China starts spin into economic mess

[MG]

http://www.telegraph.co.uk/finance/c...one-of-us.html HKMB's protests aside, Government's can't create real value and can only spend what they have previously stolen from those who do create value. The "Stimulus" that China has been hoping will keep them at +8%GDP is a fantasy based on the hope that US consumers would bounce back strongly in 2009 and keep the Chinese government's paycheck coming. Its not happening. Government's can't make markets, it can only leech from them. China's Banking Regulatory Commission fired a warning shot last week. "The top priority at the moment is to stop explosive lending. Banks should carefully monitor the process of credit approval and allocation, and make sure that loans flow into the real economy," it said. Unfortunately, 40pc of the "real economy" consists of exports, mostly to the US and Europe, the consequence of a mercantilist export model that has qcrashed and burned. Chinese exports were down 26pc in May. World trade may be stabilizing at last after contracting at faster rate than during the early Great Depression. But it will not rebound fast in a world where the US savings rate has risen to a 15-year high of 6.9pc. A trade policy based on the assumption that debtors in the Anglosphere and Europe's Club Med can ruin themselves for ever is absurd.

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[hkmb]

Hmmm.... Interesting that Malcolm Moore, the Telegraph journalist who actually knows about the Chinese banking system, didn't write this.

There is too much unregulated lending at the moment. But it's not America. The banks do actually have the muscle to cover their bad loans, and the State has the assets to back them.

Originally Posted by MG

The "Stimulus" that China has been hoping will keep them at +8%GDP is a fantasy based on the hope that US consumers would bounce back strongly in 2009 and keep the Chinese government's paycheck coming.

This would be an excellent point were it not for the fact that the stimulus package is based on the exact opposite: it's based on the assumption that the US economy won't bounce back - and that the EU and Japanese economies will continue to weaken - and that China will therefore have to engineer growth that doesn't rely on exports.

But I don't want you to read the above paragraph. It's better that you continue to think that unfettered free markets work. For you to find out otherwise would break my heart: it'd be like a child finding out that Santa isn't real. You live in your little fantasy: it'll keep you happy.

8.25% growth is the latest forecast, btw. At the start of the year, China had been aiming for around 6%, even with the stimulus package.

[MotorWerkz]

I wouldn't worry about China. They are doing all right.

I like doing business with Chinese, the fastest payment, most consistent purchase, and very easy to deal with them.

[S55inPA]

Originally Posted by hkmb

This would be an excellent point were it not for the fact that the stimulus package is based on the exact opposite: it's based on the assumption that the US economy won't bounce back - and that the EU and Japanese economies will continue to weaken - and that China will therefore have to engineer growth that doesn't rely on exports.

i absolutely agree that the US and Europe are in big pile of *****.
made worse daily by our own incompetent comrade Obama
and his gang of egotistical idiots. but to think that China will
somehow "engineer growth that doesn't rely on exports" in
a time frame that can save them is
as likely to happen as Cheryl Cole knocking on my front door
and offering herself to me. .....put simply. it ain't gonna happen.

[vraa]

Originally Posted by MotorWerkz

I wouldn't worry about China. They are doing all right.

I like doing business with Chinese, the fastest payment, most consistent purchase, and very easy to deal with them.

Don't kid me
All the Chinese numbers are inflated and completely skew the numbers
China can't keep up while US is dragging everyone one down, no one really understands how much power US$ is...

[hkmb]

Originally Posted by S55inPA

i absolutely agree that the US and Europe are in big pile of *****.
made worse daily by our own incompetent comrade Obama
and his gang of egotistical idiots. but to think that China will
somehow "engineer growth that doesn't rely on exports" in
a time frame that can save them is
as likely to happen as Cheryl Cole knocking on my front door
and offering herself to me. .....put simply. it ain't gonna happen.

Hmmmm...... not to blow my own trumpet, but I do actually know an awful lot about this. As far as government expenditure as part of the stimulus package is concerned, I suspect I know more about it than anyone else in the world, but I'll concede that there are a couple of dozen people who may know more than me about the macroeconomic effects of the stimulus package. I know most of these people, though, and was talking to several of them last night, and to many more of them a couple of weeks ago.

The thing is, we're all agreed that it's working. As is the World Bank.

Hopefully, this is good news for you. If it was as likely as Cheryl popping round and it has actually happened.... perhaps you should send Mrs S55inPA on a well-deserved spa break, just in case Cheryl turns up, saying "Ashley doesn't understand me! I need you, S55inPA! I need you now!"

[hkmb]

Originally Posted by vraa

Don't kid me
All the Chinese numbers are inflated and completely skew the numbers
China can't keep up while US is dragging everyone one down, no one really understands how much power US$ is...

Yes, a lot of the numbers are inflated. That's why we have to work so hard to find out what's really happening. And we still know that the package is working.

[S55inPA]

Originally Posted by hkmb

Hmmmm...... not to blow my own trumpet, but I do actually know an awful lot about this. As far as government expenditure as part of the stimulus package is concerned, I suspect I know more about it than anyone else in the world; but I'll concede that there are a couple of dozen people who may know more than me about the macroeconomic effects of the stimulus package. I know most of these people, though, and was talking to several of them last night, and to many more of them a couple of weeks ago.

The thing is, we're all agreed that it's working. As is the World Bank.

Hopefully, this is good news for you. If it was as likely as Cheryl popping round and it has actually happened.... perhaps you should send Mrs S55inPA on a well-deserved spa break, just in case Cheryl turns up, saying "Ashley doesn't understand me! I need you, S55inPA! I need you now!"

ashley smashley. who needs that putz. go china....hello cheryl

[vraa]

Originally Posted by hkmb

Yes, a lot of the numbers are inflated. That's why we have to work so hard to find out what's really happening. And we still know that the package is working.

Sure if youre definition of working means prolonging the real solution of the problem
Nevermind the article MG linked to

http://www.bloomberg.com/apps/news?p...d=a_ZcEXdFOeB4

“Even with the stimulus package, Chinese copper demand is unlikely to grow beyond 10 percent this year,” Zhao said. Annual demand has expanded between 10 percent and 20 percent in the past five years, he said.

Where do you think lots of the money available to serve as demand came from? Oh, something about credit, and now people can't pay it back, so we try to add more money through stimulus packages or something
It's getting difficult to think

http://www.bloomberg.com/apps/news?p...d=amEI68_34_YI

Steel, autos and semiconductors led the slump. Shipments to China, Japan’s biggest trading partner, fell 29.7 percent, more than April’s 25.9 percent. Exports to Asia slid 35.5 percent from 33.4 percent a month earlier.

China’s 4 trillion yuan ($585 billion) in stimulus measures haven’t been enough to offset sales declines in the U.S. and Europe.

Hitachi Construction Machinery Co. said this month that sales in China haven’t improved as much as the company had anticipated. The world market for digging equipment will contract by more than a third in the first half of the business year and rebound only 6 percent in the second half, according to company President Michijiro Kikawa.

Shipments to the U.S. fell 45.4 percent in May after dropping 46.3 percent in April, the ministry said. Exports to Europe slid 45.4 percent from 45.3 percent.

The World Bank this week downgraded its forecast for global growth, saying the world economy will shrink 2.9 percent this year, worse than the 1.7 contraction predicted in March.

[whiteongrey]

Note that China has a huge grey banking / credit industry with no transparency and no regulation other than nasty people visiting you if you don't service the debt.

They extend credit amounts that no bank would come close too, to people no one would touch in the first place anywhere. Some are private, others are govt sponsored sub-prime schemes.

Much of it does generate added value and debt servicing is quite good. No one likes their nude photos posted in the neighbor hood or at work, or their children auctioned off, so they borrow carefully.

A substantial influence probably estimated and accounted for in the announced productivity numbers but not traceable.

Also note that there are millions of laborers who extend billions of man hours of productivity to enterprise anually: working without payment, or minimal payment, for 1-2 years until full payment starts to roll in / or not.

They are sweat equity informal partners and of immense value, generating substantial productivity at minimal cost. The emerging consumer. Also not traceable.

Try and compete with that type of fiscal agility and equity partnering.

With that said - Airbus partners with the Chinese a few years back to produce the old A320 that no one in the west wants. Great for developing markets though. Paris air show this year and 320's win most of the orders - Boeing nada.

Is Airbus worried that their Chinese partners will copy or rip them off. NO. Airbus will be flying tourists to the moon by the time China has the capability to produce an A330 or 380.

European firms will be fine because they, and their governments; understand, and practice the golden rule for China - don't impose your ideology on us, do whatever you want but NO Politics. China is all about partnering and that's why they still buy worthless US paper at face value - they are a vital partner to the US and both are co-dependant

[LRM1]

Originally Posted by MotorWerkz

I wouldn't worry about China. They are doing all right.

I like doing business with Chinese, the fastest payment, most consistent purchase, and very easy to deal with them.

Yeah, sulfur in sheet rock, lead in toys, sure makes dealing easy when you don't have to worry about little things like whether your baby will grow a third ear.

[MotorWerkz]

Originally Posted by vraa

Don't kid me
All the Chinese numbers are inflated and completely skew the numbers
China can't keep up while US is dragging everyone one down, no one really understands how much power US$ is...

Many have said China inflates their number, but I haven't seen any slowing down in demand unlike Australia, U.S and Europe. How many countries are not in recession?

Many of my trading partners in Australia and U.S have closed down because of the recession while the Chinese are still on buying rampage. Recently, my Chinese customer secure a purchase thru a large amount of L/C. Weird as it may sound, but it seems the Government knows what they are doing to keep the positive number.

Originally Posted by LRM1

Yeah, sulfur in sheet rock, lead in toys, sure makes dealing easy when you don't have to worry about little things like whether your baby will grow a third ear.

Whatever keeps the number positive, I guess ...

You should blame local companies who import that stuff into your country. Shouldn't they do some safety testing before they are all released into the public?

[vraa]

Originally Posted by MotorWerkz

Many have said China inflates their number, but I haven't seen any slowing down in demand unlike Australia, U.S and Europe. How many countries are not in recession?

Many of my trading partners in Australia and U.S have closed down because of the recession while the Chinese are still on buying rampage. Recently, my Chinese customer secure a purchase thru a large amount of L/C. Weird as it may sound, but it seems the Government knows what they are doing to keep the positive number.




Whatever keeps the number positive, I guess ...

You should blame local companies who import that stuff into your country. Shouldn't they do some safety testing before they are all released into the public?

http://english.caijing.com.cn/2009-06-10/110181966.html

However, the decline in the country's southern and eastern coastal areas continued to narrow, with major exporter Guangdong province recording a 4 percent year-on-year drop in power use for May.

China's power generation and consumption figures are closely watched as a gauge of industrial activity and tend to reflect the strength or weakness of the overall economy after exports collapsed in 2008.

http://www.forbes.com/2009/06/10/chi...ectricity.html

Meanwhile, China's power consumption continued its decline, while the economy expands--a juxtaposition that has led to a debate among economists over the reliability of China's statistics.

How does a country use less energy and still claim positive growth

I love these stimulus plans. Fix a problem due to overextended credit with more credit

http://www.telegraph.co.uk/news/worl...ials-warn.html

However, a significant proportion has been diverted into shares and property, with the Shanghai Stock Exchange rising 60pc since January.

Several economists believe a large part of the government's 4 trillion yuan state aid package has also failed to reach the "real" economy.

http://seekingalpha.com/article/1395...-record-levels

Thus, the idea that the Chinese consumers could pick up demand slack left by the American or global consumer has proven to be wishful thinking. The Chinese government has considerable control of the economy but it appears ineffective in getting consumers to spend.

[MotorWerkz]

Originally Posted by vraa

How does a country use less energy and still claim positive growth

I love these stimulus plans. Fix a problem due to overextended credit with more credit

OECD Raises China Growth Forecast to 7.7% on Stimulus Measures

China’s economy will grow 7.7 percent from a year earlier, up from a 6.3 percent forecast in March, the Paris-based group said in a report today. Gross domestic product will climb 9.3 percent next year, up from an 8.5 percent estimate, it said.

Many economists said good and bad things about China's economy. I will believe that CHina is in trouble when they have trouble paying the goods, but until now, their payment is always on time and their purchases never drop.

[ultraseven]

Since China's economy depends so much on exports, particularly the US, I find it hard that they can actually sustain any reasonable GDP growth for a long period of time.

The govt is doing its best to spend $ in the market, and there really isn't a large enough middle class in the country to be able to absorb that many goods that would otherwise be shipped overseas.

An 8.5% GDP growth is weak by PRC standards when they used to hit the teens.

[LRM1]

http://blog.newsweek.com/blogs/wealt...mart-moms.aspx

[LRM1]

Originally Posted by MotorWerkz

Whatever keeps the number positive, I guess ...

You should blame local companies who import that stuff into your country. Shouldn't they do some safety testing before they are all released into the public?

What's a few lives in order to keep the number up, by they the lives of the line worker or the consumer right?

Ah, and we should blame the importer now, not the producer, I get it. I suppose the contracts in place are recycled into toilet paper. But wait, weren't you the same person blaming the US for not caring about other countries? I guess it only works one way, eh?

[S55inPA]

Originally Posted by vraa

http://english.caijing.com.cn/2009-06-10/110181966.html


http://www.forbes.com/2009/06/10/chi...ectricity.html

How does a country use less energy and still claim positive growth

I love these stimulus plans. Fix a problem due to overextended credit with more credit

http://www.telegraph.co.uk/news/worl...ials-warn.html


http://seekingalpha.com/article/1395...-record-levels

good job ricky

[hkmb]

Originally Posted by MG

http://www.telegraph.co.uk/finance/c...one-of-us.html

Originally Posted by vraa

http://www.bloomberg.com/apps/news?p...d=a_ZcEXdFOeB4

http://www.bloomberg.com/apps/news?p...d=amEI68_34_YI

Originally Posted by vraa

http://english.caijing.com.cn/2009-06-10/110181966.html

http://www.forbes.com/2009/06/10/chi...ectricity.html

http://www.telegraph.co.uk/news/worl...ials-warn.html

http://seekingalpha.com/article/1395...-record-levels

Originally Posted by MotorWerkz

OECD Raises China Growth Forecast to 7.7% on Stimulus Measures

Originally Posted by LRM1

http://blog.newsweek.com/blogs/wealt...mart-moms.aspx

I know it's Wimbledon fortnight. But I'm not sure quite what this game of URL tennis is achieving.

Vraa's right about the power consumption thing. But this, again, is part of the plan: even before the GFC, there was supposed to be a reduction in power consumption in the South and East, and there were meant to be factory closures as a result of the new Labour Law. The government planned to drive the low-wage Taiwanese sweatshops out of Guangdong and Fujian by pricing Chinese labour out of the market, and it's succeeded in doing so. This was always going to cause short-term economic pain, but it's worth it in the long run.

Honestly, the only thing that's surprised me - and that's surprised everyone involved, including the government - is how much better things are going than expected.

[hkmb]

Originally Posted by LRM1

Ah, and we should blame the importer now, not the producer, I get it. I suppose the contracts in place are recycled into toilet paper. But wait, weren't you the same person blaming the US for not caring about other countries? I guess it only works one way, eh?

Actually, Motorwerkz has a point here. Many foreign companies that outsource to China don't employ the level of supervision that they would if they were outsourcing to Mexico or elsewhere. Wherever they are, some OEMs are always going to cut corners, and this is as much of a problem in China as anywhere else.

But there's a laziness in attitudes to outsourcing to China which leads to problems. Mattel, for example, had no on-site management, no random visits to OEMs, and no QC checks: it was as much to blame for its problems as the OEM was. Mattel spun the story brilliantly in the US and EU press, making it a story about how it was a China problem rather than a Mattel problem.

But those of us who actually work on projects like this know where the problem lay.

[MotorWerkz]

Originally Posted by LRM1

What's a few lives in order to keep the number up, by they the lives of the line worker or the consumer right?

Ah, and we should blame the importer now, not the producer, I get it. I suppose the contracts in place are recycled into toilet paper. But wait, weren't you the same person blaming the US for not caring about other countries? I guess it only works one way, eh?

It's basic. Who will you go after for bad product distributed in your country? the company which import and distribute and fail to recognize whether product is safe or not, or the producer in other country?

[LRM1]

Originally Posted by hkmb

But those of us who actually work on projects like this know where the problem lay.

Yes, we do, and I grant that supervision should take place whether made in CHina or made in Pittsburgh, however, there are contracts in place that clearly delineate these issues, liabilities, etc. The difference is that OEM/ODM companies will be more careful since they have to take on that liability, unless of course they do what they do in China quite frequently - make a mistake, are on the hook, then close up shop, move down the road and open up under another name - all with the full support of the state. While of course this can and does happen in the US, firms will get prosecuted once caught.

So despite your typical efforts of patronization, I am fully aware of dealing with China, thanks! And BTW, we do have on site people.

[LRM1]

Originally Posted by MotorWerkz

It's basic. Who will you go after for bad product distributed in your country? the company which import and distribute and fail to recognize whether product is safe or not, or the producer in other country?

You're right, it is basic, you go after whomever used or specified the offending material - or deceptively changed the specification. In the case of someone buying already made product, it is their responsibility to state the specifications of said product - If Ling Dong claims that the train is painted with Red #2 and Matel says "Ok, and You can't use lead", who's fault is it when Ling Dong changes Red #2 to Lead #2 to cut costs without ever telling Mattel?

Now considering that Chinese companies have been known to specify "A" in a term, then deliver "B" with no notification to the buyer, who do you go after? The importer who thought he was buying "A" but got "B"? Or the manufacturer who knowingly changed the materials to cut costs without ever consulting the buyer?

I suggest you explain your belief about responsibility to the families who were getting sick, lost their homes and the companies that are going bankrupt in the US Southeast because the bought GYPSUM sheetrock and were delivered GYPSUM mixed with Sulfer made sheetrock.

[vraa]

Originally Posted by hkmb

Many foreign companies that outsource to China don't employ the level of supervision that they would if they were outsourcing to Mexico or elsewhere.

"Outsourcing" was brilliant for globalization, but it's already here to bite the American industry in the butt
http://www.bunniestudios.com/blog/?p=284

[MotorWerkz]

Originally Posted by LRM1

You're right, it is basic, you go after whomever used or specified the offending material - or deceptively changed the specification. In the case of someone buying already made product, it is their responsibility to state the specifications of said product - If Ling Dong claims that the train is painted with Red #2 and Matel says "Ok, and You can't use lead", who's fault is it when Ling Dong changes Red #2 to Lead #2 to cut costs without ever telling Mattel?

Mattel should've filed claim to the producer, cancel contract and award the contract to someone else. They should employ higher level of supervision to avoid anymore claim in the future.

Producers in 3rd world country ALWAYS try to cut cost, so importers have to be careful before distributing it. It's the risk of outsourcing in 3rd world, cheap but you gotta have strict supervision to ensure safety.

Now considering that Chinese companies have been known to specify "A" in a term, then deliver "B" with no notification to the buyer, who do you go after? The importer who thought he was buying "A" but got "B"? Or the manufacturer who knowingly changed the materials to cut costs without ever consulting the buyer?

Importer will go after the producer because they were not informed, but the public responsibility is still on the importers no matter how you see it.

Any complaints and lawsuit against toxic product will go to importers because they fail to inspect the product safety before it's released.

I suggest you explain your belief about responsibility to the families who were getting sick, lost their homes and the companies that are going bankrupt in the US Southeast because the bought GYPSUM sheetrock and were delivered GYPSUM mixed with Sulfer made sheetrock.

Do you expect the sick families to go after the producer in China? Well .. good luck.