China - Hall of Fame Articles

Re: China - Hall of Fame Articles

Postby winston » Mon Apr 23, 2012 5:43 pm

Chinese legislators have amassed outsized assets, with the wealth of the richest 70 members of the National People’s Congress amounting to $90 billion last year, 12 times the combined wealth of the 660 top officials in the U.S. government, Bloomberg News reported Feb. 27.
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Re: China - Hall of Fame Articles

Postby winston » Tue Jul 03, 2012 8:32 am

Why We Don’t Own “China” By Joseph L Shaefer

I think I understand the economics and politics of China pretty well. I was a defense attaché in Myanmar (Burma) in the 1990s and watched as China supported the vilest form of dictatorship, one that enslaved its own people in forced labor and pocketed the money the Chinese paid for the privilege of plundering the natural resources of Myanmar.

I continued to follow it as a geopolitical analyst in the US Intelligence Community. And I have continued to research and analyze it from an economic and investment point of view more recently.

Not long ago I sent a note to my friend and colleague in the business, Vivian Lewis, the doyenne of international investing and editor of Global Investing stating why I remain wary of the “incredible opportunity” in China.

I wrote, “I…am a bear in the China shop. There is much to marvel at, but the air pollution, water pollution, lack of enough potable water (occasional floods notwithstanding), failure to regulate, failure to know if the distant reporting is accurate, climate of fear if plans are not met, increasing ethnic unrest, and a population that, like all before them, will increasingly expect real wages for real work, all conspire to create an economy that will grow, but in fits and starts. I say they’re ready for a fit…”

http://www.thestockenthusiast.com/opini ... own-china/
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Re: China - Hall of Fame Articles

Postby winston » Mon Jan 21, 2013 6:24 am

China's Economic Numbers

Ask CAT about Chinese trustworthiness (as you ask yourself about CAT's due diligence).

After hours Friday CAT warned that a company it bought in China was basically a total write off, cutting half off of CAT's Q4 earnings.

Why? In a Hewlett-Packard like move, it appears CAT bought a basically worthless company that supposedly engaged in systematic year after year lying about its results.

It is taking a $580M charge. If it is not Chinese hackers, Chinese spies here on visas, it is, apparently, intentional fraud.

Oh, but you can still believe China's economic numbers.

Source: Investment House
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Re: China - Hall of Fame Articles

Postby winston » Tue Feb 05, 2013 7:31 am

Provinces exaggerate economic growth by Natallie Cai

Mainland provincial governments may have exaggerated their economic growth last year by more than 5 trillion yuan (HK$6.22 trillion).

The combined audited value of the gross domestic product of 31 provinces totaled 57.69 trillion yuan in 2012, outpacing the preliminary reading of 51.93 trillion yuan as measured earlier by the National Bureau of Statistics.

This marks a record 5.76 trillion yuan gap - equal to the total output of Guangdong province last year, the Beijing-based China Youth Daily reported yesterday.

Since 1985, the GDP of each province has been measured by its respective authority and then all data has been tallied by the central government. But figures submitted by local administrations have surpassed those released by the NBS for the past few years.

Although the bureau and the Ministry of Supervision jointly cross checked local government data, the gap has widened.

Foreign brokerages have seemingly refused to believe official data about China's economic growth, which has already slowed.

JPMorgan expects the growth in the world's second-largest economy to ease from 8.3 percent on average in 2013-2015 to 6.6 percent during 2016-2020.

The pace of economic growth in the mainland is likely to ease in the future as its primary drivers of the past 20 years - investment and production - take a slide, the US investment bank said in a note yesterday.

Investment and production have contributed 4 percentage points and 3.1 percentage points, respectively, of the mainland's GDP in the past decade, the report said.

http://www.thestandard.com.hk/news_deta ... 30205&fc=2
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Re: China - Hall of Fame Articles

Postby winston » Sat Aug 17, 2013 7:24 am

China gets $1 trillion boost from dodgy data: ReportnnBy Arjun Kharpal

China may be exaggerating the size of its economy to the tune of $1 trillion by releasing "willfully fraudulent" inflation and GDP [gross domestic product] data, according to a study out this week.

Numbers from the world's second largest economy are treated with skepticism by some economists, but this latest report has attempted to quantify the scale of discrepancy.

http://finance.yahoo.com/news/china-get ... 02113.html
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Re: China - Hall of Fame Articles

Postby winston » Mon Sep 09, 2013 6:00 am

Can’t Get Enough of China’s Ghost Cities

Macro scale madness.

China’s building boom has created a ton of abandoned cities and massive ruins — most of which are brand new, and have never had people living in them.

Here are the deserted Chinese cities, mostly built in the last 10 years, which could be sets for your next dystopian movie.

Source: io9

http://io9.com/chinas-brand-new-abandon ... 1238731420
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Re: China - Hall of Fame Articles

Postby winston » Mon May 12, 2014 7:53 pm

China's Slowdown May Be Worse Than You Thought By Chris Mayer

The following idea might seem to belong in the "Who cares?" file. But I find it really interesting, and you may too…

There has been some buzz lately about how China may pass the U.S. as the world's largest economy as early as this year. This is according to the GDP figures.

Put aside for a moment the many flaws in the measure itself. There is still one thing that most people don't understand about China's GDP figures… and this little-known fact could have wide-ranging effects in the markets – especially for commodities.

Let me explain…

What most people don't realize is that the U.S. and China actually calculate GDP differently.

The economist and author Michael Pettis has a long and wonky blog post on China's GDP calculation methods. (I met him once for dinner in Beijing four years ago. What I remember most is that I dunked my first bite of food in some sauce that I did not know right then was about the spiciest you could put in your mouth. Hilarity ensued for my dinner companions…)

Here is a key excerpt:

"China and the U.S. compile their GDP data implicitly in very different ways, among the most notable of which is the way Chinese lenders, banks as well as households, treat a substantial portion of the debt as if it were implicitly or explicitly guaranteed by central or local government agencies. This means investment losses don't show up as losses (expenses), because it is politically difficult to do so, and are instead rolled over and so show up as assets."

In short, China's accounting is like Enron's or Lehman Bros.'… or the U.S. government's.

Pettis says if you were to make the necessary adjustments, you would find that China has overstated their GDP by 20%-30% compared with the U.S. That's a pretty big difference.

Although Pettis goes on to say, "Because their economies are implicitly structured in very different ways, which create very different balance sheets, the two economies cannot be directly compared."

So who cares?

Well, that's what I thought at first, except that I then see a number of investors making portfolio decisions based on what China's GDP does (or doesn't do).

If China is much smaller than we think, or is growing at a slower rate, then that has implications — for commodities in particular.

You have surely heard already about how China consumes two-thirds of the world's iron ore, 40% of its copper, blah blah blah.

China had a lot to do with the commodity boom that kicked off in the first years of the last decade. China's slowdown also had a lot to do with why most commodities have struggled since peaking in the summer of 2011.

I tend to agree with David Rosenberg, the chief strategist at Gluskin, Sheff & Associates. He said, "China's boom was a once-in-a-century event, and the grim reality is that it's over."

China's economy will eventually pass the U.S. in size. It seems only a matter of time. But I think the texture of China's growth will look different than it has. It should be less commodity-intensive, for one thing. That's only natural and fits with past patterns of other countries' development paths.

It's also natural to expect recessions. Business cycles happen, even to the Chinese. Bad debts happen, even though the Chinese might not recognize them as such. Reality usually wins in the end, though you can keep up appearances for a long time. (See the Soviet Union, which used to put up pretty GDP numbers that made the West quail with fear.)

Given China's growing size, a recession there is not likely to go unfelt over here — or around the world. I think when that Chinese recession finally happens, it will be a macro event for the ages.

Source: Capital & Crisis
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Re: China - Hall of Fame Articles

Postby winston » Thu May 15, 2014 6:23 am

This economic slowdown could be much worse than you thought

by Chris Mayer

Source: Capital & Crisis

http://thecrux.com/this-economic-slowdo ... u-thought/
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Re: China - Hall of Fame Articles

Postby winston » Fri Jan 16, 2015 10:43 am

China’s Ultimate Debt Bubble: 27 Times Growth in 14.5 Years

We have shown many times in the past how the U.S. debt bubble mushroomed in the boom that started in 1983. U.S. debt grew 839% in 25 years into the bubble peak of the first quarter of 2009. That was 2.68 times GDP growth.

How can you have debt grow 2.68 times GDP and not have a debt crisis?

Any economist that didn’t and doesn’t see that as a problem (think Paul Krugman) should be driving a limo instead. At least they could keep the suit that way.

But as you would suspect, China makes that look like nothing. Just since 2000, or 14.5 years, China’s total debt grew from $1 trillion to $27.35 trillion or 2,635% while GDP grew from $1 trillion to $9 trillion.

Look at this chart…

See larger image

China’s debt grew 3.43 times GDP for 14.5 years. That has got to be the fastest growth rate of any major country ever.

Yet many economists praise China’s new state-driven capitalist model. Yes, now governments can take debt and leverage to extremes that the free market system could never dream of… That’s a good thing?

The U.S. and most developed countries have now taken over the economy and are setting short and long-term interest rates at zero or less when you adjust for inflation and target growth and inflation rates.

The central bankers want to run our economies like a machine as if it were an inorganic process when it is actually a very dynamic organic process that plays on opposing forces: boom and bust, innovation and creative destruction, inflation and deflation, and success and failure. That’s the secret to the golden goose of free market capitalism.

Many investments will always fail, that is how we learn and evolve. But governments in a top-down and less accountable process will almost always make worse investments than the bottoms-up free market system.

China now has 27% of urban homes vacant, excess capacity of 30% to 40% in major industries from cement to aluminum, and hordes of empty malls, offices, roads, bridges and rail systems. Real estate has gone up over 7 times since 2000 – does that sound like a bubble to you? The U.S. real estate bubble was a mere 2.2 times.

The government has suddenly pushed 220 million unskilled people from rural areas into urban areas where they’re not even registered citizens. What happens to these people when the bubble bursts?

China is going to finally prove once and for all that top-down, centrally planned economies are far inferior to bottoms-up free market ones. Russia wasn’t enough proof for clueless economists. They’re going to have to eat their words on this.

You could look at China’s debt to GDP ratio of 2.64 times versus that of the U.S. and say that’s not as high as us at 3.54 times. But emerging countries have much lower debt ratios than developed ones as their consumers have much lower incomes and are much less credit worthy.

China’s debt ratios are more than twice that of similar countries like Brazil or India.

China’s capital investment from the government has been far higher and has lasted far longer than any other emerging country. This investment and debt binge is truly unprecedented!

The best comparison with the U.S. would be to compare China’s debt growth for a similar time frame into the peak of the U.S. bubble, or 14.5 years from the third quarter of 1994 into the first quarter of 2009 as the chart below shows.

See larger image

China’s total debt grew 8.74 times as fast as U.S. debt in 14.5 years. Holy crap, we have no idea what a debt bubble is!

China will NOT have a soft landing. It will fall like an elephant.

Those 220 million people that they forced into urban areas are screwed. They will be jobless and likely not even have the option to go back to their rural farms for self-subsistence as those areas have now been paved over with empty condos.

At least they’ll have those empty condos for squatter rights.

We’ve also been warning that the Chinese government will start restricting the growing exodus of the most affluent Chinese (the smart money getting the hell out of Dodge). They just announced a crackdown on taxes owed for foreign income.

The next step could be restrictions on leaving the country without a major exit tax.

We are about to witness the greatest economic and social disaster in modern history.

Source: Economy & Markets
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Re: China - Hall of Fame Articles

Postby winston » Wed Jul 01, 2015 8:32 pm

5 Expensive Chinese Construction Projects That Are Useless

By Irene Luo

Source: Epoch Times

http://www.theepochtimes.com/n3/1411225 ... campaign=6
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