Doom and Gloom of China's Economy

[Armand2REP]

Look at the FSU, they had world class infrastructure and highly educated workforce and it is falling apart. If you don't have the money to keep it running, it turns to dust.

 

[Armand2REP]

You have been warned not to post OT and unsourced articles. Expect the wrath of Daredevil...

 

[Daredevil]

Here is another gloom scenario of China from Financial Times

A workshop on the wane

The eastern Chinese city of Wenzhou produces more cigarette lighters and spectacles than anywhere on earth, and has long been seen as an economic trend-setter for the entire country. So reports that dozens of factory owners in the city have absconded in recent weeks, leaving workers unpaid and mountains of debt, are seen by some as an ominous sign for the national economy.

Slowing global demand for cheap Chinese exports, rising production costs and unsustainable levels of debt have combined to crush some of the country's most savvy entrepreneurs. In one tragic case, the owner of a Wenzhou shoe factory who owed more than Rmb400m ($63m) committed suicide three weeks ago. More than 90 other bosses have run away, according to state media.

But events in that city do represent a crucial turning point for the nation. "What's happening in Wenzhou is a reflection of the current Chinese model coming to an end," says Huang Yiping of Barclays Capital about the country's export-led, investment-driven growth paradigm. "China's economic success over the last 30 years has been built on cheap capital, cheap labour, cheap energy and cheap land but this has now produced huge imbalances and inefficiencies that are causing more and more problems."

"The drivers of China's meteoric rise are on the wane," says Robert Zoellick, World Bank president. "Resources have largely shifted from agriculture to industry; as the labour force shrinks and the population ages, there are fewer workers to support retirees; and productivity increases are on the decline."

Beijing's latest five-year plan, which runs from 2011 until 2015, is packed full of vows to increase domestic consumption and wean the economy off its reliance on exports and particularly investment. But leaders have been talking for more than a decade about achieving these goals, and in fact the reverse has occurred. Consumption fell from about 45 per cent of gross domestic product in the late 1990s to an unusually low 33 per cent last year. Investment has hit a global high of 50 per cent of GDP.

"When reforms began 30 years ago, the investment rate was around 25 per cent of GDP and the economy grew at around 10 per cent a year, but now we are investing half of GDP for the same rate of growth; that tells you something about capital efficiency," says Mr Huang of Barclays Capital.

For more..

A workshop on the wane - FT.com

Beware, some CCP member on DFI would like us to believe that all of the above is fertile imagination of our mind and that nothing of the sorts is happening in CHina and therefore we don't have right to post such stuff on DFI.

 

[no smoking]

Here is another gloom scenario of China from Financial Times



Beware, some CCP member on DFI would like us to believe that all of the above is fertile imagination of our mind and that nothing of the sorts is happening in CHina and therefore we don't have right to post such stuff on DFI.

Well, it seems you are the one misunderstanding all the picture.
I don't see any chinese denying the low consumption contribution to GDP. That is exactly planned by CCP and agreed by the majority of chinese public. Without sequzzing the private consumption, where do you think the chinese can get their money for infrastructure and industry development without borrowing huge from international financial market?

 

[Daredevil]

Reports: China railway, road projects face cash crunch, slowing payments to suppliers, workers

SHANGHAI - China's rail and road building boom is running short of cash, according to reports saying some projects have been suspended as workers and suppliers go unpaid.

Many of the 6 million migrant workers employed in China's massive railway buildup have not been paid for months, with some 10,000 kilometres (6,200 miles) of projects halted due to a lack of money, reports said Wednesday.

Contractors also owe huge sums to cement and steel suppliers, the China Daily newspaper reported, citing Wang Mengshu, a member of the Chinese Academy of Engineering.

The Railway Ministry did not respond immediately to phone calls requesting comment.

It has been a tough year for the ministry, whose longtime chief, Liu Zhijun, was dismissed in February amid a corruption probe.

A collision of two high-speed trains in late July, which killed 40 people and injured 177, prompted a review of many railways projects and suspension of some. In September, spending on railway construction fell 19 per cent from a year earlier, reflecting the slower pace following the accident.

But the showcase railways construction program was already struggling with surging debt and difficulties in securing financing as state banks have tightened lending in order to meet record high reserve requirements imposed by the central bank to fight inflation.

The financial magazine Caijing recently reported that highway construction projects also are facing heavy pressure to repay loans that they normally would expect to roll over.

China has relied heavily on massive stimulus spending, mostly on construction, to help fend off the impact of the financial crisis. The country is due to spend roughly 2.8 trillion yuan ($440 billion) on railway construction in 2011-2015.

A slowdown could have repercussions for major construction-related industries such as steelmaking, cement and equipment manufacturing.

While much of the construction of both railways and highways is seen as vital for relieving transport bottlenecks, analysts say many projects may not recoup their costs in the foreseeable future.

"In the past few years, railway construction has expanded too quickly and on too big a scale. Some lines being built are parallel and short-distance lines," said Li Hongchang, a professor of economics and management at Beijing Jiaotong University.

Though it issues corporate bonds, the Railways Ministry holds a virtual monopoly on rail transport in China, operating its own courts and police force. Its trains have been upgraded with the push toward high-speed rail, but ticketing and other services in its stations have lagged behind.

"If efficiency is low there will be a gap between revenues and costs, and the only one who can help the situation is the government," he said.

The ministry held 2 trillion yuan ($315 billion) in debt as of the end of June and is due to issue about 100 billion yuan (nearly $16 billion) in bonds this year to help fund construction.

To entice wary investors, the government recently cut the tax on interest from railway bonds. It also has designated them as government-backed bonds, rather than corporate bonds.

Perhaps to reassure any investors who remained wary, the National Development and Reform Commission, China's main planning agency, issued a statement on the bond clearing house website guaranteeing government backing for the ministry's bonds.

 

[niceguy2011]

If China's economy is doom and gloom now, then no country is good now.LOL

 

[shiphone]

it seems this so called chart of tendency is MADE by someone, not actually Happened yet... just a opinion of somebody or some party...
-------------------
another interesting thing is :

according to this chart, china economy is not an Export Orientation model at all as many member thought here...
e.g.. in 2002 consumption and investment as %GDP was 42% and 43%
and in 2010 they were 36% and 46%

what a great chart! LOL....actually China economy was always an Investment Orientation Economy from 1950's to early 1990's... this author had no basic sense.

 

[Armand2REP]

it seems this so called chart of tendency is MADE by someone, not actually Happened yet... just a opinion of somebody or some party...

The reality is worse with 70% of GDP reliant on fixed investment including land sales

China's GDP Growth of 10 Percent: Should We Believe It?.
-------------------
another interesting thing is :

according to this chart, china economy is not an Export Orientation model at all as many member thought here...
e.g.. in 2002 consumption and investment as %GDP was 42% and 43%
and in 2010 they were 36% and 46%

It isn't export lead now because it is reliant on construction and land sales. The export sector has been stagnant since the global downturn.

what a great chart! LOL....actually China economy was always an Investment Orientation Economy from 1950's to early 1990's... this author had no basic sense.

Actually China didn't become an investment lead economy until the global downturn and it wasn't an orientated part of the economy until the 1990s which a few years later lead to the banking crisis of 1997-99. Here we are a few years after the another global downturn and China is set for another crisis. It will be interesting to see if she can dig her way out of this hole that is 5X bigger than the last one.

 

[niceguy2011]

I hope every one believe that , so don't think China as a threat anymore.LOL

The reality is worse with 70% of GDP reliant on fixed investment including land sales

China's GDP Growth of 10 Percent: Should We Believe It?.
-------------------
another interesting thing is :



It isn't export lead now because it is reliant on construction and land sales. The export sector has been stagnant since the global downturn.



Actually China didn't become an investment lead economy until the global downturn and it wasn't an orientated part of the economy until the 1990s which a few years later lead to the banking crisis of 1997-99. Here we are a few years after the another global downturn and China is set for another crisis. It will be interesting to see if she can dig her way out of this hole that is 5X bigger than the last one.

 

[Daredevil]

it seems this so called chart of tendency is MADE by someone, not actually Happened yet... just a opinion of somebody or some party...

May be that is what happens if you depend on Shanghai bean-counter statistics that come out of China

-------------------
another interesting thing is :

according to this chart, china economy is not an Export Orientation model at all as many member thought here...
e.g.. in 2002 consumption and investment as %GDP was 42% and 43%
and in 2010 they were 36% and 46%

what a great chart! LOL....actually China economy was always an Investment Orientation Economy from 1950's to early 1990's... this author had no basic sense.

Economy is still a major contributor of GDP. But the figure above shows net exports (or rather trade surplus) not absolute exports (net exports = total exports-total imports).

The figure jive well with the known consumption and investment values of China. All you need is to look around for more

If the consumption rates were not that dismal as you want to portray then why is CCP govt. trying to increase the domestic consumption rates of China by various measures

China taking steps to boost domestic consumption

China to prioritize domestic consumer demand

 

[Daredevil]

If China's economy is doom and gloom now, then no country is good now.LOL

LOL indeed China's economy is not doom and gloom because

80% of High-speed railways works not stopped

54 HSR trains not recalled

Railways workers are paid months together with bonuses

People are not suiciding in Wenzhou.

The company bosses in Wenzhou are not running away

The Chinese banks have no NPA assets

The Chinese banks are still on a lending spree

The apartments, cities and malls all over China are so much completely filled up that there is not even one empty apartment available in China

The Chinese RMB is not artificially pegged against US Dollar and

Chinese Railways or Road projects are not facing cash crunch.

Indeed China's economy is hale and heart that makes all CCP members to LOL at foreigners



PS: Before you reply please check in dictionary what sarcasm means

 

[niceguy2011]

Then , tell me witch country's economy is good. India ?US? EU? LOL

LOL indeed China's economy is not doom and gloom because

80% of High-speed railways works not stopped

54 HSR trains not recalled

Railways workers are paid months together with bonuses

People are not suiciding in Wenzhou.

The company bosses in Wenzhou are not running away

The Chinese banks have no NPA assets

The Chinese banks are still on a lending spree

The apartments, cities and malls all over China are so much completely filled up that there is not even one empty apartment available in China

The Chinese RMB is not artificially pegged against US Dollar and

Chinese Railways or Road projects are not facing cash crunch.

Indeed China's economy is hale and heart that makes all CCP members to LOL at foreigners



PS: Before you reply please check in dictionary what sarcasm means

 

[Armand2REP]

All of them are better off than your bubble popping economy.

 

[niceguy2011]

All of them are better off than your bubble popping economy.

If it said by u, it must be true.LOL

 

[utubekhiladi]

All of them are better off than your bubble popping economy.

LOL... plz leave that poor kid alone :bounce:

 

[niceguy2011]

LOL... plz leave that poor kid alone :bounce:

Sure, i will.

 

[Armand2REP]

LOL... plz leave that poor kid alone :bounce:

I should, it must be difficult enough watching his Ponzi economy crumble.

 

[niceguy2011]

I should, it must be difficult enough watching his Ponzi economy crumble.

then some country is back off when they facing a doom and gloom economy.LOL

 

[J20!]

I should, it must be difficult enough watching his Ponzi economy crumble.

So says the "Frenchman" who hates China so much he left his country's "booming european economy" to come live off our "doomed economy".

 

[SHASH2K2]

[h=2]Western solars up the ante against Chinese peers[/h]

(Reuters) - Chinese solar companies could soon find themselves bereft of some of their biggest foreign markets as Western manufacturers intensify a solar trade war and seek stiff anti-dumping duties on low-cost Chinese products.

German group SolarWorld said on Thursday it was working on steps to curb alleged price dumping by Chinese rivals in Europe.

This comes less than a day after its U.S. unit led a group of seven U.S. solar companies in urging the U.S. government to slap anti-dumping duties on Chinese-made solar energy products.

They charged that Chinese producers can aggressively undercut U.S. prices because they receive cash grants and other subsidies in China, destroying thousands of American jobs.

"If the U.S. takes action, it could have a serious impact on Chinese solar players," said Min Li, head of alternative energy at Yuanta Securities (Hong Kong) in response to the filed complaint.

Europe is the world's largest solar market, accounting for about 80 percent of global photovoltaic (PV) installations, while the U.S. accounted for 5.3 percent.

Solar companies have been betting the United States may become the world's largest market in the next few years, replacing Germany in top spot as Berlin trims subsidies.

Western solar companies have been at odds with their Chinese counterparts for years, alleging they receive lavish credit lines to offer modules at cheaper prices, while European players struggle to refinance.

NO FAIR COMPETITION

SolarWorld Chief Executive Frank Asbeck last month said there was no fair competition in the solar industry, adding that the Chinese government had made credit guarantees of more than 21 billion euros ($29 billion) to its solar companies in 2011 alone.

Chinese solar companies such as Suntech, Yingli and JA Solar have in the past secured generous loans via the China Development Bank (CDB).

Beijing says it has been fair in its dealings with its trade partners and adheres to its commitments with the World Trade Organization (WTO).

"Since China's accession into the WTO, (we have) been in strict compliance with the commitments under the WTO," said Foreign Ministry spokeswoman Jiang Yu.

Carsten Koernig, managing director of the German solar industry association BSW, said the massive price declines in the solar industry were "not a result of innovation but of uneven political conditions."

Chinese solar companies have grown significantly in recent years, attracted by solar subsidies in Germany, which have been the industry's highest for a long time, and eating away market share from their Western peers.

But a steep decline in demand from Europe, which accounts for more than three-fourths of Chinese solar module makers' revenues, following subsidy cuts have made these companies more reliant on the United States, and any escalation in trade tensions could pose a major threat to them.

"(The complaint) is closely related to the domestic political and economic situation. There are some social conflicts and an economic crisis in the United States, so they need to seek a way out and find scapegoats," said Meng Xiangan, Vice chairman of China Renewable Energy Society.
Western solars up the ante against Chinese peers | Reuters
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