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Offline Petty Tyrant

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Re: Official Chinese Toast Thread
« Reply #30 on: January 29, 2013, 05:56:55 AM »
In the immortal  words of Mking, He is right foir the wrong reasons, the US did not suddenly become a superpower after ww2, they had already taken on spain in the carribean, mexico and phillipines and won to take those spoils. The french and british they had already dispatched to cold canada. thats the 3 big players minus the portugese of global players in imperial colonisation that the US had already had victory over. That had all already happened b4 the 20th C.  Saying that they emerged as the superpower only after ww2 is incorrect history. In the 1850's they had begun forcing japan to modernise and weaponise only to  build up and pull down setting the recipe for many future dictators.

In both ww1 and ww2 if they had fought first from the start the wars would have been over way sooner, both times they came in late and effectively mopped up after the french had given up, just as with vietnam they came in after the french had given up. It was pure genius, they let the brits also exhaust themselves before entering ww2, and that is why the brits and french lost their empires after ww2. The great depression of the 1930's ended in with an armament economy but that was building up over 3 years and not deployed until 1942.

As for china this misses the fact that the chinese are banking on over 2 billion people moving from ag to industry in their own homeland and planning to be fed by farmland all over the rest of the world. A world war where they have the by far inferior navy  would cut off these food supplies as a sure bet. The simile with the US which fed itself during ww2  breaks down here. Also the fact that massive underground  bunkers are built in china to house thousands of their elite also shows a key difference between the US during ww2 and china in a possible ww3, that is the us was not vulnerable to any real attack on its own mainland wheras china definitely is now by missile. The simile is too simple.
« Last Edit: January 29, 2013, 06:10:25 AM by Uncle Bob »
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Offline monsta666

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Re: China's Air Pollution Is Saving Lives
« Reply #31 on: January 29, 2013, 03:58:32 PM »
Some experts say make the claim that Chinese air pollution - all things considered - actually saves lives. Just goes to show whatever viewpoint you have there will be some expert who will support you...

JEFFERIES: China's Air Pollution Is Saving Lives



Jefferies analysts Laban Yu and Jack Lu argue in a note today that China's epic air pollution is actually saving lives.

Wait what?

Here's their case:

Yes, of course China's smog problems are very real — they lead the world in premature deaths caused by air pollution:



But this massive pollution is actually a sign of rising living standards, they write:

                         The difference is that industrialization – with its incumbent air pollution – eliminates poverty. Among the top twenty nations with air pollution induced premature deaths are the US, Japan, the UK, Germany and Italy –                          all wealthy developed nations.

As it turns out, more people die prematurely in India from problems caused by a lacked of advanced infrastructure like diarrhoea and poor ventilation or burning of coal and animal dung for heat (which they categorize as "indoor air pollution"):



But a better measure of China's standing on public health is illness, disability and early death (DALY), a metric created by the World Health Organization.

By that criteria, China is not even in the top 20 —



And only a few notches behind Brazil:



Yu and Lu point out that China's air pollution is the fruit of industrialization, and that industrialization is a life saver.

                    The public health effects of air pollution cannot be viewed in isolation. Nobody believes air pollution is a great thing but nations continue to pollute because civilizations make hard choices. And air pollution is not even                          that hard a choice. Higher cancer rates in old age are the price that China, and many other nations, have chosen to pay for lower death rates from childhood diarrhoea.

Offline RE

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Official Chinese Toast Thread: China's BLACKEST Day
« Reply #32 on: January 30, 2013, 01:05:12 AM »
Cough. Cough.

I see DEAD Chinese.



RE

China's “Blackest Day” Is Still In The Future
Submitted by testosteronepit on 01/29/2013 20:33 -0500

BelgiumChinaCRAPGermanyIraqNatural GasNuclear PowerThe Economist


Wolf Richter   www.testosteronepit.com   www.amazon.com/author/wolfrichter

China has tried over the years to come to grips with its pandemic pollution, yet in Beijing, through a combination of factors, it reached catastrophic levels in mid-January and set another record. Result of the white-hot pace of economic growth. And of coal consumption.

The “Blackest Day,” is how The Economist called January 12 when the Air Quality Index (AQI) reached 755. It was “Beyond index” on a scale where the worst level, “Hazardous,” ranges from 301-500 and carries this warning: “Everyone should avoid all physical activity outdoors; people with heart or lung disease, older adults, and children should remain indoors and keep activity levels low.”

On that day, airborne particulate matter smaller than 2.5 microns in diameter (PM 2.5) reached 886 micrograms per cubic meter, about 35 times the guideline set by the World Health Organization. These particulates contain “sulfate, nitrates, ammonia, sodium chloride, carbon, mineral dust, and water” that form a “complex mixture of solid and liquid particles of organic and inorganic substances.” They contribute to cardiovascular and respiratory diseases, and lung cancer. Mortality in polluted cities exceeds that “in relatively cleaner cities by 15–20%.” The WHO estimated in 2007 that 656,000 Chinese died of air pollution every year, and another 95,600 from water pollution. Surely, this hasn’t gotten any better since.

Among the culprits: coal consumption. It has been on an uninterrupted tear since 2000 as China built a phenomenal number of coal-fired power plants (users of steam coal) and as it expanded its steel and iron industries (users of metallurgical coal). Bubble projects, overcapacity, construction of ghost cities, motor vehicles that turn the exploding net of roads and highways into clogged parking lots.... The excesses are everywhere. And power generating capacity from 2005-2011 doubled, of which 80%—despite efforts to diversify—still comes from coal.

China consumed 1.5 billion tons of coal in 2000, or 28% of total world consumption. By 2011, according to a just released report by the US Energy Information Agency, coal consumption had jumped 153% to 3.8 billion tons, amounting to 47% of total coal consumption in the world. Demand had increased an average of 9% per year! If the China bubble doesn’t accidentally get pricked in the interim, the country will consume more coal in 2013 than the rest of the world combined.

In that “rest of the world,” however, coal consumption has had a hard time, increasing only 1% on average per year over the 12-year period. Fingers are pointing at the US, once the largest coal market, until China came along. Much of the coal-consuming iron and steel industries in the US have migrated across the Pacific, and coal as a fuel for power generation has been on a long structural decline [read... Natural Gas And The Brutal Dethroning of King Coal].

The numbers are epic. China has more power generating capacity than any other country. In addition to being by far the largest consumer of coal, China is also the largest producer and has the third-largest coal reserves. Despite these superlatives, it was only the fourth-largest consumer of natural gas in 2011, though consumption jumped 50% from 2009. Nuclear power, with 15 reactors on line as of mid-2012, provides only a tiny portion of total power generation, but 26 (!) reactors are under construction [here is my article about its sideshow: Blowing Up: The Transfer Of French Nuclear Technology To China]. And renewables? Minuscule. But growing in leaps and bounds, of course.

As these alternatives are desperately trying to gain critical mass, coal consumption will continue to grow—and the pollution record of January 12, as horrid as it was, will turn out to be just another line item on a long list of surpassed records. The “Blackest Day” is still in the future.

While we on the West Coast get to breathe the airborne crap that makes it across the Pacific, there are opportunities for the US in China’s coal-fired bubble economy: coal exports. In 2012, the US exported an estimated 125 million tons of coal. It broke the prior record set in 1981 and was more than double the level of 2009. However, coal production in the US still declined. It’s tough out there.

Despite the frenetic growth in coal consumption in China and certain other parts of Asia, the US exported much more coal to ... Europe! Coal has been very competitive in Europe where natural-gas prices are so high that land-locked producers in the US get water in their eyes when they think about it. In countries like Germany and Belgium that were once coal mining bastions, coal production (and consumption) has been in free-fall. So US producers were able to export 42 million tons to Europe. To Asia, they shipped only 23 million tons—but this too is on the upswing. Even, if in a few years, people in Beijing are trying to figure out how to breathe the air outside.

To supply its bubble economy with raw materials and fossil fuels, regardless of the consequences, China has embarked on an all-out resource grab, in every direction. Its tentacles spread far and wide. Oil is on top of the list. Hence the moves in Iraq, where turmoil has created opportunities. Read.... It Wasn’t Supposed To Be This Way: Chinese Oil Companies Apparent Victors in Post-Saddam Iraq.
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Offline WHD

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Re: Official Chinese Toast Thread
« Reply #33 on: January 30, 2013, 10:22:17 AM »
Quote
To supply its bubble economy with raw materials and fossil fuels, regardless of the consequences, China has embarked on an all-out resource grab, in every direction. Its tentacles spread far and wide. Oil is on top of the list. Hence the moves in Iraq, where turmoil has created opportunities. Read.... It Wasn’t Supposed To Be This Way: Chinese Oil Companies Apparent Victors in Post-Saddam Iraq.

Where are CHENEY?BUSH?RUMSFELD now?

Offline Surly1

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Re: Official Chinese Toast Thread
« Reply #34 on: January 30, 2013, 10:31:31 AM »
Where are CHENEY?BUSH?RUMSFELD now?

I cannot PROVE that God exists, but I can incontrovertibly prove that Satan exists. As Exhibit A, I offer Satan's Vicar on earth, Dick Cheney. From that stain of pure evil, I posit the existence of a countervailing force.

And if you ever needed any confirmation of the contempt with which the Enlightened Ones hold the rest of us, consider his appearance this week on Faux "News"product. As an expert on gun safety.
"It is difficult to write a paradiso when all the superficial indications are that you ought to write an apocalypse." -Ezra Pound

Offline RE

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New Chinese Final Solution: Kevorkian Old People
« Reply #35 on: February 07, 2013, 03:59:30 AM »
Since the One Child Policy didn't work out too good, the Politburo has come up with a BETTER 5 year plan!

Quote
The ageing crisis is well-known. It is already six years since a Chinese demographer shocked Davos with a warning that his country might have to resort to mass suicide in the end, shoving pensioners onto the ice.

Thank God GO is not Chinese.

This off Ambrose keyboard in the MSM. OMFG.

RE

IMF sees 140m jobs shortage in ageing China as 'Lewis Point' hits China’s vast reserve of cheap workers in the hinterland is vanishing at a vertiginous pace.




Beijing revealed last week that the country’s working age population has already begun to shrink, sooner than expected.


By Ambrose Evans-Pritchard

6:48PM GMT 03 Feb 2013
427 Comments


We can now discern more or less when the catch-up growth miracle will sputter out. Another seven years or so - enough to bouy global coal, crude, and copper prices for a while - but then it will all be over. China’s demographic dividend will be exhausted.

Beijing revealed last week that the country’s working age population has already begun to shrink, sooner than expected. It will soon go into “precipitous decline”, according to the International Monetary Fund.

Japan hit this inflexion point fourteen years ago, but by then it was already rich, with $3 trillion of net savings overseas. China has hit the wall a quarter century earlier in its development path.

The ageing crisis is well-known. It is already six years since a Chinese demographer shocked Davos with a warning that his country might have to resort to mass suicide in the end, shoving pensioners onto the ice.

Less known is the parallel - and linked - labour drain in the countryside. A new IMF paper - “Chronicle of a Decline Foretold: Has China Reached the Lewis Turning Point? - says the reserve army of peasants looking for work peaked in 2010 at around 150 million. The numbers are now collapsing.

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The surplus will disappear soon after 2020. A decade after that China will face a labour shortage of almost 140m workers, surely the greatest jobs crunch ever seen. “This will have far-reaching implications for both China and the rest of the world,” said the IMF.
</IMG>
Source: IMF
These farm workers are the footloose migrants that pour into the cities from the interior, the raw material of China’s manufacturing workshops They are carefully regulated by the semi-feudal Hukuo system to keep their families tied to villages at home, and to keep the lid on social revolt.
There is little Beijing can do to head off the shock. The effects of low fertility rates - and the one child policy - are already baked into the pie. It would take half a century to turn around the demographic supertanker.
The Lewis Point, named after St Lucia's Nobel economist Sir Arthur Lewis, is when the supply of workers dries up and city wages soar. It is when labour turns the tables on capital, and profits crash.
You could argue that such a process already well under way, and is why Chinese equities are trading at a third of their 2007 peak in real terms. Manufacturing pay has risen 16pc a year over the last decade in the East Coast hubs of Shenzhen, Beijing, Shanghai and Tianjin, though this slowed sharply in 2012.
Boston Consulting Group says that “productivity-adjusted wages” were just 22pc of US levels as recently as 2005. They will reach 43pc by 2015, or 61pc for the American South.
It is a key reason why General Electric, Ford, Caterpillar and others are “re-shoring” from China back to the US, though cheap shale gas, a weaker dollar, and shipping costs all play their part.
This is no bad thing. The world economy is rebalancing. China’s current account surplus has fallen from 10pc of GDP to just 2.5pc.
China’s corrosive gap between rich and poor should narrow. The GINI coefficient measuring inequality should come down from stratospheric levels, 0.61 according to researchers at Chengdu University.
Yet it is also a dangerous moment for Beijing. The Lewis Point is the great test for catch-up economies, when they can no longer rely on cheap labour, copied technology, and export-led growth to keep the game going.
The air is thinner at the technology frontier. Success depends on such intangibles as the rule of law and the free flow of ideas. Those that fail to adapt in time slide into the `middle income trap’, and most do fail.
The Soviet Union failed. The Philippines -- richer than Korea in the 1950 -- failed. Most of the Mid-East failed. So did most of Latin America in the 1960s and 1970s, and it is far from clear that Argentina and Brazil will break free this time.
We still do not know which way China is going to go under Xi Jinping. Vested interests - aligned with Maoist nostalgics - are putting up a formidable fight against reformers. It is worth reading an investigative series by Caixin showing how close hardliners came at different times to reversing Deng Xiaoping’s free-market drive. Nothing is set in stone.
What we see so far is that the Politburo has turned on the credit spigot again, and the reforms are mostly talk. Railway investment almost doubled in the second half of last year. The authorities at all levels have pledged stimulus worth $2 trillion dollars since the economy swooned last year. Some of it is a fictional wish-list, but some is real.
The shares of construction firms have surged since premier Li Keqiang uttered the magic words: “unleashing urbanisation as the most important growth engine”. Cynics suspect that China’s leaders are reverting to bad old ways: manic over-investment, more steel and concrete
George Magnus from UBS said investment made up 55pc of all growth in 2012, and will soon have to reach 60pc to keep up the pace. It is becoming unhinged, a sort of Ponzi scheme.
The boom is rotating, of course, which makes it harder to read. The epicentre is moving West, deep into the Upper Yangtze and heartland regions holding 700m people.
The Sichuan capital of Chengdu is completing the world’s biggest building, a glass and steel pagoda. This will soon be eclipsed for sheer chutzpa by the world’s tallest tower in Changsha, to be erected in three months flat.
Standard Chartered has just upgraded its China growth forecast to 8.3pc year and 8.2pc next, and others are doing much the same. They are probably right, but one watches this latest spree with a mixture of awe and alarm.
The balance sheets of China’s banks have been growing by over 30pc of GDP a year since the Lehman crisis and are still growing at a 20pc, wildly exceeding the safe speed limit.
Fitch Ratings said fresh credit added to the Chinese economy over the last four years has reached $14 trillion, if you include shadow banking, trusts, letters of credit and off-shore vehicles. This extra blast of loan stimulus is roughly equal to the entire US commercial banking system.
The law of diminishing returns is setting in. The output generated by each extra yuan of lending has fallen from 0.8 to 0.35, according to Fitch.
Mr Magnus said credit has reached 210pc of GDP - far higher than other developing countries - and only half of new loans are “plain vanilla” under the full control of regulators.
How and when this will end is anybody’s guess. He fears a “Minsky Moment” when the investment bubble pops, as such bubbles always do.
My guess is that there is one last cycle of Chinese fever to enjoy -- if that is right word -- before the aging crunch and the credit hangover combine with toxic effect. One thing is for sure: a middle-income country with a shrinking work force is not about to displace the United States as global hegemon. [/list]
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Offline Golden Oxen

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Re: Official Chinese Toast Thread
« Reply #36 on: February 07, 2013, 04:28:58 AM »
Quote
Thank God GO is not Chinese.

I have an Oriental buddy that watches out for my welfare and safety.

                                                     
oddjob
oddjob



Offline RE

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Official Chinese Toast Thread: China LOVES the US Dollar Again!
« Reply #37 on: February 22, 2013, 01:52:42 AM »
More PUKE off the keyboard of Illuminati SHILL Ambrose Evans-Pritchard who changes his Opinion faster than Kim Kardashian changes clothes. How much did the FOREX speculators at Goldman pay Ambrose for this one?

Damn right the Chinese want Dollars, they wanna GTFO of Euro-Dodge!!

Amerika is"Roaring Back to Life". "the dollar will remain the world’s paramount reserve currency for decades to come."
hahahahahahahaha.

Boy, when this sucker BLOWS, it's gonna be something to behold indeed.

RE

China loves the US dollar again as America roars back

China’s central bank has radically revised its view of US economic and strategic power, predicting that the dollar will remain the world’s paramount reserve currency for decades to come.


Dr Jin said the world was moving to a '1+4' system, with the greenback serving as the anchor of global payments Photo: Bloomberg News

 By Ambrose Evans-Pritchard
7:11PM GMT 19 Feb 2013
353 Comments

Jin Zhongxia, head of the central bank’s research institute, said America’s energy revolution and export revival had shaken up the global landscape and would lead to a stronger dollar over time. “The dollar’s global dominance will continue,” he said.

Dr Jin said the world was moving to a “1+4” system, with the greenback serving as the anchor of global payments, supplemented by “four smaller reserve currencies” – the euro, sterling, yen and yuan.

“Compared with the euro area, the dollar zone has much greater resilience to shocks. The debt crisis in the euro area has demonstrated the structural weakness of this currency,” he wrote in a paper for the February bulletin of the Official Monetary and Financial Institutions Forum.

The comments suggest a profound shift in thinking about the US since the financial crisis five years ago, when premier Wen Jiabao questioned if Chinese holdings of US Treasuries were “safe”, and the central bank issued a paper calling for a “global currency” run by the International Monetary Fund.

The prevailing view in Beijing was that America had been toppled as a great power and was crippled by debt.

China has since begun to face its own problems as it grapples with the hangover of $14 trillion (£9 trillion) of credit growth since 2009 and surging wage costs.

The advantage is shifting back to the US. A so-called “manufacturing renaissance” is under way as US companies bring home plants to exploit cheap shale gas and lower transport costs.

A report by Citigroup said the explosive growth of US oil and gas output over the past year had exceeded the “wildest dreams of energy analysts”. The US has halved its oil imports since 2005 and is moving “rapidly towards self-sufficiency”, turning global geo-politics on its head.

Citigroup said lower energy imports and the revival of chemical industries would cut the US current account deficit by three quarters, eliminating a key cause of dollar weakness.

China’s central bank has clearly lost its earlier enthusiasm for the euro project, chastened by the debt crisis of the past three years. Dr Jin said EMU lacked the flexibility and fiscal unity needed to cope with crises, while the rigid fixed-exchange system was ill-adapted to shocks.

The informal dollar zone – a worldwide nexus – was more supple. Weaker states were forced to put their house in order before they reached acute crisis, or to devalue. “The dollar zone looks more loosely connected, but in reality it is more coherent than the euro area,” he said.
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Offline Petty Tyrant

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Re: Official Chinese Toast Thread
« Reply #38 on: February 22, 2013, 05:14:17 AM »
Thats the GREEN KOOL-AID, lol. As they say, tell someone what they want to hear and they will believe anything.
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Offline RE

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Why A China Crash May Be Imminent
« Reply #39 on: February 23, 2013, 05:51:08 PM »
      Forget the Hard Landing in China.  Crash Landing Coming Soon Coming to a Chinese Laundry Near You.


RE

Why A China Crash May Be Imminent

Double, double toil and trouble
Why the noose is tightening
Can China prevent a crash?
Sell China stocks

Those silly enough to believe that China’s economy has “recovered” should at least been given some pause by this week’s events. For China surprised the market with moves to reduce liquidity in the banking system and curb the property market. Clearly, the government is worried about the re-appearance of bubbles due to excessive credit growth. And they should be worried because it’s obvious that the bubbles which caused China’s slowdown never went away. In fact, they’ve gotten worse from government stimulus designed to prevent a hard economic landing. These government actions have made the chances of an imminent China crash more likely.
Double, double toil and trouble
Just when the world had bought into a Chinese economic recovery, along comes the government throwing proverbial spanners in the works. Actually, they’re more like grenades.
According to Bloomberg, China’s central bank has drained Rmb910 billion (US$145 billion) from the banking system this week, a record high weekly net drain. Reducing liquidity after Chinese New Year is normal, as is increasing liquidity prior to this holiday. But the extent of the liquidity reduction dwarfed the Rmb 662 billion added before the New Year.
To put this in some context, the People’s Bank of China has now drained a net Rmb548 billion from the banking system this year. This compares with a net injection of Rmb1.44 trillion last year.
On top of this news came calls from outgoing Chinese Premier Wen Jiabao for local governments to impose home price restrictions and “decisively” curb housing market speculation. He described house price gains as “excessively fast” and also ordered major municipalities to publish annual price control targets.
It’s obvious that the government is concerned with three things:
[LIST=1]
  • Local governments are again turning to fixed asset investment, particularly property sales, to boost their revenue and GDP. The problem is that local governments own the land so they’re incentivised to sell that land to get revenues. These governments are already heavily in debt and this is exacerbating the issue.
  • Property sales have led to increased bank lending, as January figures attest too. This is not what the government wants given total credit to GDP is already high, at 190% according to Fitch.
  • More broadly, the property bubble has never really deflated. As economist Andy Xie points out, NBS data shows 10.6 billion square metres of property was under construction at the end of last year, half in residential and the other half in office/commercial. If you put market prices on this inventory, it equates to 1.5x Chinese GDP. Quite the bubble.
Why the noose is tightening
The vast majority of economists will tell you that the government’s actions are prudent and will ensure that the economic recovery remains on track. They’ll site all kinds of data to show that a recovery is on the cards.
After all, GDP increased 7.9% in the fourth quarter of 2012, compared with the 7.4% in the third quarter. Exports in January grew 25% from a year earlier, while imports surged 29%. New lending from banks in January more than doubled from December. Total social lending – a broad measure of liquidity in the economy – increased to Rmb2.5 trillion in January, from Rmb1.63 trillion in December. Impressive stats indeed.
But I’d suggest that economists who take this data at face value are either extraordinarily lazy, ignorant of basic economics or both. Here are three initial quibbles:
[LIST=1]
  • Anyone taking GDP growth as a sign of economic health needs to be seriously questioned. GDP growth in developed world economies before the 2008 crisis was supposedly showing healthy economies when they were anything but.
  • Anyone taking GDP growth in China as a sign of economic health needs more serious help. The GDP figures can’t get more rubbery, as highlighted by recent reports suggesting the real GDP growth for China was closer to 5.5% in 2012, rather than the 7.8% recorded.
  • I was one of the first to question the export data out of China late last year and the latest data makes me more sceptical. Exports from China to its largest partner, Europe, are sharply recovering, really? Given the deterioration in European economies, it’s more than a little hard to believe.
So the extent of the economic recovery as indicated by the data needs to be questioned. More importantly though, a simple, broader question needs to be asked: what has driven this seeming recovery? And it’s here that the answer should concern everyone.
For China is repeating the same mistakes that it made post the financial crisis. Back then, the government unveiled an enormous Rmb4 trillion (US$640 billion) package to ward off an economic slump after developed market economies crashed. It primarily stimulated the economy via infrastructure and property-related investment, fuelled almost exclusively by debt. It seemingly saved the day as China’s economy roared back into life.
But then the hangover began in 2011. The investment garnered little if any returns in industries which were already suffering from over-capacity. Property prices started levelling off after a decade of super-charged returns, as it became obvious that demand couldn’t meet the endless supply. And bad debts at banks undoubtedly skyrocketed, but have remained hidden to this day.
An investment-driven, debt-fuelled binge had seemingly come to an end. Even the government had privately told investors and stockbrokers that this binge was a mistake.
I, for one, believed them. Six months ago, I thought an economic soft landing was likely as the government wouldn’t repeat the mistakes of 2009-2010. But that assumption was wrong.
As the economic downturn gathered steam in the second quarter of last year, the government turned to the easiest way it knew how to boost economic activity: fixed asset investment funded by debt. The central government officially unveiled a Rmb1 trillion (US$160 billion) infrastructure package in September last year. Unofficially, local governments launched a similar package totalling up to Rmb13 trillion (US$2.1 trillion).
How much of this money has been spent isn’t clear. But infrastructure spend and property investment figures suggest much of it has been put to work. And total credit financing figures, as mentioned above for January, are showing a sharp increase from the first half of last year.
The unique thing this time around is that the debt financing is being done less via traditional banks but non-banks. In 2012, total credit financing grew 20%, with trust loans up 80%, FX loans up 27% and bond financing increasing 45%.

Credit Suisse estimates that the so-called shadow banking system now totals Rmb22.8 trillion or 44% of GDP, making it the second largest asset class in China!

All of this means that an economy that was unbalanced and fragile before 2012, has become more so thanks to the governments actions. The options to maintain the investment-led, credit boom are narrowing, and fast. As hedge fund titan Jim Chanos said of China: “They’re on a treadmill to hell”. Meaning, they either try to keep the bubbles going to maintain economic growth or they don’t and risk an immediate economic crash.
Can China prevent a crash?
Now, the same economists who proclaim a Chinese economic recovery will also suggest that a hard landing isn’t possible because China has the money to throw at any problems. They’ll point to considerable savings, at 53% of GDP, and US$3.3 trillion in foreign exchange (forex) reserves.
There are several large holes in this argument. China’s forex reserves cannot be swiftly used to help prevent an economic crisis. The majority of these reserves are tied up in U.S. government bonds. If China decided to sell just 10% of these bonds to throw at its own economy, it would have severe consequences. U.S. interest rates would spike, the U.S. economy would tank, closely followed by economies around the world. China’s export-reliant economy would also be impacted. In other words, the forex reserves argument is largely an illusion.
That’s not too mention that China’s forex reserves have crawled to a stand-still: they’re not growing anymore. If these reserves start to decline, it would mean China would need to start selling renminbi to maintain its currency peg. This would be deflationary.
The savings argument has some more merit. But anyone that has money in China and can get it out, is doing just that at present. The Chinese have few good options as deposit rates are negligible, they don’t trust the stock market given its woeful performance since 2007 and property has become a less reliable investment too.
The other question that needs to be asked is: firepower for what? How can the money be productively used to both prevent a crash and re-orientate the economy to a more sustainable path. The likely answer is that it can’t be: the bubbles have gone on for too long and are too large.
The best solution for China is to reduce its reliance on investment and promote the services sector. Doing this quickly though would mean plummeting economic growth. Doing it slowly would the bubbles of today could get larger and more problematic.
Sell China stocks
In October last year, I suggested that it was time to buy Chinese stocks. It was a short-term trade based on the extreme negative sentiment then towards both China and its stocks. It was not based on an improving economy, but the fact that a lot of the negativity had been baked into share prices.
I was about five weeks early in picking a bottom to the market, but since then there have been some nice gains. Now though is the time to get much more cautious and sell out of China stocks. And also think carefully about the wider ramifications of a potential China hard landing, in terms of countries and sectors most impacted (think Australia, Canada, industrial metals etc).
And that’s it for this week.
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Offline JoeP

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Re: Official Chinese Toast Thread
« Reply #40 on: March 16, 2013, 02:38:41 PM »
China: 'Airpocalypse' Now
just my straight shooting honest opinion

Offline Golden Oxen

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Re: Official Chinese Toast Thread: China Trade Balance Turns To Deficit
« Reply #41 on: April 11, 2013, 04:36:09 AM »
4/10/2013 1:23 AM ET

China unexpectedly reported a trade deficit for March amid a surge in imports and a weaker expansion in exports, official data showed Wednesday. Separately, Fitch Ratings downgraded the country's local currency sovereign rating on Tuesday, citing surging credit growth in the country.

The General Administration of Customs said that the trade balance turned to a deficit of $884 million in March, belying expectations for a surplus of $15.15 billion. In February, the balance was in a surplus of $15.23 billion.

Exports rose 10 percent year-on-year in March, weaker than forecasts for a 11.7 percent expansion and the 21.8 percent increase witnessed in February.

On the other hand, imports rose 14.1 percent annually last month, beating forecast of 6 percent growth and reversing most of the 15.2 percent drop in the previous month.

The government targets an 8 percent growth in trade this year, which is lower than the previous year's target of 10 percent growth.

In a report on Tuesday, the Asian Development Bank said that the ongoing sluggishness in the global economy will remain a drag on Chinese exports, while further headwinds from Europe, China's largest trading partner, and the possibility of renewed inflationary pressures pose downside risks to the overall outlook.
http://www.rttnews.com/2091430/china-trade-balance-unexpectedly-turns-to-deficit-as-imports-surge.aspx?type=aeco  :icon_study:

Offline RE

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Alarm Bells Go Off in China
« Reply #42 on: April 13, 2013, 10:42:52 PM »
This will end well. From Brit Prep School Brat Ambrose.  Can-U-Spell TOAST?

RE

China's shadow banking boom rings alarm bells


New loans jumped by $400bn, mostly in the less regulated pockets of the banking system. Trust loans have surged by 360pc over the past year.

Wang Yongping, head of China’s Commercial Real Estate Association, said there is a major bubble in office property across the country as developers switch strategy to evade curbs on residential homes, with extreme over-building in second tier cities or deep in the interior.

The vacancy rate in Shenyang has hit 24.3pc, with 55 giant projects still being built. “It will take at least five years to find enough tenants to fill the vacancies if no new project is approved,” he told Caixin magazine. Mr Wang said there had been wild construction in the western city of Chengdu, as well as Tianjin on the coast. “The supply is huge in these cities.”

The gung-ho mayor of Chengdu is explicitly aiming to match and surpass the massive scale of building seen in Shanghai, hoping to turn the Sichuan capital into one of the world's top cities by the end of the decade.

Fitch Ratings downgraded China’s sovereign debt this week, warning that torrid loan growth had put “financial stability” at risk. “Total credit including various forms of 'shadow banking' activity may have reached 198pc of GDP,” it said. This is up from 125pc four years ago.

The pace of credit expansion has been much faster than in the US, Japan and Korea in the four years before each of their bubbles burst.

Fitch said credit has jumped from $9 trillion to $23 trillion since early 2009. The increase alone is equal to the entire US banking system. Yet the potency of these loans is fading. The extra output generated each yuan of credit has dropped from 0.8 to 0.35.

Fitch’s Charlene Chu said the shadow nexus is flourishing because lenders are “trying to push things off the bank’s balance sheet so they can be in compliance with the required loan-to-deposit ratio”.

Beijing tried to cool the property boom with loan curbs from 2010 onwards but triggered an industrial recession last year in the process. The Politburo was shocked by the severity of the downturn. The concern is that they are turning a blind eye again to excess credit to protect jobs and boost growth, but risks are rising and effect is diminishing. “Economic recovery has been shallow. It is not sustainable,” said Zhiwei Zhang from Nomura, citing weak electricity use and freight traffic.

Professor Michael Pettis from Beijing University said it is unclear whether the new leadership under Xi Jinping really will wean China off dependence on exports and over-investment. It has been the same rhetoric for the past two years.

Financier George Soros warned that there could ultimately be a “run” on the state-owned banks if China fails to get a grip soon. “This is similar to what happened in the US with subprime mortgages. The authorities are aware of the problem, and they also have very substantial resources available to deal with the problem,” he told the South China Morning Post.

“They also know what happened in America in 2008. So I think they will be able to deflate this incipient bubble without a serious financial crisis. This is the problem the new leadership now faces.”
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Offline alan2102

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Re: Official Chinese Toast Thread
« Reply #43 on: April 17, 2013, 07:31:25 PM »
I've been calling this one for YEARS


Yep. And you've been WRONG for years, like all of the other China
bears. Oh, some day you'll be right, briefly. Some day China will
take a hit, or undergo a big crisis, perhaps even collapse in some
fashion. And you'll be giddy with delight, yelping "see! see! told ya!"
But your gloating won't last long, because China's doldroms won't
last long. They'll rebound out of it and carry on. They have far too
much momentum and strength to collapse into the permanent
dysfunctionality and entropy that you hope for.
« Last Edit: April 17, 2013, 07:33:53 PM by alan2102 »

Offline RE

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Re: Official Chinese Toast Thread
« Reply #44 on: April 17, 2013, 10:11:43 PM »

Yep. And you've been WRONG for years, like all of the other China
bears.

Wrong?  Moi?



Welcome back from Lurkerville Alan!

RE
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