time, you loan more and more money to Steel Inc. Is Steel Inc. bankrupt? No, you own Steel Inc. and it doesn't have to repay its debt.

Similarly, the Chinese government has loaned billions of Yuans to its steel companies. Are the Chinese steel companies bankrupt? No, the Chinese government will never call in the loans to itself.

Do you understand now?

A transaction where the lender and lendee are the same entity is not a normal bank-debtor situation. In the unusual case of the Chinese government and SOEs (state-owned enterprises), the bank and debtor are the same entity. The assets on the Chinese government's ledger cancels out the debt on the SOEs' books. The net debt is ZERO.

This concept is not hard to understand. Otherwise, the Chinese steel companies would have defaulted on their debt a long time ago. Why haven't they? BECAUSE...the debt doesn't have to be repaid. Duh!

on a lighter note, your explanation reminds me of a guy i had met many years back.

one day while i was working in a different company's office, an employee of that company comes up to me for something else and during the conversation he notices that i was sending an email. and he was genuinely surprised that i was using that particular mail software. as per him only his company uses this software and no other company uses it.

The mail software in question is microsoft OUTLOOK.

few days later i was telling about this incident to a colleague of mine, he says somebody else from the same company commented about microsoft communicator in a similar way.

Microsoft outlook and communicator is something almost all companies use.

That company is one of the top company's in india.

coming back to you post...

what you are explaining is a debt taken on by steel company. until the chinese govt decides to write it off it remains a debt.

even we have the same case with Air India here, their annual debt is close to half a billion $ every year and overall debt of about 9 billion $. So indian govt is planning to disinvest some assets and maybe write off the remaining.

point is every company which maintains a ledger records non revenue income as a debt initially, assumption is that investment has to be paid back at some time. until it is paid back or written off the values should ideally be recorded as a liability.

there is nothing unique in what you are explaining, it happens in most countries.

 

[Krusty]

So indian govt is planning to disinvest some assets and maybe write off the remaining.

Noob question Saar: this 'write off' is still a loss isn't it. Even if the firm is run by the government.

Unless it risks inflation and just keeps printing notes, and even that would eventually be a disaster..

 

[badguy2000]

well,

Chinese youth now earn dozens time more than their parents did,but are they more happier?

the question is not so easy to answer.

the starting salary of one Chinese freshman might be 3000-5000RMB(500-800USD)/month,after they graduate from college/universities( 75% of CHinese middle_school student now have chance to study in universities/colleges).

if they live in tier3/tier4 cities or inland rural areas/towns, they have few chance to get considerable rises of salaries. of course, they can enjoy cheap house,while they have less chance of higher-income.

if they live in tier1/tier2 cities such as Beijing/Shanghai/Xiamen/Hanzhou,case is quite different.
their salary might rise to 10000RMB(1500USD)/month or more in 3-5 years.but houses there are so expensive (11K USD/square meter in Beijing) that they can not afford house as their parents did.


According to CHinese tradition, one can not live as a resident without his own house,wherever he live.

thus ,the result is that many CHinese youth in CHinese big cities can hardly have the feeling that " the city is my home city",just because they can not afford the house .

 

[ezsasa]

Noob question Saar: this 'write off' is still a loss isn't it. Even if the firm is run by the government.

Unless it risks inflation and just keeps printing notes, and even that would eventually be a disaster..

Yes, Write off is a loss. But once the write off is complete, it will no longer show in the liabilities in next year's ledger. Other wise every year these liabilities make a dent in profits.

Little more info on topic:

There are more such cases in private sector that will come up this year and next in India, because of the insolvency law passed last year. Earlier it was very difficult to close shop in India.

Indian Banks are going to have some uncomfortable years ahead, mainly big govt banks like SBI.

 

[ezsasa]

well,

Chinese youth now earn dozens time more than their parents did,but are they more happier?

the question is not so easy to answer.

the starting salary of one Chinese freshman might be 3000-5000RMB(500-800USD)/month,after they graduate from college/universities( 75% of CHinese middle_school student now have chance to study in universities/colleges).

if they live in tier3/tier4 cities or inland rural areas/towns, they have few chance to get considerable rises of salaries. of course, they can enjoy cheap house,while they have less chance of higher-income.

if they live in tier1/tier2 cities such as Beijing/Shanghai/Xiamen/Hanzhou,case is quite different.
their salary might rise to 10000RMB(1500USD)/month or more in 3-5 years.but houses there are so expensive (11K USD/square meter in Beijing) that they can not afford house as their parents did.


According to CHinese tradition, one can not live as a resident without his own house,wherever he live.

thus ,the result is that many CHinese youth in CHinese big cities can hardly have the feeling that " the city is my home city",just because they can not afford the house .

Since we are on the topic of housing..

I always had this doubt, do people living in Chinese cities own a house or lease a house.

Makes decades ago I heard Chinese govt owns everything, everybody else is just using it for a fee.

 

[badguy2000]

Since we are on the topic of housing..

I always had this doubt, do people living in Chinese cities own a house or lease a house.

Makes decades ago I heard Chinese govt owns everything, everybody else is just using it for a fee.

well, housed is owned by the government/villages,but people can be granted 70-year-long usage right of the house.

And, such 70-year-long usage right can be succeeded or gifted or rented..
In a word, before it cease 70 years later, such usage right is not different from ownship.

of course, what about the usage right 70 years later?

I don't know. And the question is still not on the table of most chinese,because the usage right was allowed and appeared in late 1990s,


so China has lots of time to discuss and deal with it,before the the question is on the table of the public.

 

[airtel]

well, housed is owned by the government/villages,but people can be granted 70-year-long usage right of the house.

And, such 70-year-long usage right can be succeeded or gifted or rented..
In a word, before it cease 70 years later, such usage right is not different from ownship.

of course, what about the usage right 70 years later?

I don't know. And the question is still not on the table of most chinese,because the usage right was allowed and appeared in late 1990s,


so China has lots of time to discuss and deal with it,before the the question is on the table of the public.

and how they get Houses ? they Have to Pay Money or Government is Providing Houses For free ??

 

[IndianHawk]

Thus, India's trade deficit is a main reason for its almost-junk-level credit rating.

That is not because of trade deficit but high fiscal deficit which now is under control hence clamoring for india rating upgrade.
China rating was recently downgraded why???it is still has huge surplus???
You clearly don't understand a thing.

India does not have sufficient dollars to pay for its imports. Hence, India pleads with Iran to pay for oil in Indian Rupees.

India has more than enough foreign reserves . India paid Iran in rupees because us sanctions were not clearing dollars payment

Seriously man your :bs:is worth than any CCP propaganda troll I have ever encountered. At least search Google for basic information before making a fool out of yourself.

 

[badguy2000]

and how they get Houses ? they Have to Pay Money or Government is Providing Houses For free ??

the government collects land from urban residents or villages,build necessory infrastrutures(roads/pipewater/eletricity/communication net...) on it,then sell land to developers at the cost +70~year~long house tax.

developers(privtae or state~owned) buy land from the government ,build houses,then sell houses to people at cost+profit+all kinds of tax(including 70-year~long house tax,of course).

thus,the house price in china usually includes 70-year~long house tax already.it is quite different from west coutries.

 

[badguy2000]

well,
now,one ordinary 3 bedroom apartment in tier1 cities like Beijing now usually costs 1.5M USD(10M RMB).
such a apartment cost only 0.2M USD(1.5M RMB) 10 years ago.


so, many young white~collars got frustrated by the rocketing house price in tier1 chinese cities,although their yearly income might already be 200k RMB(30K USD) or more.

many of those young frustrated guys give up their high~income jobs and retreat to their hometowns just for cheaper houses nowdays.

such a phenomenon is now labeled by medias as "the Tide of Fleeing From BSG(Beijing/Shanghai/Guangzhou)".


BTW,
My wife is one of such guys.
She is a certfied public accountant(CPA) and once worked in Beijing,then retreated to the home city 7 years ago.

now,the starting salary for CPA usually is 200kRMB(30K USD) in Beijing,but is only 70-80KRMB(11-13K USD) in my home city.

of course, one 3-bedroom apartment costs only 1.5M RMB here, about 1/7 of one in Beijing.

 

[Armand2REP]

No. You do not understand the concept of a government owing money to itself.

Let me explain it in simple terms.

Assume you create a company. Let's call it Steel Inc. You loan $1,000 to Steel Inc.

Steel Inc. now has $1,000 of debt and it uses the money to create a steel business by buying steel manufacturing equipment.

Over time, you loan more and more money to Steel Inc. Is Steel Inc. bankrupt? No, you own Steel Inc. and it doesn't have to repay its debt.

Similarly, the Chinese government has loaned billions of Yuans to its steel companies. Are the Chinese steel companies bankrupt? No, the Chinese government will never call in the loans to itself.

Do you understand now?

A transaction where the lender and lendee are the same entity is not a normal bank-debtor situation. In the unusual case of the Chinese government and SOEs (state-owned enterprises), the bank and debtor are the same entity. The assets on the Chinese government's ledger cancels out the debt on the SOEs' books. The net debt is ZERO.

This concept is not hard to understand. Otherwise, the Chinese steel companies would have defaulted on their debt a long time ago. Why haven't they? BECAUSE...the debt doesn't have to be repaid. Duh!

That applies to the zombie SOE, that does not apply to the government that must back up the faith and credit of its monetary system. At the end of the day the books must balance. Owning most of your debt does not make it go away. It only lets you kick the debt bomb down the road.

 

[Martian]

That applies to the zombie SOE, that does not apply to the government that must back up the faith and credit of its monetary system. At the end of the day the books must balance. Owning most of your debt does not make it go away. It only lets you kick the debt bomb down the road.

Give me a break. People have been discussing China's SOEs for 40 years. They don't go bankrupt and the debt doesn't matter.

China's SOEs (such as steel manufacturers) are national companies designed to provide jobs. The Chinese government is flush with cash (e.g. $550 billion annual trade surplus). The chance of a large Chinese SOE becoming bankrupt is about ZERO.

 

[Armand2REP]

Give me a break. People have been discussing China's SOEs for 40 years. They don't go bankrupt and the debt doesn't matter.

China's SOEs (such as steel manufacturers) are national companies designed to provide jobs. The Chinese government is flush with cash (e.g. $550 billion annual trade surplus). The chance of a large Chinese SOE becoming bankrupt is about ZERO.

Give me a break. They only float because they are backed up by the government. There is a limit to how much waste a government can support. There are $10 trillion in non-performing loans floating around the system that is going to have be flushed out and when it does, there will be pain. Lots and lots of pain.

 

[no smoking]

You didn't even read what I posted above did you. Deficit is not debt. And no china can't write off debt whether it's in yuan or popcorn . Printing more money creates more debt not absolves it.!!!!!

Well, deficit is even worse when you have double deficit for decades. It is right that deficit is not debt, but it presents your capability of paying back your debt in the future.


And no, printing more money doesn’t create more debt but create inflation. The inflation will devalue the debt, that is exactly what India has been doing for decades.

That is not because of trade deficit but high fiscal deficit which now is under control hence clamoring for india rating upgrade.

China rating was recently downgraded why???it is still has huge surplus???

You clearly don't understand a thing.

No, the major world credit rating agencies have rejected India’s request for rating upgrade.

And yes, just because Chinese still enjoys hundreds billions dollars trading surplus, it is still 5 notches above India’s rating.

 

[IndianHawk]

And no, printing more money doesn’t create more debt but create inflation. The inflation will devalue the debt, that is exactly what India has been doing for decades.

Govt doesn't print money. Central Bank does. Govt then borrows money from Central bank.

China has been printing too much . 6$ of lending creats just 1 $ of growth in china. Now somebody will have to pay those 5$ .
You can name it anything , you can shuffle it around . But bottom line is when you have huge debt and you are forced to think of a write off then something is horrendously wrong. Someone somewhere will pay the price .

And why doesn't china write off debt today if it can ??? Well because it can't.:biggrin2:

Why is china controlling foreign outflow if it has huge forex reserves.
Answer is it is scared.:biggrin2:

Enjoy your rating while it lasts it has already gone a step down no???
India has only up to go:biggrin2:

And yes, just because Chinese still enjoys hundreds billions dollars trading surplus, it is still 5 notches above India’s rating.

Those days are about to end soon enough. Other countries are walking up to chinese scheme. Your products will increasingly face tarrifs everywhere if you don't open domestic market. The trade has to be balanced .just as indefinite deficit is dangerous so is indefinite surplus.

Trump is already gaslighting China's tail. Nobody wants your steel .close these Mills and let millions of Chinese beg on the streets.:biggrin2:

 

[airtel]

the government collects land from urban residents or villages,build necessory infrastrutures(roads/pipewater/eletricity/communication net...) on it,then sell land to developers at the cost +70~year~long house tax.

developers(privtae or state~owned) buy land from the government ,build houses,then sell houses to people at cost+profit+all kinds of tax(including 70-year~long house tax,of course).

thus,the house price in china usually includes 70-year~long house tax already.it is quite different from west Buying a leasehold property has a few disadvantages. Says Singh: “You can’t take a loan on a leasehold property as you can in case of a freehold property.”.

Give me a break. They only float because they are backed up by the government. There is a limit to how much waste a government can support. There are $10 trillion in non-performing loans floating around the system that is going to have be flushed out and when it does, there will be pain. Lots and lots of pain.

I think Condition of China is Much better because Their CCP Government Protected China from Islam ..................in India there are to many Muslims and they are creating too much problems .

 

[no smoking]

Govt doesn't print money. Central Bank does. Govt then borrows money from Central bank.

It doesn't matter who is printing the money. The point is the debt is devalued when it is paid back because of the great inflation created by money printing.

China has been printing too much . 6$ of lending creats just 1 $ of growth in china. Now somebody will have to pay those 5$.

Dude, GDP is output minus input, so the net every $6 of lending creates just $1 growth means that every $6 input will only produce $7 output. In other words, your profitability is only 1/6. Now do you understand how you pay those $5?

You can name it anything , you can shuffle it around . But bottom line is when you have huge debt and you are forced to think of a write off then something is horrendously wrong. Someone somewhere will pay the price.

Certainly, writing off the debt is not a good thing. Unfortunately, that is what is happening in almost every country since 2008.

And why doesn't china write off debt today if it can ??? Well because it can't.:biggrin2:

Because China doesn't need to because there is no sign that the market will collapse due to the debt. There is some companies are defaulting their debt, but the scale and influences are not big enough to cause the panic of the market.

Why is china controlling foreign outflow if it has huge forex reserves.
Answer is it is scared.:biggrin2:

Why not? since 2006, there were too much hot money getting into China, the best thing for Chinese is to keep these money in China as long as they can.

Enjoy your rating while it lasts it has already gone a step down no???
India has only up to go:biggrin2:

Yes, Indians have been talking this for almost 20 years.

Those days are about to end soon enough. Other countries are walking up to chinese scheme. Your products will increasingly face tarrifs everywhere if you don't open domestic market. The trade has to be balanced .just as indefinite deficit is dangerous so is indefinite surplus.
Trump is already gaslighting China's tail. Nobody wants your steel .close these Mills and let millions of Chinese beg on the streets.:biggrin2:

Indians have been talking about this for 20 years too.