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

[ChinaToday]

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



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)




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.



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.


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.


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?

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?

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?

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.

Dam you are putting off many indian trolls coming to bad mouth china in this thread

 

[Yzd Khalifa]

What problems are you talking about? I mean seriously?

China is getting stronger and stronger everyday. Their manufacturing machines never stop; they produce pretty much everything the world needs! What the Devil are you talking about?

I never heard of a country that produces many stuff from toilet paper to 14,000 KM range ICBM missiles (Hopefully will get my hand on those ) . I also never heard of such a rapid economic development in human history. Do you know who's borrowing money from whom? Do you actually realize that the PRC gave the US $10 trillion? Do you even realize that the Chinese go to the developing countries to do business and help them out? Unlike others who go and do ...

This is a revolutionized State and will continue to grow up and many countries are keen on working with them. Their policy is amazing and they're very friendly.

What the West is going to do about that? Take their factories back to their countries? GDL the Chinese have gotten the blueprint of their technology anyway.

GTFO the Chinese aren't stupid. The West won't take them down ,but with Russia in hand ,and developing countries on the other hand of the PRC, it won't go back to the 30s when they suffer from the Japanese Imperial humiliation.

To the Chinese, go and work hard for your country. It will only take you guys another more 3 decades and you will becoming as stronger as you never have been.
Long live China

 

[xuxu1457]

House price of top 100 cities of China
NO. City price(yuan / square meters)
1 Beijing 34,977
2 Shanghai 25,849
3 Wenzhou 22,480
4 Shenzhen 21,180
5 Sanya 20,963
6 Xiamen 20,121
7 Hangzhou 19,016
8 Canton 16,552
9 Nanjing 16,426
10 Ningbo 14,597
11 Tianjin 13,723
12 Qingdao 13,115
13 Fuzhou 13,008
14 Jinhua 12,040
15 Zhuhai 11,528
16 Taizhou 11,191
17 Shaoxing 10,978
18 Dalian 10,966
19 Suzhou 9,853
20 Chengdu 9,091
21 Nanchang 9,035
22 Kunming 9,002
23 Jinan 8,898
24 Huzhou 8,433
25 Wuhan 8,421
26 Nantong 8,362
27 Foshan 8,321
28 Zhengzhou 8,270
29 Lanzhou 8,224
30 Wuxi 7,924
31 Shenyang 7,872
32 Quanzhou 7,857
33 Jiaxing 7,777
34 Dongguan 7,691
35 Yangzhou 7,639
36 Taiyuan 7,607
37 Changzhou 7,592
38 Qinhuangdao 7,440
39 Yantai 7,440
40 Shijiazhuang 7,437
41 Harbin 7,394
42 Xi'an 7,391
43 Chongqing 7,366
44 Seaport 7,327
45 Nanning 7,130
46 Shantou 7,053
47 Taizhou 7,019
48 Hefei 6,882
49 Xuzhou 6,852
50 Urumqi 6,831
51 Langfang 6,825
52 Zhenjiang 6,764
53 Changchun 6,746
54 Hohhot 6,602
55 Tangshan 6,584
56 Changsha 6,513
57 Wuhu 6,407
58 Yancheng 6,369
59 Sunshine 6,366
60 Liuzhou 6,288
61 Guilin 6,246
62 Ganzhou 6,151
63 Dongying 6,130
64 Yichang 6,118
65 Tai'an 6,049
66 Baotou 5,934
67 Zibo 5,917
68 Zhongshan 5,898
69 Bengbu 5,887
70 Tongling 5,866
71 Huizhou 5,816
72 Zhanjiang 5,783
73 Guiyang 5,770
74 Jining 5,763
75 Ma On Shan 5,696
76 Texas 5,634
77 Jiangmen 5,596
78 Yinchuan 5,555
79 Xining 5,544
80 Xiangyang 5,530
81 Anqing 5,458
82 Jilin 5,416
83 Jiujiang 5,409
84 Dandong 5,406
85 Weihai 5,375
86 Jinzhou 5,355
87 Baoding 5,300
88 Luzhou 5,254
89 Suqian 5,088
90 Luoyang 5,028
91 Mianyang 4,780
92 Nanchong 4,766
93 North Sea 4,736
94 Zunyi 4,694
95 Weifang 4,627
96 Pingdingshan 4,622
97 Linyi 4,614
98 Changde 4,511
99 Mudanjiang 4,375
100 Changji 4,341
101 Binzhou 4,303
102 Zaozhuang 4,279
103 Shaoguan 4,204
104 Yueyang 4,137
105 Tonghua 4,039
106 Jiamusi 3,833
107 Kashi 3,346

 

[tranquilium]

What problems are you talking about? I mean seriously?

China is getting stronger and stronger everyday. Their manufacturing machines never stop; they produce pretty much everything the world needs! What the Devil are you talking about?

I never heard of a country that produces many stuff from toilet paper to 14,000 KM range ICBM missiles (Hopefully will get my hand on those ) . I also never heard of such a rapid economic development in human history. Do you know who's borrowing money from whom? Do you actually realize that the PRC gave the US $10 trillion? Do you even realize that the Chinese go to the developing countries to do business and help them out? Unlike others who go and do ...

This is a revolutionized State and will continue to grow up and many countries are keen on working with them. Their policy is amazing and they're very friendly.

What the West is going to do about that? Take their factories back to their countries? GDL the Chinese have gotten the blueprint of their technology anyway.

GTFO the Chinese aren't stupid. The West won't take them down ,but with Russia in hand ,and developing countries on the other hand of the PRC, it won't go back to the 30s when they suffer from the Japanese Imperial humiliation.

To the Chinese, go and work hard for your country. It will only take you guys another more 3 decades and you will becoming as stronger as you never have been.
Long live China

Well, we didn't actually give US 10 trillion dollars. Sure, we give out aids and low interest loans to a lot of nations, but US is certainly not on that list.
What we did was buying US bonds and that only amounts to 1.2229 trillion or about 7.1% of total US debt as of February, 2013. (If someone has a more recent figure, please update me on it.) In fact, more than half of the US debt is owned domestically.

The reason we bought US bonds is several fold:

1. When we bought these, US was our biggest trading partner and if we let the US economy collapse in 2008 crisis, our economy is gonna be dragged along for the ride. This is not ideal, so we are working to change it in two ways: one) find more reliable partners who are less likely to gamble their economy. two) Expand domestic market to reduce reliance on export.

2. US treasury bonds were and still are decent investment. When you have to help US, the treasury bond is about the most reliable way to go. The investment return is decent and the risk is way lower than their stock market. Someone in the Chinese forums asked what will happen if US defaults on it and refuse to pay? Mind you, this is not impossible, as Russian Federation partially did it in 97 (or is it 98). Argentina and Iceland also did it and in Iceland case, they actually filed an honest(?) to God bankruptcy. The answer to this question is that China will be very happy about it. Because if US actually did that, then they are essentially committing credit suicide and that will effective end dollar as an international currency. Basically, if 1.2 trillion dollar will get our biggest competition to commit suicide, then we can stand losing some money.

3. This bond are also deterrents. US' economic attacks are every bit as vicious as its military invasions and are about ten times looser in term of constraint. Holding a large amount of US debt is like carrying a large bomb. Sure, when it blows up it will hurt you badly, but your attack is also gonna get caught in it and he will think twice before attacking.

 

[Yzd Khalifa]

I know you guys have bought their securities we did the same with them too. I understand the decision-making process within the political-elite in China. They are very rational and acted out on their interests.

Well, we didn't actually give US 10 trillion dollars. Sure, we give out aids and low interest loans to a lot of nations, but US is certainly not on that list.
What we did was buying US bonds and that only amounts to 1.2229 trillion or about 7.1% of total US debt as of February, 2013. (If someone has a more recent figure, please update me on it.) In fact, more than half of the US debt is owned domestically.

The reason we bought US bonds is several fold:

1. When we bought these, US was our biggest trading partner and if we let the US economy collapse in 2008 crisis, our economy is gonna be dragged along for the ride. This is not ideal, so we are working to change it in two ways: one) find more reliable partners who are less likely to gamble their economy. two) Expand domestic market to reduce reliance on export.

2. US treasury bonds were and still are decent investment. When you have to help US, the treasury bond is about the most reliable way to go. The investment return is decent and the risk is way lower than their stock market. Someone in the Chinese forums asked what will happen if US defaults on it and refuse to pay? Mind you, this is not impossible, as Russian Federation partially did it in 97 (or is it 98). Argentina and Iceland also did it and in Iceland case, they actually filed an honest(?) to God bankruptcy. The answer to this question is that China will be very happy about it. Because if US actually did that, then they are essentially committing credit suicide and that will effective end dollar as an international currency. Basically, if 1.2 trillion dollar will get our biggest competition to commit suicide, then we can stand losing some money.

3. This bond are also deterrents. US' economic attacks are every bit as vicious as its military invasions and are about ten times looser in term of constraint. Holding a large amount of US debt is like carrying a large bomb. Sure, when it blows up it will hurt you badly, but your attack is also gonna get caught in it and he will think twice before attacking.

 

[darkhero]

The reason we bought US bonds is several fold:

First of all, we buy US bonds is: because we have nowhere to spend the money.

If we decide to buy a trillion dollar oil today, tomorrow the price will be skyrocketing to $300/b.

If we want to buy shirts and shoes, ohh, well, they are made in China, we do not need dollars.

 

[jhungary]

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.

umm. Wikipedia and IMF says otherwise

World 71,707,302 (GDP) 5.9% (Agricultural sector) 30.5% (Industrial sector) 63.6% (Service Sector)

World 4,230,731 (Millions in Agricultural) 21,870,727 (millions in Industrial) 45,605,844 (millions in Service)

You see the earning from Service sector is 2.05 times of Industrial Sector.

Translate to the world most powerful at Service sector, which contribute 63% of the WORLD economy

Of course Chinese chest thumper will say Industrial Sector is the most important because if you recap the US and China by sector

United States 15,684,750 1.2% 19.1% 79.7% 188,217 2,995,787 12,500,746
China 8,227,037 10.1% 45.3% 44.6% 830,931 3,726,848 3,669,259

Well, simply because Chinese's Industrial Sector is on top of the Service sector, that does not mean the world have to follow the same trial. You can again go run away and pretend sunshine as usual if you want, that is just lying to yourselve kiddo. Or you are saying the Chinese GDP will be bigger section will be bigger than the world. Well. That's never going to be true

Today world is not the same world we lived in 60 years ago Truth Hurt, don't it?

I got quote from Wikipedia which quote from IMF 2012, what do you got? Your word, professor??

 

[worldrna]

I am a Chinese. And i am fighting for my house with my wife. i love this contry.
in my eyes, what u say is not a problem.

all the people work hard can handle it.

sorry for my poor English.

 

[tranquilium]

umm. Wikipedia and IMF says otherwise

World 71,707,302 (GDP) 5.9% (Agricultural sector) 30.5% (Industrial sector) 63.6% (Service Sector)

World 4,230,731 (Millions in Agricultural) 21,870,727 (millions in Industrial) 45,605,844 (millions in Service)

You see the earning from Service sector is 2.05 times of Industrial Sector.

Translate to the world most powerful at Service sector, which contribute 63% of the WORLD economy

Of course Chinese chest thumper will say Industrial Sector is the most important because if you recap the US and China by sector

United States 15,684,750 1.2% 19.1% 79.7% 188,217 2,995,787 12,500,746
China 8,227,037 10.1% 45.3% 44.6% 830,931 3,726,848 3,669,259

Well, simply because Chinese's Industrial Sector is on top of the Service sector, that does not mean the world have to follow the same trial. You can again go run away and pretend sunshine as usual if you want, that is just lying to yourselve kiddo. Or you are saying the Chinese GDP will be bigger section will be bigger than the world. Well. That's never going to be true

Today world is not the same world we lived in 60 years ago Truth Hurt, don't it?

I got quote from Wikipedia which quote from IMF 2012, what do you got? Your word, professor??

Well, let's take a look at another set of data then:

List of countries by public debt - Wikipedia, the free encyclopedia

I guess I will take the word from both CIA and IMF then. How are those debt doing by the way? The finance must have paid off really well.

I already stated this point in my previous post and I will say it again. Financial based economies are like straw houses. They are quick and easy to build. You have said yourself, nowadays the financial sector easily generates more GDP than industrial sector. So it is very tempting for a nation to go down that route. Hey, if you can make the same amount of money as a actual field engineer while sitting in an office and tinkering with virtual money, it is very difficult for the individual find motivation to back to the hard work, but GUESS WHAT? Financial sector does not create value. No matter how many times zeros and ones are switched on a computer, the actual, physical material and assets will not change. Ultimately, financial sector is dependent on industrial sector and without a solid industry sector, financial sector cannot survive. A good analogy is that industrial sector is the base number and financial sector is the multiplier. Sure, the multiplier increases your overall more quickly, but if your base is zero, then it is going to stay at zero no matter how big your multiplier is.
The world today is different from the world 50 years ago and it is different from 100 years and certainly different from 2000 years ago. However, the basic principle of the economy will not change. It is supply and demand. Production sectors creates supply and financial sector just manages it.

Welcome back to earth, there is no easy way out and no free lunch. If you are not willing to work hard, then the wheel of time will grind you down without a care.

The truth hurts isn't it?

 

[jhungary]

Well, let's take a look at another set of data then:

List of countries by public debt - Wikipedia, the free encyclopedia

I guess I will take the word from both CIA and IMF then. How are those debt doing by the way? The finance must have paid off really well.

I already stated this point in my previous post and I will say it again. Financial based economies are like straw houses. They are quick and easy to build. You have said yourself, nowadays the financial sector easily generates more GDP than industrial sector. So it is very tempting for a nation to go down that route. Hey, if you can make the same amount of money as a actual field engineer while sitting in an office and tinkering with virtual money, it is very difficult for the individual find motivation to back to the hard work, but GUESS WHAT? Financial sector does not create value. No matter how many times zeros and ones are switched on a computer, the actual, physical material and assets will not change. Ultimately, financial sector is dependent on industrial sector and without a solid industry sector, financial sector cannot survive. A good analogy is that industrial sector is the base number and financial sector is the multiplier. Sure, the multiplier increases your overall more quickly, but if your base is zero, then it is going to stay at zero no matter how big your multiplier is.
The world today is different from the world 50 years ago and it is different from 100 years and certainly different from 2000 years ago. However, the basic principle of the economy will not change. It is supply and demand. Production sectors creates supply and financial sector just manages it.

Welcome back to earth, there is no easy way out and no free lunch. If you are not willing to work hard, then the wheel of time will grind you down without a care.

The truth hurts isn't it?

oh lol, I told you about the How the world operate on, you told me about a totally different thing. This can only be done by a Chinese Member here

Yes we owe China a lot of money, try come and get it, your money is gone pal, if you try to recover it, we will bring you and the world economy down with us. LOLROFLMFAO

You do know why China did not even saw 1 cents back right? And in no hurry collecting the so-called "debt"

and yet the "Straw house" contain 63% of "THE WORLD" wealth, do you think if the straw-house collapsed? China will get out unscathed? You really think so? Then good luck

Truth Really hurt, isn't it??

And if I have to listen to one person, will I listen to the people who do the statistic with IMF or some Chinese "Professor"??

but hey, PLEASE DO NOT LISTEN TO ME. I am just a brainwashed Westerner, actually, by not listen to us, you are doing us a very big favor. Enjoy your economic collapse.

 

[tranquilium]

oh lol, I told you about the How the world operate on, you told me about a totally different thing. This can only be done by a Chinese Member here

Yes we owe China a lot of money, try come and get it, your money is gone pal, if you try to recover it, we will bring you and the world economy down with us. LOLROFLMFAO

You do know why China did not even saw 1 cents back right? And in no hurry collecting the so-called "debt"

and yet the "Straw house" contain 63% of "THE WORLD" wealth, do you think if the straw-house collapsed? China will get out unscathed? You really think so? Then good luck

Truth Really hurt, isn't it??

And if I have to listen to one person, will I listen to the people who do the statistic with IMF or some Chinese "Professor"??

but hey, PLEASE DO NOT LISTEN TO ME. I am just a brainwashed Westerner, actually, by not listen to us, you are doing us a very big favor. Enjoy your economic collapse.

I do agree, we are having entirely different view on how the world operates on, oh, by the way:
PolitiFact Virginia | Randy Forbes says the U.S. pays China $73.9 million per day in debt interest
You are quite correct, because I am sure US did not pay those 73.9 million USD in 1 cent coins every day. That will just be too much work.

I don't think you are brain-washed. It is just a difference in view. I like to look at all statistics, indicators and consider the fundamental driving force of the economy and you are focused a single statistic. It is not like US government's current motto is "re-industrialize and bring jobs back" right? I am sure Obama is complete wrong on this regard.

 

[jhungary]

I do agree, we are having entirely different view on how the world operates on, oh, by the way:
PolitiFact Virginia | Randy Forbes says the U.S. pays China $73.9 million per day in debt interest
You are quite correct, because I am sure US did not pay those 73.9 million USD in 1 cent coins every day. That will just be too much work.

I don't think you are brain-washed. It is just a difference in view. I like to look at all statistics, indicators and consider the fundamental driving force of the economy and you are focused a single statistic. It is not like US government's current motto is "re-industrialize and bring jobs back" right? I am sure Obama is complete wrong on this regard.

73.9 million on a 14 Trillion debt........Do you know what is the calibre of the payment??

73.9 millions a day mean 26 billion per annum. With a 14 trillion debt. That's amount to about 0.2% even of the debt (26000 millions/14,000,000 millions). Borrowing rate today is 7% annum (a la commonwealth Bank), that's not even whatever percentage of "Interest" oweing. And you need to know where those 73.9 millions a day is coming from....

As I said, you cannot keep up the low cost With your country keep earning money. When your country have money, money will be more influxes into public sector. When money influx the Market, you know what will going to happen.

I don't want any argument anymore, if you think China can get out of this Unavoidable economic procedure by keep industrialising their economy then be my guest, it's your country you are talking about. I am saying because it violate almost every rule of modern Economy.

However, if you can find a way to lower the secondary production cost and keep competitive meanwhile retain a growth rate like now with GDP, let me know, I will recommend you for a nobel price of economy.

 

[tranquilium]

73.9 million on a 14 Trillion debt........Do you know what is the calibre of the payment??

73.9 millions a day mean 26 billion per annum. With a 14 trillion debt. That's amount to about 0.2% even of the debt (26000 millions/14,000,000 millions). Borrowing rate today is 7% annum (a la commonwealth Bank), that's not even whatever percentage of "Interest" oweing. And you need to know where those 73.9 millions a day is coming from....

As I said, you cannot keep up the low cost With your country keep earning money. When your country have money, money will be more influxes into public sector. When money influx the Market, you know what will going to happen.

I don't want any argument anymore, if you think China can get out of this Unavoidable economic procedure by keep industrialising their economy then be my guest, it's your country you are talking about. I am saying because it violate almost every rule of modern Economy.

However, if you can find a way to lower the secondary production cost and keep competitive meanwhile retain a growth rate like now with GDP, let me know, I will recommend you for a nobel price of economy.

Please go back and re-read my post. China has 1.2 trillion US debt. 14 trillion is close to the full US debt. More than half of the US debt is domestically owned. This comes out to be about 2.4% interest per year. While this is certainly lower than direct investment return, treasury bonds and security is about the safest investment possible.

I am not sure what you are saying regarding to the money flowing into the market. Money has been flowing into Chinese private market for the past three decades, what is new here?

I would also like to re-state a point I already made in my first post. Chinese economy is managed differently from US economy or European economy (they have differences as well, to a lesser extent). So what if it does not fit western economic models and theories? Economy is not a hard sciences and models will evolve over time.

Unfortunately, I am gonna have to pass on the offer. I am an electrical engineering student and I will be going into engineering. Economy is not among my skill set and I will leave it in hands of people who are trained to do such. Fortunately, considering PRC's performance in the past, especially the way they handled financial crisis, there is no lacking of such individuals.

 

[jhungary]

Please go back and re-read my post. China has 1.2 trillion US debt. 14 trillion is close to the full US debt. More than half of the US debt is domestically owned. This comes out to be about 2.4% interest per year. While this is certainly lower than direct investment return, treasury bonds and security is about the safest investment possible.

I am not sure what you are saying regarding to the money flowing into the market. Money has been flowing into Chinese private market for the past three decades, what is new here?

I would also like to re-state a point I already made in my first post. Chinese economy is managed differently from US economy or European economy (they have differences as well, to a lesser extent). So what if it does not fit western economic models and theories? Economy is not a hard sciences and models will evolve over time.

Unfortunately, I am gonna have to pass on the offer. I am an electrical engineering student and I will be going into engineering. Economy is not among my skill set and I will leave it in hands of people who are trained to do such. Fortunately, considering PRC's performance in the past, especially the way they handled financial crisis, there is no lacking of such individuals.

Still. 2.4% on a 7 % annum interest is a token payment, even you should be able to see that. In term of the debt, it will only get bigger (I don't know what and which bond issue with what interest rate, but it would most likely be greater than the 2 %)

Money cycle is, you cannot make the money you and your country earn disappear.

Current Chinese Economic model is they uses RMB and pay off the local factories and make goods. With Goods export, those people are not going to pay RMB to buy your goods. THey will use its local currency. As RMB is still prohibit to sell over international market (As far as I know) So China is getting USD instead.

However, with exchange rate and interest deficit. You have to convert the USD China earn back into RMB. There are only one way you can do it, is by issuing more credit or print more money. Where Credit was given out by bank to transform into loan and being borrowed by Chinese, money will hit the market directly. However, you cannot print money any willy-lily you want, so most of those conversion cash are going to end up in credit. Which is not a big problem but when you consider when people can have easy credit to borrow (i.e. more people borrow from bank), it push up anything that require a loan, from mortgage to personal loan. Hence you have an inflation.

However, not all of the Chinese are better off with these inflation, while there are people earning 12,000 a year who can pay off almost whatever they can, some people are earning 2,400 a month, those people are worse off. However, when you look back at those people who earn top dollar, pay a lot of tax, and the country now more developed. The land of everything will rise. Again, it's good to selected few, But not good on the others, the Majority of others. Up to a point the local factory cannot sustains the high rental price and higher salary payout. You need to increase the price for your product. Hence you lose completeness.

If you would bother reading the OP post, his word are spot on, you cannot expect every dollar Chinese Company earn goes into Chinese government for a centralised financial control. The moment they earn more, their employee will demand more, and the city they live in and work in will demand more. Money will not disappear out into nowhere. So, you are going to look at a certain rise of standard in China, but with rise of standard, you cannot keep it low on cost. As the cost always represent the standard.

That's why I said, if you can find a way to increase the standard in your country and your product without adjusting the cost, let me know, you deserve a Nobel Prize in economic

 

[Genesis]

so after living in China for three years, you have no personal experience?

Why do you have to live in China to see the housing situation? (not here to discuss this)

I thought you were going to talk about day to day life, how's the living condition, entertainment, the people, the schools, work place and stuff like that not some crap about Chinese economy and from the look of it is not even written by you at least not all of it.