Chinese Economics Thread
- Thread starter Norfolk
- Start date
122% corporate debt?
30% household debt?
43% government debt?
Are these official numbers or western made up numbers to prove china is collapsing?
Unless you can give me links that PROVE these are official numbers, I'm skeptical about these numbers.
XYZ% of what?
Pocket Money?
Wages?
GDP?
I have a 4200% debt ratio against my gross monthly income.
But the cost of servicing my debt is less than 30% of net monthly income.
Ratios are meaningless without a baseline
Your numbers are meaningless
Well, if you want to calculate it this way, then we should use the same standard to ALL nations on earth not just China. So if you calculate the debt for US, beside the government debt, but also include private debt and future obligations it come out to $211 trillion, not $14 trillion, not 100% of GDP, but 1400% GDP.
I'm pretty sure if you use the same calculation on Europe, India, Japan it will be FAR worse. I think since the value of currency is not backed by gold or commodity anymore that means all nations on earth are cheating with their currency and debt, they are constantly inflating and printing their currency in order to stimulate the economy and increase job growth for today, maybe they are ignore the future on purpose and short sighted, or they are all making a deliberate calculation to do so in anticipation of the weak of their currency.
But one thing for sure, if all currency are fiat valued, then it does not matter how weak your currency is, as long as other people's economy have more problem than yours, then you come out on top. The problem is that this is NOT a license to recklessly spend money, and if you go too far like Greece and maybe even US at this point putting your economy into massive debt in a very short period of time you are still going to suffer.
As for China's massive debt that was lend out for infrastructural construction, I think eventually those money will be forgiven by the bank, because bank in Western world are privately owned with private shareholders. Bank in China are government entities, their primary goal is NOT to make a profit, they are being used rather as a institution for government to administer social stability, reduce employment, reduce poverty and promote growth. If you look at this this way, you can almost say they are cheating, and yes they are, because they are not "bank" anymore. This is what happens when state capitalism is being done on a massive scale for the interest of the nation, rather than for the interest of the private party.
In the end, when trillions of RMB of loans are forgiven to the construction companies... guess what? millions of apartments and stores will be standing there for people to fill it up.
Here is the source to back up my $211 trillion claim, please list your 200% claim for China, I believe you but I'm interested to see sources to back this up.
You're right the situation in America, Europe, UK and Japan is much worst than in China. China doesn't even make it in to the top 10 of the worlds most indebted nations. However we cannot ignore the problems there are in China just like America, Japan, Europe and the UK ignored their problems for too long and then it was too late.
here are the sources
and this from post #2901
To be sure, the era of double-digit growth in China seems to be ending just as significant new challenges appear. China is facing a rapidly aging population, in part because of its one-child policy of the past 30 years. Its labor force will peak next year at 1 billion, then it will shrink, adding huge new pressures to China’s already stressed pension system. Wage inflation, running at 20 percent a year, is proving particularly painful for lower-cost exporting industries, including textiles and toys. Corporate debt has soared after several years of investment-driven growth and looks set to reach 122 percent of GDP this year, estimates GK Dragonomics.
Like I said, if China does not even makes top 10 worst, then they are in the good position. Because today it is a race to the bottom, no matter how bad you are as long as someone else is worth then you then you are good... this is sad but unfortunately it is the truth.
Those are certainly real problems, and they are pretty much copy and paste for all China basher out there like Gordon to support this theory since 2001 that "China is going to collapse on Monday"
1. There is been talks in the official media debating ending the one child policy, and the one Child policy was never fully enforced as there was no restriction on minorities in China, and very little enforcement in rural areas. And even now, the one child policy has been modified for many years already. Because right now, if you yourself is single child, you can now have two children but they must be 5 years apart, this is official rule, google it if you don't believe me. Then with the recent debate about one child policy in the CCP official media, there is always the chance they are going to abolish the rule once and for all.
2. Cheap labor force have already peaked in the middle of 2000s. Now most of the garment workshop have already left China and moved into Vietnam, Bangladesh (remember the fire few days ago) and with any luck Burma and North Korea in the near future if they can stabilize their nation and make peace with the West. I remember waves and waves of doom and gloom report about end of China because their labor got expensive, but funny thing is if you take a look at China's trade date, they are still increasing by double digit every year. This is because China have transform itself from the absolute low cheap wage producer into a manufacturing powerhouse with technology. During the past decade China invested most of their money earned from trade into their infrastructure like roads, factories, schools etc... Now this is the real value that China offers to the West, do you know how much is the assembly cost of an Iphone? It is less than 20 dollars, an Iphone's total life cycle will be more than 1000 dollars from the parts manufacturing, shipping, retail, extend warranty, cell phone contract, date plans, overage charges etc... China's share in all of this is about 2%. So why does Apple, Samsung, Dell, HP almost all exclusively produce in China?
Answer is TIME, in today's world where produce life cycle is getting shorter and shorter, it is NOT about cost anymore it is about how fast you can produce it and get it out to market, The Chinese factories can respond more quickly, and not simply because of 12-hour workdays. Anyplace else, you’d have to import different raw materials and components, in China you’ve got nine different suppliers within a mile of the industry zone, and they can bring a sample over that afternoon. People think China is cheap, but really, it’s fast. And if you need an emergency batch of extra 100k more unit produced in a short time... China will do it for you by this weekend.
And this speed is solely depended on their massive investment into infrastructure of past years. I mean sure, you can produce in Bangladesh, Congo or Mexico even and instead of 20 dollars cost you can do it for 10 dollars, but by the time your item is ready and hit the market, your competitor's product will be one generation ahead of you. So yes, congrats, you save $10 but you lost $990 dollars.
3. China's aging population, this is directly tied into #1 point where they may relax one child policy, but I admit even this is not enough to change the balance. So again, we have to use the concept of applying the same rule to everyone not just China, trust me, by the year 2020-2030, Japan, Germany, France, US (Baby boomer) will be facing the same problem. The only places where this not a problem will be Middle East and Africa and India, but the challenge that we speaks of and the China basher like Gordon Chang wants to speak of is that China will get old and get weak and everyone else will stay strong, but what happens is when China and all of the nation it is competing right now will get be facing the identical problem as well. Then that would make this a moot point to support the thesis of "China's downfall" moot.
As for Middle East, they are not investing in education, infrastructure or science and they are too hang up on Allah, so I have no hope for them. For Africa, they will not achieve political stability for the next 100 years or more, and unfortunately warfare, aids and instability will eat away their populations growth as fast as their birth rate. As for India, they have a massive problem of inequality and they are servery lacking on basic infrastructure and education, so if they wants to challenge China, they better get their act together fast TODAY, because if they keep going at the way they are going now, they are not going to be a challenge to anyone.
So next time... when you think US/Europe will do this and do that and will win... ask yourself what is preventing other people from doing the same.
So next time... when you think this and that will happen to China and they will face doom... ask yourself is other nations facing the same problem as well?
Last edited:
Hendrik_2000
Lieutenant General
As Jack Liu said there is more to it than just wages comparison. Wages only make small percentage of the finish cost. Beside speed as Jack clearly explained there is also the ecosystem of supplier. China can make the product so cheap because most of the processed components are also made in China most likely within 20 miles of the main assembly plant.
The other thing is worker productivity and skill Aside from Japanese and Korean worker China have the most productive worker in Asia.
You think China corruption is bad wait until you try to invest in South East Asia country Trying to set up a company you probably need 12 department stamps and delay in each of the department. Just trying to clear the custom office you will probably get delay for weeks .
In China most of the procedure has been streamline combine with excellent infrastructure speed up the delivery and custom clearance of products
Again to compare one country to other you have to use the same metric
Instead of leaving China together most company now moved inland. Intel built factory in Chonging and Samsung built plant in Xian. In fact now most inland province grew faster than coastal province
Last edited:
Indeed this is the case, the next step of moving the economy inland is already paying fruit and it is only in the beginning stages.
COME ON Gordon... you have less than 30 days to implode the Chinese economy... better hurry up dude.
