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How China Fooled the World [video]

bbc.co.uk

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Re: How China Fooled the World [video]

#4

Post by zmanian »

My interpretation is that China did the heavy lifting of pulling the world out of the last crisis. Neither the US nor Germany had the political wherewithal to do large scale stimulus and/or structural reform. The Chinese also had the most to loose.

The cost of propping up the global economy had been highly damaging to China's weak institutions if we are lucky it will recover in 20 years. If we are unlucky there will be a partial collapse.

Re: How China Fooled the World [video]

#5

Post by __pThrow »

It seems as though China is undergoing a Keynesian expansion. So I'm probably wrong about that. I'm going to watch to see if I can figure out the difference between what they seem to trying to say is a problem due to massive government spending and Keynesism.

Or are they saying "too much" Keynesism is a bad thing?

Okay, these seem to be the main differences and concerns I am getting from this vid.

  1. Many loans eventually come via a shadow banking system
     and so are not transparent, ie, no one know how much is
     loaned and regulation is poor, this could lead to a
     huge credit crunch, and China's own too big to fail  
  2. Some large amount of housing is speculative in nature
     and kept empty as an investment and hence could be
     causing an enormous bubble
  3. This real estate bubble brings benefits to rich but
     doesn't improve the economy for the poor
  4. The boom has made the local authorities very rich and
     powerful (political corruption, crony capitalism, ...)
  5. The sheer size of it is unprecedented in modern
     financial history
  6. Citizens save too much (1/3rd of earnings). So economy
     is dangerously unbalanced, fueled by debt spending and
     not enough by consumer spending or shopping (41:10)
  7. Investment is 50% of economy, consumption 30%, so when
     investment slows down, it can't be replaced with 
     consumption. Credit is at a level of twice the size
     of the economy.
  8. State owned companies are filled with inefficiencies.
     "Shaking" them up would leave huge numbers of people
     unemployed.
  9. There is beginning to be a fear of collapse (that
     could lead to collapse.)
 10. Punk Rock pointing out corruption in the system
     and how the rich are getting richer.
 11. Hard to see further economic reform without political
     reform, yet it seems that Chinese are intent on
     not reforming their political system further.
Recommendations to balance economy:

  1. China needs to become more like us and consume more 
     themselves.

Re: How China Fooled the World [video]

#6

Post by gscott »

China owns part of many industries, Governments that start having issues start selling their stakes and come up with plenty of money. Like everyone I am fascinated with China building new cities where no one lives, but they are going to totally get away with it and come out the other side unharmed.

Re: How China Fooled the World [video]

#8

Post by marukokinno »

Every year , for the last 20 years, many articles say that we can be sure of the imminent Chinese economy collapse. Then every year they are proven wrong. This is just one more of these articles. The guys have no idea what they are talking about. The education effort is as huge as the infrastructure building effort, and it will bring its benefits. At some point the growing will slow down; at some point it will be 1% yearly growth; but a political collapse is very unlikely, and economic collapse is even more unlikely.

Re: How China Fooled the World [video]

#9

Post by yourapostasy »

gscott wrote: post #6

China owns part of many industries, Governments that start having issues start selling their stakes and come up with plenty of money. Like everyone I am fascinated with China building new cities where no one lives, but they are going to totally get away with it and come out the other side unharmed.

I saw an explanation somewhere for the ghost cities. The CCP realizes that construction labor there is currently very cheap, land is cheap (in terms of political capital to displace people --- wealthier citizens will make it more expensive to displace them), and materials are relatively cheap. As they develop further, all three cost inputs will only get more expensive. So the CCP is deliberately allowing the rapid development of these projects in anticipation of the massive shift from rural to urban population migrations over the next several decades. If the CCP is trying to stem catastrophic inflation when the mass migration hits a peak, then these ghost cities can in retrospect appear a prudent, long-range measure.

There are also also quirks of the Chinese property market [1] and mass media's penchant for sensationalism that might more reasonably explain the ghost city phenomena.

[1] http://blogs.wsj.com/chinarealtime/2013/09/24/chinas-ghost-c...

Re: How China Fooled the World [video]

#10

Post by AJ007 »

marukokinno wrote: post #8

Every year , for the last 20 years, many articles say that we can be sure of the imminent Chinese economy collapse. Then every year they are proven wrong. This is just one more of these articles. The guys have no idea what they are talking about. The education effort is as huge as the infrastructure building effort, and it will bring its benefits. At some point the growing will slow down; at some point it will be 1%…

For the past 20 years I've been hearing how China was going to take over the United States in everything. Invasion of Taiwan would happen whenever they wanted. I've never heard anyone say their economy was about to imminently collapse.

I'm surprised any one thought that China's "bailout" was doing anything more than kicking the can down the road? It is the end of the road now, and they get to deal with unserviceable debt. There are many options. All are ugly in unique ways. For who and when are the questions left undetermined.

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