Chinese Economics Thread

[Dolcevita]

cont.

Saudi Aramco President and CEO Amin Nasser recently told the Nikkei Asian Review that he was considering additional investments in China.

Saudi Arabia needs to expand cooperation with China to regain market share and counter Russia's advance. "Should Saudi Arabia follow in Russia's footsteps with yuan settlement for oil transactions, this would mean a paradigm change for the whole industry," economists led by DBS Group Holdings' Chris Leung wrote in a report last November.

Pushing the redback out into a greenback-dominated world is a big part of Xi's drive to restore China's status as a great power. The Belt and Road Initiative -- Xi's campaign to build an economic zone from China to Europe, mainly through infrastructure development -- is another part of the equation. This is expected to help diversify China's oil sources and promote circulation of the yuan as well.

"The [yuan's] influence in the region is set to grow in tandem with Xi's proactive and assertive foreign policy," the DBS economists wrote. The Belt and Road "will be an indispensable catalyst for greater use of the yuan on oil settlement."

Even so, there is a long way to go until Shanghai oil futures become an actual benchmark.

"We expect to see a growing volume of arbitrage trades between the Shanghai and Tokyo exchanges," said Mitsuhiro Onosato, executive officer of the Tokyo Commodity Exchange, which lists Dubai crude futures. A crude trader at a major Japanese trading house, though, said he is taking a wait-and-see approach and is "only collecting information for now."

The trader said he believes there are profit opportunities in Tokyo-Shanghai arbitrage trading but cannot brush off concerns about market intervention by the Chinese government.

INFLUENCING MARKETS Meanwhile, Exxon-Mobil and other big resource players have no need to actively trade in yuan, which would expose them to foreign exchange risks. They, too, are likely to sit on the fence for now.

Investor mistrust over China's repeated market meddling is one reason the government delayed the launch of crude futures from 2012 to 2018. The Chinese authorities' heavy-handed restrictions after the stock market downturn and the yuan's fall in 2015 did not sit well with investors in the U.S., Europe and Japan.

 

[Dolcevita]

cont.

As long as China is worried about limiting inflows and outflows of funds, it will be difficult to realize the unrestricted transactions global investors and trading houses expect. And given current restrictions on exchanging yuan for dollars and overseas remittances, it will not be easy for foreign investors to fully participate anyway.

Zhou Xiaochuan, the People's Bank of China governor who is spearheading the yuan's globalization drive, told a Chinese magazine that no country with strict currency controls has ever achieved an open economy.

China has sought to set other global commodity benchmarks before.

The Dalian Commodity Exchange ranks No. 1 in the world in terms of trading volume of iron ore. The market has a significant impact on spot markets in Asia. "Checking prices on the Dalian futures market is one of my daily routines," said a staffer responsible for materials procurement at Nippon Steel & Sumitomo Metal.

Fluctuating iron ore futures prices in Dalian can complicate life for steelmakers. © Reuters


But individual investors playing the short-term game have an outsize role in the market. Often, they trade through online services accessed through mobile phones. They demonstrated their power in 2016: Trading volume on some days exceeded China's annual imports of around 1 billion tons, as they speculated on a rebound in steel prices. Such speculation ignores supply and demand and stokes volatility -- sowing confusion in the physical spot markets for iron ore and steel.

Will China's new crude futures market be similarly problematic? Either way, creating a benchmark is more of a marathon than a sprint.

"It is not easy to gain the confidence of global natural resource companies and investors," said the crude oil trader at the Japanese trading house. "It'll take years for China's crude oil futures trading to become a leading benchmark and have an influence on the crude oil markets."

 

[Hendrik_2000]

It is good first start like they say journey of thousand mile start with one steps
If this energy future succeed It will be the beginning of and end

 

[Anlsvrthng]

You cherry pick the data you want to paint a gloomy picture of China. No one doubts that China's growth will plateau in future, but you seem to base your forecast on dubious logic.

So, China's consumption of pork, cellphones and pork has hit a wall. And because of that, a crisis is brewing, leading to a slowdown in GDP growth? I am not saying GDP will slow down, it has been slowing down. But eating less pork is not going to make a difference to the economy because people substitute other items for pork.

I don't know about the spending habits of the people where you live, but he Chinese people's expenditure do not consist of cellphone, cars and pork only. There are many other goods and services that drive the economy and that is why you get ever increasing annual increase in retail sales. As for household debt, there are other factors to consider, especially employment. And it is still below Germany's, far below UK's and the US'.

I want to point out car sales slowed because the preceding year saw a surge in demand due to increase in car tax the following year. More cars were bought that year to avoid having to pay tax the following year. And what you get is a high base for that year.

Your pessimism is similar to that naysayers over the years who called hard landings after hard landings. Too soon and too little understanding of China's economy.

You seem to think that if household debt to GDP were to be frozen, the economy will go into crisis. What has that got to do with the middle class?


Based on your logic, the regimes in Europe should have adopted China's style of communism that has uplfited hundreds of millions out of poverty and continued to defy doooomsayers over the past twenty years.

It pains you that the time has not arrived for China to hard-land.

Up to this point the only good condiiton part of the Chinese economy was the households.

Mainly debt free, and growing.

As it looks like now the goverment pushed a lot of debt onto them, to increase the gdp growth ( most important : D ) and to get more time before they found out how to restructure the economy / political landscape painless .

This is the story, the other parts of the economy now has so much underperforming debt, projects, assets and so on they can not grow the headline gdp number now with even extreme levels of investment.

It is a "collapse" of the 2004-2018 growth / economy model, and they pushed it so badly to the edge in the past ten years now I have no clue how they can get out from the hole .


Now there are similar signs of trouble like in 2007.

The current global economical model is doomed, it won't work any more.

Anyway, I think th Chinese policy makers has nightmares now, the US trade thingies pushing up the instability as well.


And actualy we can't forget that the Chinese policy makers main target is to stay in power, not to pull out millions from powert ( actually they sent them to powerty in first place) or to have middle class or to have GDP growth.


So, the GDP will have marginal importance compared to that to keep the political landscape stable.

 

[Anlsvrthng]

And who care for bric brac and toy those industry are leaving China anyway But million of farmer in midwest will holding a bag when China restricting their sales It is 12 billion dollar agi export think about it
China can buy more from Brazil which they already did A bonanza for Brazil
Today is sorghum but tomorrow it will be soybean

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The number of farm workers is 676000 int the US.

US agricultural production totaled around 900 billion $, export around 133 billion, means say even 10% reduction in export can cause job loss to no more than 10 000 US workers.


However I think the affected export commodity doesn't have 12 billion $ annual volume in the US-China trade .

IT can be more damaing to the US employment if China restrict the semiconductor equipment / semiconductor export to China .
: D

 

[Anlsvrthng]

What crisis?

So the sales of cars and smartphones dropped. Despite the country registering nealy 7% economic growth. And you did not bother to dig further to find out why? Because if you had taken the time to find out why, you would not be arguing for butthurt's sake because unlike Europe, the sales dropped not because the economy is was struggling.

Wrong logic.

I looked after the consumer items with available statistics, and I found the cars/pork/phones, and the consumer debt to GDP number.

If you have statistics for any high ticket , mass consumed item,then fine ,please share it.

And the car / phone sales are weak compared to the US numbers, in China the demand for phones droped by 5%, in the US increased by 2-3%, on world level the demand increased by 8%.

Means it is NOT lack of new phones or whatever.

If you have same nice statistics about TV sets, furniture purchasing, school expenses or anything household related that can give even better pircture please share it.

 

[Anlsvrthng]

The trick to avoid the middle-income trap is to avoid those development doctrines that reflect self-interested doctrines in the advanced world. The real task is to concentrate on economic development that supports progressive increases in living standards of ordinary people in emerging economies.

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The last sentence is the most important.

However when China signed the WTO she falled into this trap, and accepted trade / credit terms favorable for the US / europe.

At the moment China playing within the US trade system.

 

[broadsword]

Wrong logic.

I looked after the consumer items with available statistics, and I found the cars/pork/phones, and the consumer debt to GDP number.

If you have statistics for any high ticket , mass consumed item,then fine ,please share it.

And the car / phone sales are weak compared to the US numbers, in China the demand for phones droped by 5%, in the US increased by 2-3%, on world level the demand increased by 8%.

Means it is NOT lack of new phones or whatever.

If you have same nice statistics about TV sets, furniture purchasing, school expenses or anything household related that can give even better pircture please share it.

6.9% GDP growth.

 

[broadsword]

Up to this point the only good condiiton part of the Chinese economy was the households.

Mainly debt free, and growing.

As it looks like now the goverment pushed a lot of debt onto them, to increase the gdp growth ( most important : D ) and to get more time before they found out how to restructure the economy / political landscape painless .

This is the story, the other parts of the economy now has so much underperforming debt, projects, assets and so on they can not grow the headline gdp number now with even extreme levels of investment.

It is a "collapse" of the 2004-2018 growth / economy model, and they pushed it so badly to the edge in the past ten years now I have no clue how they can get out from the hole .


Now there are similar signs of trouble like in 2007.

The current global economical model is doomed, it won't work any more.

Anyway, I think th Chinese policy makers has nightmares now, the US trade thingies pushing up the instability as well.


And actualy we can't forget that the Chinese policy makers main target is to stay in power, not to pull out millions from powert ( actually they sent them to powerty in first place) or to have middle class or to have GDP growth.


So, the GDP will have marginal importance compared to that to keep the political landscape stable.

It was the European colonial powers. Don't think too much. Too dodgy.

 

[manqiangrexue]

Up to this point the only good condiiton part of the Chinese economy was the households.

Mainly debt free, and growing.

As it looks like now the goverment pushed a lot of debt onto them, to increase the gdp growth ( most important : D ) and to get more time before they found out how to restructure the economy / political landscape painless .

This is the story, the other parts of the economy now has so much underperforming debt, projects, assets and so on they can not grow the headline gdp number now with even extreme levels of investment.

It is a "collapse" of the 2004-2018 growth / economy model, and they pushed it so badly to the edge in the past ten years now I have no clue how they can get out from the hole .


Now there are similar signs of trouble like in 2007.

The current global economical model is doomed, it won't work any more.

Anyway, I think th Chinese policy makers has nightmares now, the US trade thingies pushing up the instability as well.


And actualy we can't forget that the Chinese policy makers main target is to stay in power, not to pull out millions from powert ( actually they sent them to powerty in first place) or to have middle class or to have GDP growth.


So, the GDP will have marginal importance compared to that to keep the political landscape stable.

It's really funny how difficult it is for you to make up bad things about China. While doing so, you've had to condemn your own European system, and now, you've even said that the entire world system is "doomed" LOL. Well, I guess if everything in the world is messed up, then you can believe China is messed up too by default. Pessimist's view: find a way to make everything sound bad.

And I can't "forget" (reference to bold part) that because I never believed that. I guess you make this assumption based on how things are in Europe. Well Europe is not China and you know nothing about the Chinese, making you completely unqualified to surmise Chinese intentions.

Wrong logic.

I looked after the consumer items with available statistics, and I found the cars/pork/phones, and the consumer debt to GDP number.

If you have statistics for any high ticket , mass consumed item,then fine ,please share it.

And the car / phone sales are weak compared to the US numbers, in China the demand for phones droped by 5%, in the US increased by 2-3%, on world level the demand increased by 8%.

Means it is NOT lack of new phones or whatever.

If you have same nice statistics about TV sets, furniture purchasing, school expenses or anything household related that can give even better pircture please share it.

No, you have the wrong logic. China's phone market numbers are much stronger than US numbers, with nearly three times the volume of sales. The drop of 4.9% was almost entirely from Samsung's volumes dropping over 50%. ALL top 4 brands, which are Chinese, grew; it was the foreign brands from USA and South Korea that declined. This is why you need to actually look at your data before trying to interpret it based on how the title sounds.

(

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)
Chinese car sales rise, particularly for new energy vehicles. Looks good to me.

The last sentence is the most important.

However when China signed the WTO she falled into this trap, and accepted trade / credit terms favorable for the US / europe.

At the moment China playing within the US trade system.

Well, you know, when China signed the WTO, it was a heavily US-centric world. What should China do to not fall into this "trap?" Practice isolationism? LOL Yeah China played the US game, and is kicking everyone's ass at it so hard that the US is complaining that the trade deficit is too high, but can't do anything about it.