This may be a good thing, unless it gains total control of Proton a 51% stake would open up the joint venture to vested interest by the Malaysian company that is linked to the ruling political party and that is what is happening. Let the French company have it, they will find out soon how difficult it is to manage a company whose only reason it is still in business is because of politics.
Chinese Economics Thread
- Thread starter Norfolk
- Start date
broadsword
Brigadier
Wages in UK and Japan are not that different compared with UK and China. CRRC does build assembly plant overseas, starting in Malaysia even though wages are cheaper in China. It all boils down to business economics and strategies. Brexit is giving Hitachi butterflies:
It has also established training and overhaul facilities in Africa and sent the local personnel for training in China.
has
Blackstone
Brigadier
I'm not sure what you mean by "wages in in UK and Japan are not different compared with UK and China," because UK's per capita GDP is about four times China's. Care to clarify?
broadsword
Brigadier
Difference in wages in UK and Japan (if any), is smaller than between UK and China.
Article about china´s economy. I post it here because it mentions china´s banking system is now 310% the size of its GDP (always thought that it was below 300%) surpassing the eurozone, becoming in terms of assets the largest in the world, also putting the eurozone in second place, and expected to add the equivalent of Germany´s GDP just in this year alone. Crazy !!!!!
If they dont start very urgently adressing this mountain of debt...there is no signal that they are adressing it, however. All they care is (debt-fuelled) growth, growth, growth...
If they dont start very urgently adressing this mountain of debt...there is no signal that they are adressing it, however. All they care is (debt-fuelled) growth, growth, growth...
Blackstone
Brigadier
China's banking at >300% GDP is both not as bad as it looks, and worse than it looks. It's not as bad because the vast majority of PRC's debtors are state own enterprises with money from state banks. With government owing itself money, financial hard landings solely from excessive debt are not likely. On the other hand, China's debt it worse than it looks because huge amounts of money going to SOEs crowd out loans to private industries and so repress market competition and innovation. Also, easy credit for large SOEs can result in debt addiction and enable rent-seeking behavior by vested interests.
Hendrik_2000
Lieutenant General
12,000 startups are being created every day in China
But now they have new source capital It is called VENTURE Capital. They now provide the fuel igniting the innovation thru every sector of Chinese economy
Bank is not the only source of funding watch this amazing video How Chinese startup get their capital allowing 12000 startup being created everyday. Bank is so old fashion.Here come fintech come venture capital
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Thing is, the bulk of the investment in china is bank driven. No one can hide the fact that chinese banks´s balance sheet is growing to the point where the entire financial system is in danger.
Hendrik_2000
Lieutenant General
Bank lent mostly to SOE because of perceived safety too big to fall. NO doubt that they have to reduce the exposure but they still have time. It is not that they don't know the prescription . They do but you cannot bankrupt thousand of SOE overnight throwing million out of work.
SOE is one arm of the government and so do the bank. It is like left arm lending to right arm.So what is the problem. The share of SOE in Chinese GDP is dwindling with every year. So they are not the engine of growth anymore Instead the private small company is now job growth engine
In the meantime this new fintech provide the funding for startup It like galvanizing the asset of 1.3 billion people . Did you see how fast they get the funding in most cases no less than 1 hr . Granted the industry need regulation. But never underestimate the Chinese ingenuity when it come to making money
Most of the job are created by this small scale entrepreneur. And like the video said they provide 60% of the tax base Even without bank support
Hopefully this feisty entrepreneur will absorb all the excess work force
If you have a good idea and the grittiness to follow thru with your idea there will people who will fund your idea in return for a share in future success. Very fair and efficient way
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Hendrik_2000
Lieutenant General
Here is an article that clearly position the private sector as engine of growth. The author has an updated version for 2016
Private Companies Are Driving China's Growth
15
OCT 14, 2014 10:15 AM EDT
By
In China, the conventional wisdom holds, state-owned enterprises dominate the economy, private companies are often starved for credit, and the central government exerts substantial influence.
But here's a quiz: What share of China's gross industrial output will come from state enterprises this year? I have tried this question on friends, even knowledgeable economists, and the responses I hear fall between 50 percent and 75 percent. The is only about 25 percent, a big drop from more than 75 percent in 1978.
In his important new book, ": The Rise of Private Business in China," Nicholas Lardy of the Peterson Institute for International Economics assembles statistics like this to demonstrate that our image of state capitalism in China is dated and wrong. Lardy's central thesis is that "private firms have become the main source of economic growth, the sole source of increasing employment, and the major contributor to China's growing and now large role as a global trader." (Disclosure: I am on the board at the Peterson Institute.)
Lardy is a careful, soft-spoken scholar of China, not given to overstating his arguments in the hope that strength of conviction can make up for lack of evidence. But he pulls no punches in attacking prevailing assumptions about the Chinese economy.
Lardy uses the same classifications that China's national statistical agency uses to differentiate "state" and "private" companies. Normally, given the reputation of Chinese statistics, some skepticism about their accuracy would be warranted. But Lardy checked a sample of companies and verified the classifications. He also makes other good arguments against the possibility that the data are substantially biased.
Now, it's true that in some sectors state enterprises are still the major players in China. In tobacco manufacture, electric-power generation and oil extraction, for example, state companies' share of output exceeds 90 percent. But in many other industries, from general-purpose machinery to paper and plastics, the state share is less than 15 percent. As for services, state companies still dominate telecommunications, financial services and transportation, but more than four-fifths of retailers, accounting for about half of retail sales, are privately controlled.
But don't state firms enjoy substantial market power, even if they don't account for most of the output? Once again, Lardy suggests otherwise. For example, profit margins are no higher for state companies than for non-state ones, and the average return on assets of private companies is substantially higher than that of state ones -- roughly 13 percent and 5 percent respectively in 2012. Those facts are hard to square with the assertion that state companies enjoy extraordinary privileges and market power. Private companies use their retained earnings -- along with industrial bank loans, of which they receive roughly half -- to finance their own growth.
Finally, Lardy questions the notion that China's central government is omnipotent. Here's another quiz: Which country has more government officials per capita, the U.S. or China? China has 31 civil servants and party officials for every 1,000 people; the U.S. has 75. (France has 95.) Nor is the Chinese government always as successful as we may perceive. Its repeated efforts to consolidate the steel industry have failed, and its attempts to do the same with the auto industry have been only partially realized. Environmental protection has been uneven at best; one Chinese official complained that he couldn't conduct inspections because minimal funding meant he didn't have regular access to a car to visit factory sites.
Lardy's myth-busting informs a crucial question for the global economy over the next decade: Will Chinese growth decelerate noticeably?
One reason to expect of is the middle-income trap that often afflicts countries with roughly China's per capita income. Those who are unconcerned about this dynamic in China invoke the state capitalism view: The government can sustain growth, even artificially, for a long time because it still controls most economic activity.
Lardy's thesis raises worrying questions about this assumption. He warns that the best hope for avoiding significant deceleration is to continue the process of structural reform, shifting further toward private enterprise. That is a harder path forward.
"Markets over Mao" should trigger a re-examination of how we view the Chinese economy. More urgently, it should rouse economic policy makers from complacency about the risks of a slowdown in Chinese growth.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
To contact the author on this story:
Peter R Orszag at
To contact the editor on this story:
Mary Duenwald at
Private Companies Are Driving China's Growth
15
OCT 14, 2014 10:15 AM EDT
By
In China, the conventional wisdom holds, state-owned enterprises dominate the economy, private companies are often starved for credit, and the central government exerts substantial influence.
But here's a quiz: What share of China's gross industrial output will come from state enterprises this year? I have tried this question on friends, even knowledgeable economists, and the responses I hear fall between 50 percent and 75 percent. The is only about 25 percent, a big drop from more than 75 percent in 1978.
In his important new book, ": The Rise of Private Business in China," Nicholas Lardy of the Peterson Institute for International Economics assembles statistics like this to demonstrate that our image of state capitalism in China is dated and wrong. Lardy's central thesis is that "private firms have become the main source of economic growth, the sole source of increasing employment, and the major contributor to China's growing and now large role as a global trader." (Disclosure: I am on the board at the Peterson Institute.)
Lardy is a careful, soft-spoken scholar of China, not given to overstating his arguments in the hope that strength of conviction can make up for lack of evidence. But he pulls no punches in attacking prevailing assumptions about the Chinese economy.
Lardy uses the same classifications that China's national statistical agency uses to differentiate "state" and "private" companies. Normally, given the reputation of Chinese statistics, some skepticism about their accuracy would be warranted. But Lardy checked a sample of companies and verified the classifications. He also makes other good arguments against the possibility that the data are substantially biased.
Now, it's true that in some sectors state enterprises are still the major players in China. In tobacco manufacture, electric-power generation and oil extraction, for example, state companies' share of output exceeds 90 percent. But in many other industries, from general-purpose machinery to paper and plastics, the state share is less than 15 percent. As for services, state companies still dominate telecommunications, financial services and transportation, but more than four-fifths of retailers, accounting for about half of retail sales, are privately controlled.
But don't state firms enjoy substantial market power, even if they don't account for most of the output? Once again, Lardy suggests otherwise. For example, profit margins are no higher for state companies than for non-state ones, and the average return on assets of private companies is substantially higher than that of state ones -- roughly 13 percent and 5 percent respectively in 2012. Those facts are hard to square with the assertion that state companies enjoy extraordinary privileges and market power. Private companies use their retained earnings -- along with industrial bank loans, of which they receive roughly half -- to finance their own growth.
Finally, Lardy questions the notion that China's central government is omnipotent. Here's another quiz: Which country has more government officials per capita, the U.S. or China? China has 31 civil servants and party officials for every 1,000 people; the U.S. has 75. (France has 95.) Nor is the Chinese government always as successful as we may perceive. Its repeated efforts to consolidate the steel industry have failed, and its attempts to do the same with the auto industry have been only partially realized. Environmental protection has been uneven at best; one Chinese official complained that he couldn't conduct inspections because minimal funding meant he didn't have regular access to a car to visit factory sites.
Lardy's myth-busting informs a crucial question for the global economy over the next decade: Will Chinese growth decelerate noticeably?
One reason to expect of is the middle-income trap that often afflicts countries with roughly China's per capita income. Those who are unconcerned about this dynamic in China invoke the state capitalism view: The government can sustain growth, even artificially, for a long time because it still controls most economic activity.
Lardy's thesis raises worrying questions about this assumption. He warns that the best hope for avoiding significant deceleration is to continue the process of structural reform, shifting further toward private enterprise. That is a harder path forward.
"Markets over Mao" should trigger a re-examination of how we view the Chinese economy. More urgently, it should rouse economic policy makers from complacency about the risks of a slowdown in Chinese growth.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
To contact the author on this story:
Peter R Orszag at
To contact the editor on this story:
Mary Duenwald at