Chinese domestic production is fueled by 15-20% direct subsidy and 50% tax rebates. $1.27 trillion in bad banque loans prop up the asset market and state industry operating in the red. $586 billion stimulus spending creates short term construction jobs that only adds fuel to the asset bubble. The Chinese domestic economy is a drain on a state that is spending itself into oblivion.what you said based on one condition: China will never grow its internal market
if you change the China to Russia, then I will agree with you. because Russia's population are shrinking especially for white Russian, the Muslim Russian population is growing though.
may India be lucky to find its own unique wayTry not to think that "industrialization" is the only way to accommodate the working class, it is one of the ways. There is no hard and fast rule that every developing nation has to follow the agriculture > industry > service route. Sure, there is industrialization, but even if the manufacturing sector is small, it wouldn't affect us. India is moving towards a service-sector economy. "jobs" matter, "working in a factory" doesn't (when the former is able to accommodate the working class).
Chinese domestic production is fueled by 15-20% direct subsidy and 50% tax rebates. $1.27 trillion in bad banque loans prop up the asset market and state industry operating in the red. $586 billion stimulus spending creates short term construction jobs that only adds fuel to the asset bubble. The Chinese domestic economy is a drain on a state that is spending itself into oblivion.
If you want to talk about demographics, why don't you worry about your own? One child policy of CCP is creating a demographic nightmare. Fewer children born, most being males, means the older generation won't have enough workers to support them and there won't be enough daughters to care for them as is Chinese custom. Pension revenues won't be enough to sustain them. New entrants to the workforce will continue to decrease and Chinese economic growth will have nowhere to go but flat. Russia grew for the first time in 15 years. Registered Muslim population is declining so our problems are being rectified, yours are being exacerbated.
Yes, cancelling the project will not create new problems, because there will be no change. But there certainly would be loss if we take the potential people who will benefit from the project. I dont know in what scenario the project would be cancelled in Inida, so it is important to figure out under which circumstances the project should be cancelled, because almost every major project will be opposed by people in some degree, we can't cancell al of them.problems are not solved. problems are avoided. respect of people's verdict.
just because a project is cancelled does not mean those people in that area lost out on jobs etc.. they are engaged in their own jobs/activities. infact that is the reason they oppose a certain project in the first place. their is no loss.
I dont need to pray, the growth is there, i can see it, i can feel it, i am personally involved in the process of the gowth. Plus i dont believe in god.i hope. you pray.
Right to enjoy freedom alone is hollow, it is growth that makes the right meaningful.you are fixated only on growth. quality of life is a mix of growth and a fundamental right to enjoy freedom.
China is not the only developing country that is suffering from that, How about the situation in Inida? And even country like USA, which surely is economically and democratically superior to both China and India, can't get rid of that.yes. that is what i meant.
In a time of globalization, no country can be shield from the adeverse impact of the outside. It is true China is an export oriented economy which is totally exposed, but that situation is temporary, China sees this financial crisis as an opportunity to upgrade the industry and transform the economy into a more domestic driven one.you are completely export oriented economy. any adverse global impact will hurt you. india is domestic driven and hence safe.
you are thinking only of future potential beneficiaries but what about justice to the existing inhabitants? you want to put them away in some alien place and expect them to fend for themselves? people have centuries of attachment to their respective lands and region. you just can't steal it. growth has to be progressive not regressive. it also needs to be just and fair to all.But there certainly would be loss if we take the potential people who will benefit from the project.
opposition does not happen in every case. it is a possibility in some cases and state has to respect people's opinion. that is what works in democracy.because almost every major project will be opposed by people in some degree, we can't cancell al of them.
same as above.If the project was cancelled because there were just a few people oppose, even if the project was very critical to the growth,such as a bridge, a dam, then i think it is unwise. By cancelling the project, you may save some problems, at the same time you also ignore the interests of others.
one does not pray only to god.Plus i dont believe in god.
growth, justice and freedom. they go hand in hand.Right to enjoy freedom alone is hollow, it is growth that makes the right meaningful.
there are plenty of problems in india just like in any other country. india is giving emphasis on rural infrastructure and agriculture.In fact, I am interested how Inida will deal with that, any explanations, friends?
agree. but since india is domestic driven hurts less. india and china both have to find middle ground between their existing status.In a time of globalization, no country can be shield from the adeverse impact of the outside. It is true China is an export oriented economy which is totally exposed, but that situation is temporary, China sees this financial crisis as an opportunity to upgrade the industry and transform the economy into a more domestic driven one.
And the CCP had an interesting "fix" to hide them. Take all non-performing loans and shift them to asset management corps... very slick. You get liabilities off the books and continue like it never happened. Problem is those AMCs are going to be disolved and those NPLs they didn't dump will come due. Estimates are as high as $1 trillion. Considering you can't dump FOREX to pay for them without devaluing the return... figure it out.1. One decade ago, Wall street warned china that CHinese banks would be all " bankrupty" due to enormous "bad loans,just as you warn tody.
What has happened is delaying judgment day. AMCs have taken them off the banque books, but they are still there. As of 2008 only 50% had been sold and at a 75% loss. Chinese asset management corps are worthless and growing at a threefold rate today due to banques trying to dump more insolvent debts. Since AMCs were funded with bonds, they will have to be paid back. When this happens, Chinese banques will have to foot the bill. Now that you have $1.27 trillion new debt floating around this year, you just doubled the problem.Now ,one decade has passed, and what has happened???? indeed some banks have got bankrupty...but they are no chinese banks,but that in wall streets,such as Rayman Bro. Instead, CHinese bank live happily and has sovled most bad loans.4 of global top 10 banks are chinese banks.
Amerikans have a GDP big enough to absorb their bad debts, when China matches US spending and lending, it is two different worlds $3 trillion vs $13 trillion... US faces their problems which leads to real market corrections. China pushes them under the rug hoping breakneck growth will cover it... it won't.It is ironic that the current global finanical crisis has shown that in fact the bad loans of wall street is more serious that anywhere else..
As for bank bad loan.....I think that if you had enough energy ,you should pay more attention to the bad loan of wall street or the daily-increase fiancial budget red-deficit of USA....
the bad loan of wall street has pull the whole world ,including Russia,into a financial cirsis. if the next global fianical cirsis were to break out again, it must be caused by the red-deficit of Washiongton.....
Russian crises was caused by commodity devaluation... China will be the cause of the next which is why we look there.BTW, as a Russian ,you should pay more attention to the red-deficit of washington, as we all know how terrible Russia's economy performs in the current crisis, Russian weak economy can not stand another crisis any more....
Sure... CCP has been real successful with their "Smoke-free China" campaign with 30% of all smokers in the world with 75% of males addicted.2. as for chinese demography tendency, I think that your phrases just proves that you brain is full of " one-way" mentality.
If CCP government can make CHinese people accept "one-kid policy", why it can not make chinese people accept "two-kids policy" or even "3-kids policy"...that is just a matter of policy-decision. the success of "one-kid policy" just prove how efficient CCP' policy can be executed!
CCP now has not overtly change "one-kid policy" ,just because CCP doesn't think the pressue of population explosion has not released yet and it is still not tme to change "one-kid policy".
Latest statistics don't agree with you. Russian births exceeded deaths... the policy is working, yours are failing.Frankly speaking ,CHinese demography is much better than Russia...as we all know what is happening to Russia's populaiton.:twizt:
Russia demopraphy disaster is far beyond a matter of policy-decision.
some clues should be given to you. guy, I have been working for chinese banks since 2000.....I should know about chinese banks much more clearly than you.....And the CCP had an interesting "fix" to hide them. Take all non-performing loans and shift them to asset management corps... very slick. You get liabilities off the books and continue like it never happened. Problem is those AMCs are going to be disolved and those NPLs they didn't dump will come due. Estimates are as high as $1 trillion. Considering you can't dump FOREX to pay for them without devaluing the return... figure it out.
What has happened is delaying judgment day. AMCs have taken them off the banque books, but they are still there. As of 2008 only 50% had been sold and at a 75% loss. Chinese asset management corps are worthless and growing at a threefold rate today due to banques trying to dump more insolvent debts. Since AMCs were funded with bonds, they will have to be paid back. When this happens, Chinese banques will have to foot the bill. Now that you have $1.27 trillion new debt floating around this year, you just doubled the problem.
And I have been a contracts analyst for the last eight years, working extensively in China. It is my job to know the financials of our business ventures. Am I supposed to be impressed?some clues should be given to you. guy, I have been working for chinese banks since 2000.....I should know about chinese banks much more clearly than you.....
You are only talking about Tranche 1 (1.4 trillion) 1999. You are forgetting tranche 2 (2004) amounting to RMB 1.3 trillion and tranche 3 (2008) amounting to RMB 816 billion. Tranche 4 will include what ever is left on the books and the mounting years losses. Real world estimates place the remaining balance at $911 billion according to an Ernst & Young audit. The first tranche's (RMB 1.4 trillion) 10 year bonds will come due at the end of the year and the rest of the tranches will follow accordingly. The unreported funds will come out soon enough.1. the NO. of shifted NPLs is about 1.7 trillion RMB( about 200 billion USD at the exchange rate at that time)
Since 2000,about 1.7 trillon RMB(about 200 billion USD ) NPLs were shifted to asset management corps from Chinese 4 biggest banks .
About 25% of those shifted NPLs have been taken back and 75% of them will be at loss. So the total loss should be about 1.2-1.3 trillion RMB(about 150 billion USD.
2. Those NPLs were indeed serious challenge to Chinese banks one decade ago.
In 2000, the total asset of Chinese 4 biggest banks was only about only 4 trillion RMB(about 600 billion USD).
So,before the shift of NPLs in 2000 or so, about 30% assets of chinese biggest banks are NPLs....terrible,isn't it?
$1 trillion in insolvent debt is not negligable when you are going to double it when your asset bubble bursts. Can you shore up $2 trillion insolvency in the next decade with low growth... no way. Your total liabilties are RMB 50 trillion... your money ain't going anywhere and that bubble will kill your asset value.3. Now,those NPLs are almost negligible to the total asset of Chinese banks today. In 2009, the total asset of CHinese 4 biggest banks has expanded to 30-40 trillion RMB( about 5-6 triilion USD).
In 2009,Chinese biggest bank, ICBC, has a total asset of over 10 trillion RMB(about 1.5 trillion USD). that is, ICBC's asset is more than the GDP of India.it makes ICBC become the global biggest bank. the other 3 of chinese "Big 4" are just slimly smaller than ICBC.
So, even if the 1.7trillion RMB NPLs were all at loss, it would be just a piece of cake to 30-40 trillion RMB assets of Chinese 4 biggest banks.In fact, as you refered, about 25% of the 1.7 trillion RMB can be taken back.
In china,3 "shifts of NPLs" have taken place in the past decade altogether.And I have been a contracts analyst for the last eight years, working extensively in China. It is my job to know the financials of our business ventures. Am I supposed to be impressed?
You are only talking about Tranche 1 (1.4 trillion) 1999. You are forgetting tranche 2 (2004) amounting to RMB 1.3 trillion and tranche 3 (2008) amounting to RMB 816 billion. Tranche 4 will include what ever is left on the books and the mounting years losses. Real world estimates place the remaining balance at $911 billion according to an Ernst & Young audit. The first tranche's (RMB 1.4 trillion) 10 year bonds will come due at the end of the year and the rest of the tranches will follow accordingly. The unreported funds will come out soon enough.
And you just finished saying... "1. the NO. of shifted NPLs is about 1.7 trillion RMB"In china,3 "shifts of NPLs" have taken place in the past decade altogether.
the NO. of shifted NPLs is 2.187 trillion RMB( about 250 billion USD)
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If the rate of growth cannot be sustained then the NPLs will simply mothball into a huge problem. There are already fears of rise in inflation in China.Chinese NPLs can be divided into four tranches. Tranche 1 is Rmb1,400bn removed from the “Big Four” commercial banks – Bank of China (BoC), China Construction Bank (CCB), Industrial and Commercial Bank of China (ICBC) and Agricultural Bank of China (ABC) – and China Development Bank in 1999.
Tranche 2 is Rmb1,300bn removed from the first three of the Big Four in 2004-05 as they were being prepared for international stock market listings, plus some other bits and pieces from other banks in 2007.
Tranche 3 is Rmb816bn removed from ABC in 2008, presumably preparing the ground for it to list.
And Tranche 4 consists of whatever NPLs still sit on the banks’ balance sheets, especially as a result of this year’s lending binge.
Strategy was: rolling them over into the future. But a time-bomb is ticking, depending on the economic growth rate of the country. The burden for the future is substantial, but not catastrophic, writes Kroeber:
But this bet absolutely cannot be placed a third time.
The above scenarios only work if the financial system generates no net new NPLs in 2011-2019 beyond the banks’ own ability to provision and write down.
After 2020, demographic and other factors will turn unfavourable, and the structural real GDP growth rate will fall from 10 per cent in 1980-2008, and an expected 8 per cent or so in 2010-2020, to around 5 per cent. When that happens, growth can no longer erase past NPLs – only inflation can.
China Herald: Non-performing loans heading for a stress test - Arthur Kroeber
If the rate of growth cannot be sustained then the NPLs will simply mothball into a huge problem. There are already fears of rise in inflation in China.
The Chinese banks have already provided 2.5Trillion RMB in loans in the first 2 months of 2009. That figure was supposed to have taken 6 months to reach and not 2. I don't know the current figure for the month of October. But, one things for sure, hoping on future growth for covering up these losses is questionable.
Chinese authorities is more wary of inflation than you.China will see inflation rising in the coming months. And the CCP will not try to bring it in control as quickly as possible as its a source of revenue for the govt.
Don't forget that China is sitting with $2Trillion in reserves and the US govt is printing Dollars like they are possessed. The losses due to strengthening of the Yuan is not recoverable as of now.
That's huge.well, the additional loans in the first 9 months of 2009 is 7 trillion RMB...
Any country is.Chinese authorities is more wary of infaltion than you.
That would put the banks under tremendous pressure. Nevertheless, the banks are all state owned. So, any losses it generates can be hidden. Inflation is the only sure shot way of revenue generation directly from the populace. But, rising inflation will mean lesser domestic consumption. Messed up.in fact, it was in July that CHinese center bank started to raise rediscount rate silently.
Then can you explain how it works. According to me, If a banks NPL ratios are higher than usual, then it means trouble. According to me, I want to get back the money I have invested with a profit and not a loss.guy,
after talking with you, I find that most non-chinese people really don't know how chinese economy works........ Chinese economy work in a unique way while non-chinese here try to understand and explain it in a west mentality....
I can't help laughingThen can you explain how it works. According to me, If a banks NPL ratios are higher than usual, then it means trouble. According to me, I want to get back the money I have invested with a profit and not a loss.
Let me tell you something, even we have PSUs(Public Sector Undertaking or state owned companies). All PSUs work under directions of the state and are bailed out by the state whenever the companies generate losses. Consistent losses will obviously result in more bailouts. And most of these bailouts cost the state. The state will in turn have to generate more money through other means, namely inflation and in the case of banks, rediscount rates.
In China, even if the rediscount rates are higher or lower, it does not matter since the increase in rediscount rates will only result in money circulation rather than revenue generation. Raising the rediscount rates will not matter at all if it is the state that foots the bills in the end, as in the stimulus. Right now, CCP is focusing on "future" growth rates and stability in the US market for recovering whatever was lost in the stimulus package.
In India the ratio of NPLs is less than 2.5% while it is more than 15% in China.
RIETI - The Chinese Economy After the Burst of the Bubble - Lessons to be learned from Japan
The 2.5% figure for India is as of 2009 while the figure for China is as of 2003. The ratio is much higher now compared to 2003 especially after Tranche 2,3 and 4 that happened after 2003.
Why don't you look at the data? The four tranches are several times higher than your 1.7 trillion RMB figure. Tranche one was almost that high to begin with. NPLs are posted since 2007 in front of your face... add the rest up and open your eyes.I can't help laughing
who tell you the ratio is much higher now?Please check the data,
here are the data from CBRC(China bankng regulatory Commission)Why don't you look at the data? The four tranches are several times higher than your 1.7 trillion RMB figure. Tranche one was almost that high to begin with. NPLs are posted since 2007 in front of your face... add the rest up and open your eyes.
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