Chinese Economics Thread

[AndrewS]

Japan is and remains a wealthy developed country, despite the debt issues.

China is still on average, a developing country which still has a lot more growth potential ahead.

Debt is only bad if it can't be paid off or it doesn't generated enough economic growth. On both these points, the balance is that Chinese debt probably passes these 2 measures.

 

[Qi_1528]

I don't think China's economic system will collapse, or that there will be a proper recession, but how the government handles the debt could be the difference between slowly deflating the bubble, or delaying the progress of the country for several years at least, not to mention creating a lot of unemployed and dissatisfied people. Just being a developing country can't save China from the stagnating effects of excessive debt.

 

[antiterror13]

Wow! Most users in other countries are not even on 4G yet, but in China there are more than 500 mln

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Xinhua, May 31, 2016

There are now more than 500 million 4G users in China thanks to government measures, a minister told a conference Tuesday.

China owns the world's largest 4G network with more than 2 million 4G base stations, Industry and Information Technology Minister Miao Wei told the First Global 5G Event in Beijing.

The country's mobile Internet users processed more than 4 million terabytes of data last year, 103 percent more than the previous year, according to Miao.

China has formed a 5G R&D team to research and test the technology with a view to commercialize it by 2020.

Yeapp, China is the leader of 4G infrastructure, Huawei is the biggest telecommunication company in the world and also the leader of 4G infrastructure technology.

4.5G in Singapore is super fast and it was built with Huawei technology, I was there in Dec 2015

In NZ, Huawei built the first 4G mobilenetwork infrastructure in 2013

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also just last month (May 2016), the first 4.5G mobile infrastructure is operational in NZ, also by Huawei

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[Yvrch]

I'm not one to talk doom and gloom about the Chinese economy, but I'm not sure I buy this argument. For example, Japan had a high savings rate too before it ran into debt problems.

The only thing I can see that really saves China is the fact that the vast majority of its debt is held domestically, and the major banks are all state controlled. Bad debts can be written off with much greater ease than they can in a system dominated by private banks. The question is if the government is prepared to use these levers, or if factional disagreements will get in the way. It seems like certain people in the policy making establishment has fallen for a lot of neoliberal fallacies, such as thinking private debt is not a big deal, and deregulation is always a good thing.

You are exactly right. China's financial system at current stage is pretty much like a walled garden in a sense. Whether it is good or bad would depend on context.

I don't think policy makers are for any isms, they just want the one that works for them, whatever that is as long as it solves their problems at hand. If any ism I'd say it's pragmatism.

To compare below is BIS latest quarterly data on total credit % of respective GDP's in a list of economies.

 

[Yvrch]

I don't think China's economic system will collapse, or that there will be a proper recession, but how the government handles the debt could be the difference between slowly deflating the bubble, or delaying the progress of the country for several years at least, not to mention creating a lot of unemployed and dissatisfied people. Just being a developing country can't save China from the stagnating effects of excessive debt.

China growing at 6% annual is adding an extra USD600 billions into her economy every year, much more than what she added at average 10% annuals a decade or so ago. Even 5% at $ 500 billions is nothing to sneeze at. US growing at average 2% is adding a lot less than that. That's one of the key ingredients to slowly deflate and outgrow debt problem.

Of course, you have to look at things in a balanced perspectives and differentiate between what is cyclical and what is secular. And what is hype and what is real.

 

[ahojunk]

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Xinhua, June 4, 2016

China's pursuit of acquisitions around the world has been a big trend for the global market and it is now standing at a whole new height, a recent report says.

Chinese firms have struck 143.3 billion U.S. dollars in overseas deals this year, according to a report published by Dealogic, a financial information provider.

The number is even higher than China's 2015 total -- 106.8 billion dollars. At this rate, China will become the world's largest cross-border acquirer when the year of 2016 runs its course, the report predicted.

The United States has topped the ranking in cross-border acquisition every year since 2007.

The largest deal bid by a Chinese company so far is China National Chemical Corp's 43 billion cash offer for Syngenta, a Swiss seed company.

 

[taxiya]

The latest development of China's involvement in Russia's HSR.

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1. Part of the One Belt One Road initiative. One step at a time, gradually we will see the line connected by dots.
2. Also helpful to offload the over capacity of production in China.
3. Improvement to local economy along the lines. Factories for example.

At the end of the day, stocks, treasure papers, interest rate policies are all empty papers. Railways, Roads, Machines, Oils and foods are real and that is what really matters.

To extend further what I see in the long term, I sincerely hope the success of the OBOR initiative. It is connecting people through the whole Eurasian continent and Africa. It not only provide opportunity to Chinese business in developed Europe, but more importantly breed the future big market of Eastern Europe, Russia, Central Asia etc. That is something we have never seen in the whole human history, lifting living standard of people across continents, connecting countries and cultures by mutual benefit rather than force.

This is also why I am confident that whoever join this initiative will come out alright in the long run regardless their current troubles, that includes the most anti-China advocates if they sincerely change their minds.

 

[SamuraiBlue]

looks as if the Europeans are retreating from PRC as well.

EU business lobby warns stalled reforms driving China pessimism

Foreign companies face an "increasingly hostile" environment in China, a European business lobby said on Tuesday, with fewer than half of its members saying they currently plan to expand operations in the world's second-largest economy.

China's failure to deliver on pledges to open market access for foreign companies has triggered a "fresh wave of pessimism", the European Union Chamber of Commerce in China said in its annual members' survey, which had more than 500 respondents.

"China's economic slowdown continues to pose a significant challenge to both Chinese and European companies. However, a business environment that is increasingly hostile combined with a playing field that is perpetually tilted in favour of domestic enterprises means the effects of the slowdown are intensified for European business," the chamber's report said.

"In fact, it often seems that Beijing is moving in the opposite direction, promulgating vaguely worded, security-related laws and strangling Internet access to the point of harming domestic as well as international businesses."

Forty-seven percent of European companies said they planned to expand their operations in China, a nine percentage point decrease from 2015 and down from 86 percent three years ago...... to read more

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[AssassinsMace]

Good riddance. Yeah like Chinese companies have the kind of access in Europe that they want in China? It reminds me of the same arrogance from Google. It's not unfair treatment. It's called leveling the playing field. They want market access in areas where China would not have a chance in Europe. Look at Li-Kashing, the richest man in Hong Kong who declared his love for Europe over China and recently he was denied buying a European telecom after all that sucking up. Hong Kong is the West's darling yet still suspicious. Look at the depression Western luxury companies are going through because of China's anti-corruption campaign. Because they're losing money, they're for corruption now despite how it's been one of their primary criticisms. Stop corruption unless if affects my pocketbook. That's what they see as unfair.

 

[manqiangrexue]

You're not Gordon Changing as well as usual, Samurai. See, how Gordon Chang gets to be wrong all the time and still keep writing is that he's only wrong in the long run while in the short run, it's impossible to prove his interpretation wrong. But your interpretation of this article, Samurai, is obviously wrong on too many accounts. Firstly, the Europeans are not "retreating" in the sense that total investment is lower, but simply their growth is slower than it was before. Let me give you an example: China's economy growing at 6.5% is not "retreating" just because it's lower than the 8% it previously posted; but when Japan's economy records a -1.7% growth, that's actually retreating. Then, we have the why. The article clearly states that the slightly slower growth in investment is due to hostile environment imposed by government regulations, NOT by a perceived lack of market/growth potential. The Europeans go on to specifically complain that China's not opening its markets to Europe as much as Europe is to China since "If you look at Chinese investment into Europe, there's not a single case of an investment being rejected," quoth the Chamber President. So it is China that is rejecting European moves that it sees as not beneficial to its interests that is causing this slightly slower expansion of European investment into China. You gotta read the whole article to properly Gordon Chang it next time, ok, Samurai? Nice try though.