Chinese Economics Thread

[broadsword]

It is not "Nazi" germany , but rather than the economical management / problems that Germany has in 1937-8, and China facing now.

At 1930 Germany has high unemployment and underutilisation, it was solved by starting a big armament program and running war time like economical management.
This solved the prroblem of excess unemplyoment, and generated 8-10% growth for a decade, but around 1937 they moped up the unemployed, the low utilisedworkforce (from gariculture and so on) and they faced stagnating perfomrance ( means they reached the maximum level of peace time military porcution) , growing wages, and workforce shortage.


At that point they had the choice to wound down the military production, and simply rebalance the economy to consumption from investment/military production, or hit the wall,and be forced to do the same.

The situation is similar in china, appart from the investment in China is not weapon making industry, but roads, buildings, infrastructure and factories to make all of these.
And the economy growth in the past decade(s) was mainly the growth of the capability to make more of the above.

Now the next step can be to wound down the excess capacities,send into bankrupcy many companies, BUT protect the workers and consumers , and pushing under the bus the goverment officials and business owners/ management.
Or just try to go forward this road, and face labour shortag.

China managed to do all of this due to the tight control of the goverment above the economy like in Germany in the 30s.
But at sam point you have to pass the control to the consumers.

Your fantasy is not working.

 

[supercat]

San Marino has a population of 66000 person, and it is actualy a city in Italy.That is state as well.

So, I don't think that the number of cars there has any statistical importance to the Chinese car market.

As you said, a place with a population of 66,000 is a city, not a village. San Marino is a densely populated city, similar to some densely populated Chinese cities. On the other hand, many Chinese cities are actually less densely populated than San Marino. If San Marino can have a vehicle ownership of 1200 per 1000 persons, most Chinese cities can certainly have a vehicle ownership of more than 510 per 1000 persons.

 

[supercat]

The average person can have money in the bank, but on country level each deposit has to lended out to sameone to make the interest, means one person deposit is a liability of another person.

Per definition each person has to stay allive, means that has to drink/eat, so they will consume from basic neccessities the same ammount anywhere on the earth. So on its own it is a meaningless data.

How much is the return of each yuan lent out in the january of 2018?
I mean, the ammount of loans exponentialy growing, but the GDP decreasing.
Only explanation is the real return on the new loans going to zero, or under zero now.

As I said, you have started to make things up. Who told you that China had negative GDP growth in January 2018? If China's GDP grew positively in Jan. 2018, how could her Jan. 2018 investment have zero or negative return?

 

[AssassinsMace]

Please, Log in or Register to view URLs content!

Don't believe your lying eyes, folks. There are no people in this train station only crickets because no Chinese can afford to buy a ticket according to the real experts in the West thus a collapse is imminent.

 

[Hendrik_2000]

More ammunition for trade war

Please, Log in or Register to view URLs content!

China Imposes Anti-Dumping Measure Amid Trade Tensions
China is requiring importers of a U.S. industrial chemical to post deposits in preparation for possible anti-dumping duties amid rising trade tension with Washington.


Feb. 13, 2018, at 4:47 a.m.

FILE - In this Sept. 8, 2016, file photo, paramilitary police patrol near a cargo ship at a port in Qingdao in eastern China's Shandong province. China imposed measures Tuesday, Feb. 13, 2018, against importers of a U.S. industrial chemical, requiring them to post deposits in preparation for possible anti-dumping duties amid rising trade tension with Washington. (Chinatopix via AP, File) The Associated Press


BEIJING (AP) — China told importers of a U.S. industrial chemical to start posting deposits Tuesday in preparation for possible anti-dumping duties amid rising trade tension with Washington.

A preliminary ruling by the Ministry of Commerce said styrene monomer from the United States, South Korea and Taiwan is being sold at prices 5 to 10.7 percent below the proper level. The chemical is widely used to make packaging and consumer products.

Importers must now pay cash deposits while the ministry completes its investigation.

The ministry said in its ruling the Chinese styrene industry has been "substantially damaged" by dumping, which occurs when manufacturers sell a product to another country at unusually low prices.

The decision follows U.S. President Donald Trump's approval last month of higher tariffs on Chinese-made solar equipment and washing machines that Washington said were sold at unfairly low costs. The Trump administration is also due to announce results of a probe into whether Beijing improperly pressures foreign companies to hand over technology, which could lead to further penalties.


Beijing's steady accumulation of multibillion-dollar trade surpluses with the U.S. — which widened January to $21.9 billion — has prompted demands for import controls.

Meanwhile, Chinese authorities have accused Trump of threatening the global trade regulation system by taking action under U.S. law instead of through the World Trade Organization. Beijing has filed a challenge in the WTO against Washington's latest trade measures.

It also launched an anti-dumping investigation of U.S. sorghum exports earlier this month.

Styrene monomer figures largely in foam and plastic packaging, as well as low-cost consumer products, which are central to China's booming e-commerce industry.

 

[Hendrik_2000]

This is amazing 10 years ago Chinese manufacture share of car market is only 10 to 20% Now they wrest the control from foreign made car to the tune of 50% of the market. Due to improving in quality, styling and faster model change Via GS Zhou

Chinese brand car makers report strong yoy growth in JAN: SAIC 81%, Geely 51%, GAC 32%, Greatwall 17%

SAIC: 73,036 unis sales in JAN, yoy growth 81%
Geely: 155,089 units sales in JAN, yoy growth 51%
GAC: 61,231 units sales in JAN, yoy growth 32%
Greatwall: 105,446 units sales in JAN, yoy growth 17%

Please, Log in or Register to view URLs content!

Please, Log in or Register to view URLs content!

Please, Log in or Register to view URLs content!

Please, Log in or Register to view URLs content!

GAC's GM8

 

[Anlsvrthng]

Your fantasy is not working.

I hope it works.

The other way is the Japan style lost decade(s).

 

[Anlsvrthng]

As I said, you have started to make things up. Who told you that China had negative GDP growth in January 2018? If China's GDP grew positively in Jan. 2018, how could her Jan. 2018 investment have zero or negative return?

My bad, I did a not finished correction.

Not the GDP getting negative (at this moment) but the return of the new marginal debt.

This happened in Japan,USA,and this will ( or happened) in China.

The point is simple : if the economy underdeveloped then any new investment ( say combined harvester machine) increase the productivity ( and GDP) dramatically, but there is an n-th harvester that will have 0 return, and after that the following ones will have negative return.

The manufacturer can make cobined harvesters for stock, and if it can get cheap loan then it can roll over the debt for infinite time, and even if it growing the production can contribute posivily to the GDP. The company can do it until it can not get any more financing. At that point the GDP will take a big hit.


This was the issue with the socialist block in the 70/80s. Negative return on the marginal investments/ debts.

The above example can be done with diferent combination of tools, but the common element is the exploding need of financing.

The exploding need of new debt in china can be ( or is ) the mark of the hiden negaive return on marginal investment.


But I can point out the fact ten years ago less ammount of new debt created twice as much GDP as today.

The exploding new debt is never a good sign.

C'mon, Pettis talking about this for 10 years : )

 

[Hendrik_2000]

Another western dogma and concept that does not panned out in real world Krugman,Petis and whole other theorist been the most advocate of this misplaced concept.

Depending on the use of investment, If it for consumption in the form of subsidy ala Latin america yeah it will ruin the country but if the investment is in infrastructure, factory , housing education etc it will eventually enrich the country

Investment are needed in this developing economy to improve efficiency in transport, connectivity, housing stock etc. Any developing country including US in 1880 incurred large debt But the later improving efficiency in the economy will enrich the country So long the economy is growng debt is no problem And China grow 3X times faster then US and 5 X faster than Europe
Plus most Chinese debt are domestic and the central government can clean it up it it needed to

Please, Log in or Register to view URLs content!

Question:
Debt is a big worry. What do analysts miss?

Answer:
[Everyone] is scared to death. When I look at this issue, I say to myself: The debt levels are surging. Is this inherently bad? Not necessarily. A lot of it is going into the private sector in some way. Eight or nine or ten years ago, what were we really complaining about? That the private sector wasn’t getting the lion’s share of the credit. It was all going to state-owned enterprises. So why are we now bothered by the fact that it is now actually going more to the private sector than before?

But we are also worried that it is not necessarily going to productive activities, or the normal form of industrial expansion, and a lot more of it is going into property and asset values. And is being channeled through shadow banking.

Shadow banking funds money to where the returns are high -- that’s how it functions in the West. Hedge funds, Wall Street create all kinds of innovative products that essentially channel money to where they think there is going to be a lot of money made. And we can have an ethical debate about whether that is good or bad for a country and whether it is a risk.

Question:
Does that money moving into property produce risks?

Answer:
So what happens? Property-based assets soar in value. What happens to GDP? It doesn’t increase. That’s because property asset appreciation doesn’t count as GDP. And then the question is, okay, is this a problem? Not necessarily, as long as this asset is really worth this amount. Because that is what businesses do -- you go around buying assets that you think are under-priced. And then you sell it for something more. And if you are right, you make a lot of money. If you are wrong, you lose money.

The question then becomes are these land-based assets really worth this 500-600 percent increase [over the last ten years]. If it is, bonanza, you are rich. Households have gotten rich. And the risk if there is one, is people who bought in the last couple years. And if the prices fall a lot, they could lose a lot. But for people who bought their apartments in 2004 or 2005, there is no way that the prices could fall enough for them to actually come out a loser. It is impossible. Maybe it is too high by ten or fifteen percent and maybe prices have to stabilize. But for it to be destabilizing it would have to fall 50 percent. Is that logical? Clearly it’s not.

Question:
What prevents property values from falling dramatically?

Answer:
There are 1.4 billion Chinese and they’re moving into urban areas, and though urbanization has slowed, it’s still going to go up.

Why has it slowed? Because a lot of people who migrated from rural areas or the interior have gone back, because it’s so expensive, and they can get good jobs now, while they couldn’t 10 years ago.

Ultimately what’s going to happen? The rural ownership of land is going to become trade-able in some way. Rural residents will sell the land use rights, and they’ll get a bundle for that. And then the question will be different. I now have a bundle of money. Where do I go? Where the jobs are higher paid. If China gets it right, they will go and move a lot. And they’ll move in many cases to the biggest cities, because that’s where the best jobs are.

 

[manqiangrexue]

My bad, I did a not finished correction.

Not the GDP getting negative (at this moment) but the return of the new marginal debt.

This happened in Japan,USA,and this will ( or happened) in China.

The point is simple : if the economy underdeveloped then any new investment ( say combined harvester machine) increase the productivity ( and GDP) dramatically, but there is an n-th harvester that will have 0 return, and after that the following ones will have negative return.

The manufacturer can make cobined harvesters for stock, and if it can get cheap loan then it can roll over the debt for infinite time, and even if it growing the production can contribute posivily to the GDP. The company can do it until it can not get any more financing. At that point the GDP will take a big hit.


This was the issue with the socialist block in the 70/80s. Negative return on the marginal investments/ debts.

The above example can be done with diferent combination of tools, but the common element is the exploding need of financing.

The exploding need of new debt in china can be ( or is ) the mark of the hiden negaive return on marginal investment.


But I can point out the fact ten years ago less ammount of new debt created twice as much GDP as today.

The exploding new debt is never a good sign.

C'mon, Pettis talking about this for 10 years : )

As long as your conclusion is that China's GDP will keep growing at the government set pace, none of your arguments has substance. It's like complaining about the food at a restaurant while eating there every day.

If you wanna debate about something, then you need to set out the precise negative consequences that you expect to see on the Chinese GDP in a well-defined span of time, and it should be very near-term because nobody wants to go on a 20 year imagination journey with you.