Chinese Economics Thread

[SampanViking]

Well before we go any further, please tell me what it is that you disagree? Do you disagree with the empirical, that American capital has been a major source of finance flow into the developing world, or that America's wealth has allowed it to purchase goods from the world, and is in fact the preferred customer of the world as judged by actions of Asian monetary authorities to prop up the purchasing power of the dollar? In that case you are not disagreeing with me, you are disagreeing with reality.



America is poorer than it thought, but even on a purchasing power basis you can't possibility convince anyone that other nations are better off. Who's better off? Is the Japanese business man crammed into an internet cafe to sleep at night because he has no home better off? Is the average Chinese citizen working in factories and are consistently squeezed of their hard-earned income by corrupt administrators better off? Are the Arabs living in deserts better off? Are the aging Europeans dying by the hundreds in heat waves better off?

Financial assets are claims on future income, but the projections for these astronomic cash flows have not owned up to the reality that real growth averages around 2% annually. But still, when you peak into the kitchen of an average American household vs. an average Chinese household, the reality of the situation should speak pretty clear.

The keys words being perhaps "has been" and "was" etc.

The appeal of a currency for the use in International Trade and Foriegn Reserves is based as previously stated on the percieved stability of that currency (something usually helped by the size of the economy) plus the confidence in the Financial Institutions; both State and Private of the country of the currency and the Proberty of the Regulators. This is because you need to use these Institutions when you transact an International Trade in that Currency. Do you FV appreciate that facilitating such deals has been a primary occupation of Americas Global banking and that many commissions, currency exchange deals and instrument sales are linked directly to it?

When you have all these things working well, you have a virtuous circle in which the value, strenght and stability of the economy of the currencies home nation will grow significantly. Sadly however if these things are lost you enter a vicous circle of swift loss and decline and it is this that we are seeing at the moment.

If the Dollar Hegenomy is in retreat, it appears to be being replaced by a series of Regional Currencies, the greater of which being the Euro is which is the main currency for transactions for Oil and Gas between Europe and Gazprom and Iran etc.

Interestingly enough it appears that the Chinese Yuan is being used as International Trade Currency in East Asia itself which is why the PBOC is agreeing to more flexibilty to its tradeabilty in the immediate region and why it is making more Chinese Currency available to the Central Banks of its neighbours, including South Korea and Japan.

 

[Schumacher]

Whoops I think there is a mistake in the article I had posted> The writer suggested Chinas annualized growth was 6.8%, for 2008 but I thought Chinese sources had said their 4th quarter growth was 6.8% with a annualized growth closer to 9%. ( Can anyone substantiate this mistake, perhaps made by the writers haste in dishing it out to the Chinese.)
....

The 6.8% is the growth from 4th Q 07 to 4th Q 08 so I don't think it's wrong depending on how one reads 'annualized'. The 9% is for Jan to Dec 08 compared with 07 so not wrong as well.
But I make the same point that 07 was recently bumped up to a white hot 13%. Since 07 was fast first faster later, one can see 07 4th Q could be more than even 13% & how such a figure might affect the 6.8% in 4th Q 08.

 

[FugitiveVisions]

The Economist is speculating that China is doing something underhanded,

Nothing to see here. All is bright and sunny. Newsweek pundits know the Chinese political economy the best, no point in arguing. Long live the chairman and hail to de-coupling.

 

[Schumacher]

Nothing to see here. All is bright and sunny. Newsweek pundits know the Chinese political economy the best, no point in arguing. Long live the chairman and hail to de-coupling.

No need to waste time with silly posts like this. Replying to others' points is more helpful. We're early days in this global crisis, a bit early to run out of arguments for your case against de-coupling don't you think ?

 

[crobato]

At the moment the Western Banks are beginning to come clean, but the "S... will hit the fan" when China does the same thing?

For far too long, many "pundits" have been predicting problems with the Chinese banking sector, saying this and that.

Now it appears that the Chinese banking sector are the best in weathering this crisis.

The reason why Western banks are forced to come clean is because they have to beg for money.

Chinese banks are not the ones begging for money. Rather, they are the ones with the money.

 

[FugitiveVisions]

For far too long, many "pundits" have been predicting problems with the Chinese banking sector, saying this and that.

Now it appears that the Chinese banking sector are the best in weathering this crisis.

The reason why Western banks are forced to come clean is because they have to beg for money.

Chinese banks are not the ones begging for money. Rather, they are the ones with the money.

Ignore the pundits. After all, why should we care that China assumed $170 billion dollars of bad loans from Chinese banks in '99, or roughly 17% of the national GDP? State owned banking and enterprise must be better, Newsweek said so!

Why should we listen to the same pundits who have warned about loans to build additional manufacturing capacity in the middle of this decade? As long as I sleep well knowing that an army of government bureaucrats is there to protect China, I could care less. Long live the Chairman.

 

[Hendrik_2000]

For far too long, many "pundits" have been predicting problems with the Chinese banking sector, saying this and that.

Now it appears that the Chinese banking sector are the best in weathering this crisis.

The reason why Western banks are forced to come clean is because they have to beg for money.

Chinese banks are not the ones begging for money. Rather, they are the ones with the money.

The pundit is right on the money except that they are looking at the wrong Place. So much consumed by their own propaganda as to the infalibility and perfection of "free market" that if anything wrong it should be the command economy China Heheh:china:

 

[crobato]

Ignore the pundits. After all, why should we care that China assumed $170 billion dollars of bad loans from Chinese banks in '99, or roughly 17% of the national GDP? State owned banking and enterprise must be better, Newsweek said so!

Why should we listen to the same pundits who have warned about loans to build additional manufacturing capacity in the middle of this decade? As long as I sleep well knowing that an army of government bureaucrats is there to protect China, I could care less. Long live the Chairman.

Gad, you're talking about 170 billion as if you think that's a big amount. That's a smaller figure by a significant margin than it takes to bail out AIG alone. Consider that the Chinese savings rate is higher than anything in the world. Even with losses, they can easily reformulate capital.

Get real.

 

[FugitiveVisions]

Gad, you're talking about 170 billion as if you think that's a big amount. That's a smaller figure by a significant margin than it takes to bail out AIG alone. Consider that the Chinese savings rate is higher than anything in the world. Even with losses, they can easily reformulate capital.

Get real.

Oh, so 17% of national output is nothing. We get it. And if you care to know any more about the subject, a couple hundred billions more of capital injections and loan purchases TARP style were implemented up til 2002, and even then some of the old NPLs are still there. We get it. Bow to the chairman.

 

[crobato]

Having bad debt isn't the problem if you got the reserves and deposits to cover it. High savings rate, high FDI and plenty of foreign reserves. China has all three by the spades over anything in the world.

It is the accountability of bad debt that is the problem in many Western institutions. Many of these "complex" and "exotic" financial instruments thought of by many investment banks are literally repackaging bad debt as "good", and one of the ways that is done is to mix in good or performing assets to hide the smell. Kind of like packaging crap with good food, the smell of the food covers up the smell of the crap. In the end, you can't tell what is good or bad, and when what used to be good, also becomes crap from the decaying economic conditions. So yeah, we don't know yet to the full extent how truly bad the extent of bad debts are, and certainly we're running out of liquidity to cover them up. In the end, like in the UK, which Jim Rodgers have just declared to be "finished", the bad has to be nationalized. That does not solve the problem either, because in effect, the still productive has to be penalized for the failed banks.