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Offline RE

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Economic Crisis in China
« Reply #45 on: May 07, 2013, 11:56:59 PM »
The latest from Ambrose on Chinese Toast.  :icon_mrgreen:

RE

Policy battle rages in China as slowdown feeds 'sense of crisis'

Anti-reform hardliners in China's Communist Party have become seriously alarmed by the sharp slow-down in economic growth,  creating a "task-force" to crank up production.

China's Caixin Magazine reports that there is a growing "sense of crisis" not felt since the depths of the global banking crash in 2008-2009.
Photo: Quirky China News / Rex Features

By Ambrose Evans-Pritchard

4:17PM BST 06 May 2013

China's Caixin Magazine reports that there is a growing "sense of crisis" not felt since the depths of the global banking crash in 2008-2009.

The State-owned Assets Supervision and Administration Commission (SASAC) has assembled a team to "protect economic growth" and pressure state companies to boost jobs at all costs.

SASAC is the bastion of vested interests and controller of 115 state behemoths with assets above $6 trillion and lock on much of the economy.

The move comes amid further signs that growth is faltering across all fronts. HSBC's gauge of Chinese services fell three points to 51.1 in April, the lowest in almost two years.

The broader composite index also dropped sharply to a six-month low of 51.1 and is now barely above the contraction line, with new orders trailing badly. The economy grew 7.7pc in the first quarter, slower than expected.

The Shanghai index of stocks rolled over in early March and has given up the half the gains since the rally started late last year. It has dropped almost 60pc since its peak in 2008 and is now trading at levels comparable to 2003.

China's downturn is rippling through commodity markets, led by a major sell-off of base metals this year. Credit Suisse said the short-covering rally over the last few days is likely to prove a "dead cat bounce" as China's structural slow-down and a weakening global economy overwhelm all else. It expects copper to "bite the dust", falling to 2009 levels near $6,000 a tonne.

China's authorities have been trying to stop property speculation with loan curbs but it is proving hard to pop the housing boom without popping the economy itself.

New so China's growth task-force comes amid reports that SASAC has ordered state firms to go for expansion and disregard other objectives such as investing in new technology.

The policy drive cuts across efforts by the reformist premier Li Keqiang to wean China off uber-growth and shift to a different development model. He has asked China's State Council to study ways to cut growth to 7pc next year, deemed the safe speed limit.

Resistance from SASAC is thwarting his efforts to reduce Beijing's stifling control over production. State firms have grown fourfold since 2003, meaning that the economy is being renationalised. The unreformed behemoths gobble up most of the available bank credit even though many are loss-making, or are grossly inefficient.

Mr Li was a key sponsor of a report last year by China's Development Research Council and the World Bank warning that the country has already picked the low-hanging fruit of catch-up growth and can no longer rely on cheap exports and imported know-how.

The report has become the policy Bible for reformers. It said China risks languishing in the sort of "middle income trap" that has ensnared much of Latin America and the Middle East at different times, unless it embraces the free market and fosters bottom-up thinking.

"The forces supporting China's continued rapid progress are gradually fading. The government's dominance in key sectors, while earlier an advantage, is in the future likely to act as a constraint on creativity," it said.

"The role of the private sector is critical because innovation at the technology frontier is quite different in nature from catching up technologically. It is not something that can be achieved through government planning."

Mr Li faces powerful resistance from entrenched interests and those in the Politburo who fear that China risks a social explosion unless it keeps the economy on steroids.

Pressure is building for yet another burst of easy credit, even though the "economic efficiency" of debt is collapsing. The output gained from each extra yuan of credit has fallen from a ratio of 0.8 to 0.35 since 2008, a warning sign that the cycle has played out.

Fitch downgraded China's debt in April, warning that credit has already jumped from 125pc to 200pc of GDP in four years, much of it in shadow banking. While another burst of loans may boost growth in the short run, it risks storing up ever greater problems.

President Xi Jinping has yet to tip his hand in what amounts to a civil war over policy and China's economic destiny. Experts say he tilts back and forth between the reformist and dirigiste wings of the party. The Standing Committee appears evenly split.

The International Monetary Fund warned last week that China is in danger of becoming "old before it is rich" as the demographic crisis hits. The work-force has already begun to shrink, contracting by 3.5m last year.

The IMF said China and other emerging economies in Asia must embrace the rule of law, sound institutions, credit reform, and "limited government involvement in the economy", or risk falling into the middle income trap.
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Offline RE

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Re: Official Chinese Toast Thread
« Reply #46 on: June 18, 2013, 03:51:16 PM »
Sing along with RE!  The Chinese are...

From Ambrose.

RE


Fitch says China credit bubble unprecedented in modern world history


China's shadow banking system is out of control and under mounting stress as borrowers struggle to roll over short-term debts, Fitch Ratings has warned.

Fitch warned that wealth products worth $2 trillion of lending are in reality a "hidden second balance sheet" for banks, allowing them to circumvent loan curbs and dodge efforts by regulators to halt the excesses. Photo: Alamy
Ambrose Evans-Pritchard

By Ambrose Evans-Pritchard, International Business Editor

4:12PM BST 16 Jun 2013

The agency said the scale of credit was so extreme that the country would find it very hard to grow its way out of the excesses as in past episodes, implying tougher times ahead.

"The credit-driven growth model is clearly falling apart. This could feed into a massive over-capacity problem, and potentially into a Japanese-style deflation," said Charlene Chu, the agency's senior director in Beijing.

"There is no transparency in the shadow banking system, and systemic risk is rising. We have no idea who the borrowers are, who the lenders are, and what the quality of assets is, and this undermines signalling," she told The Daily Telegraph.

While the non-performing loan rate of the banks may look benign at just 1pc, this has become irrelevant as trusts, wealth-management funds, offshore vehicles and other forms of irregular lending make up over half of all new credit. "It means nothing if you can off-load any bad asset you want. A lot of the banking exposure to property is not booked as property," she said.

Concerns are rising after a string of upsets in Quingdao, Ordos, Jilin and elsewhere, in so-called trust products, a $1.4 trillion (£0.9 trillion) segment of the shadow banking system.

Bank Everbright defaulted on an interbank loan 10 days ago amid wild spikes in short-term "Shibor" borrowing rates, a sign that liquidity has suddenly dried up. "Typically stress starts in the periphery and moves to the core, and that is what we are already seeing with defaults in trust products," she said.

Fitch warned that wealth products worth $2 trillion of lending are in reality a "hidden second balance sheet" for banks, allowing them to circumvent loan curbs and dodge efforts by regulators to halt the excesses.

This niche is the epicentre of risk. Half the loans must be rolled over every three months, and another 25pc in less than six months. This has echoes of Northern Rock, Lehman Brothers and others that came to grief in the West on short-term liabilities when the wholesale capital markets froze.

Mrs Chu said the banks had been forced to park over $3 trillion in reserves at the central bank, giving them a "massive savings account that can be drawn down" in a crisis, but this may not be enough to avert trouble given the sheer scale of the lending boom.

Overall credit has jumped from $9 trillion to $23 trillion since the Lehman crisis. "They have replicated the entire US commercial banking system in five years," she said.

The ratio of credit to GDP has jumped by 75 percentage points to 200pc of GDP, compared to roughly 40 points in the US over five years leading up to the subprime bubble, or in Japan before the Nikkei bubble burst in 1990. "This is beyond anything we have ever seen before in a large economy. We don't know how this will play out. The next six months will be crucial," she said.

The agency downgraded China's long-term currency rating to AA- debt in April but still thinks the government can handle any banking crisis, however bad. "The Chinese state has a lot of firepower. It is very able and very willing to support the banking sector. The real question is what this means for growth, and therefore for social and political risk," said Mrs Chu.

"There is no way they can grow out of their asset problems as they did in the past. We think this will be very different from the banking crisis in the late 1990s. With credit at 200pc of GDP, the numerator is growing twice as fast as the denominator. You can't grow out of that."

The authorities have been trying to manage a soft-landing, deploying loan curbs and a high reserve ratio requirement (RRR) for banks to halt property speculation. The home price to income ratio has reached 16 to 18 in many cities, shutting workers out of the market. Shadow banking has plugged the gap for much of the last two years.

However, a new problem has emerged as the economic efficiency of credit collapses. The extra GDP growth generated by each extra yuan of loans has dropped from 0.85 to 0.15 over the last four years, a sign of exhaustion.

Wei Yao from Societe Generale says the debt service ratio of Chinese companies has reached 30pc of GDP – the typical threshold for financial crises -- and many will not be able to pay interest or repay principal. She warned that the country could be on the verge of a "Minsky Moment", when the debt pyramid collapses under its own weight. "The debt snowball is getting bigger and bigger, without contributing to real activity," she said.

The latest twist is sudden stress in the overnight lending markets. "We believe the series of policy tightening measures in the past three months have reached critical mass, such that deleveraging in the banking sector is happening. Liquidity tightening can be very damaging to a highly leveraged economy," said Zhiwei Zhang from Nomura.

"There is room to cut interest rates and the reserve ratio in the second half," wrote a front-page editorial today in China Securities Journal on Friday. The article is the first sign that the authorities are preparing to change tack, shifting to a looser stance after a drizzle of bad data over recent weeks.

The journal said total credit in China's financial system may be as high as 221pc of GDP, jumping almost eightfold over the last decade, and warned that companies will have to fork out $1 trillion in interest payments alone this year. "Chinese corporate debt burdens are much higher than those of other economies. Much of the liquidity is being used to repay debt and not to finance output," it said.

It also flagged worries over an exodus of hot money once the US Federal Reserve starts tightening. "China will face large-scale capital outflows if there is an exit from quantitative easing and the dollar strengthens," it wrote.

The journal said foreign withdrawals from Chinese equity funds were the highest since early 2008 in the week up to June 5, and withdrawals from Hong Kong funds were the most in a decade.
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Offline agelbert

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Re: Official Chinese Toast Thread
« Reply #47 on: June 18, 2013, 04:42:37 PM »
<a href="http://www.youtube.com/v/HHo-gnc0gw0#&fs=1" target="_blank" class="new_win">http://www.youtube.com/v/HHo-gnc0gw0#&fs=1</a>
:ernaehrung004: 

Make sure you don't have the wrong TOAST!

The below timeless bit of wisdom was in reference to a 2011 hit piece on China. I don't think much has changed.

Quote
... suppose 1,000 people were on a sinking ship and the government was able to rescue 90% of them.

You might have one newspaper write, “The brave actions of the rescuers helped save 900 people,” or another newspaper might write, “Careless plan results in the death of 100 passengers.”

It should be obvious to everyone that the corporate media has an agenda.
;)

http://blog.hiddenharmonies.org/2011/07/perspectivehere-chimes-in-on-anti-china-propaganda/
Leges         Sine    Moribus      Vanae   
Faith,
if it has not works, is dead, being alone.

Offline RE

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Hammer Time for China
« Reply #48 on: June 20, 2013, 05:29:50 AM »
Ruh Roh.

RE

China Interbank Market Freezes As Overnight Repo Explodes To 25%


It seems liquidity (or counterparty mistrust) is beginning to reach extreme levels in China as the nation's banking system is now quoting overnight repo transactions at 25%. The explosion in funding costs echoes the collapse in trust (and surge in TED spread) among US banks in the run-up to the Lehman bankruptcy. MSCI Asia-Pac stocks are down over 3% with China's Shanghai Composite -2.5% at seven-month lows.

    China’s 1-day Repo Rate Climbs to Highest Since at Least 2006
    MNI - CHINA OVERNIGHT REPO FIXING AT RECORD HIGH

China's bond market is also collapsing:

    Yield on 3.1% govt bonds due January 2016 jumps 39 bps to 3.749%, biggest rise since notes were issued in January
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Offline g

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Re: Official Chinese Toast Thread
« Reply #49 on: June 23, 2013, 05:56:11 AM »

 My Dear Friends,

                                                             
clip image00229
clip image00229

Please remember when it comes to recent dire Western analyst comments on China that China is still a Maoist country, but interested in economics more than war.

The most dire comments common towards China in the West fail to understand how a Maoist country will react under pressure.


Respectfully,
Jim Sinclair

Offline RE

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Re: Official Chinese Toast Thread
« Reply #50 on: June 23, 2013, 06:11:09 AM »

Please remember when it comes to recent dire Western analyst comments on China that China is still a Maoist country, but interested in economics more than war.

The most dire comments common towards China in the West fail to understand how a Maoist country will react under pressure.


Respectfully,
Jim Sinclair

Where does that come from?  Is Jim Sinclair making THREATS here at the behest of the Chinese?

RE
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Offline g

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Re: Official Chinese Toast Thread
« Reply #51 on: June 23, 2013, 06:42:24 AM »

Please remember when it comes to recent dire Western analyst comments on China that China is still a Maoist country, but interested in economics more than war.

The most dire comments common towards China in the West fail to understand how a Maoist country will react under pressure.


Respectfully,
Jim Sinclair

Where does that come from?  Is Jim Sinclair making THREATS here at the behest of the Chinese?

RE

No, it was just an isolated quote on it's own, not part of an article.  Your reaction to it surprised me, but proves the point no on who thinks like a westerner can understand the Chinese mind and how it works or will work in a financial calamity

Remember the Tientsin Square uprising? They don't fool around.

I took it to remind folks they have total dictatorial powers over their system and can declare laws overnight that could never be done here without mayhem

Close all markets.

Instant rationing of necessities declared.

Bank Closures and Canceling of debts.

Martial law

It would not be like here where we have a left right battle and arguing about what to do.

You, of course, may interpret the observation of Jim in any way you wish, but I got no war threat from it.   :dontknow:

Offline RE

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CHINA CRASHING!!!
« Reply #52 on: June 24, 2013, 12:39:44 AM »
Shaudenfreude Time!  Boy, it sure is great to be proved correct after all these years of hammering on this one.  :icon_mrgreen:

From ZH, and KATY BAR THE DOOR!

SHORT THE PHONE BOOK!


RE

China Crashing: Shanghai Composite Tumbles Most Since 2009

Submitted by Tyler Durden on 06/24/2013 02:51 -0400

Those who have been holding their breath until China joins the overnight market fireworks can finally exhale.

Following yesterday's unprecedented formal announcement of epic capital misallocation, the PBOC tried to continue the damage control when a few hours ago it announced that Chinese banking system liquidity "is at a reasonable level", but that banks must control liquidity risks from fast capital expansion, especially credit expansion, according to a statement on management of banks’ liquidity on website. The implication: no easing any time soon, and sure enough no repo or reverse repo activity was logged in the overnight session meaning Chinese banks, for the time being, continue to be on their own, without any hope of the central bank stepping in to bail them out.

The PBOC announcement appears to have restored some stability in the interbank market if only for a very brief amount of time: the 1 Month SHIBOR drops 234 bps, most since Oct. 2007, 7.3550%, with the one-day repo rate falling 204 bps to 6.6540%. Longer-term liquidity also improved modestly, with the seven-day repo rate drops 159 bps after sliding 237 bps on June 21. However, as Market News reported , the PBOC won’t cut reserve ratio, interest rates in near term, and if anything will just use more open-market operations. The problem with this kind of opaque intervention is that it once again raises the specter tha behind the scenes one or more banks are getting direct bailouts. In other words, look for real interbank liquidity to be abysmal at best.

Not helping the PBOC's credibility was the news that China Development Bank canceled a bond sale up to CNY20 billion planned for tomorrow for "reasons."

Certainly not helping China was that late on Sunday Goldman cut its China growth forecasts for 2013 and 2014, "on the account of soft cyclical signals and recent tightening of financial conditions. We now expect real GDP growth to be at 7.5% yoy in Q2 2013 (from 7.8% previously), and 7.4% and 7.7% for 2013 and 2014 respectively (from 7.8% and 8.4% previously)."

End result: the Shanghai Composite, which had largely been able to weather the recent dramatic shocks to both liquidity and the economy, finally threw in the towel and crashed. Moments ago the Shanghai Composite fell 5.5%, the biggest intraday slide since August 2009, and dropping below 2,000 for first time since December.

The brodest China index is now down 14% year to date, with the Property Index leads slump with 7.7% drop to lowest since November.

Needless to say the world's second largest economy imploding, and its stock market crashing were enough to send all of Asia lower, with the Nikkei225 unable to sustain gains on a weaker Yen, and swining from up over 1% to down 1.3%. As for that China derivative, Australia and specifically its currency the AUD, it just hit a fresh 52 week low against the USD at 0.9155.

Of course, if the BIS's warning about what is coming to the "developed markets" is accurate, this is nothing but a pleasant rehearsal of what one can expect in the US and in other G-7 places.

As for China, if Goldman is correct, look for much more pain below. Here is the summary of the firm's downgrade of the Chinese economy:

    We are cutting our China growth forecasts for 2013 and 2014, on the account of soft cyclical signals and recent tightening of financial conditions. We now expect real GDP growth to be at 7.5% yoy in Q2 2013 (from 7.8% previously), and 7.4% and 7.7% for 2013 and 2014 respectively (from 7.8% and 8.4% previously).

     

    The recent tightening of the interbank market has sent a strong policy signal that the strong credit growth earlier in the year will likely not continue. We estimate this to tighten the FCI by another 30-40 basis points (bp) in the coming months, in addition to the FCI tightening of 100 bp so far this year driven by the rapid CNY appreciation on a trade-weighted basis.

     

    The liquidity tightening is another indication that the new government has put priorities on tackling the structural problems. These policies help to foster more sustainable medium-term growth, but will test the government’s tolerance for a cyclical downturn. A reversal of the recent tightening is the main upside risk to our new forecast. Continued DM stagnation or spreading overcapacity problems will imply downside risks.
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Offline RE

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BLOODBATH COMING!!!
« Reply #53 on: June 24, 2013, 12:52:42 AM »
GET YOUR SHORTS IN WHILE YOU CAN, SPORTSFANS! DON'T MISS OUT ON THE OPPORTUNITY OF A LIFETIME TO PROFIT OFF THE MISERY OF THE CHINESE!

RE
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Offline RE

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Official Chinese Toast Thread: No More One Child Policy
« Reply #54 on: August 06, 2013, 01:36:31 AM »
The new, NEW Chinese Solution to Overpopulation and Resource Depletion...start breeding like rabbits!

The Population Equivalent here of solving a Debt Crisi by issuing more Debt!  LOL.

Below from Ambrose.

This will not End Well.

RE


China to ditch its one-child policy as ageing crisis looms

China's new leaders are close to abandoning the country's one-child policy, belatedly moving to avert an ageing crunch as the work force goes into sharp decline.


The official news agency Xinhua reported that the Family Planning Commission is studying proposals to lift the ban on a second child, if either parent is an only child. Photo: AFP

Ambrose Evans-Pritchard

By Ambrose Evans-Pritchard

6:08PM BST 04 Aug 2013


The official news agency Xinhua reported that the Family Planning Commission is studying proposals to lift the ban on a second child, if either parent is an only child. The body's spokesman said aim is to "improve" family policy, confirming leaks to Chinese newspapers that a major shift is in the works. The new rules are expected to come into force early next year, and may be extended to cover all families by 2015.

Jun Ma from Deutsche Bank said the new policies should shore up the pension system and inject stimulus as China's growth sputters. "As tens of millions of sibling-less people in China are now entering their child-bearing age, we expect this policy shift would induce a baby boom," he said.

The one-child policy dates back to 1971 in its original form and has led to 336m abortions and 222m sterilisations, often badly executed in poor regions. Recent abuses have caused uproar, with photos circulating on the internet of a young mother lying beside a fully formed baby after she had been seized by police for failing to pay the "social compensation fee" for an illegal child. She was forced to undergo an abortion just before her natural birth.

Premier Li Keqiang clearly views the policy an anachronism at a time when China is running out of workers, and faces a demographic time-bomb. There are currently five workers for every pensioner. This ratio will fall to two by 2035.

The policy has always been a patchwork of measures. Ethnic minorities are exempted. Farmers are allowed a second child if the first is a girl. The urban middle class can usually pay the fine, barely enforced in Shanghai where fertility rates are collapsing for other reasons. The shift in policy may come too late to avert an ageing shock. The workforce shrank by 3m last year, an inflection point that has come sooner than expected.

The International Monetary Fund said the working age population will soon go into "precipitous decline". The "reserve army" of rural poor looking for work peaked in 2010 at around 150m. This surplus will disappear soon after 2020. The IMF said there will be a labour shortage of almost 140m workers by the early 2030s with "far-reaching implications".

Demographers say it is unclear whether a two-child policy will set off a baby boom. Fertility rates plunged in Japan, Korea, Taiwan, Singapore and Hong Kong as they became richer, due to a complex interplay of culture and economics.

China is unique in growing old before it is rich, but this may not be a bad thing. Lauren Johnston from Peking University said it was better to get a demographic crisis out the way early. Baby boomers in the West and Japan have swept through like a "plague of locusts", leaving the next generation to cover a colossal debt burden and gilded pensions. "It is much worse to get rich first. What gets left behind is crumbs," she said.


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Offline RE

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Re: Official Chinese Toast Thread
« Reply #55 on: August 19, 2013, 07:24:59 AM »
Boy, I sure wish I could get some of the old China Bulls from Peak Oil on here and say "I told you so".   :icon_mrgreen:

RE

China Warns It Can't Find Jobs For College Graduates

Submitted by Tyler Durden on 08/19/2013 08:58 -0400


While jobs in the US are hardly a success (employment not the movie), it appears that despite the faith that China is still growing at 7.5%, the slowing-growth nation is facing its own job creation nightmare. As China.org reports, this is being called the hardest job-hunting season ever for Chinese graduates - as nearly 7 million of them swarmed into the job market this summer. In a sad reflection of the US, it is becoming increasingly difficult for college graduates to secure a job in recent years (let alone a degree-required job) as the number of unemployed graduates has nearly doubled in the last 4 years (from 9% of graduates in 2008 to 17.5% now).

 

Via China.org,

    Although China's job market showed resilience in the first half of this year, the problem of creating enough jobs for graduates remains a hard nut to crack.

     

    It is being called the hardest job-hunting season ever for graduates, as nearly 7 million of them swarmed into the job market this summer, adding to the country's job creation pressure amid the ongoing economic slowdown.

     

    It has become increasingly difficult for college graduates to secure a job in recent years. Given the accumulated number of college students who graduated in previous years and failed to find a job, the pressure is growing.

     

    According to the Blue Book of China's Society in 2012, compiled by the Chinese Academy of Social Sciences, about 9 percent of graduates in 2008 couldn't find a job on leaving college. In 2011, 17.5 percent failed to find employment,.

     

    ...

     

    However, the authorities have a clear picture of the difficulties facing young job seekers. Premier Li Keqiang told college graduates that they should not just be content with looking for a job but should consider starting their own businesses when he met students in Lanzhou University on Sunday.

     

    ...

     

    Those measures will surely ease the tension in the job market. But it will be almost impossible for the economy to fully absorb all the unemployed graduates in the short term, because the problem stems, in essence, from the explosive growth of the number of college graduates in recent years thanks to the country's college expansion program that started 10 years ago.

     

    In 2001, China had 1.15 million college graduates. Now the number is more than six times that.

     

    ...

So, let's just run through this:

    1) Credit enabled explosive (mis-allocated capital-based) growth

    2) Explosive growth funded unsustainable jobs

    3) Given the jobs growth (and easy credit) more students went to college

    4) More graduates (thanks to government-sponsored education programs)

    5) Growth 'stabilizes' (or slows)

    6) Graduate unemployment surges

    7) Government recognizes this problem (but it's not structural)

    8) Government solution - more people should become self-employed

Seems the playbook of a quasi-Keynesian dream playing out once again...
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Offline g

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Re: Official Chinese Toast Thread: Maybe Not - Other Side of Coin Article?
« Reply #56 on: September 24, 2013, 11:05:10 PM »
Speedy Trains Transform China
                                         
24chinarail span articleLarge
24chinarail span articleLarge


September 23, 2013
Speedy Trains Transform China
By KEITH BRADSHER

CHANGSHA, China — The cavernous rail station here for China’s new high-speed trains was nearly deserted when it opened less than four years ago.

Not anymore. Practically every train is sold out, although they leave for cities all over the country every several minutes. Long lines snake back from ticket windows under the 50-foot ceiling of white, gently undulating steel that floats cloudlike over the departure hall. An ambitious construction program will soon nearly double the size of the 16-platform station.

Just five years after China’s high-speed rail system opened, it is carrying nearly twice as many passengers each month as the country’s domestic airline industry. With traffic growing 28 percent a year for the last several years, China’s high-speed rail network will handle more passengers by early next year than the 54 million people a month who board domestic flights in the United States.

Li Xiaohung, a shoe factory worker, rides the 430-mile route from Guangzhou home to Changsha once a month to visit her daughter. Ms. Li used to see her daughter just once a year because the trip took a full day. Now she comes back in 2 hours 19 minutes.

Business executives like Zhen Qinan, a founder of the stock market in coastal Shenzhen, ride bullet trains to meetings all over China to avoid airport delays. The trains hurtle along at 186 miles an hour and are smooth, well-lighted, comfortable and almost invariably punctual, if not early. “I did not think it would change so quickly. High-speed trains seemed like a strange thing, but now it’s just part of our lives,” Mr. Zhen said.

China’s high-speed rail system has emerged as an unexpected success story. Economists and transportation experts cite it as one reason for China’s continued economic growth when other emerging economies are faltering. But it has not been without costs — high debt, many people relocated and a deadly accident. The corruption trials this summer of two former senior rail ministry officials have cast an unfavorable light on the bidding process for the rail lines.

The high-speed rail lines have, without a doubt, transformed China, often in unexpected ways.

For example, Chinese workers are now more productive. A paper for the World Bank by three consultants this year found that Chinese cities connected to the high-speed rail network, as more than 100 are already, are likely to experience broad growth in worker productivity. The productivity gains occur when companies find themselves within a couple of hours’ train ride of tens of millions of potential customers, employees and rivals.

“What we see very clearly is a change in the way a lot of companies are doing business,” said Gerald Ollivier, a World Bank senior transport specialist in Beijing.

Productivity gains to the economy appear to be of the same order as the combined economic gains from the usual arguments given for high-speed trains, including time savings for travelers, reduced noise, less air pollution and fuel savings, the World Bank consultants calculated.

Companies are opening research and development centers in more glamorous cities like Beijing and Shenzhen with abundant supplies of young, highly educated workers, and having them take frequent day trips to factories in cities with lower wages and land costs, like Tianjin and Changsha. Businesses are also customizing their products more through frequent meetings with clients in other cities, part of a broader move up the ladder toward higher value-added products.

Li Qingfu, the sales manager at the Changsha Don Lea Ramie Textile Technology Company, an exporter of women’s dresses and blouses, said he used to travel twice a year to Guangzhou, the commercial hub of southeastern China. The journey, similar in distance to traveling from Boston to Washington, required nearly a full day in each direction of winding up and down mountains by train or by car.

He now goes almost every month on the punctual bullet trains, which slice straight through the forested mountains and narrow valleys of southern Hunan province and northern Guangdong province in a little over two hours, traversing long tunnels and elevated concrete viaducts in rapid succession.

“More frequent access to my client base has allowed me to more quickly pick up on fashion changes in color and style. My orders have increased by 50 percent,” he said.

China relocated large numbers of families whose homes lay in the path of the tracks and quickly built new residential and commercial districts around high-speed train stations.

The new districts, typically located in inner suburbs, not downtown areas, have rapidly attracted large numbers of residents, partly because of China’s rapid urbanization. Enough farm families become city dwellers each year to fill New York City, part of a trend visible during a series of visits to the Changsha high-speed train station over the last four years.

When the station opened at the end of 2009 in an inner suburb full of faded state-owned factories, the neighborhood was initially silent. But by 2011, nearly 200 tower cranes could be counted building high-rises during the half-hour drive from downtown Changsha to the high-speed rail station. On a morning last month, only several dozen tower cranes were visible along nearly the same route. But a vibrant new area of apartment towers, commercial office buildings and hotels had opened near the train station.

China’s success may not be easily reproduced in the West, and not just because few places can match China’s pace of urbanization. China has four times the population of the United States, and the great bulk of its people live in the eastern third of the country, an area similar in size to the United States east of the Mississippi.

“Except for Boston to Washington, D.C., we don’t have the corridors” of high population density that China has, said C. William Ibbs, a professor of civil engineering at the University of California, Berkeley.

China’s high-speed rail program has been married to the world’s most ambitious subway construction program, as more than half the world’s large tunneling machines chisel away underneath big Chinese cities. That has meant easy access to high-speed rail stations for huge numbers of people — although the subway line to Changsha’s high-speed train station has been delayed after a deadly tunnel accident, a possible side effect of China’s haste.

New subway lines, rail lines and urban districts are part of China’s heavy dependence on investment-led growth. Despite repeated calls by Chinese leaders for a shift to more consumer-led growth, it shows little sign of changing. China’s new prime minister, Li Keqiang, publicly endorsed further expansion of the 5,900-mile high-speed rail network this summer. He said the country would invest $100 billion a year in its train system for years to come, mainly on high-speed rail.

The Chinese government is already struggling with nearly $500 billion in overall rail debt. Most of it was incurred for the high-speed rail system and financed with bank loans that must be rolled over as often as once a year. Using short-term loans made the financing look less risky on the balance sheets of the state-controlled banking system and held down borrowing costs. But the reliance on short-term credit has left the system vulnerable to any increase in interest rates.

“Even well-performing railways capable of covering their cash running costs and interest on their debt will almost certainly be unable to repay the principal without some long-term financing arrangements,” said a World Bank report last year.

Another impact: air travel. Train ridership has soared partly because China has set fares on high-speed rail lines at a little less than half of comparable airfares and then refrained from raising them. On routes that are four or five years old, prices have stayed the same as blue-collar wages have more than doubled. That has resulted in many workers, as well as business executives, switching to high-speed trains.

Airlines have largely halted service on routes of less than 300 miles when high-speed rail links open. They have reduced service on routes of 300 to 470 miles.

The double-digit annual wage increases give the Chinese enough disposable income that domestic airline traffic has still been growing 10 percent a year. That is the second-fastest growth among the world’s 10 largest domestic aviation markets, after India, which now faces a slowdown as the fall of the rupee has made aviation fuel exorbitantly expensive for air carriers there.

High-speed trains are not only allowing business managers from deep inside China to reach bigger markets. They are also prompting foreign executives to look deeper in China for suppliers as wages surge along the coast.

“We always used to have go down south to Guangzhou to meet with European clients, but now they come up to Changsha more often,” said Hwang Yin, a sales executive at the Changsha Qilu Import and Export Company.

The only drawback: “The high-speed trains are getting very crowded these days.”
                                                   
CHINA2 popup
CHINA2 popup

Hilda Wang contributed reporting.
http://www.nytimes.com/2013/09/24/business/global/high-speed-train-system-is-huge-success-for-china.html?ref=business&_r=1&  :icon_study:



Offline RE

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Re: Official Chinese Toast Thread: Maybe Not - Other Side of Coin Article?
« Reply #57 on: September 24, 2013, 11:34:10 PM »
Speedy Trains Transform China
                                         
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24chinarail span articleLarge


It takes a LOT of electricity to move a train at 186 MPH.

This explains why the Air in China in these High Population Density neighborhoods looks like this:


Viewed from Space:


The Chinese are...wait for it...


RE
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Official Chinese Toast Thread:Smog Shuts Down Beijing
« Reply #58 on: October 07, 2013, 11:55:47 PM »
I probably should run a parallel Chinese Toast thread over on the Environment Board, since articles like this one are more Environment than Economic.  However, it all does tie together of course.

Having to shut down a Major City due to SMOG is a pretty extreme problem by any measure.  I can't ever remember even Los Angeles ever being shut down due to Smog.

The Chinese are TOAST.

RE

No Planes, No Trains, And No Automobiles As Record Smog Shuts Beijing


Submitted by Tyler Durden on 10/07/2013 19:06 -0400

    China

China started re-opening roads and airports in Beijing and surrounding areas that have been shut by record high levels of smog. An estimated 430 million people were expected to travel during the holiday that ends today and with the air quality index "improving" from its highest possible level to below 200 (the line between heavy and medium pollution), some will be able to return home. The clips below are stunning (and no that is not 'fog'); summed up best by one Shanghai-based accountant that Bloomberg reports noted, "I won’t go to heavily polluted places like China’s north region as it’s either hazardous to your health or causes trouble when traveling."

 

Beijing Air Polution Hits Highest

<a href="http://www.youtube.com/v/J4XUvUjDMOA?feature=player_embedded" target="_blank" class="new_win">http://www.youtube.com/v/J4XUvUjDMOA?feature=player_embedded</a>

China smog shrouds Beijing and Northern China

<a href="http://www.youtube.com/v/woHSSuj9inQ?feature=player_embedded" target="_blank" class="new_win">http://www.youtube.com/v/woHSSuj9inQ?feature=player_embedded</a>

Via Bloomberg,

    ...

     

    “Beijing will see light rain tonight, which will make it easier for air pollutants to dissipate,” Beijing Meteorological Bureau said today in its official microblog. The bureau lifted a yellow alert on smog at 8:50 a.m., predicting that visibility will improve.

     

    The closures yesterday of six expressways and disruption at Beijing Capital International Airport underscore the severity of pollution that has become the top cause of social unrest in China.

     

    ...

     

    Police closed six expressways linking the capital city to Shanghai, Tianjin and Harbin yesterday, and 47 flights at Beijing Capital International Airport were affected.

     

    Some parts of the expressways linking Beijing to Shanghai and Tianjin were still closed as of 9:40 a.m

     

    ...

     

    The State Council, China’s cabinet, said last month it will cut coal consumption, close steel plants and control the number of cars on its roads to gradually eliminate heavily polluted days in as soon as a decade.

    ...

    China will build a nationwide network within three to five years to monitor the impact of air pollution on health, the official Xinhua News Agency reported on Oct. 5, citing the Chinese Center for Disease Control and Prevention.
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Coal Will SAVE the Day!
« Reply #59 on: October 14, 2013, 11:14:01 PM »
On Reuters yesterday.  Didn't these folks read the story the Chinese are going to REDUCE coal consumption and Pollution?

You gotta wonder about the Energy Experts being paid to pitch this stuff out on the MSM.  This one clearly comes from the Coal Shills.

Coal is "Plentiful".  Baloney, High Energy Anthracite Coal is about gone now.  Beyond that, mining the stuff is going to be darn hard in greater quantities without the Oil Powered Heavy Equipment.


Then of course there is the Money Problem...

RE

World Coal Consumption To Surpass Oil By 2020 Due To Rising Demand In China And India

Reuters  |  Posted: 10/13/2013 11:59 pm EDT
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By Florence Tan

DAEGU, South Korea, Oct 14 (Reuters) - Coal will surpass oil as the key fuel for the global economy by 2020 despite government efforts to reduce carbon emissions, energy consultancy firm Wood Mackenzie said on Monday.

Rising demand in China and India will push coal past oil as the two Asian powerhouses will need to rely on the comparatively cheaper fuel to power their economies. Coal demand in the United States, Europe and the rest of Asia will hold steady.

Global coal consumption is expected to rise by 25 percent by the end of the decade to 4,500 million tonnes of oil equivalent, overtaking oil at 4,400 million tonnes, according to Woodmac in a presentation on Monday at the World Energy Congress.

"China's demand for coal will almost single-handedly propel the growth of coal as the dominant global fuel," said William Durbin, president of global markets at Woodmac. "Unlike alternatives, it is plentiful and affordable."

China - already the top consumer - will drive two-thirds of the growth in global coal use this decade. Half of China's power generation capacity to be built between 2012 and 2020 will be coal-fired, said Woodmac.

China has no alternative to coal, with its domestic gas output limited and liquefied natural gas (LNG) imports more costly than coal, Durbin said.

"Renewables cannot provide base load power. This leaves coal as the primary energy source," he said.



ASIA TO FOCUS ON LOW-COST COAL

Power infrastructure provider Alstom estimated that across Asia close to half of the 600 gigawatt of new power generators to be built over the next five years will be coal-fired, Giles Dickson, a vice president at the company said.

"Coal prices are low," he said, adding that coal is about one-third of the price of LNG in Asia and about half of the gas price in Europe.

Abundant supply is also supporting demand for coal. The traded volumes of coal will increase by a further 20 percent by 2020, Dickson said, including supply of lower grade coal from Indonesia, Australia and South Africa.

"As the lower grade coal comes into the market, further downward pressure on prices will further drive demand," he said.

Excess supply and faltering demand growth have depressed global coal prices this year. European coal futures have tumbled more than 20 percent, while Australian coal prices have plummeted from the record $130 per tonne hit in 2011 to around $80 per tonne as China's demand grew slower than expected.

"If you take China and India out of the equation, what is more surprising is that under current regulations, coal demand in the rest of the world will remain at current levels," Durbin said.

High fuel import costs and nuclear issues will support coal use throughout Northeast Asia, while in North America coal is still competitive in many locations despite abundant low-cost shale gas.

"The struggling economy and low coal prices has rendered the European Union (EU) Emissions Trading Scheme (ETS) ineffective," Durbin said. "The carbon price will need to reach 40 euros per tonne to encourage fuel switching, which is unlikely before 2020."

In Southeast Asia, coal will be the biggest winner in the region's energy mix. Coal will generate nearly half of Southeast Asia's electricity by 2035, up from less than a third now, the International Energy Agency said in early October.

This will contribute to a doubling of the region's energy-related carbon dioxide emissions to 2.3 gigatonnes by 2035, according to the IEA. (Additional reporting by Meeyoung Cho and Jane Chung; Editing by Tom Hogue)
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