Is the Chinese economy doing as wellsas the Chinese claim?

Discussion in 'Economics' started by Wordsmith, Jan 26, 2012.

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  1. Wordsmith

    Wordsmith LE Book Reviewer

    Interesting article in the Telegraph. Ambrose Evans-Pritchard is making the point that a number of commentators have been making over the years - that it is difficult to reconcile the official Chinese rate of growth with the statistics for Chinese imports and exports.

    To put that into simple language we know what's going into China and we know what's coming out - and that doesn't tally with official Chinese figures for growth. Personally, I have long wondered if China has been having the housing boom to end all housing booms. If that's true - and the wheels have now fallen off - that's scary.

    So is China doing as well as people think? Read the story below...


  2. Everyone is economically trapped China included. Its all just a case of who is going to get hit the hardest. China seems like it will be the one taking the hardest hit. It has a both a old export economy based on low wages that is now coupled to a new investment economy that requires middle class wages in order to repay the costs of investments.

    One of the two economic models is going to collapse.

    I would watch commodity prices because in the near term I expect a sharp drop in most.
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  3. No, by our standards they are up shit creek without a sampan, but hey why should that stop them, they are strategically motivated, not economically. With their dollar holdings they could ruin America tommorrow, they are working now to grease the slope. They know exactly how much their people will put up with and won't stop until our economies collapse!
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  4. China's growth sense 2008 has been investment driven. Remove that and China's economy would have been stagnant are in decline. To make those investments pay off China has to produce a middle class capable of supporting that investment. You cant have third world wages with first world infrastructure.

    China could dump its dollar reserves and the result would just be more QE of basically the same amount.

    I don't see China as being a threat to anyone but themselves in the next ten years.
  6. If you build houses that 99% of population cant afford to buy and far more then the 1% who can will ever need it will end badly.

    If you rip up old long distance passenger train tracks and replace them with high speed trains that cost three times as much as the old ones to make the same trip you need to have passengers that can afford the new fares.

    If you spend on expanding factories massively but have much slower export growth you need to expand internal consumption in order to provide demand for what those factories produce.

    All the above require a large Chinese middle class to buy the houses being made, to pay the fares for the high speed trains, and to buy all the goods from the new factories.

    China has mastered creating new production on a vast scale but hasn't managed to find the buyers to pay for the most recent investment binge yet.
    • Like Like x 2
  7. I see your thinking... and printing more money just isnt a chinese thing to do ! thanks for clarification. I think your right.
  8. In Soviet Russia it was expected that official figures be vastly inflated to satiate the appetites of leaders for "success".

    China is rather better managed, but it is quite possible a proportion of the figures is piss and wind.
  9. china has long been trading at a defecit and prinitn money to cover the losses but in the last 5 years that change a lot, with a vast majority of the tech industry moving production to mainland china where stuff is produced for less than 1/3 of the cost than in more traditional manufactuing bases, even better is the fact for many of those industires they dont even own the production plants they meerly provide the product specs and ask for however many they need to fill there predicted sales (apple is a prime example of doing this) wiht options for larger orders, the pegged yuan exchange rate makes it expensive to move money out of china but cheap to buy stuff made in china something that they have been keen to exploit, of course they dont seem to have realised its hurting there import market and grossley inflating the costs, there answer thus far has been to keep relitivley low wages across the board, but the idea that state owned infrastructure needs ot be more expensive to use once updated doesnt make sence, sure it has to be paid for but not in the normal sense they just declare a fixed price and crack on, the workers were already paid for the job of building it and its cheap as chips ot run compared ot the previous older stuff.

    no if china senses its in cash crisis it will undoubtably just print more money and declare more stuff to be state owned, or perhaps change its exchange rate to compensate, selling its $ reserves wont do any good though it needs them to trade for oil and raw goods in order ot maintain its industrial nation status, if it cant buy anything then its going to be scuppered
  10. Deng said yonks ago 8% growth was required each year and so it was.

    Trusting the Chinese on their economy is like trusting Cammeroon on Europe.
  11. I thought the Chinese were a nation of savers. Wont Mr Choo be mightily pissed off to see infationary meaures (like printing more cash) erode the value of his hard earned ?