Chinese Economics Thread


FuManChu

Senior Member
That's assuming the rises are all natural.
You have evidence to the contrary? I'd like to see it, because all I read about is increased cost to the producer. On certain issues like pork it's clear that the rises are natural (disease in the national herd) - coal has become more in demand globally too.
 

Schumacher

Senior Member
You have evidence to the contrary? I'd like to see it, because all I read about is increased cost to the producer. On certain issues like pork it's clear that the rises are natural (disease in the national herd) - coal has become more in demand globally too.
Did I say there're no increases to producer prices ? I said there're also businesses who take advantage of inflation to raw material prices to pass on a higher rate of increase to the consumers than the costs increase they've actually incurred.
Chinese officials have on many occasions mentioned the importance of battling such profiteering as part of the overall task against inflation.
When such distortion exists in the market, hoping market forces alone to fight inflation will take a long time & incur high social costs.
 

FuManChu

Senior Member
I said there're also businesses who take advantage of inflation to raw material prices to pass on a higher rate of increase to the consumers than the costs increase they've actually incurred.
If you believe the main problem is down to such activities, you need to give some actual evidence for it. Otherwise I believe the comments made by people such as Henry Li and Li Jianwei.

If you don't believe it is the main problem, then it does go back to the lack of government flexibility over pricing.

Chinese officials have on many occasions mentioned the importance of battling such profiteering as part of the overall task against inflation.
Of course, because the only other option is to admit that their lack of action in the past/poor policy-making has led to the current problem. In China, whenever there is a problem someone other than the central government is to blame.
 

Schumacher

Senior Member
If you believe the main problem is down to such activities, you need to give some actual evidence for it. Otherwise I believe the comments made by people such as Henry Li and Li Jianwei.

If you don't believe it is the main problem, then it does go back to the lack of government flexibility over pricing.

Of course, because the only other option is to admit that their lack of action in the past/poor policy-making has led to the current problem. In China, whenever there is a problem someone other than the central government is to blame.
I have no problem believing it when I see reports pointing to profiteering for some of the problems be it in China or anywhere else, even in economies more well-developed than China, it's common to have businesses take advantage of situations to raise prices more than justifiable by costs alone. That's why there're laws related to consumer protection, fair competition etc.
So the evidence is in those reports. I'm puzzled why you find it hard to believe such common issues exists. I can only attribute it to lack of experience in observing such issues.

It's ultimately your choice whose analysis you want to believe. Pick the ones you like & simply dismiss the official version or any similar ones.
 

FuManChu

Senior Member
it's common to have businesses take advantage of situations to raise prices more than justifiable by costs alone.
And as I asked, I would like some evidence that indicates such activities are the main cause of China's price inflation rather than what the central government has done/failed to do.

So the evidence is in those reports.
Which reports? Published by whom? Available where?

I'm puzzled why you find it hard to believe such common issues exists. I can only attribute it to lack of experience in observing such issues.
Actually it's because I have experience in observing such issues that I am sceptical. Governments frequently whine about "price speculators", "hoarders" et al when inflation becomes a problem because it's a good way to deflect attention from anything they may (or may not) have done. Of course such people do operate, but frequently they're a symptom of inflation or a relatively minor contributing factor, rather than the primary cause.

It's ultimately your choice whose analysis you want to believe.
If you can provide some other analysis, it might make for interesting reading. But all you have done is regurgitated what I already know - the government is blaming others for the situation.
 

Schumacher

Senior Member
And as I asked, I would like some evidence that indicates such activities are the main cause of China's price inflation rather than what the central government has done/failed to do.

Which reports? Published by whom? Available where?

Actually it's because I have experience in observing such issues that I am sceptical. Governments frequently whine about "price speculators", "hoarders" et al when inflation becomes a problem because it's a good way to deflect attention from anything they may (or may not) have done. Of course such people do operate, but frequently they're a symptom of inflation or a relatively minor contributing factor, rather than the primary cause.

If you can provide some other analysis, it might make for interesting reading. But all you have done is regurgitated what I already know - the government is blaming others for the situation.
These reports have appeared regularly on both Chinese & others' reports when talking abt issues related to inflation. I'll try to remember to point it out to U next time I see one.
I find these reports common sense that's why I don't bookmark or save them, unlike a rare report like for example one reporting PLAAF has flown a stealth for the first time etc.

How minor/major such issues as a contribution to the overall inflation is up for debate.
Take the price of water & gasoline for instance, the government has increase the prices of these 2 substantially over the years but still maintain tight control at the higher level as well as them still not being as high as 'market price' yet.
This is moving in the 'right' direction of market reform & reducing wastage but at the same time being aware of distortions that still exists in the imperfect market.
This is about real world situation rather than purely theoretical discussion.
 

FuManChu

Senior Member
Strange, I don't see any reports of "devious business activity" being the source of the energy shortage in the following article either.....

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The Chinese government issued an “urgent notice” on Wednesday to the country’s power generators, coal companies and railways to address an electricity shortage that has led to rationing in more than a third of China’s provinces in recent weeks.

The rationing, mostly achieved by telling factories that their power will be shut off for a day or two each week, coincides with the annual frenzy of factory production to meet orders before shutting down for the Chinese New Year holidays, which fall in early February this year.

Factories have kept going during past electricity rationing, usually during the summer air-conditioning season, by running diesel generators. But that is proving expensive this winter because of high fuel prices.

Power executives and government statements attributed the electricity shortfall this winter to a confluence of problems. Many of the problems appear to have their roots in the government’s imposition of a long list of price controls in recent months in an attempt to tamp down inflation, which reached 6.9 percent at the consumer level in November.

Trucks did not deliver adequate coal stockpiles to power plants before winter snows arrived in northern China, partly because of nationwide diesel shortages. Refiners had cut back on the production of diesel because price controls were forcing them to sell the diesel for slightly less than the cost of the crude oil needed to make it.

Recent modest declines in world oil prices, together with government subsidies for refiners, have restored diesel supplies. Zhang Yanchao, a long-haul trucker who travels large areas of eastern China, said in a telephone interview on Wednesday that after waiting up to 10 hours at a time for diesel in November, he now finds that he can drive up to service stations and refuel immediately.

But the alleviation of diesel shortages has come too late for many power plants because heavy snows have blocked roads and rail lines in recent weeks. The official Xinhua news agency said that coal reserves at power plants were perilously low, with just 17.7 million tons in the reserves and power plants burning two million tons a day.

The snow has also felled some crucial high-power transmission lines, officials at two power companies said in telephone interviews.

The downed lines have made it harder for the operators of China’s electricity grid — really a series of poorly connected regional grids — to redistribute power to areas that need it most.

Frigid weather has also increased demand for coal for heat, driving up prices for immediate coal deliveries. That has made coal mines more reluctant to fulfill their long-term, low-cost contracts to deliver coal to power companies.

“Coal enterprises must produce and sell coal based on the law, and deliver on their responsibility to society,” the government’s powerful National Development and Reform Commission in Beijing warned in an “urgent notice” to various industries, posted on its Web site on Wednesday. Low water levels in lakes have also limited the availability of hydroelectric power, the notice said.

Low electricity tariffs, particularly for residential users, have been another problem.

The central government issued an official “suggestion” to provincial governments last fall that they not allow increases in electricity tariffs charged to customers, as part of national price controls.

Provincial governments have responded by freezing tariffs, and even reducing them in the case of Guangdong Province in southeastern China, the home of much of the country’s export-oriented light industry.

The low tariffs have made it uneconomical for oil-fired plants to operate, and many have stopped doing so.

“It makes absolutely no sense for anyone to run a diesel- or oil-fired plant. They’re all shut down,” said a power company executive in China who asked not to be identified because of the sensitivity of commenting on regulatory policies.

The executive added that even when ordered by the government to resume operating at a loss, many state-owned oil-fired plants had not done so, scheduling maintenance and repairs instead.

Oil-fired power plants account for up to 15 percent of the power generation capacity in parts of southeastern China but very little elsewhere in China, where coal remains the primary source of electricity.

The rationing this winter is particularly embarrassing for China because the country’s power failures are usually limited to the summer, when ever-growing use of air-conditioning strains the power grid to its limits. Blackouts were more limited than usual last summer, as capacity finally seemed to be catching up with demand, which has been growing 13 percent a year.
 

SampanViking

The Capitalist
Staff member
Super Moderator
VIP Professional
Much of the current shortage in capacity is being blamed on transportation problems, due to snow in the Coal Mining Regions.

You may argue that a move to a fully integrated Nationwide grid may help a bit, but given the distance and the Capacity required, it would still need transportation to many remote Power Station Nodes in order to maintain a regular and stable current.
 

Schumacher

Senior Member
Strange, I don't see any reports of "devious business activity" being the source of the energy shortage in the following article either.....
Tell me you're joking, to try to prove there's no "devious business activity" you simply post a report that has no mention of it. It's like looking up & see no birds in the sky you therefore conclude there's no such an animal as birds. lol
 

FuManChu

Senior Member
Tell me you're joking, to try to prove there's no "devious business activity" you simply post a report that has no mention of it. It's like looking up & see no birds in the sky you therefore conclude there's no such an animal as birds. lol
You're too paranoid, Schu. Methinks you should calm down a bit and not jump to conclusions. I suggest you try drinking less coffee and have more water in your diet.

I was merely commenting that I found it strange yet another report on the situation hadn't mentioned these "obvious" factors that are so important to explain the shortages.
 

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