2013 China problems (My feelings living in China from 2011-2013)

[cnleio]

I didn't say Chinese ppl r poor, indeed they'r rich or some very rich. But i must say China meet some traps/came into some big troubles in the economy development.

Now in 2013, the main problem is: RMB(Chinese People's Money) appreciation for export (foreign market) & devaluation for domestic consumption (internal market).

The Chinese banks owned by CCP still printed more than trillion new RMB cashs(1st step 2008-2010, 2nd step 2011-2012) into domestic construction market, most of these hot money were delieved into domestic market in the form of Bank loans to buy homes.

Therefore in 2013, the Chinese house(apartment) average price: In most China medium-sized
and big-sized cities, 10,000 RMB/per centare. In superbig cities, 20,000 RMB/per centare.

Most workers & employeers salary still 3000~5000 RMB/per month. Of course if u r project manager/department manager in the compay will reach 8000~10,000RMB/per month, or u r a successful goods seller also easily to reach over 10,000 RMB/per month. But for normal Chinese ppl, there's still millions of employeers living here.


Bad circulation: The house price rise ---> Employeer require salary rise ---> Commodity
price rise ---> Raw materials cost rise ---> Export goods price rise and reduce competitiveness--->Business profits to become low ---> Jobs cut or reduce wages ---> Manufacturing move to abroad ...


Yes, most Chinese ppl r false rich ！ Why i call them FALSE RICH ?!
Coz in 2013 usually a 100m2 house/apartment could worth 1.0 million or more RMB in China cities, See at least each family own a their own house/apartment, maybe they have payed for all price or maybe they still owe the bank thousands of money. It sounds these Chinese ppl r rich (a millionaire). But that's just the house price, not real cash. Nothing left in our hands.

In 2013 China, nearly all Chinese normal ppl considered buying house/apartment as the most effective & best value activities. Most of these ppl didn't have such many money to invest buying house, but they have the balls to borrow 100,000 - 1,000,000 RMB from the bank to join the crazy party.

Yes i didn't doubt now 2013 China r the past 15-year ago Japan or 2001-2008 United State. When whole ppl believe something could growing without restriction, it means not far away from the crash.

Just see future China economy a hard landing or soft landing? 2005 - 2013 how the China government to boot China domestic economy rapid development? By printing trillion money and throw it into China house market.


Read this pic, to understand 2013 China economy troubles:

 

[cnleio]

Directly result: For the young ppl living in China big-sized and super-big sized cities, more and more young ppl can't afford average price 100,000 or 200,000/per centare of house price.

Indirectly result: Production costs r rising , more and more employees ask for a high salary. Bad news for "The world's factory in China" also bad for "made in China".

 

[livingdead]

Its the same in UK and India. House prices are out of reach of most people.

 

[HongWu]

Too biased. Of course all rapidly developing countries have problems. Xi Jinping is now emphasizing a moderate rate of growth and environmentally friendly development model.

The banking sector is changing to put loans in the hands of ordinary borrowers with good credit. Corruption is facing an iron fist today. The problems in the system are getting fixed step-by-step. It's all leftover from 10 years of Hu Jintao and Wen Jiabao.

 

[navtrek]

Directly result: For the young ppl living in China big-sized and super-big sized cities, more and more young ppl can't afford average price 100,000 or 200,000/per centare of house price.

Indirectly result: Production costs r rising , more and more employees ask for a high salary. Bad news for "The world's factory in China" also bad for "made in China".

Dont worry buddy what u are predicting is true but the economy has a buffer time in which the government should take appropriate measures to increase salaries at the lower levels and give tax breaks to companies.

 

[jhungary]

What comes up must comes down. China cannot be the number 1 GDP power in the world as the same time keep their Secondary production low cost.

Now China get some Money, money better make good use to Tertiary Production. China need to change from a export based economy to a research based or Financial based economy quick, otherwise it will become a net import based economy. Which mean money is bleeding out, not bleeding in


#Country nominal GDP Agri%. Indus%. Serv%. Agri. Indus. Serv.

0 World 71,707,302 5.9% 30.5% 63.6% 4,230,731 21,870,727 45,605,844
1 United States 15,684,750 1.2% 19.1% 79.7% 188,217 2,995,787 12,500,746
2 China 8,227,037 10.1% 45.3% 44.6% 830,931 3,726,848 3,669,259
3 Japan 5,963,969 1.2% 27.5% 71.4% 71,568 1,640,091 4,258,274
4 Germany 3,400,579 0.8% 28.1% 71.1% 27,205 955,563 2,417,812
5 France 2,608,699 1.9% 18.3% 79.8% 49,565 477,392 2,081,742
6 United Kingdom 2,440,505 0.7% 21.1% 78.2% 17,084 514,947 1,908,475
7 Brazil 2,395,968 5.4% 27.4% 67.2% 129,382 656,495 1,610,090
8 Russia 2,021,960 3.9% 36% 60.1% 78,856 727,906 1,215,198
9 Italy 2,014,019 2% 23.9% 74.1% 40,280 481,351 1,492,388
10 India 1,824,832 17% 18% 65% 310,221 328,470 1,186,141
11 Canada 1,819,081 1.8% 28.6% 69.6% 32,743 520,257 1,266,080
12 Australia 1,542,055 4% 26.6% 69.4% 61,682 410,187 1,070,186
13 Spain 1,340,266 3.3% 24.2% 72.6% 44,229 324,344 973,033
14 Mexico 1,162,891 3.7% 34.2% 62.1% 43,027 397,709 722,155
15 South Korea 1,151,271 2.7% 39.8% 57.5% 31,084 458,206 661,981
16 Indonesia 894,854 14.3% 46.9% 38.8% 127,964 419,687 347,203
17 Turkey 783,064 8.9% 28.1% 63% 69,693 220,041 493,330
18 Netherlands 770,224 2.8% 24.1% 73.2% 21,566 185,624 563,804
19 Saudi Arabia 657,049 2% 66.9% 31.1% 13,141 439,566 204,342
20 Switzerland 622,855 1.3% 27.7% 71% 8,097 172,531 442,227
21 Sweden 538,237 1.8% 26.9% 71.3% 9,688 144,786 383,763
22 Poland 513,821 3.4% 33.6% 63% 17,470 172,644 323,707
23 Belgium 513,396 0.7% 21.6% 77.7% 3,594 110,894 398,909
24 Norway 483,650 2.7% 38.3% 59% 13,059 185,238 285,354
25 Iran 482,445 11.2% 40.6% 48.2% 54,034 195,873 232,538
26 Taiwan 466,832 1.3% 32% 66.9% 6,069 149,386 312,311
27 Argentina 447,644 10% 30.7% 59.2% 44,764 137,427 265,005
28 Austria 419,243 1.5% 29.5% 69% 6,289 123,677 289,278
29 South Africa 408,074 2.5% 31.6% 65.9% 10,202 128,951 268,921
30 United Arab Emirates 360,136 0.7% 59.4% 39.8% 2,521 213,921 143,334

 

[Splurgenxs]

Ive personally analysed these things personally fr 2 years now...but refrain from highlighting these things a they are pointless, on a relative scale China trough all its secrecy ,heavy regulations and lieing has done better fr itself holistically.

To a person like me ill categorize it as a valid economic strategy(comparatively in the short term). How it manifests in a long term in my view it has potential to be very bad.China will need major institutional changes.
But the thing that saves China will be its military infra which it may or may not amass in the period of its rise.

This gives China breathing room to maybe get back up again.How bloody it gets is all upto the CCP

 

[tranquilium]

What comes up must comes down. China cannot be the number 1 GDP power in the world as the same time keep their Secondary production low cost.

Now China get some Money, money better make good use to Tertiary Production. China need to change from a export based economy to a research based or Financial based economy quick, otherwise it will become a net import based economy. Which mean money is bleeding out, not bleeding in

Erm, you are kidding right? Throughout human history, the most powerful economy in the world has always been the nation with the most powerful production. In fact, US is currently the most powerful economy in the world BECAUSE it was also the nation with the most industry production from 1900s all the way up to 2010. Immediately after it lost its status as the biggest industrial nation in the world in 2011, lo and behold, US began to run into all sorts of problems ranging from dollar losing its dominant status to debt problems. Sure, these problem exists in some sense previous, but it did not generate nearly as much problem. So this "transition to a Financial based economy" thing has "BAD" written across it in flaming letters.
Also there is no such thing as research based economy. Japan used to propose something like that in the 80s or the so called Flying Geese Pattern and looked how that actually turned out. The fact is, if you want to be a proper major nation, you have to have research and a powerful industry at the same time.
And pray tell, how is the nation that generate 1/4 of the production in the world gonna turn into a "import" based nation? US import only exceed export AFTER it switched to a finance based economy.
If 97 and 08 financial crisis, as well as the current European debt crisis, taught us anything, the lesson will be finance based economies are like straw houses. Sure, they are easy and quick to build, but the slightest wind will blow it over. Industry base economies, on the other hand, are like concrete houses. Sure, they are slow and expensive to build and you often have to dirty and exhaust yourself in the process, but the end result is much more reliable.

 

[tranquilium]

Oh, how should I start. I think I will make with a bit clarifications on some of the issues you are talking about, but first of all, I will make one thing clear. There is a difference between falling short of ideal and falling short of necessity. Basically, falling short of ideal will be a student getting a 96 on a test when his ideal expectation is 100 and falling short of necessity will be a student getting 56 on the same test when 60 is the passing grade. Both are 4 points short from the target, but the effect is very very different. So keep this in mind when you read the t

I didn't say Chinese ppl r poor, indeed they'r rich or some very rich. But i must say China meet some traps/came into some big troubles in the economy development.

Now in 2013, the main problem is: RMB(Chinese People's Money) appreciation for export (foreign market) & devaluation for domestic consumption (internal market).

Now by RMB appreciation problem, I assume you mean the effect of export reduction due to RMB worth more relative to other currencies. While this is true if you only consider the selling part, the fact is, as long as the appreciate rate is consistent and slow, this is hardly problem. Why is this? Well, this is because as RMB appreciates, the cost of raw material will go down; therefore, balancing the final price of the product. Remember, if RMB is worth more US dollars, then import raw materials will also be cheaper. (remember, China accounts for HALF of the raw material import in the entire world)

The Chinese banks owned by CCP still printed more than trillion new RMB cashs(1st step 2008-2010, 2nd step 2011-2012) into domestic construction market, most of these hot money were delieved into domestic market in the form of Bank loans to buy homes.

If you are talking about the so called M2 problem, then let me nib that one in the bud. Chinese M2 is roughly equivalent to US M3, because the Chinese financial markets are heavily regulated. The raw M2 amount is also worthless because by itself it is not a indicator for financial health. The true indicator for potential M2 problem is the CPI. Chinese CPI, with the exception of 2007 (6.58%), has been consistently below 5% in the past 12 years. In fact, 2012 only has a CPI rate of 2.41%. This indicates the economy is quite healthy.

Therefore in 2013, the Chinese house(apartment) average price: In most China medium-sized
and big-sized cities, 10,000 RMB/per centare. In superbig cities, 20,000 RMB/per centare.
Most workers & employeers salary still 3000~5000 RMB/per month. Of course if u r project manager/department manager in the compay will reach 8000~10,000RMB/per month, or u r a successful goods seller also easily to reach over 10,000 RMB/per month. But for normal Chinese ppl, there's still millions of employeers living here.

According to Trulia, the AVERAGE real estate at LA in April 13 is about $312/square ft. This translates to roughly 20672.93 RMB/square meter. Big city housing is expensive, news at 7 o'clock. As for the salary of real estate agent. So you are saying a guy making $1624.51 per month is a lot? I am pretty you make more as a dish washer in NY.

Bad circulation: The house price rise ---> Employeer require salary rise ---> Commodity
price rise ---> Raw materials cost rise ---> Export goods price rise and reduce competitiveness--->Business profits to become low ---> Jobs cut or reduce wages ---> Manufacturing move to abroad ...

The correct cycle is:
National revenue rise---> accumulated capital/fixed asset amount increase--->production increase vs employee salary increase
If the production increase outpace the salary increase, then national revenue rise, if not, then the revenue false. This is the main cycle for a nation. The housing and commodity price is in a related, but separated cycle.

Yes, most Chinese ppl r false rich ！ Why i call them FALSE RICH ?!
Coz in 2013 usually a 100m2 house/apartment could worth 1.0 million or more RMB in China cities, See at least each family own a their own house/apartment, maybe they have payed for all price or maybe they still owe the bank thousands of money. It sounds these Chinese ppl r rich (a millionaire). But that's just the house price, not real cash. Nothing left in our hands.

Whether the people is rich or not has nothing to do with the absolute price of a single commodity or item. The true indicator is the living standard. Can you honestly say with a straight face that living standard in China now is worse than a decade ago?

In 2013 China, nearly all Chinese normal ppl considered buying house/apartment as the most effective & best value activities. Most of these ppl didn't have such many money to invest buying house, but they have the balls to borrow 100,000 - 1,000,000 RMB from the bank to join the crazy party.

Yeah, because a 16 grand loan is a sign of crazy party. If that is actually true, then US would be a mental asylum and this is a sign that people are poor...how?

Yes i didn't doubt now 2013 China r the past 15-year ago Japan or 2001-2008 United State. When whole ppl believe something could growing without restriction, it means not far away from the crash.

Japan's lost decade comes from the plaza accord, where US, Britain and France managed to neuter Japanese export. In order to maintain growth, the Japanese has to throw their money into financial sector or in other words, forcefully transition into a financial based economy. In summary, they are in their sorry state because someone forced them to neuter their economy over the barrels of a gun. How exact is this suppose to happen to China?
US' decline occurred because cold war arm race outpacing the natural growth of US economy. As a result, Reagen is forced to switch US to a financial base economy to provide fast and artificial growth. The Chinese military spending is pegged at 1.6% GDP far below that of US or any major nation, including the likes of India. So how exact is this suppose to happen to China, again?
This is not to mention the fact that Japan and US economies are managed differently than Chinese economy. For example, US economy is famous for its periodic depression and recession cycle. Chinese economy doesn't have those. The circumstance and basic situation in China right now is completely different from Japan and US 20 years. Where exactly did you draw that conclusion?

Just see future China economy a hard landing or soft landing? 2005 - 2013 how the China government to boot China domestic economy rapid development? By printing trillion money and throw it into China house market.

Where did the "trillions" figure came from? The biggest stimulus from Chinese government in the past decade is during 2008 where the government injected roughly 650 billion USD into the ENTIRE infrastructure sector. High speed rail way, for example, took the biggest slice of the pie. The rest went into school, hospital and dams, etc. Real estate sector is mainly privately owned and privately constructed, how is the Chinese government "throw it to China house market" as you so eloquently put?

And I would like to remind everyone the distinction I made at the beginning of this post. Sure, the Chinese housing price is not as ideal as some of us would liked, but it is far from "too expensive to live". In fact, the house ownership rate in China is approximately 90%. This value is significantly higher than all nations with a population 15 million or above.

Please, at least do a bit research on specifics of the Chinese economy. Read actual economy reports and key indicators.
China will most definitely face quite a bit challenge in the next decade. For example, Chinese economy will expand its influence into some of the sectors that are literally the "last fort" of many western economy. As a result, China will face challenges from intense protectionism. Chinese RMB will also begin to transition into a world trade medium, which create management challenges. Militarily, Chinese and US will also come into quite a bit conflict. These are all big challenges. However, please don't pull problems that do not actually exist out of thin air.

 

[ChineseTiger1986]

cnleio sounds more and more like a foreign NGO member to me, his goal now is to spread the misinformation about China.

China won't collapse before your US master, so you trolling effort will be all in vain.

 

[Okemos]

Directly result: For the young ppl living in China big-sized and super-big sized cities, more and more young ppl can't afford average price 100,000 or 200,000/per centare of house price.

Indirectly result: Production costs r rising , more and more employees ask for a high salary. Bad news for "The world's factory in China" also bad for "made in China".

Young people shouldn't buy houses. They have no stable career yet. China's home ownership is way too high. Only migrant workers or outsiders living in Beijing or Shanghai rent. This demand somehow pumps up prices.

 

[Okemos]

Erm, you are kidding right? Throughout human history, the most powerful economy in the world has always been the nation with the most powerful production. In fact, US is currently the most powerful economy in the world BECAUSE it was also the nation with the most industry production from 1900s all the way up to 2010. Immediately after it lost its status as the biggest industrial nation in the world in 2011, lo and behold, US began to run into all sorts of problems ranging from dollar losing its dominant status to debt problems. Sure, these problem exists in some sense previous, but it did not generate nearly as much problem. So this "transition to a Financial based economy" thing has "BAD" written across it in flaming letters.
Also there is no such thing as research based economy. Japan used to propose something like that in the 80s or the so called Flying Geese Pattern and looked how that actually turned out. The fact is, if you want to be a proper major nation, you have to have research and a powerful industry at the same time.
And pray tell, how is the nation that generate 1/4 of the production in the world gonna turn into a "import" based nation? US import only exceed export AFTER it switched to a finance based economy.
If 97 and 08 financial crisis, as well as the current European debt crisis, taught us anything, the lesson will be finance based economies are like straw houses. Sure, they are easy and quick to build, but the slightest wind will blow it over. Industry base economies, on the other hand, are like concrete houses. Sure, they are slow and expensive to build and you often have to dirty and exhaust yourself in the process, but the end result is much more reliable.

Finance-based economy sounds like type of colonialism, siphoning wealth from people that are actually producing for human consumption. I mean what would happen if China, U.S. Europe, India all become finance or service based economy? Who is going to produce anything for humanity? Martians? Africans.

China is basically the last virgin land for the so called finance-based economies to exploit. If China's economy reaches an equilibrium when exports of cheap products are less profitable than domestic consumption, who are going to produce cheap goods for Europeans and Americans? Will they reverse back to production based economies?

I might sound naive since I am novice in economics. I am just being curious from basic instincts!

 

[longyi]

Let's face it, young graduates in the US can't even afford to buy a car or rent a decent apartment. Most are still living with their parents. I know at least 10 of my former tutorial students went back to China looking for suitable jobs and last I heard they made right decisions.

 

[ChineseTiger1986]

Young people shouldn't buy houses. They have no stable career yet. China's home ownership is way too high. Only migrant workers or outsiders living in Beijing or Shanghai rent. This demand somehow pumps up prices.

lol, i do 100% agree with you on this issue.

The Chinese people have too much vanity to be the house owner and car owner when even they can't financially support it.

This is our dark side, care too much about face and vanity.

 

[shuttler]

I thought cnleio has been living in China for a lot more than 2 years

The government has housing planning like this

China is engaged in building more than 7 million government-subsidized units this year as part of its five-year plan to construct 36 million such affordable homes by 2015 in a bid to make housing accessible to low-income families.

08:13, November 13, 2012

Folks have to be more patient and wait for their turns