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How China Fooled the World [video]

bbc.co.uk

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Re: How China Fooled the World [video]

#11

Post by radicaldreamer »

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%…

This trope is just not true, but people keep bringing it up when discussion of China's enormous debt growth comes up.

https://twitter.com/prchovanec/status/442838642974007296

Re: How China Fooled the World [video]

#12

Post by seanmcdirmid »

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%…

Hey, back in 2007 someone wrote:

Every year, for the last 20 years, many articles say that we can be sure of an imminent housing crash. Then every year they are proven wrong. This is just one more of these articles.

... Bubbles are bubbles until they pop. A lot of infrastructure in China is under utilized, and let's not even get started on empty shopping malls and apartment buildings, even here in Beijing!

Whether the government can pull off a soft landing is up for debate, but every year with people, local governments, and companies become more leveraged, not less, I think a hard landing is more likely.

Now, if that happens, this doesn't necessarily mean that the government collapses, but many of the bandits who are making out on this have gotten their money out of the country, and a correction is more likely to negative effect those who didn't really benefit in the gorging. And if that happens, the CCP (many whose relatives have already fled abroad) is going to be facing a lot of pissed off nongming.

Re: How China Fooled the World [video]

#13

Post by radicaldreamer »

zmanian wrote: post #4

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…

The US has done large scale stimulus operations since 2008 (https://dl.dropboxusercontent.com/u/113986/kkr52%207tofussti...), just not to the scale China adjusted to respective GDPs.

Re: How China Fooled the World [video]

#14

Post by seanmcdirmid »

yourapostasy wrote: post #9
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 de…

A lot of this opportunistic construction isn't done very well, and often its just a form of money laundering (build this, charge a lot, do a very crappy job, lots of pockets are padded). Many of these buildings will be torn down before they are ever used; every few months there is a scandal where this actually happens.

Re: How China Fooled the World [video]

#15

Post by MrHeartBroken »

radicaldreamer wrote: post #2

Full Episode on YouTube: http://www.youtube.com/watch?v=YW3h4wv8_ko Edit: see subsequent comments for a better quality video

The aspect ratio on that link seems a bit off. This one showed up in the suggested videos and has the correct aspect ratio. https://www.youtube.com/watch?v=HUSjMnmS5lI

Re: How China Fooled the World [video]

#16

Post by AJ007 »

yourapostasy wrote: post #9
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 de…

I don't know about Eastern China, but I was told first hand from a relative:

a) General lack of maintenance in all buildings. At the most basic level this includes keeping things clean, at a higher level fixing things when they break.

b) Air pollution causing external wear.

c) Individual was surprised when told a stadium was 6 years old. It looked decades old due to pollution and lack of maintenance. The locals were just going to build a new one to replace it.

Re: How China Fooled the World [video]

#17

Post by AJ007 »

seanmcdirmid wrote: post #14
yourapostasy wrote: post #9

Earlier quoted context omitted.

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 de…

A lot of this opportunistic construction isn't done very well, and often its just a form of money laundering (build this, charge a lot, do a very crappy job, lots of pockets are padded). Many of these buildings will be torn down before they are ever used; every few months there is a scandal where this actually happens.

Are there any statistics of buildings collapsing? I've seen the "tipped over building" picture, and heard some other sketchy stories but its all anecdotal.

Re: How China Fooled the World [video]

#18

Post by hangonhn »

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%…

If someone say it for long enough, they're bound to be right one day. It's the same about the decline of the US.

All we can do is judge them on a case-by-case basis.

In this case, it's really hard to judge because the threat, similar to the US credit crisis, is hard to measure. China has a really sizable foreign reserve that some people think will buffer any economic crisis. However, some estimates of the shadow banking system puts it well beyond its reserves. That said, not every loan in the shadow banking system will go bad. It just means the loans were made off the books. One can reasonably assume that the lender did his work and made loans that have a decent chance of success. Also, I don't know what falls under some of the definitions of shadow banking. The Chinese have been loaning each other large sums of money for generations. This "tradition" is one of the theories put forth in the rise of overseas Chinese communities and their dominance in business in those areas. Anyways, my point is that it's not all doom and gloom. The threat is there but don't panic yet.

Re: How China Fooled the World [video]

#19

Post by marukokinno »

radicaldreamer wrote: post #11
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%…

This trope is just not true, but people keep bringing it up when discussion of China's enormous debt growth comes up. https://twitter.com/prchovanec/status/442838642974007296

Last time I checked, China had 1 Trillion dollars in reserves. Chinese people is not living on credit cards, actually quite the opposite, they save a lot, even the little waitress at the cheap restaurant has a lot of savings. Every year, at spring festival, hundreds of millions of young chinese give their savings to their parents to keep, and those old people can save! I dont know where is the debt guys are talking about.

Re: How China Fooled the World [video]

#20

Post by yawniek »

isn't chinas foreign debt still net negative? if so, wouldn't be the obvious strategy be to start outsourcing the debt as the US did? we possibly have a few more years and as poulson said, there are quite capable people steering the ship.
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