Chinese Economics Thread

SampanViking

The Capitalist
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I did say in comparison to Chinese workers ;).

To be honest, wholly reimbursable contracts are the exceptions rather than the normal these days precisely because of the problem of contractors stretching jobs out.

Most modern contracts are on a fixed price or measured basis, meaning the construction company is either paid one lump sum, or paid a certain amount of money per unit of work done.

In either case, it makes no sense for companies to stretch timetables as that just needlessly increases their costs while doing nothing to boost their revenue.

From what I know of the industry, labour disputes are a major cause of project delays in western countries, where Unions stage walk outs or overtime bans or other similar non-sense over petty and inconsequential things, and often effectively hold companies to ransom.

Saying that, I don't think China's current labour force, especially for menial workers, everything is quite right either, as their are far too many cases of workers getting cheated out of pay, or being made to work in unsafe or simply bad conditions.

I think the key to efficiency and success is all down to balance. In the west, the laws and rules favour Union far far too much. They need to be reigned way back so they become a means for workers to protect themselves against bad employers, rather than as a means for bad employees to extort and harass good employers as it does far too often now.

Conversely, in China, workers does need a little more bargaining power and protection against bad employers.

It is the nature of the construction industry worldwide, that a large part of the business is to try and screw your contractors and sub contractors down on the fees. Most of it on account of completion quality and schedule.
It is a fact, that most project managers get their jobs, not so much for their technical construction skills, but for the additional skill of being able to squeeze the costs as hard as possible.
Needless to say, that the biggest firms have the strongest hand and hardest squeezers, while it is the smallest contractors/sub contractors/labourers that end up bearing the brunt of the squeeze.
 

solarz

Brigadier
I don't think it has to do with Western construction workers are lazy (not all of them) but rather the general contractors and construction companies tends to over stretch the schedule date for completion therefore requiring more money from the paid clients, especially Federal contract jobs.

There are, IMO, two things that slow down Toronto's public infrastructure projects. Note that I said public projects. Private projects proceed pretty quickly. In the time we started construction on the subway extension, we must have completed a dozen high rise condos!

First factor is the amount of bureaucracy involved before construction even starts. This process can often take longer than the actual construction itself!

Second is the lack of funds for public infrastructure. While Toronto was working on a single subway extension, Shanghai was building 2-3 new lines AT THE SAME TIME!
 

delft

Brigadier
Its not just per hour labour costs, but the entire attitude of workers as a whole. Its a cultural thing.

I don't have any first hand experience of US workers, but British construction workers are a joke compared to Chinese workers.

Compared to the Chinese, British workers are lazy, spoilt, unmotivated and selfish.

I blame much of that on the Unions to be honest. There are plenty of hard working, honest and capable British workers, but the culture created and fostered by the Unions just doesn't like such people, because they show the rest of the work force up.

The Unions absolutely hate any hint at performance based compensation, and fight tooth and nail against it. That means that most of the time, wages are negotiated through collective bargaining, and there is zero incentive for anyone to work hard.

If anything, there is often strong, informal pressures for hard working workers to "cool it" from fellow workers or even Union bosses.

Apparently British workers are held in decent regard by the rest of Europe and America, so I expect them all to be of a similar standard.

All of this means that not only does each hour of western labour cost more compared to Chinese, it takes significantly more man hours to get the same job done in the west compared to China.
The attitude of the Unions are a reaction to the attitude of the bosses which when it was treated in Dutch newspapers in the 'seventies was extremely poor compared with that of the not very enlightened Dutch ones. I haven't been following this for a long time now. :)
 

Equation

Lieutenant General
It is the nature of the construction industry worldwide, that a large part of the business is to try and screw your contractors and sub contractors down on the fees. Most of it on account of completion quality and schedule.
It is a fact, that most project managers get their jobs, not so much for their technical construction skills, but for the additional skill of being able to squeeze the costs as hard as possible.
Needless to say, that the biggest firms have the strongest hand and hardest squeezers, while it is the smallest contractors/sub contractors/labourers that end up bearing the brunt of the squeeze.

Yes for the most part it's true on especially big projects. But the majority of the big firms gets most of the contracts due to connections with big government people in high positions. From my experiences most GC (general contractors) get's paid according to the phases of completion within the project instead of one lump sum. Therefore weather, late arrival of supplies, accidents, inflation, increasing costs of materials and fuel and various other hurdles could put a project on hold and therefore can cause additional delays and costs.
 

texx1

Junior Member
Another milestone step of Yuan's internationalization is complete. It also has the added advantage of reducing the effectiveness of US using access to SWIFT as political leverage.

China launch of renminbi payments system reflects Swift spying concerns

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launched a cross-border renminbi payments system on Thursday, a big step in its drive to boost international use of the Chinese currency and protect itself from US spy agencies with access to the Swift system.

Chinese leaders want the
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to rival the US dollar as a global currency for trade and investment. The “redback” is now the fourth
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for global payments but its share by value remains low at just 2.8 per cent in August, according to Swift.

In addition to opening its
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to foreign investment, authorities hope that replacing the convoluted system for
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renminbi payments with a streamlined platform will promote greater use of the Chinese currency.

“As the cross-border renminbi settlement framework approaches completion, it will inevitably stimulate greater renminbi demand from market participants,” Ma Jun, People’s Bank of China chief economist, said last month.

Currently renminbi payments to and from China are slow and costly to execute. China’s domestic payments system only supports Chinese characters, making it incompatible with Swift, the secure messaging system banks use to exchange payment details.

In mid-September the PBoC sent detailed instructions to 19 banks that will start implementing the new China International Payments System (CIPS) this month. The Chinese units of eight foreign banks including
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,
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and
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were among those selected.

“The establishment of CIPS is an important milestone in Rmb internationalisation, providing the infrastructure that will connect global Rmb users through one single system,” said Helen Wong, greater China chief executive at HSBC.

In addition to solving interoperability issues, experts say China also wants to reduce its reliance on Belgium-based Swift, whose governance is dominated by US and European banks.

In a sign of how vital Swift has become to global finance, Russian Prime Minister Dmitry Medvedev warned in January that an EU proposal to exclude Russia from the system over the conflict in Ukraine would elicit an “unlimited” response from Russia. “If there is no Swift, there is no banking . . . relationship,” said a
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at the time.

Spying is also a concern. The US National Security Agency has targeted Swift as a means to
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, according to NSA documents leaked by Edward Snowden.

China “wants to facilitate cross-border international business transactions, but you also have to wonder if there’s another angle here,” said Gerard Comizio, chair of global banking practice at law firm Paul Hastings in Washington.

“They’re now relying on a payments system that is highly susceptible to being accessed by intelligence agencies from the US.”

Currently most cross-border renminbi payments are routed through offshore
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that the PBoC has appointed to serve Hong Kong, Singapore, London and other
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. As overseas affiliates of big Chinese lenders, the clearing banks can use internal channels to recycle offshore renminbi back into China and have access to liquidity from the PBoC.

The clearing banks are crucial because China’s domestic interbank clearing and settlement system, the China National Advanced Payment System (CNAPS), does not support international payments.

“CIPS is trying to be the middleman between Swift and CNAPS. That makes the process smoother because Swift cannot talk to CNAPS,” said Raymond Qu, chief executive of Geoswift, which facilitates cross-border renminbi payments for banks and merchants.

CIPS is modelled on the Clearing House International Payment System (CHIPS), the US dollar payments network that supports about $1.5tn in payments each day.

The new system will eventually allow offshore banks to participate, enabling offshore-to-offshore renminbi payments as well as those in and out of China, but the initial rollout only includes onshore entities.

CIPS will also begin by using Swift for interbank messaging, but eventually the system will have the ability to operate independently.

“In the future CIPS will move in the direction of using its own dedicated [communications] line. At that point it can totally replace Swift,” said a person with knowledge of the PBoC’s plans for CIPS.

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For those that have used up their free articles on FT. Here is an article from reuters about the same development.

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Equation

Lieutenant General
Looks like Communism with Chinese Capitalism is paying off big time.:D China's middle class continues to grow meanwhile here in the US the opposite is happening. Where are all my doubters, naysayers, and haters at that didn't believe in the CPC ways? I rest my case.



China has crossed another economic threshold. The country’s middle class reached 109 million this year, and overtook the US’s for the first time ever, according to a
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released Oct. 13.



China’s middle class is growing much faster than the US’s. Since 2000, China added 43.4 million middle class adults, while the US added just 22 million,
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(pdf, pg. 35).




Globally, 664 million adults, or 14% of the adult population, belong to the middle class in 2015, Credit Suisse said. That’s up from 524 million in 2000. Middle class wealth grew at a slower pace than wealth at the top end of the economic spectrum this year, the bank said, and grew faster in Asia than in Europe or North America.




“The middle class will continue to expand in emerging economies overall, with a lion’s share of that growth to occur in Asia,” Credit Suisse CEO Tidjane Thiam said in a statement with the report. “As a result, we will see changing consumption patterns as well as societal changes as, historically, the middle class has acted as an agent of stability and prosperity,” he added.




Middle class in the report is defined “in terms of a wealth band rather than an income range” and is benchmarked against the US, because the US traditionally had the largest middle class in the world. The lower level of the band is defined as having wealth “double the annual medium income,” or $50,000 in the US at mid-2015 prices. The upper level is defined ten times that amount, or “the amount of capital a person close to retirement age needs to purchase an annuity paying the median wage for the remainder of their life.”

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vesicles

Colonel
Looks like Communism with Chinese Capitalism is paying off big time.:D China's middle class continues to grow meanwhile here in the US the opposite is happening. Where are all my doubters, naysayers, and haters at that didn't believe in the CPC ways? I rest my case.

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I think we need to be a little more careful about such comparison. The US has been a developed country for a long time, meaning that it has established a middle-class base. Thus, its pace of growth will be undoubtedly slow. China, on the other hand, is still a developing country. with its starting point so much lower, China surely would grow faster. Like an elite NBA team won 56 games last season and 60 games this season (a mere 6% increase). A lottery team won 12 games last season but 30 games this seam (a whopping 150% increase). However, we still cannot say that the latter team is in the same league as the former.

I think China still has a lot of catching up to do. Like look at the percentages. the middle class in China is less than 10% of the total population (109 million / 1.3 billion), still below the world average of 14%. The middle class in the US would be ~ 30% (slightly below 109 million middle class / total population of 300 million).
 

Blitzo

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Looks like Communism with Chinese Capitalism is paying off big time.:D China's middle class continues to grow meanwhile here in the US the opposite is happening. Where are all my doubters, naysayers, and haters at that didn't believe in the CPC ways? I rest my case.


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There is really no reason to address haters and naysayers... especially because this is just part of the first steps toward China moving to become a fully developed nation.

The only useful measuring stick for China is measuring it against itself. It doesn't matter how rich China is relative to the US or how many in the middle class they have compared to other countries, what matters is how well China's economy is doing for its own people to fully urbanize in a sustainable way and to move up the technology chain and to improve the lives of the people. And in that regard, there is still a long task ahead.
 
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