131–140 of 153 posts
China purposely engineered its economic growth to capture the lions share of the reward, which leaves China with the lions share of the risk. Moreover with capital outflows at record highs the only money going back into China is sovereign so this shouldn't create a net flight of capital in the west that would lead to a liquidity crisis. China's been in an economic boom for 37 years and for the most part people don't…
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$57 trillion in world debt is something quite unlike a savings glut. And that is just public debt, and it is growing quickly. http://www.economist.com/content/global_debt_clock But in general I agree with your overall statement... everyone talks about China's "ghost cities" as if they are some sort of quixotic or keynesian tomfoolery... but a simpler explanation is simply that China wants to urbanize and grow a middl…
"$57 trillion in world debt is something quite unlike a savings glut" That's also $57 trillion in savings. You do realize that someone owns the $57 trillion in debt, right? From the point of view of the owners, that is $57 trillion in savings. If you think debt is all bad, then you are not thinking coherently.
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If you save another dollar in the bank, that's another dollar of global debt that the bank owes you - it's how the accounting works.
Right, of course. But ultimately debts are paid back through energy creation, natural resource extraction, tangible assets, and human labor. The accounting details of fractional reserve banking in a debt based monetary system aside, that is a huge sum of human labor that governments have promised... and if that money ever gets paid off it will require the global workforce to work for decades to do it... I would hardl…
How much of that is pensions? People work for decades, in the expectation of a pension, creating the pension liability; and are then going to require possibly decades of other people's work while they themselves are too old to work.
Discussion of "paying it off" is meaningless when it can only be sensibly rolled over forever.
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>China's economic growth simply isn't sustainable, and that's even if it was true growth People have been naysaying China for a while but it's kept merrily growing. Mostly it's because the Chinese tend culturally to be pro education and hard working but in China were reduced to very low incomes by Mao's communism and have since been recovering and getting back towards the kind of economy they have in Taiwan, Hong Kon…
Yup China grew......by borrowing 32Trillion http://www.businessinsider.com/china-debt-to-gdp-statistics-... in order to support dead state companies http://www.dailymail.co.uk/news/peoplesdaily/article-3422491... and build empty cities and buildings http://www.chinatopix.com/articles/75493/20160126/shanghais-... http://www.citymetric.com/skylines/enough-empty-floor-space-... . Now they have to layoff tons of steel/ce…
China took on the greatest pile of debt in world history in the shortest amount of time. Nothing like it has ever been seen before. They're now arguably the most indebted nation when you combine public + private debt, and it continues to expand. They have no way to reduce that debt, as the moment they take their foot off the debt gas their economy will crash, and yet their new debt is generating almost no growth return. They're bleeding reserves, they're overflowing with zombie corporations, their asset classes keep trying to implode and require constant large bailouts, and they still have nearly a billion poor people to deal with and half a billion pretend farmers without jobs. How could they be more of a disaster?
China's economic growth simply isn't sustainable, and that's even if it was true growth. There isn't a top economist alive who believes China's self-reported GDP numbers aren't fudged in one way or another (source: http://www.businessinsider.com/economist-reactions-to-chinas... ). Either one of those situations (an economic slowdown, China fudging the numbers, or the more likely situation: a combination of both) make…
Any nation with a large rural population with access to easy credit has the potential for massive growth. The majority of China's population still consists of subsistence farmers. China should be able to maintain rapid growth until those farmers are integrated into a modern industrialized economy at which point the returns on investment will start to diminish like it has for every other industrialized nation.
Those subsistence farmers are kept that way because there's nothing else for them to do and there never will be. China can't allow the productivity of their farming to rise - it's among the lowest on earth - because of the social chaos that would occur. Unless you can find another three to four billion global consumers equal to your typical US or European consumer, such that China can then employ 450 million more people in jobs.
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Now all they need is a billion dollar marketing department.
It's called Huawei, or Xiaomi.
http://fortune.com/2016/01/15/xiaomi-smartphone-sales-fall-s...
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I think Japan stopped growing rapidly partly because they'd caught up with the west and couldn't keep transforming by copying more developed countries. I don't think China's there yet. Maybe if their gdp/capita goes from $6.8k (China) to $39k (Japan) that will be the case but there's a way to go.
The problem is more that the rest of the world cannot absorb more chinese exports, which force the chinese to have to do consumption based growth. Changing direction of growth like that is not simple.
Isn't everyone and their dog trying to devalue their currency these days to boost exports? What's the problem with weak yuan? Sure, iPhones will get even more expensive to buy in China (rather funny since they are made there) but other than that it should be a boon to exports, no?
All other things being equal, a weak currency is a good thing for a country. Unfortunately for China, a weak currency comes with a host of other problems, one of the most significant is capital outflow: http://www.bloomberg.com/news/articles/2015-09-25/china-capi...
Also don't tell the US from 1820-1970 that. The strong dollar, backed by a gold standard, enabled the US to become the largest economy at warp speed.
A balanced to strong currency is ideal for a country. It provides increased purchasing power for consumers; it lures foreign capital; it keeps import costs low, including for commodities + producers; it keeps inflation from eroding the standard of living of the bottom 3/4 of citizens that can't hedge inflation; and it generates confidence for consumers, foreign investors, domestic investors, and businesses.
That said, I think that the world economic situation is so complex and chaotic that who knows. The USA might have a black swan economic event (my bet would be on a digital credit meltdown, no ATMs, run on cash, etc.) that would affect everything.
I don't subscribe to the WSJ so I can't read the OP, but I thought the Yuan was wanting to rise, and that china was slowly letting it revalue. I thought all the economic pressure was aligned that way. Chinese have currency controls so they can't easily sell the yuan to buy other currencies (bitcoin is down for the past couple weeks- the one currency which chinese people love and which doesn't have any controls).