The Chinese economy 2019...

#1
Stocks tumble on weak factory data, dim Apple outlook

Well watching the stock market melt down today, it does appear that the Chinese economy seems to be in a bit of trouble. So any of you well learnt folks care to chip in on what the Economic forecast is looking like for them this year? Forgive me for being ignorant as feck but it is pretty hard to decipher their government's projections versus the real world situation they are in.
 
#2
Housing bubble built on a debt bubble with a load of unproductive state owned enterprises thown in for good measure. The CCP/Army training for a working class insurrection is likely to be used at a point in the near future, and every government stat is not to be trusted IMO (especially GDP).

Emporer for life Xi has the tools at his disposal to keep the CCP in power, built on as much violence as required and a surveillance system big brother would be proud of.
 
#5
The headlines are about Apple, because they're in trouble throughout most of the world, not just China. As the story notes:
"While it's likely a combination of both macro and micro, the contribution of the former means that maneuvering through the upcoming earnings season will be like swimming in shark invested waters," said Peter Boockvar, chief investment officer at Bleakley Advisory Group, about what prompted Apple's guidance cut. "That said, I'd argue it's more of the latter."
To put the above quote in plain English, Apple's problems mainly related to problems with Apple's marketing strategy. They are counting on selling ever more expensive phones to people who already have eye-wateringly expensive Apple phones. Their market has reached saturation and their status conscious customers have only so much disposable income to spend.

Meanwhile, Chinese companies are coming out with very nice phones for a fraction of the price and are scooping up increasing shares of the market. As a result Apple has gone from second to third place in the global market (after Samsung and Huawei).

According to IMF forecasts, the US and China have both been hurt by their tariff war with projected US growth down from 2.7 to 2.5 percent, and China's growth down to 6.2 from 6.4 percent.
IMF cuts world economic growth forecasts for 2018 and 2019 | CBC News
With much of the U.S.-China tariff war's impact to be felt next year, the IMF cut its 2019 U.S. growth forecast to 2.5 per cent from 2.7 per cent previously, while it cut China's 2019 growth forecast to 6.2 per cent from 6.4 per cent. It left 2018 growth forecasts for the two countries unchanged at 2.9 per cent for the United States and 6.6 per cent for China.
Eurozone growth for 2018 is down from 2.2 to 2.0 percent, with Germany being particularly hard hit.
The eurozone's 2018 growth forecast was cut to 2.0 percent from 2.2 percent previously, with Germany particularly hard hit by a drop in manufacturing orders and trade volumes.
Meanwhile Trump's trade war with China is expected to cut global growth over the long run by 0.4 percent, Chinese growth by 0.5 percent, and US growth by 1.0 percent. Seeing as the US growth rate was less than half of China's to begin with, the hit on the US is proportionally even greater than the basic figures suggest. Perhaps Trump should change his slogan to MCGA - "Make China Great Again".
In a new simulation exercise to show trade war risks to the global economy, the IMF modelled the effect of an all-out U.S.-China trade war, coupled with threatened global U.S. automotive tariffs and retaliation from trading partners. The model also includes the effects of a reduction in business confidence that reduces investment and leads to a tightening of financial conditions.

It found that global GDP output under this scenario would fall by more than 0.8 per cent in 2020 and remain roughly 0.4 per cent lower in the long-term compared to levels without these effects, which "inflict significant costs to the global economy, especially through its impact on confidence and financial conditions."

The effects on the United States and China would be particularly severe, with 2019 GDP losses of more than 0.9 per cent in the United States and 1.6 per cent in China in 2019.
The exercise assumes that U.S. President Donald Trump imposes tariffs on the remaining $267 billion US worth of Chinese goods imports not already under punitive tariffs and China retaliates in kind. It also assumes that Trump imposes a 25 per cent tariff on imported cars and auto parts imports.

Adjustments would occur as domestic production displaces higher-priced imports, the model shows, but in the long run, the U.S. GDP would still be 1.0 per cent below a baseline without these tariffs, while China's GDP output would be one half per cent below the baseline.
 
#6
When in doubt, blame Brexit.
actually it has a lot to answer for - just look at Jaguar/Land Rover. Chinese economy is being used as the excuse for job cuts when we all know its BREXIT.
 
#9
To put the above quote in plain English, Apple's problems mainly related to problems with Apple's marketing strategy. They are counting on selling ever more expensive phones to people who already have eye-wateringly expensive Apple phones. Their market has reached saturation and their status conscious customers have only so much disposable income to spend.

Meanwhile, Chinese companies are coming out with very nice phones for a fraction of the price and are scooping up increasing shares of the market. As a result Apple has gone from second to third place in the global market (after Samsung and Huawei).
There's also the increased use of IT in the PRC's 'social credit system' with which the likes of Huawei and even Samsung can better integrate. It's not quite as simple as 'buy local, get preferential treatment' but there's an added degree of convenience which seems to be shaping consumer choice against one-trick ponies like Apple.
 

overopensights

ADC
Book Reviewer
#10
Stocks tumble on weak factory data, dim Apple outlook

Well watching the stock market melt down today, it does appear that the Chinese economy seems to be in a bit of trouble. So any of you well learnt folks care to chip in on what the Economic forecast is looking like for them this year? Forgive me for being ignorant as feck but it is pretty hard to decipher their government's projections versus the real world situation they are in.
Anyone that deals in China, will realize that things are getting difficult for their Chinese suppliers, traders and manufacturers. In the early 90s the Local Government had a man sat in each export business that nobody spoke with. He was a Party low level Member' and kept an eye on things, he disappeared over the years. It's changed now, recently China's Government are more dictatorial and will close a business with one day's notice, closed as 'undesirable' or in the name of 'anti pollution' The anti pollution seems to be working, but 500 businesses have disappeared in Hebei alone, you have to travel further in China now to find your stock.
I have seen inflation rise greatly in the years since 2008. The 100 yuan note was quite rare in the 90s, now youngsters will produce a fat wallet full of them.
China has done some great things. 'The fast trains' and probably the best road and bridge system, perhaps in the world. They seems to take little time to do such things. However they also build the equivalent of Manhattan every six months, mostly high rise disgusting towers. These are paid for by local or city governments, and from borrowed funds, so they are in hock to central government, it is difficult to quickly rent such places, vast blocks are almost empty; some cities are becoming broke, and then being propped up again.

They maintain a large army, to see an Infantry Division pass by with all Arms, Gnrs, Engineers etc, is to be admired, The domestic market is growing rapidly as the 'Young Rich' like to show off their wealth. Moa's Generation are dying off, you now have a New Generation in China, full of confidence. and a will to travel.

China produces so much cheap tack and send it world wide, we should get wise to that. The world is leveling out, you can get stuff made in England now, just about as cheap as in China. That process started about three years ago and is continuing! Furthermore the stock-market in China is not completely trusted, not at home in China or abroad! That's just my own opinion over 25 years, others will vary of course.
 
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#11
Anyone that deals in China, will realize that things are getting difficult for their Chinese suppliers, traders and manufacturers. In the early 90s the Local Government had a man sat in each export business that nobody spoke with. He was a Party low level Member' and kept an eye on things, he disappeared over the years. It's changed now, recently China's Government are more dictatorial and will close a business with one day's notice, closed as 'undesirable' or in the name of 'anti pollution' The anti pollution seems to be working, but 500 businesses have disappeared in Hebei alone, you have to travel further in China now to find your stock.
I have seen inflation rise greatly in the years since 2008. The 100 yuan note was quite rare in the 90s, now youngsters will produce a fat wallet full of them.
China has done some great things. 'The fast trains' and probably the best road and bridge system, perhaps in the world. They seems to take little time to do such things. However they also build the equivalent of Manhattan every six months, mostly high rise disgusting towers. These are paid for by local or city governments, and from borrowed funds, so they are in hock to central government, it is difficult to quickly rent such places, vast blocks are almost empty; some cities are becoming broke, and then being propped up again.

They maintain a large army, to see an Infantry Division pass by with all Arms, Gnrs, Engineers etc, is to be admired, The domestic market is growing rapidly as the 'Young Rich' like to show off their wealth. Moa's Generation are dying off, you now have a New Generation in China, full of confidence. and a will to travel.

China produces so much cheap tack and send it world wide, we should get wise to that. The world is leveling out, you can get stuff made in England now, just about as cheap as in China. That process started about three years ago and is continuing! Furthermore the stock-market in China is not completely trusted, not at home in China or abroad! That's just my own opinion over 25 years, others will vary of course.
So why continue to build high rises etc, that just occupy space? Command economy with decisions made years before?
 
#12
So why continue to build high rises etc, that just occupy space? Command economy with decisions made years before?
Deliberate urbanisation, it's been a policy since Jiang's day to eventually move the peasantry off the land and into cities. The theory is that it promotes economic growth by increasing the services each person requires; while at the same time it improves agricultural efficiency by allowing consolidation of small plots into larger farms.

The UK did it haphazardly, by forcing tenant farmers off their plots and leaving 'the market' to force them into urban slums and eventually the factories - we call it the Lewis Model of economic development.

Arguably, the Great Leap Forward represented the PRC's first attempt at manufacturing a surplus workforce by releasing movement controls on their rural population. It didn't work too well and explains why they're extremely cagey and step-by-step about rural-urban shifts and in particular relaxing the hukou system.
 

overopensights

ADC
Book Reviewer
#13
So why continue to build high rises etc, that just occupy space? Command economy with decisions made years before?
Just like the agrarian revolution in the UK 140 years ago, similarly the young Chinese are leaving the villages for work in the cities, they have been doing this since the late 1980s but many that I speak to can't afford an, 'apartment' just yet, they tend to live in dormitories. Some that can afford it do move into apartments and take their older folk with them. There'll come a time perhaps when they will move back to the countryside, just like that which is happening in the UK at present.
 
#14
What I find strange are the Chinese ghost cities. Huge developments that are unoccupied. They've also built 5 such cities in Angola which are unoccupied and the locals would not be able to afford the housing if it was for them in the first place. Very strange.
 

overopensights

ADC
Book Reviewer
#15
What I find strange are the Chinese ghost cities. Huge developments that are unoccupied. They've also built 5 such cities in Angola which are unoccupied and the locals would not be able to afford the housing if it was for them in the first place. Very strange.
Some villages outside of Xiamen in Fugian in the South are pretty and so very old. They are also functional just like a lovely English village, yet when the old folk die off, the cottages are left derelict. I have seen this so many times and cannot understand it, some of these villages are only five miles from the city. I suppose it's a Chinese thing to leave a cottage with a veg plot and lovely trees, to move into a block of flats, whereby with many of them the sun never shines through any window... I don't understand that!
 
#16
There's also the increased use of IT in the PRC's 'social credit system' with which the likes of Huawei and even Samsung can better integrate. It's not quite as simple as 'buy local, get preferential treatment' but there's an added degree of convenience which seems to be shaping consumer choice against one-trick ponies like Apple.
I previously published the following chart on another thread:
https://www.arrse.co.uk/community/t...nks-goog-employees.288708/page-2#post-8940077
China's home-grown tech giants are dominating their US competitors
In short, nearly half of the word's major Internet tech companies are based in China. The rest are US. Yandex (Russia) just misses making the list. Not a single one is based in the EU.


China are also big in electric vehicles (cars, trucks, buses) and are entering the Canadian market, and are already being sold elsewhere in the world. The story notes that both Japanese and Korean cars had a reputation for appallingly poor quality when they first came to the Canadian market, but improved rapidly.
China leads in affordable electric cars, but Canadian consumers can't buy them — yet: Don Pittis | CBC News

The Chinese are already moving beyond just doing contract assembly for foreign companies and have their own products and technology. Where they are weak at the moment is in having globally recognised brands, but they are working on that with companies such as Huawei and more recently Xiaomi as examples of their ability to develop recognised consumer brands.

What I suspect will happen though is that companies that are focused on doing contract assembly work in China or on producing cheap commodity products will either increasingly struggle with rising labour costs in China or else will move abroad to lower wage countries such as Vietnam and Indonesia, or even possibly into Africa (if the latter can come up with some reliable infrastructure). When this happens there may be some economic stuttering as the factory workers are not as easily absorbed into the "new China" as the peasants were into the factories. Western countries are still going through a similar transition, but it has happened much more slowly here with more time to adapt as the pace of development has not been so rapid as in China.
 
#17
Some villages outside of Xiamen in Fugian in the South are pretty and so very old. They are also functional just like a lovely English village, yet when the old folk die off, the cottages are left derelict. I have seen this so many times and cannot understand it, some of these villages are only five miles from the city. I suppose it's a Chinese thing to leave a cottage with a veg plot and lovely trees, to move into a block of flats, whereby with many of them the sun never shines through any window... I don't understand that!
Someone more familiar with China could probably answer the question better that I can, but the first explanations that I would look to would be for residency permits and property titles.
 

ugly

LE
Moderator
#18
Frankly if we stopped buying cheap tat off the internet then china and India would tank, air pollution would reduce and maybe some jobs would be created in the UK.
Its in your hands folks.
The Japanese had a similar problem about ten years ago where the older workers would save rather than spend, caused them real problems and they had to manage their interest rates to change things.
Funny how the Govt exhorts us all to save and put away into pensions (which are often robbed by the same Govt) and yet the banks call foul if we aren't spending!
 

overopensights

ADC
Book Reviewer
#19
Someone more familiar with China could probably answer the question better that I can, but the first explanations that I would look to would be for residency permits and property titles.
Two of the families that I know who have now vacated their old village properties, they just left them. Even though their ancestors had lived there. It is something to do with 'title' they were not even allowed to sell the plots..
 

Pob02

LE
Book Reviewer
#20
Oh it does seem like that will be a future kick to the shins..
the kick will probably be higher that that. Around the balls level.
 

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