Chinese Economics Thread

[antimatter]

Just for blackstone, they acquired just slightly under 10%, when the stock price is around mid 30 USD, now is what, roughly 18 USD. They lost 30 to 40% of that investment already.

For the article from Chinadaily articel link, they lost 150 billion USD both domestically and overseas.

 

[crobato]

They could spend the USD to buy some foreign equipments, can they?


Also, since domestically, China still has alot works to do. Why not invest more money inside the country. For example, There's backlog of several hundred of GE's commercial aircraft engines ordered by China. What they can is invest and form JV /w and demand GE to manufacture those engines inside China. Using the USD to acquire the necessay equipment for that manufacturing.

They need to invest alot to form JV for every kind of important commercial technology.

Also it's contradictory to invest in US and also build up militarily for potential US confrontation. In a cnflict, US could easily freeze all China's oversea assets. Either that or got accused of supporting future terrorists and assets got frozen also.

To play it safe, better to invest for build up domestically.

Their bloodbath on investment on financial institutions are the result of kneejerk reaction of the rejection by the US on acquiring some the companies.
They might have some OK ideas on investment , but the detail planning and execution are very poor.

Like I said before, you cannot turn FOREX money into domestic without 1.) causing inflation to rise on your local economy due to increased money supply, and 2.) cause exchange currency to devaluate while your own to escalate.

To balance that, China has to use FOREX to acquire things from outside.

1. If China uses that to buy mineral resources, prices of mineral resources rises, so you end up spending more. The rising prices of oil and metals shows you that this has been done to some extent with consequences.

2. Purchase imported finished goods. That's where the GE engines and Boeing jets come in. But of course you will be accused of not helping the domestic industry.

3. Purchase companies. Did that too, causing alarm on some countries like the US.

4. Invest in funds and institutions. Doing that with Blackstone and other groups. Lost some short term money.

Its a damned if you do, damned if you don't situation.

 

[montyp165]

Smart investing in domestic industry alongside purchasing imported goods can work to balance out economic growth and cost/inflation increases.

 

[antimatter]

Like I said before, you cannot turn FOREX money into domestic without 1.) causing inflation to rise on your local economy due to increased money supply, and 2.) cause exchange currency to devaluate while your own to escalate.

To balance that, China has to use FOREX to acquire things from outside.

1. If China uses that to buy mineral resources, prices of mineral resources rises, so you end up spending more. The rising prices of oil and metals shows you that this has been done to some extent with consequences.

2. Purchase imported finished goods. That's where the GE engines and Boeing jets come in. But of course you will be accused of not helping the domestic industry.

3. Purchase companies. Did that too, causing alarm on some countries like the US.

4. Invest in funds and institutions. Doing that with Blackstone and other groups. Lost some short term money.

Its a damned if you do, damned if you don't situation.

2. China shouldn't buy finished goods of GE engines. Instead buy the equipments and form JV /w GE to form the aircraft engine manufacturing sites. This way they gain the knowledge by doing so.

3. They have better luck in non-US companies. As for US tech companies go for small sized one. Also IC component making comapny has better chance than company making system level intergrated goods.

 

[Roger604]

Just for blackstone, they acquired just slightly under 10%, when the stock price is around mid 30 USD, now is what, roughly 18 USD. They lost 30 to 40% of that investment already.

For the article from Chinadaily articel link, they lost 150 billion USD both domestically and overseas.

I don't know why you keep posting your thoughts on this thread when you don't even have a basic grasp of what's going on.

First. The $150 billion is the drop in value of the stock markets. It's not real money because the Chinese stock market was just a speculative bubble. The market skyrocketed, then the market crashed.

Second. Crobato keeps telling you that you don't even have a basic grasp of why the forex reserve exists. You cannot use the money in China, you can only buy things from other countries. If you don't know what's going on in a thread, ask some questions or just read it. Please don't post a ton of misleading junk.

 

[Quickie]

" 2. China shouldn't buy finished goods of GE engines. Instead buy the equipments and form JV /w GE to form the aircraft engine manufacturing sites. This way they gain the knowledge by doing so.

3. They have better luck in non-US companies. As for US tech companies go for small sized one. Also IC component making comapny has better chance than company making system level intergrated goods. "

I doubt the U.S. would permit such a JV or even a stake buyout of such strategic companies when it comes to China.

Making electronic components shouldn't be much of a problem for most countries. The problem only begins when they try to market them - which explains why most countries would rather buy those components of the market. In the commercial world, marketing, branding and cost are important consideration too.

 

[FriedRiceNSpice]

Smart investing in domestic industry alongside purchasing imported goods can work to balance out economic growth and cost/inflation increases.

Well that goes for any economy... the problem is you cannot dump a large amount of foreign currency into your domestic economy with certain repercussions...

 

[SampanViking]

Like I said before, you cannot turn FOREX money into domestic without 1.) causing inflation to rise on your local economy due to increased money supply, and 2.) cause exchange currency to devaluate while your own to escalate.

To balance that, China has to use FOREX to acquire things from outside.

1. If China uses that to buy mineral resources, prices of mineral resources rises, so you end up spending more. The rising prices of oil and metals shows you that this has been done to some extent with consequences.

2. Purchase imported finished goods. That's where the GE engines and Boeing jets come in. But of course you will be accused of not helping the domestic industry.

3. Purchase companies. Did that too, causing alarm on some countries like the US.

4. Invest in funds and institutions. Doing that with Blackstone and other groups. Lost some short term money.

Its a damned if you do, damned if you don't situation.

China has come up with a good answer in the concession projects in which China builds substantial Infrastructure projects upfront and receives its payment in either an exclusive period or in a fixed quantity of Raw Materials.
Good examples of this increasingly widespread practice can be seen in Laos, Kyrgyzstan and the Democratic Republic of Congo. All indications is that these kind of projects will be implemented in an increasing manner over the years.

Otherwise I think China should concentrate in acquiring minority stakes in a wide number of Strategic companies. Some politicians may moan, but the company shareholders will not (and they do vote).

Either way after been offered all sort of lame duck financial sector investments, China should be justified for ignoring "advice" and determining its own Investment policy.

On an aside I hear that China (and many other holders of US Debt Instruments) have a significant amount of Debt tied directly to Freddie Mac and Fannie Mae. I hear the figure of $256 Billion, but whether this is China's exposure or the total exposure of overseas debt holders I can't remember. Either way the US cannot allow this debt to be simply wiped off the books as the outrage from the holders would be intense and with dramatic consequences. Seems as though the US taxpayer is going to have offer substantial support to these organisations for the foreseeable future

 

[antimatter]

China also into morgan stanley, barclay and a number financial sectors in EU and Russia. It's type of wrong obsession.

Industrial & Commercial Bank of China Ltd (ICBC), the world's biggest bank by market value, is buying 100 percent of Russian bank Rosevrobank for between $800 million and $850 million, a newspaper reported on Friday.



Stock price is low, at least they should give a try to acquire Infineon, Siemens from Germany.

EU seminconductor is going downhill, CHina should acquiring remaining fabs from Dresden and move them back to CHina.

 

[crobato]

" 2. China shouldn't buy finished goods of GE engines. Instead buy the equipments and form JV /w GE to form the aircraft engine manufacturing sites. This way they gain the knowledge by doing so.

3. They have better luck in non-US companies. As for US tech companies go for small sized one. Also IC component making comapny has better chance than company making system level intergrated goods. "

I doubt the U.S. would permit such a JV or even a stake buyout of such strategic companies when it comes to China.

Making electronic components shouldn't be much of a problem for most countries. The problem only begins when they try to market them - which explains why most countries would rather buy those components of the market. In the commercial world, marketing, branding and cost are important consideration too.

Quickie, Antimatter. A joint venture with GE does exist with Shenyang Liming. Yes the firm that makes all your local jet engines like the WS-10A. As a matter of fact, this JV is called GE-Liming. The purpose is non military of course, its to make gas turbines for stationary power plants.

That also happened a long time ago.

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GE Energy Expands Role in China

Celebrates Grand Opening for Two Joint Ventures in Shenyang

SHENYANG, CHINA (Aug 25, 2005) — GE Energy recently hosted a joint grand opening for new facilities in Shenyang built to support two of the company's joint ventures: Shenyang GE Liming Gas Turbine Component Co. Ltd. (GE Liming) and GE Shenyang Turbomachinery Technology Co. Ltd. (GESTT). The two joint ventures represent a combined investment of $32.6 million USD in China's northeast region.

Mr. Zhang Guobao, Vice Chairman, China National Development and Reform Commission (NDRC), who was present on the ceremony, described the joint ventures as a result of "win-win cooperation" with "far-reaching significance" and "a symbol of the revitalization of China's northeast industrial base and more opening-up to the outside world by China's state owned enterprises.

"The birth of the joint ventures once again proves that GE is a trustworthy multinational company that delivers on its commitments. The two joint ventures are both high-technology enterprises making high valued-added products," Zhang continued.

Key dignitaries attending the opening ceremony on May 11 in Shenyang also included Lu Yanxun, former Vice Minister of China's Machinery Industry, Xu Weiguo, Standing Vice Governor of Liaoning Province and Wang Ying, Vice Mayor of Shenyang City. Representing GE Energy were Steve Bransfield, Vice President of Global Supply Chain Management, Steve Fludder, President and Region Executive of GE Energy China and William Cooney, General Manager for GE Energy's China Programs.

"These joint ventures are a key part of our strategy to effectively support China's growing energy industry by localizing our manufacturing capabilities and building relationships with local partners," said Bransfield. " They provide us with a strong platform to better serve our customers in China with higher in-country competence."

Lin Zuoming, Senior Vice President, China Aviation Industry Corporation (AVIC I), GE's partner in the GE Liming joint venture, believes it will be able to provide high quality products and services to contribute to China's energy product upgrading and updating. "AVIC I is very proud to have GE as our strategic partner because GE is a company of excellence, leadership, integrity and power," he said.

Su Yongqiang, President, Shenyang Blower Works (SBW) said, "GESTT was the first investment project in China for GE Energy and also the first investment in manufacturing industry for GE in northeast China. We are honored to partner with GE on this milestone project. Since the founding of GESTT, this joint venture has provided customers with high value-added products and services and rich experiences in reforming traditional manufacturing industry in Shenyang thanks to SBW's decades of production capability and GE's advance technology and managment."

"The joint ventures demonstrate our long-term commitment and expands our local capabilities to provide technology and services that support the reliable power and oil and gas production needed for China's continuing growth," said Fludder. "Through our latest expansions in our gas turbine, hydro, wind, gasification licensing, energy service and oil and gas businesses, GE Energy is better positioned as an active and key player in China's rapidly growing energy industry."

According to Lu Yanxun, "GE has fulfilled its commitment on gas turbine technology transfer [since the beginning of China's Gas Turbine Power Plants Construction Project]. With the first gas turbine assembly completed on time, GE has become the first to deliver a locally assembled gas turbine to the China market, and also the first to deliver the locally manufactured combustion component in China."

To date, 20 of GE's F technology gas turbines and four 9E gas turbines have been selected for China's Gas Turbine Power Plants Construction Project, a centerpiece of China's efforts to increase its power generation capacity. For all phases of the Gas Turbine Power Plants Construction Project, GE Energy and its partners Harbin Power Equipment Company, Ltd. (HPEC) and Nanjing Turbine Company, Ltd. will supply gas turbines totaling 8,628 megawatts of new capacity to help meet China's soaring power requirements.

"GE and its partner HPEC have already delivered eight GE 9FA gas turbines assembled and tested at HPEC's new factory in Qinhuangdao in Hebei province," said Cooney. "All have been delivered ahead of contract schedules and are expected to be put into commercial operation starting this summer. The GE Liming JV has already delivered its first set of combustion components to HPEC for assembly into gas turbines, which will also ship this summer. GE is very pleased with the progress made with our gas turbine technology partners in the past two years."

GE Liming

GE Liming is a $18.9 million USD joint venture formed on August 28, 2003 between GE Energy (51%) and Shenyang Liming Aero-Engine Company, Ltd. (49%), one of China's primary manufacturers of aero-derivative gas turbines and jet engines. The joint venture manufactures combustion components, buckets and nozzles to contribute to the assembly of GE's Frame 9FA and 9E gas turbines in China.

GESTT

GESTT, a $13.7 million USD joint venture, was formed on January 8, 2003 between GE Energy (75%) and Shenyang Blower Works (SBW) (25%), a major state-owned enterprise (SOE) in centrifugal compressors, blowers and gear manufacturing in China. The joint venture brings to the Chinese oil and gas industry a wide range of GE Energy's oil and gas service offerings, coupled with strong local capability.

GESTT services all Nuovo Pignone equipment and SBW compressors for oil and gas applications, and also provides service for products from other original equipment manufacturers (OEM), including reciprocating and centrifugal compressors and steam turbines.

GE Energy In China

GE Energy has been active in China for more than 90 years, supplying 70 steam turbines, 165 gas turbines, 97 wind turbines, 180 hydropower units and 300 compressors as well as total engineering solutions to help the country improve the reliability and availability of its energy production and transmission equipment. In addition to GE Liming and GESTT, GE Energy has three other joint ventures in China: GE-HPEC-NTC Energy Services Co., Ltd. in Qinhuangdao, GE Hydro Equipment Asia Co. Ltd. in Hangzhou, and Xin Hua Control Engineering Co., Ltd. in Shanghai.

GE Energy also has a research and development team at the GE China Technology Center in Shanghai Zhangjiang Hi-tech Zone. Current GE Energy activities in China include gas turbine power plant construction, hydro, oil and gas and renewable energy projects, as well as preparing for the 2008 Beijing Olympics.


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Everything that could potentially has been done, is already done. You can say China already did uncovered all the possible stones and now needs to do something else.