The Harsh Reality behind China’s Growth Story

[Jay]

Re: The Harsh Reality behind China’s Growth Story

When it all goes sour, the central bank can just recapitalize the banks by paying 100% for crap assets and then pay interest on reserves to keep inflation at bay. I hear it is working in the States... so far. If anyone makes a peep they get a work camp. Problem solved.

[touchring]

Re: The Harsh Reality behind China’s Growth Story

When it all goes sour, the central bank can just recapitalize the banks by paying 100% for crap assets and then pay interest on reserves to keep inflation at bay. I hear it is working in the States... so far. If anyone makes a peep they get a work camp. Problem solved.

The Chinese are never known to be really generous to foreigners, so not before the stakes held by US and Europeae investors in Chinese banks are rendered worthless.

[Serge_Tomiko]

Re: The Harsh Reality behind China’s Growth Story

I wonder how accurate the reports are. The article that was apparently translated from Chinese confuses ten thousand with million and the wording is remarkably clumsy. Translating Chinese to English using a program should result in something highly readable due to the simplicity of Chinese grammar. Instead, the article almost reads as if someone purposely wrote in extremely broken English to make it seem more authentic. If the article were translated manually by a person fluent in Chinese, it's difficult for me to believe the translator could get the ten thousand/million translation wrong.

It's also not clear to me how knowledgeable the Israel-based China market analyst is. I'm quite pessimistic about many goings-on in China but this Israeli makes me sound Pollyanna-ish.

My guess on China's real estate bubble is that if and when it pops, it will be more like the U.S. stock market crash in 2000 than the housing bubble crash in 2008. As far as I understand, there were substantial down payments required even before the market really started percolating, unlike in the U.S. where 103% LTV, negative-amortizing, option ARMs were rampant. There is also no global securitization engine for Chinese to further increase the amount of money flying in real estate.

A lot of the peon, wanna-be land tycoons in China are going to be financially wiped out if the bubble pops. However, it's not clear to me that China's banking system will be trashed like the U.S.'s. It could be similar to how things were in Hong Kong in the late 1990s when Hong Kong's real estate market crashed.

The Chinese have very high savings rates and that will somewhat cushion a crash. Furthermore, the Chinese government could enact policies (and maybe further devalue the RMB) to raise wages to ease a housing bubble crash.

Raising wages is something that the U.S. and Japan couldn't realistically do--their wages were already first-world. China could double wages and they'd still be substantially cheaper than any other industrialized nation with decent infrastructure.

Yeah, this anit-China piece borders on very overt propaganda.

The reality is that the elite of the US, which is highly intertwined with Israel, has effectively destroyed the culture of the original inhabitants of the United States - i.e. the descendants of the aboriginal peoples of the European continent. In the US, people are completley dependent upon the government for every aspect of their lives, not merely material concerns but personal, cultural, and even spiritual direct. The collapse of the US economy will have dire consequences as people have nowhere else to turn besides the Elite.

In China, people save their money. They share it with immediate and extended family. Old people don't have to worry about savings because their children and grand children will take care of them. They don't have to worry about their local Wal Mart or other centralized retailer going out of business because retail distribution is highly decentralized. Their people are not raised on decadent filth and trash, and thus won't descend into rabid animals the moment twinkies are no longer available from said Wal Mart. There are also no illusions about mass media propaganda unlike in the US. They know the government lies to them and censors the news, and thus more easily can handle situations where "the truth" ends up being an obvious lie. The same thing happens in the US, but we indoctrinate our people to believe that what they see on the boob tube is true. Finally, the Chinese people are fiercely independent and actually consider it shameful to be in debt. This article is obvious propaganda for the simple reason it does not indicate how the vast majority of Chinese people buy homes in cash saved over many years and acquired from family. Then there are taxes. Taxes in China are very, very low compared to the US.

In short, as Goethe said, no man is more hopelessly enslaved than he who believes he is free. Freedom is an illusion, a decadent fantasy that has been used to cement political control and that has corrupted the masses such that they conform their lives in every way to a financial oligarchy that no drains away months of their labor every year.

[touchring]

Re: The Harsh Reality behind China’s Growth Story

Does anyone here thinks this is a joke?

http://www.forbes.com/2010/07/14/wor...lup-table.html

[Rajiv]

Re: The Harsh Reality behind China’s Growth Story

Does anyone here thinks this is a joke?

http://www.forbes.com/2010/07/14/wor...lup-table.html

At least the countries I am intimately familiar with, I would agree with the ratings/numbers

[touchring]

Re: The Harsh Reality behind China’s Growth Story

At least the countries I am intimately familiar with, I would agree with the ratings/numbers

I'm also not surprised with the ranking with respect the countries I am familiar with to. Places with high income inequality tend to have significantly less happy people, particularly those in "high economic growth" regions where prices of real estate and essential goods go up a couple times faster than wages, e.g. Singapore, Hong Kong.

What is most interesting is that China is among the ranks of sub-sahara African countries, way behind other high growth countries with similar economic structures, such as Vietnam, Malaysia, the Philippines, Indonesia.

At the least, I would have thought that China to be ahead of India in this respect.

The other interesting finding is South Korea's ranking that is well ahead of other "high economic growth" Asian countries, although still behind the supposedly bankrupt country Greece.

Lesson of the story -

The grass is always greener on the other side. So if you've watching too much CNN, Foxnews, CNBC, news agencies based in America, the green grass has got to be on the other side of the Pacific Ocean.

[mliu_01]

Re: The Harsh Reality behind China’s Growth Story

China totalitarian mindset has caused an unprecedented waste of the financial capital. The waste is much larger than the Federal Reserve and other crony capitalists in the West could ever dream of creating.

Bullcrap. You mean 28 trillion dollar bail out isn't waste of the financial capital? So tell me, which chinese has gotten 100s of millions of dollar(yuan) bonus? Yes some or many of them steal. But at least it is not done in public's view. And many got their reward of a piece of copper when they got caught.

True, Chinese government has done a lot of wrong thing. But they are trying pretty hard to keep the population happy. Have you heard that chinese government actually not collecting tax from the peasants? Wake up, people. I am not saying chinese economy will not go sour. But I am pretty sure about one thing, it won't go as bad as western countries.

Their condition has nothing to do with the “evils” of capitalism, and these are not signs of a communist revolution, as I’m sure a lot in left will love to believe. China is one big jail and use of the labor in China is a use of slaved labor. They are fighting for their freedoms.

I am taking a deep breath of this free american air. How lovly, I felt freedom. Post the same thing on youtube comment, it is still in pending. I hope the ahole in youtube will prove my american freedom loving post a.s.a.p. If china is one big jail. what we are in american? disneyland? lol everyone seems so happy over here. And "work camp". OMG. You guys have no understanding of chinese. Their balls are much bigger than you thought. From what I have heard or see. Chinese balls are bigger than american's guts, if americans still have any left.

[Starving Steve]

Re: The Harsh Reality behind China’s Growth Story

We here in the so-called, "developed world" can only dream of having the luxury of the "problems" that China has now... Imagine having problems like:

1.) What do we do with all of our reserves? What commodities should we buy? How much gold should we own?

2.) We are growing too fast, so we have surpluses of power, and power prices might fall? What do we do with falling prices?

3.) Everyone's income is increasing, so how do we slow this process down and keep incomes from increasing too fast?

4.) Imagine solving the problem of getting every worker membership in a labour union?

5.) Imagine suffering with the problem of having people hold too much savings and not wanting to consume needlessly, nor to consume wastefully?

6.) Imagine the luxury of having too many exports and not enough imports?

7.) Imagine the problem governing a people that is gaining more freedom and gaining more rights, with each passing year?

8.) Imagine having the problem of being too competitive in the world?

9.) Imagine having to buy-up assets in foreign countries in order to keep them from going bankrupt?

And to think Bernanke still is setting Federal Reserve Bank policy and keeping interest rates at zero, apparently forever! And to observe that Samuelson's economics text is still used in university economics classes everywhere in the developed world!

Dr. Paul Krugman, at Princeton University, writes in the New York Times (italics) that interest rates still need to go lower in America. ( You can't make this stuff up! )

[Jay]

Re: The Harsh Reality behind China’s Growth Story

Bullcrap. You mean 28 trillion dollar bail out isn't waste of the financial capital? So tell me, which chinese has gotten 100s of millions of dollar(yuan) bonus? Yes some or many of them steal. But at least it is not done in public's view. And many got their reward of a piece of copper when they got caught.

True, Chinese government has done a lot of wrong thing. But they are trying pretty hard to keep the population happy. Have you heard that chinese government actually not collecting tax from the peasants? Wake up, people. I am not saying chinese economy will not go sour. But I am pretty sure about one thing, it won't go as bad as western countries.



I am taking a deep breath of this free american air. How lovly, I felt freedom. Post the same thing on youtube comment, it is still in pending. I hope the ahole in youtube will prove my american freedom loving post a.s.a.p. If china is one big jail. what we are in american? disneyland? lol everyone seems so happy over here. And "work camp". OMG. You guys have no understanding of chinese. Their balls are much bigger than you thought. From what I have heard or see. Chinese balls are bigger than american's guts, if americans still have any left.

Just so you know, and it may not have come though due to language or the limitations of the typed word, but my post was tongue-in-cheek and more poking fun at the US and the idiocy of the situation we all find ourselves in, rather than China specifically, although they are in for a rough ride too.

I would add this clip though when it comes to Chinese balls:

http://www.youtube.com/watch?v=7RwLpCJx1Z0

You would never see Americans stand around like that. I forget who posted this originally here, so sorry not to give credit, but it is illuminating and illustrates a vast cultural gap between our cultures.

[touchring]

Re: The Harsh Reality behind China’s Growth Story

I would add this clip though when it comes to Chinese balls:

http://www.youtube.com/watch?v=7RwLpCJx1Z0

You would never see Americans stand around like that. I forget who posted this originally here, so sorry not to give credit, but it is illuminating and illustrates a vast cultural gap between our cultures.

Also, to point out that it will be way more dangerous to help out in a situation like this in the US lest the guy whips out a gun.

I saw this clip and any guy seeing it will be angry, but I can understand why nobody helped. What if the guy is some govt official or relative of a top local govt official? If you have helped subdue him, you might end up being charged instead. So the only thing the bystanders can do if to help with their mouths - by shouting.

This is the reality in Asian countries where there is no jury system - the state judges and not the people.

People of influence and connections are often above the law. In the West, even if the guy is the son of the president or prime minister, if he attacks a pregnant woman like that, you can strike him down and still be a hero.

And the law is applied rigidly, since the state decides and not the jury - it doesn't consider who is right or wrong from the moral point of view. The judge or group of judges who represent the state are compelled to go by the book lest being accused of being biased.

In America, as I understand, people have the right to self-defense, so if someone whips out a gun and point at your, shoots you, you can shoot him back and it is your right, even if he gets killed. This is not the case in authoritarian Asia. If you retaliate and he becomes injured, you'll be charged with all sorts of crimes. This leaves fleeing the only solution in such a situation. The natural instinct will be to either flee or stay out of trouble - as the guys that saw the pregnant woman being beaten up did.

Laws in the West are to protect the rights of the people. In authoritarian Asia, laws are created to subdue the people, to instill fear in them so that the government (or whatever party or army) maintains firm control.

[mliu_01]

Re: The Harsh Reality behind China’s Growth Story

Just so you know, and it may not have come though due to language or the limitations of the typed word, but my post was tongue-in-cheek and more poking fun at the US and the idiocy of the situation we all find ourselves in, rather than China specifically, although they are in for a rough ride too.

I would add this clip though when it comes to Chinese balls:

http://www.youtube.com/watch?v=7RwLpCJx1Z0

You would never see Americans stand around like that. I forget who posted this originally here, so sorry not to give credit, but it is illuminating and illustrates a vast cultural gap between our cultures.

LOL, I only responded to the word "work camp". And you brought out more stuff. hahahaha

I am pretty sure you can't read any chinese. lol. I suggest you understand the caption at the begining of the video. It is clearly stated the outrage of this case. And the police is going after the guy. So, I suppose to believe all the chinese are like that because of this video? Ok let me give you some news. http://www.courthousenews.com/2010/06/24/28330.htm Police Tasered an 86-year-old disabled grandma in her bed and stepped on her oxygen hose until she couldn't breathe. I am pretty damn sure that no chinese is so sick to pull this shit. I am pretty sure you are right about vast cultural gap between our cultures. One thing for sure. Chinese know the bullcrap they are told. And americans on the other hand believe all the bullcrap they are told. That is the real difference btw your culture and theirs.

[touchring]

Re: The Harsh Reality behind China’s Growth Story

http://www.bloomberg.com/news/2010-0...es-tumble.html

Special Vehicles

In Tianjin, credit to special financing vehicles last year reached more than 700 billion yuan, according to Shih. Tianjin’s units have also lined up an additional 840 billion yuan in credit lines with banks, he said.

Construction of the 180,000-square-meter Tianjin West Railway Station and transport hub, which will include a 1.3 billion yuan underground link to nearby Tianjin Railway Station, helped propel the city’s economy to a 16.5 percent growth pace last year. The challenge for local leaders will be to sustain that without the bump from land-sales financing.

“To imagine a situation where eventually Tianjin is able to repay all of its debt, you have to believe that it will grow at a phenomenal rate,” said Shih. “There are aspirations and there’s reality.”

To put things into perspective, Tianjin's GDP is 750.1 billion yuan. So, we're looking at a city government of a city with gross domestic product of 750 billion yuan that has borrowed 700 billion and has probably used up part of, maybe even half of another 840 billion yuan in credit lines.

[ThePythonicCow]

Re: The Harsh Reality behind China’s Growth Story

Chinese know the bullcrap they are told. And americans on the other hand believe all the bullcrap they are told.

You may well have a point there. Not all Americans, not all Chinese, of course, But the majority in each case, perhaps.

[touchring]

Re: The Harsh Reality behind China’s Growth Story

You may well have a point there. Not all Americans, not all Chinese, of course, But the majority in each case, perhaps.

In the world today, few people genuinely believe in what their government says. Even if you were to go to North Korea, where even uttering a word against the government or Kim will put you in jail, people will still talk bad stuff about him at home behind closed doors.

Regardless of whether the people believe it or not, what matters is whether the people choose to align themselves with propaganda, especially propaganda with nationalistic theme. The Chinese may know what all this growth thing benefits government officials and businessmen (the top 5% of the population) many times more than ordinary people, that may actually be suffering because of inflation and high housing prices, but for the sake of national pride, they will sing in unison to the glory of economic growth and the Party. This is the nationalistic card that the Chinese government is playing.

This is the reason why China and other "high growth" Asian countries are more vulnerable to an economic slump than Western countries, because while growth does not really benefit the ordinary people that much (beyond national pride), a slump that creates unemployment will hurt as much, if not much more because of stagflation - high unemployment combined with high inflation, and a lack of social security, and not to mention political instability, as the people wake up from the dream.

In a way, the whole affair smacks of dot com.

[aaron]

Re: The Harsh Reality behind China’s Growth Story

When I was in Taiwan, I saw an old man fall off his scooter. Nobody helped him, at least for some time. I asked a friend about this. Apparently, people worry about getting sued. In this case, somebody might be accused of causing the accident and have to pay a lot of money.

I am not sure why I thought of this after reading your comments, touchring. But, I believe you are absolutely correct in your assessment.