China Economy: News & Discussion

[Yan Luo Wang]

Everyone in asia wants a strong china but less the bullying and enemy mongering. India does not choose to be an enemy even when it was invaded un provoked in 1962 and we left that behind and keep trying to make friends yet China for some reason only likes aiding our enemy. India also did not arm or support the Tibet rebles to fight China like Pakistan has done with Kashmire or neither did India attack China and neither did India help its enemies.

Unprovoked? LOL... it was a reaction to two things. In 1959, India hosted our largest separatist group, immediately after a failed violent revolution. Secondly, Nehru's "forward policy" pushed into Chinese territory, and had to be repelled.

The 1962 war, was not "unprovoked" at all.

I wish the CCP collapsed leaving China as a prosperous democracy like Japan,Korea or Taiwan. China would have been a developed county if not for Mao. He gave needless sorrow and poverty to China or else China would have grown like other east asian neighbors like Japan,South Korea, Taiwan and other democracies.

Fair enough, you don't like the CPC.

However, it will take some kind of miracle to make the Chinese people stop supporting the CPC, and I don't see that happening.

 

[aramsogo]

^^^^Armand

HK is but one city in China. Consumption is not hard for the Chinese. Trust me. I'm one of the best.

Your wealth destruction for a generation hypothesis is more wishful thinking. It's domestic debt, domestic banks and domestic currency. The building and infrastructure won't disappear. Worst case, the central government can print money and forgive the debt. That's what happened in 1998. The US does not have this flexibility in the current crisis because the banks control the state unlike China where the state clearly controls the banks. People have been calling for HK's real estate collapse since the 1960's. Don't underestimate the Chinese cultural affinity for real estate to store wealth.

AUM matters less than style and sticking to one's specialty and niche strategy. Short sellers trying to be macro guys is a clear warning. Chanos can read a corporate earnings report and the footnotes. He's an accounting guy. Hardly the same as reading a sovereign nation that can legally print fiat money and has nuclear warheads.
Rubini is just milking his one correct call. I haven't seen him be right since.

 

[Armand2REP]

^^^^Armand

HK is but one city in China. Consumption is not hard for the Chinese. Trust me. I'm one of the best.

HK is outside of China, otherwise I wouldn't have to pass through customs at the Bay Control Point to get there. Consumption is hard for the Chinese, otherwise I wouldn't have to buy my girl everything except food.

Your wealth destruction for a generation hypothesis is more wishful thinking. It's domestic debt, domestic banks and domestic currency. The building and infrastructure won't disappear. Worst case, the central government can print money and forgive the debt. That's what happened in 1998. The US does not have this flexibility in the current crisis because the banks control the state unlike China where the state clearly controls the banks. People have been calling for HK's real estate collapse since the 1960's. Don't underestimate the Chinese cultural affinity for real estate to store wealth.

The buildings and infrastructure will collapse in 10-20 years, nothing is made to last in China. Since 1998, Chinese banks set up asset management companies to take NPLs off their books, they only recouped 20% of their losses. $320 billion is still floating around in unpaid bond holdings which get reissued every 10 years. The AMCs can't even pay the interest. When these local investment vehicles go belly up, the flood of NPLs will be too great to float. The banks are going to require a massive bailout putting Chinese debt to GDP levels as high as America.

AUM matters less than style and sticking to one's specialty and niche strategy. Short sellers trying to be macro guys is a clear warning. Chanos can read a corporate earnings report and the footnotes. He's an accounting guy. Hardly the same as reading a sovereign nation that can legally print fiat money and has nuclear warheads.
Rubini is just milking his one correct call. I haven't seen him be right since.

Chanos is the most successful short-seller in the world, that requires looking at the numbers and in China, they don't add up. The fact more people are getting on the band wagon is only going to grow as China's problem becomes more apparent.

 

[cw2005]

Hong Kong buys more French luxury goods than PRC.

The people who buy French Luxury fashions, Swiss watches, Italian designs, French wines in Hong Kong are all from Mainland China, not the local Hong Kong people. Without them, Hong Kong's retail business would be dead. I have also read a report somewhere saying the Chinese are the highest spending visitors to France.

 

[aramsogo]

^^^^
Wrong on so many levels Armand. Where shall I start?

NPL are in Yuan. Banks are state owned. State will just print money in an emergency and forgive bad debts. Problem solved. This is actually a very similar situation to the US bank bailouts with two differences in China's favor. China is a net creditor nation and the RMB is moving towards reserve currency status not losing it. And US had $50 Trillion in public and private debts, China isn't even close.

And you think it's difficult to borrow and spend?? You know nothing about China or Chinese people. I give it another 5 to 10 years for consumer finance to reach critical mass in China. When Chinese consumerism explodes, it will come out of no where like the Chinese internet.

The most successful shorts are people like Soros or Paulson. Chanos is nothing but a financial statement reader. He should leave the macro investing to the pros.

 

[Tolaha]

well, Gorden Chang.....hahahahahahah

Badguy2000,

Avoid quoting the entire post! That too for a 3-word response!!

 

[aramsogo]

This is precisely right. When I visit college friends in Beijing from the US, they tell me to bring them $200 bottle wines because that bottle is $500 in China.

Hong Kong buys more French luxury goods than PRC.

The people who buy French Luxury fashions, Swiss watches, Italian designs, French wines in Hong Kong are all from Mainland China, not the local Hong Kong people. Without them, Hong Kong's retail business would be dead. I have also read a report somewhere saying the Chinese are the highest spending visitors to France.

 

[Resistance]

Unprovoked? LOL... it was a reaction to two things. In 1959, India hosted our largest separatist group, immediately after a failed violent revolution. Secondly, Nehru's "forward policy" pushed into Chinese territory, and had to be repelled.

The 1962 war, was not "unprovoked" at all.



Fair enough, you don't like the CPC.

However, it will take some kind of miracle to make the Chinese people stop supporting the CPC, and I don't see that happening.

When you invaded tibet what where supposed to do with those refuges? Give them back to you so you can arrest them or kill them like you did in the cultural revolution? We took them in as Humanitarian support but we did not provoke your conflict by training them and sending them back with guns to fight for their freedom. Tibet did not belong to you and the people of Tibet did not want to join China, it was done by force and when refuges flooded after the failed tibet upraising eveyone knew it was the death sentence for the Dali Lama. Even today no one is holding them back, if they want they can go back what is stoping them?

 

[Armand2REP]

^^^^
Wrong on so many levels Armand. Where shall I start?

NPL are in Yuan. Banks are state owned. State will just print money in an emergency and forgive bad debts. Problem solved. This is actually a very similar situation to the US bank bailouts with two differences in China's favor. China is a net creditor nation and the RMB is moving towards reserve currency status not losing it. And US had $50 Trillion in public and private debts, China isn't even close.

That is just wrong on so many levels. You don't make hundreds of billions of dollars disappear and not have consequences. US bank bailouts went on the national debt and when China's floating bonds can't be floated anymore, they will appear on the balance sheets along with the new debts accrued since the latest lending binge. You can't change the laws of economics, just delay them. China will have a GDP debt ratio similar to the US after the coming banking crisis.

And you think it's difficult to borrow and spend?? You know nothing about China or Chinese people. I give it another 5 to 10 years for consumer finance to reach critical mass in China. When Chinese consumerism explodes, it will come out of no where like the Chinese internet.

You know nothing about China or Chinese financials. China already lends more than any nation on earth and consumption remains flat, because it all goes into fixed asset investment. Try using a credit card in Guangzhou guy, it is accepted almost nowhere. It has been decades since its introduction yet cash is still king. Can't even get a direct deposit on a pay check, paid in cash. All the major lending goes to SOEs, the little guy has to go to loan sharks with outrageous interest rates. I got a CCB account and moving money is a pain in the ass. Letting it sit there is actually costing me money thanks to this high inflation. High inflation, negative real interest rates, low social spending and insane housing prices are not going to get people to empty their savings accounts except to pay for those things that are not consumption.

 

[Armand2REP]

China's April inflation at 5.3% as it ups price battle


Chinese inflation rose by more than expected in April as its battle against price growth intensifies.

Consumer prices climbed by 5.3% in April from the same month a year earlier, according to the National Statistics Bureau.

Analysts had been expecting an annual rate of 5.2% for April.

The government has identified rising prices, especially in food, fuel and housing, as a serious social and political problem.

Premier Wen Jiabao said in March that reining in prices was the government's "top priority" in 2011.

China's government has an annual inflation target of 4%.

In an attempt to slow price growth, China's central bank has raised the cost of borrowing and asked banks to keep more money on reserve.

Some economists believe the People's Bank of China is also allowing its currency, the yuan, to appreciate in value in order to bring down the price of imports.

China imports much of its food and fuel.

Analysts said that while there were signs that the government and central bank measures were having an impact, there were still significant pricing pressures.

"From an overall view, the economic situation is still relatively hot," said Shao Yu, an economist at Hongyuan Securities.

BBC News - China's April inflation at 5.3% as it ups price battle

________________________

Keeping my inflation journal is 10% in reality

 

[cir]

Over
China's got a long way to go. The past 30 years of rapid development is just the start for the next 30 years of further development.

Rest assured, China progress in all respects won't slow down till its GDP is at least twice that of the US'.

Indian friends should be more worried about the slowdown that is obviously occurring in India. ？

 

[aramsogo]

^^^^Armand

You actually just proved my point. Consumer finance needs another 5 to 10 years to reach critical mass, then it will go thermonuclear. Who doesn't like to borrow and spend and live like Americans with 3 cars and 7 flatscreen in every home.

One last time on the debts. They are in RMB. The PBoC can print RMB at will. It can just disappear. That 10% inflation you claim is already reducing it at 10% every month.

 

[Armand2REP]

^^^^Armand

You actually just proved my point. Consumer finance needs another 5 to 10 years to reach critical mass, then it will go thermonuclear. Who doesn't like to borrow and spend and live like Americans with 3 cars and 7 flatscreen in every home.

Credit cards have been in China for 20 years... so why haven't they taken off? China UnionPay is the bastard holding China credit cards back. It is the only electronic payment network allowed in China and its partnership with foreign banks is the only convenient way to move money. I had a bank account with BNP Parabas, largest bank in the world, and it was like CCB don't even care. They tell me Credit Agricole is the only French bank we deal with so I had to set up an account with them. If you are an American you only use Citibank. It is easier to move money by Western Union than using the bank. UnionPay issues debit cards and few credit cards, so buying on credit is hard. Merchant fees are so low it isn't even worth it for them to accept it so vast majority only take cash. Only 6% of transactions in China are electronic, actual credit is near nothing. Even if you get more merchants accepting it and UnionPay issuing more credit lines, it isn't going to get people spending when they have to save everything for housing, medical, and old age. Chinese can't move their money so they can't make money with it. People in the West get their money to work for them, in China people are slaves to their money.

One last time on the debts. They are in RMB. The PBoC can print RMB at will. It can just disappear. That 10% inflation you claim is already reducing it at 10% every month.

One last time on inflation. They are in RMB, when China prints more money, inflation rises. It is already at double digits according to my basket of goods since I got here. If China has to print its way out of a 100% GDP debt, it will be hyper inflation and the end of CCP. It gets itself into that debt by printing so much and lending it out which ends up fueling the property and construction bubbles. It is a viscous cycle that cannot be ended until 70% of the economy is reduced to 20%... ie the construction treadmill to hell.

 

[Armand2REP]

Interesting read by Michael Pettis...

Small Companies Feel the Pain in China

 

[nitesh]

Building Highways, China style:

[video]http://youtu.be/AFnYzSjStU4[/video]

 

[nitesh]

some very interesting times ahead:

Foxconn to replace workers with 1 million robots in 3 years

 

[Armand2REP]

That is Foxconn's answer to rising wages in China, replace 1 million workers with 1 million robots who don't complain or commit suicide.

 

[Armand2REP]

China manufacturing goes negative in July

The drop in mainland Chinese stocks came after a preliminary reading showed HSBC's China purchasing managers' index fell to 48.9 in July from 50.1 in June. A measure below 50 indicates a contraction.

Asian Shares End Mixed; Weak Flash HSBC China PMI Data Weighs - WSJ.com

 

[cir]

Advanced Semiconductor to Spend $6B in China
By Bloomberg News - Sep 21, 2011 12:47 PM GMT+0800

http://www.bloomberg.com/news/2011-09-21/a...b-in-china.html

Advanced Semiconductor Engineering Inc. (2311), a Taiwanese provider of chip-testing services for customers including Sony Corp. (6758) and Toshiba Corp., said it plans to spend more than $6 billion in Shanghai to add capacity.

The investment, to be made over eight to 10 years, includes spending on a $2 billion site in Shanghai's Pudong district that Advanced Semiconductor plans to open next year, the Kaohsiung, Taiwan-based company said in a statement today. It expects to generate $8.5 billion in annual revenue and employ 50,000 people in the Chinese city when the investment is completed, the company said.

Advanced Semiconductor is boosting production and research facilities to compete for chip-testing and assembly orders with rivals including Amkor Technology Inc. (AMKR) Taiwan Semiconductor Manufacturing Co., the world's biggest contract chipmaker, also plans to expand in the semiconductor assembly market to diversify.

Net income in the second quarter fell 21 percent to NT$3.64 billion ($122 million) from a year earlier, Advanced Semiconductor reported last month.

--Mark Lee, Bonnie Cao, Adela Lin. Editors: Subramaniam Sharma, Garry Smith

 

[cir]

Chinese tech factory looks to replace humans with robots. Foxconn Technology Group, a contract manufacturer headquartered in Taiwan, will use the robots for simple tasks on production lines at its mainland China plants. (Source: http://www.nydailynews.com/money/2011/08/0..._robots_at.html)

http://www.businessinsider.com/thomas-frei...ne-force-2011-8

"Thomas Freidman Spews Nonsense With Hurricane Force
Dean Baker, CEPR | Aug. 28, 2011, 1:18 PM
...
Finally, Friedman shows a stunning ignorance of arithmetic when he tells readers:

"China also has to get rich before it gets old. It has to move from two parents saving for one kid, to one kid paying for the retirement of two parents. To do that, it has to move from an assembly-copying-manufacturing economy to a knowledge-services-innovation economy. This requires more freedom and rule of law, and you can already see mounting demands for it. Something has to give there."

Using somewhat more realistic numbers (China is not seeing its population cut in half), let's say that it is moving from having 5 workers per retiree to 2 workers per retiree over 30 years, a far faster decline than it is actually seeing. China's output per worker has been increasing a rate of more than 8 percent a year. This means that over a 30 year period, output per worker will increase more than 10 fold.

Suppose our 5 workers are taxed at a 12 percent rate at the start of the period to give retirees an income equal to 70 percent of the typical worker's after tax income. If we want to maintain this 70 percent ratio, when 2 workers support each retiree, it would take a tax rate of just under 24 percent to maintain this ratio.

Okay, so output per worker has increased by 1000 percent. We have to increase the tax rate from 12 percent to 24 percent. This means that with the higher worker to retiree ratio, the average worker will have a bit less than 9 times the after-tax income (76% of 1000 percent, as opposed to 88 percent of 100 percent) of her predecessor thirty years earlier who only had to support one-fifth of a retiree. If there is a problem here, it is very hard to see it.

So there we have it, Thomas Friedman once again letting his poor grasp of economics and arithmetic invent grand problems where there are none. What would be do without him?"

http://online.wsj.com/article/SB1000142405...1528715950.html

"Robots March Into Emerging Markets
AUGUST 14, 2011, 1:30 P.M. ET
By MATTHEW CURTIN

Has the robot finally come of age? Foxconn Technology Group said this month that it plans to install a million robots in its Chinese factories by 2013, up from 10,000 today, to make Apple iPhones and iPads. That will be one of the first times industrial-automation technologies have been deployed in large scale to substitute for low-cost emerging-market labor. It may signal the start of a prolonged boom for the robotics industry.

Although many contract manufacturers face pressure from rising wages and skilled-labor shortages in emerging markets, this only tells part of the story. Original-equipment manufacturers designing technologically complex products care increasingly about fast delivery times and customization as well as quality. Soon, only a robot may have the dexterity and endurance for the job. (article continues)"