http://nypost.com/2015/07/08/chinas-miracle-is-over-now-comes-the-nightmare/
Posted on 07/10/2015 8:01:27 PM PDT by Zhang Fei
Too bad because I have wished for nothing but doom for that POS Communist country for a long time.
Considering all the billions of dollars lost by the part of China that is doing the industralization, as well as the Chinese government itself, and millions upon millions of regular people, I think this guy is probably exaggerating.
That said, China is like a third world country anyway trying to live like it is a 1st world country. Having all that money wiped out isn’t going to affect the vast majority of people, even if all 90 million investors go entirely bankrupt.
http://nypost.com/2015/07/08/chinas-miracle-is-over-now-comes-the-nightmare/
The best anyone can hope for is that that it unleashes factional discord in China among the cadres who may be wary of Xi Jinping’s wide-ranging purge of his enemies within the Party in the guise of an anti-corruption drive. Xi and his premier Li Keqiang, are rumored to have family fortunes totaling in the hundreds of millions of dollars. Not Mugabe territory (i.e. tens of billions of dollars), but nonetheless substantial, and likely the result of the same type of corruption on which basis he is persecuting and imprisoning his Party rivals and the members of their factions.
Hey, what’s $3.2 trillion between friends?
The issue for China is not about their markets, which will never stabilize, It’s about the command and control breaking down because there is no way they can stop a pissed off Chinese population from going on a destructive demonstration against the government and all at the same time.
They'd have to be close to the breaking point for that to happen. The Chinese are individualistic and supreme cynics to a fault. Why would a Chinese person risk his life to put somebody else in power? Abstract universal principles don't cut it, which is why "the Chinese people" won't fight the government. If anyone fights Xi Jinping, it will be another faction of the government that has lined up rival power players in a blood pact of sorts that will end up with the losing side fleeing into exile or being executed. While complete outsiders have, in the past, seized power (e.g. the founders of the Han and Ming dynasties), they were exceptional players and arguably political and/or military geniuses, and definitely not the norm.
I'll take your word for it, but I have read about a number of small skirmishes with local Chinese authorities from time to time, over a number of years. Generally resulting in someone getting hacked to pieces..
China will not be doomed because China produces things. They can produce their way out of their situation. We can, too, but we are producing less and less.
Well, having lost tens of thousands of dollars trading US/Chinese securities, I can safely say for the Chinese citizens sake, that if china does not adopt a modern rule of law with courts, jury trials, and all the protections that defrauded investors require, I doubt seriously that their market will ever be more than a game of musical chairs where the last guy pays and the first guy makes a profit.
Just a shell game..
The Chinese dung eaters can only produce things because the west trained them and gave them western technology. Our factories were ripped up and plopped right down on a sliver platter. What idiots we are in the west.
It was more like extorted, often stolen and not given..
It was the price our corporations paid to do business in china.
Re Chinese eminent domain, the system is generally pretty generous, which is why you get these isolated instances where large demonstrations occur - these are the exceptional cases in which the tenants got gypped. And almost like clockwork, the officials at the center of the dispute get fired and in many cases, prosecuted. Through Chinese contacts, I’ve heard that a lot of land is basically leased out to manufacturers, with the rents being distributed to the former tenants. It’s when the officials involved try to grab the lion’s share of the proceeds that the tenants get riled up. Note that in many cases, the tenants literally have only squatters’ rights to the land - much of it was confiscated by the Communist Party from rich landowners (many of whom were executed, along with their families, with the cooperation or even assistance of the tenants). Since the rightful owners of the land are in many cases dead, thanks to the Party and the tenants who helped kill the landlords, it’s probably not unreasonable that the tenants don’t get all the rewards that a rightful owner would from land development.
I think we tend to perceive the citizens of authoritarian countries as enthusiastic or docile robots who march in lockstep with their rulers. Thus, any sign of dissent must mean that regime collapse is near. Lockstep conformity was emphatically not present in China - factions representing multiple opposing interests have always duked it out. At one point, the Cultural Revolution was a civil war of sorts that had rival factions sorting their differences out with light weapons (i.e. pistols, rifles and grenades). They've always fought for their interests, but taken care to phrase them in a way simultaneously puts a positive light on their grievances while stressing that their interest is in getting redress for specific injustices and not ousting the powers-that-be in the central government. Point being that the clashes are isolated incidents without any larger significance.
The central Chinese authority has been ineffective in restraining this. Moreover, the central authority is presented with the dilemma made very acute by the great recession, in order to avoid collapse China massively introduced liquidity into its economy through the banking system (because the stock market system simply was not set up to handle it) but in doing so it could not hope to avoid corruption.
If it seeks to rein in corruption now, it risks reintroducing recession.
China’s still rapid growth in nominal GDP should bring its overall debt ratio down sharply over the next few years.
This idea that China is still maintaining growth in the 7-8% range is disputed by Western observers who believe that the books are cooked. The same problem that is at the root of the banking corruption problem, the central authorities must rely on data which is unreliable. If GDP growth is really substantially lower than reported, the debt ratio will not be "brought down sharply" as the author maintains.
Whether growth is funded in a fiat economy by a central banks gushing out money to other banks or to Wall Street banking houses, the counter forces introduced (possibility of inflation, distortion of the economy) remain whether it is done in China or in America. The central bank in America has proved time and again that it is terribly difficult to time and administer Keynesian doses of fiscal medicine even as those decisions are based on the best data collection system in the world. The central command economy of China is based on a data system which is through and through corrupt.
This article says that wise old men acting on questionable data can artfully navigate between the rocks of recession and the shoals of runaway inflation while steering a corrupt system that the demands of demographic growth require be run at high speed. The Chinese introduced massive amounts of liquidity into their economy through the banking system precisely because they cannot afford to have less than phenomenal growth.
But if growth in China is closer to 0% than to 7% or 8%, the problem is virtually insoluble. More, the cost of manufacturing in China is rendering its mercantilist advantages less attractive than the manufacturing opportunities in India and Indonesia and even in America. That may well be why the manufacturing sector is giving way to the consumer sector and this "transition" might rather be seen as a symptom of slowing GDP and weak manufacturing rather than a rising and needed increase in the consumer economy.
This is not to say that the rise of China has not been phenomenal. It is not to say that the future for China is unquestionably that of economic growth. The question is whether that growth will be uneven and tragically stunted by Top-down authoritarianism. Eventually, if China is to really prosper it must control corruption but that is not just a legal problem it is a cultural problem, a problem endemic in China for millennia which has infected every dynasty, not excluding the communists and neo-communists.
Superficially, one would think that Top-down control of society would make it easier to cleanse it of corruption but it is historically true that free markets and free societies are invariably less corrupt than command economies in statist governments. Which is the chicken and which is the egg, prosperity or democracy?
OK....that’s helpful to know..thanks..
You've just summarized the investment environment of most of the fast-growing emerging markets. The Chinese stock market - as with other emerging markets - is one where the only names you can trust are the marquee names. Large cap telecoms, airlines, utilities, miners, integrated oils. Anything outside of those categories, you're taking a flyer. At the same time, they're not all frauds. The problem with ADR's is that some stock frauds only list overseas because they figure the Chinese government won't go after them on behalf of foreign investors. Stock frauds that list in China can end up becoming involuntary organ donors because economic crimes beyond a given magnitude carry the death penalty. I believe the threshold is as low as several hundred grand US.
Now that is what I would like to see happen to one Zhao Ming.
The problem with the Shanghai is small compared to their real estate bubble.
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