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Q: Is this country broke and about to be exposed?
As I said last night, even though admin erased it. They want to take 200 USD from our paycheques. I think they're foreseeing financial problems. And why not? They've foolishly bought a bunch of foreign debt and keep building glamour projects. Looks like the recession could double dip, so I think they are frightened.
When you think about how much money is funneled to dirty politicians Swiss accounts, plus building things like huge towers and entire cities from nothing has cost a lot of money. It's basically what happened in Dubai.
Well since they are nothing but an export country and all their bigger clients have having money issues right... Of course the being broke will trickle down and they won't recover until after everyone else has.
I don't think China is broke, but there is a lot of artificial inflation going on. I do think this is going to be exposed and explode soon.
As for the foreigners being forced to pay into social welfare that we'll never actually benefit from, it's to create a pool to cover social welfare for the massive aging population that will be collecting benefits over the next 20 years. The gov't here expects to get a sizable amount of money by taxing foreigners and the companies that hired them (and WFOEs as well) - somewhere to the tune of $1 billion USD a year.
So basically, you will pay taxes to support the rapidly aging Chinese population.
It seems like a good move in practice for the government to try and prepare for the future, but of course, all the money will be siphoned off to buy Baijiu and BMWs.
The real problem in China is shadow banking, which is estimated at 14,000-15,000 billion RMB:
'Troubled enterprises are usually heavily involved in underground banking, which is basically direct and informal lending and borrowing between family members, friends, and people from the same community or locality. These unnerving stories always begin with PBoC’s lending curbs on formal banks, followed by surging underground banking, and then at some point – there is always such a point – inevitable and abrupt breaks in liquidity chains, and ending finally with run-away business owners or their suicide.'
So you have shadow banking on the one hand, and, on the other, the government's inability to pump in money and bail out businesses because it would make inflation go through the roof.
Check out the link below, which is dated Oct. 6th. Fascinating read.
