Chinese Economics Thread

[Brumby]

You said China's economy "stalled," what context do you wish to present that? Economists say nations that transform from investment to consumption-based economies will experience lower GDP growth, and China's is somewhere around 5 to 7% (depending on who you believe). Kindly explain, in your context, how that relatively good growth number is "stalled?"

Did you actually read my post #4535? If you still disagree, please offer your rebuttal based on that post.

 

[Jura The idiot]

Here's my take.

... But I still think the rebound to the 4200 level can happen before the end of 2016.

I guess you know what I'll do then

anyway, right now they're gaining, climbing back to Tuesday values:

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[manqiangrexue]

I have to give you credit for trying. The simple meaning of the word "stalled" is associated with movement and movement to have meaning needs context and context needs an anchor point. The graph clearly shows that GDP growth is slowing but that in itself doesn't mean the economy is not growing - just that it is not growing as quickly in relative historic terms. The main argument that the economy has stalled is in relation to the target the central government has set for itself and that is 7 % growth. We do not know whether that target will be met but recent events suggest that target is increasingly questionable. If the target is not met (which I believe it will not be), the economy has stalled relative to its set target. In other words, the planned economic growth has stalled.

The issue of economic value is not relevant to the conversation.

I think that definition of stalling is unique to your understanding. Most people take "stalled" to mean "making little or no progress" (possibly measured by an accepted standard set by peers). It usually does not take into consideration how realistic or overly aggressive the self-set goals were. According to what you say, if China grows at 7% but set its goals at 3%, then it's speeding ahead while the same 7% growth under a 7% growth target means it stalled, yet it's the same economy performing at the same level. If that is your definition of "stalling" then I think it's meaningless. Anyone could break the stall simply by setting low targets. According to your definition, if I set out to gain 30 pounds of muscle from exercising this year and I only gained 28, I've stalled. But if I set out to gain 15 pounds of muscle yet gained 20, then I'm growing. So, basically, I could do worse while "growing" than "stalling," by your definition.

 

[Brumby]

I think that definition of stalling is unique to your understanding. Most people take "stalled" to mean "making little or no progress" (possibly measured by an accepted standard set by peers).

The standard you talked about in the context of GDP growth was set by the Chinese government

It usually does not take into consideration how realistic or overly aggressive the self-set goals were. According to what you say, if China grows at 7% but set its goals at 3%, then it's speeding ahead while the same 7% growth under a 7% growth target means it stalled, yet it's the same economy performing at the same level. If that is your definition of "stalling" then I think it's meaningless. Anyone could break the stall simply by setting low targets. According to your definition, if I set out to gain 30 pounds of muscle from exercising this year and I only gained 28, I've stalled. But if I set out to gain 15 pounds of muscle yet gained 20, then I'm growing. So, basically, I could do worse while "growing" than "stalling," by your definition.

According to your reasoning, economic targets have no meaning. That statement unfortunately is devoid of reality and do not reflect how the markets react to economic performance just as we have seen in recent days.

 

[SampanViking]

I read something utterly bizarre on the BBC website yesterday (and which I cannot find today).
It was an graphic that claimed Chinese debt at $26Trillion
Leaving aside the claim of saying $26 Trillion as opposed to the equivalent of $26 Trillion, I still have one basic and unanswered question

What the "heck" are they talking about as this figure is a complete mystery to me?
If anyone has a clue please share as I am sure as Haydes, I don't.
Thanks

 

[SamuraiBlue]

I read something utterly bizarre on the BBC website yesterday (and which I cannot find today).
It was an graphic that claimed Chinese debt at $26Trillion
Leaving aside the claim of saying $26 Trillion as opposed to the equivalent of $26 Trillion, I still have one basic and unanswered question

What the "heck" are they talking about as this figure is a complete mystery to me?
If anyone has a clue please share as I am sure as Haydes, I don't.
Thanks

I believe they are talking about this;

A $26 trillion debt problem is crushing competitiveness in China

China owes its stock market boom and bust to the one thing that is crushing the competitiveness of every part of the world's second biggest economy - debt.

The nation's debt mountain is widely estimated to top 250 per cent of gross domestic product, roughly equivalent to US$26 trillion, and is unlikely to peak before 2018.

Its rate of growth since the start of the global financial crisis in 2007 has been exceeded only by the euro zone countries that have required international bailouts to stave off bankruptcy.

The mainland corporate sector is among the most indebted in the world and the drag on economic activity is made worse because most has been accumulated by state-owned enterprises that deliver a shrinking share of economic growth..... to read more

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[Equation]

In the end China has a large dollar in reserves ($4 Trillion) alone, not to mention other assets as well to play with.

 

[manqiangrexue]

The standard you talked about in the context of GDP growth was set by the Chinese government


According to your reasoning, economic targets have no meaning. That statement unfortunately is devoid of reality and do not reflect how the markets react to economic performance just as we have seen in recent days.

Economic targets reflect how aggressive the country is, but actual growth reflects progress. Economic targets are just a guide, a plan for this year. They have no meaning as it pertains to the actual GDP, especially once done. Basically, a B student is still a B student no matter whether he aimed for straight A's or just wanted to pass. Literally all that someone needs to do to succeed, according to your definition, is to set low goals.

 

[SamuraiBlue]

In the end China has a large dollar in reserves ($4 Trillion) alone, not to mention other assets as well to play with.

That has also been covered within the article;

The good news is that most of the debt is denominated in yuan, which helps insulate Beijing's US$3.7 trillion foreign reserves pile, and almost all the debt has been borrowed by, or is owed to, entities ultimately backed and owned by the government.

The overarching bad news, however, is that cost of servicing the debt and the country's dependence on credit to drive the economy has become so acute that it now takes non-financial businesses around 1.6 units of leverage to deliver a one unit increase in GDP growth.

Basically saying it is not enough.

 

[plawolf]

That article lost all credibility when it started to insinuate that China is in deflation.

It is amazing how western analysts seem to have this uncanny ability to "forget" their own earlier criticisms of China when it suits their current agenda.

When the Chinese economy was growing at 10%, or when the west wants to beat the "fair trade" drum, western analysts often try to downplay and dismiss that as inaccurate by arguing that the Chinese government makes Chinese banks extend loans to favoured Chinese companies at extremely low interest rates.

Now, when they want to hype up China's supposed debt problem, these same companies are suddenly paying near 10% annually to finance their loans? Talk about wanting to have their cake and eat it.

On the whole, that article looks like someone cherry picking every negative line and assumption they could find and pasting them all into one place rather than a serious balanced attempt at real analysis.

Its just the same old "China collapse" crowd peddling the same old BS, just with some updated examples.