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Q: China - Apocalypse Now?

I've just read somewhere that Moody forecasts Chinese economic growth for this year to be 6.8% and then 6.5% for 2016.

 

WTF! From a 9% average to one that is around 6%. Something has changed and we can't avoid that fact. I'm not trying to generate panic, but at the same time, it seems like we've now passed the stage where things are "business as usual" in China.

 

My guess is that the Chinese government is going to continue spending on local infrastructure projects such as railroad expansion and investing in various energy sources. Nonetheless, some of this investment comes across as overextension.

 

What the heck do we have in store for us? I've got no idea man.

4 years 15 weeks ago in  Business & Jobs - China

 
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the numbers are actually worse than they publish, electricity usage and auto sales are actually down from last year, these are pretty good indicators that gdp is actually already in the range of 4 to 5 %, i predict the party will eventually change the credit laws ( jail for not paying a credit card for 60 days currently and allow bankruptcy, and no down payment cars and houses), they have to keep the bubble growing to avoid anarchy, maybe the current guy can pass off the problem to next leader but a decade is a long time in the modern world.

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4 years 15 weeks ago
 
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the numbers are actually worse than they publish, electricity usage and auto sales are actually down from last year, these are pretty good indicators that gdp is actually already in the range of 4 to 5 %, i predict the party will eventually change the credit laws ( jail for not paying a credit card for 60 days currently and allow bankruptcy, and no down payment cars and houses), they have to keep the bubble growing to avoid anarchy, maybe the current guy can pass off the problem to next leader but a decade is a long time in the modern world.

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4 years 15 weeks ago
 
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There's a huge, massive difference between

 * Recession (ie. country X more money getting out that money getting in)

 * Growth slowdown (ie. country X having more money getting in than getting out, but that money surplus is smaller than it used to be)

 

A 10% or even 5% growth can't go on eternally. Go in a country with nothing and give it some loan, 10 years of peace, and a somewhat rational management : of course the growth will skyrocket at a crazy 20%. Look at Botswana or Rwanda as textbook examples. It's easy to double or triple almost nothing. It's much harder to double something really big. Say, it's easy to double your railroad cover or your power supply when it's close to nothing, it's harder when you reached 100% capacity. After a decade or two of that kind of growth, level of life increases, cheap workers are not so cheap, there are much less low hanging fruits for investment, so growth slowdowns. Eventually, you get 1%, 2% growth like in most Western countries. Close to an equilibrium, where you need really good management and policies to reap benefits (or by selling the family jewels, or pillaging your middle class, hahem...).

 

China is not going to crumble just right now, they have lots of new infrastructure, and this kind of change goes with lots of inertia. If a factory decide to move elsewhere, it's going a year or two between the decision and the actual completion of the move. China have cash, giving it room for manoeuvers. Ok, so far, the way that cash is spent (moar infrastructure and ridiculous stock market policy) is questionable.

The real question is : can China have 1% or 2% growth, while giving to its people perks like a social security net, proper healthcare, rule of law, balancing inequalities, lowered pollution levels. It's going to be hard to justify being in power when you have 2% growth but with none of the perks others manage to offer. Unless you suppress dissent and nip in the bud this kind of public consciousness, So far Chinese people didn't show much ability to look beyond their personal benefit, much less to criticize efficiently their overlords, but who knows, they might start to ask questions when the easy times are gone.

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4 years 15 weeks ago
 
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Bound to happen, they've been growing way above average for a long time now. Which is good for them. But they're likely to regress more toward the mean for growth.

 

Silly to assume the factors that affect every other place in the world don't apply here for some reason. 

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4 years 15 weeks ago
 
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Just came across this article about China:

https://www.stratfor.com/weekly/chinas-crisis-price-change?utm_source=fr...

I like this organisation, they seem to know their stuff.

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4 years 15 weeks ago
 
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Man, how things can get from bad to worse within a week!

 

Share prices are continuing to fall and now the powers that be are rushing to try and piece everything back together by once again, reducing rates and cash reserves.

 

Weirdly enough, I think that the root cause of all this panic stems from a lack of communication on the part of those managing the economy. What exactly is the grand plan for the Chinese economy? What is the overall plan and philosophy behind all of the recent decisions the government has made? A clear plan needs to be outlined and effectively communicated to the markets on a world stage. We always hear about Abenomics, what happened to the Xi market (lol) economy?

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4 years 14 weeks ago
 
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Governor

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This is what happens when you have greedy peasants playing the stock market like a roulette wheel.

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4 years 14 weeks ago
 
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Hey, since in the 70's people would beat each other to death with a hoe cause the government said so, I'm sure it won't be hard to convince people not to panic...

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4 years 14 weeks ago
 
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