China risks following Japan into economic coma.

[Kolaps]

for the first time i heard this kind of weird statement ! ! ! do you know how GDP grows ? do you know why governments spend in infrastructure ? is it bad or good ? enlighten me plz.

7.5%....because it lack the rest of 3% from the domestic consumption, to keep growth 10%, that everyone hope for...

That is why it just grow...that slow, unlike before.

 

[BigDaddyWatch]

I always say that China will become Japan if China behaves like Japan. The risk of China going into a Japan like coma comes from the fact that like Japan in the 1980's there is a housing bubble that has build up in China through easy credits. And when the bubble burst Japan instead of allowing some the debt to restructure and allow others to default and go bankrupt they simply almost bailed everyone out. That's the same mistake that America made in 2008. If China will allow there to be a correction in house prices and allow some of the debts to be restructured and allow others to default and go bankrupt and endure a period of slower growth then China could potentially come out of the crisis stronger. Rather or not the government will allow that to happen is another matter that we will have to wait and see. And that's where the risk is. I don't see China's slowing growth as a problem. This is something inevitable as China becomes more developed.

China's retail sales are going up by double digits year after year. And what you see is that some of the local brands are out selling the international ones at least in the Chinese domestic markets.

 

[walle990]

stupid 台巴子 is back

 

[tranquilium]

Japan had third largest Nuclear stock pile? source please - and if you dont give a source, make sure you apologize for the statement. (neutral and reliable source)

It's called sarcasm. Japan never had that much manufacturing capacity, nor did it have a strong enough army to protect its interests from US, that's the whole point.

Japan's decline is two fold. One. its population size and limited natural resource means its technological development simply can't keep up with the likes of US, USSR and China in the long run. For example, Japan, once known as leading expert in robotics, has fallen behind in the recent years to the point that during Fukushima incident, they have to rent remote control robots from US and China. Don't get me wrong, they are still very strong comparing to the rest of the world and still top contenders in many fields, but anyone who went to a lot of top engineering conferences in the recent years will tell you that there is less and less Japanese presence each year.
The second reason is that japan simply don't have the military power to fully protect its economic development. While all-out open war between major powers have ceased since the conclusion WWII, regional conflict and alternative battlefields have persisted and even expanded. Economic warfare is a prominent example. Today, global economies are close knit and depend on each other to function and an economic attack is one of the most effective method to cripple an opponent. The spoil of the war from such an attack can also be enormous.

How well a nation can resist such an attack heavily depends on several factors. The first one is the available resources. For example, during 97 Southeast Asia financial crisis, although Thailand and Singapore have decent control over its own economic, they simply don't have the foreign reserve to fight off a determined attack from Wall Street. In comparison, Hong Kong managed to fight it off successfully since the combined reserve of Hong Kong and mainland China is way too big. In this regard, Japan is doing pretty good, since it has the second largest foreign reserve on the planet. (Second only to China)
The other factor, however, is the amount of control over its economy. For example, during 97 crisis, the financial attack avoided mainland China entirely. The reason is that foreign influences simply doesn't have the same pull there. Basically, if the Chinese government says the stock price has to be below a certain level (so not too much money flow into there), you bet your a$$ it is going to stay there. The other example is Russia. While the 97 financial attack targeted Russia and managed to make some progress in the bond market, the Russian government simply announced that the bond is going to void (it is more complicated than that, but the effect is on the mark). What are wall street going to do to Russia in this situation? Not a thing. You can't invade it since it got the biggest nuclear stockpile on the planet and you can't prevent its business because all Russia does is selling natural resources and you can't prevent them from doing that because, again, their military is way too strong. In comparison, during Plaza accord, the Japanese and Germans basically rolled over and gift-wrapped themselves to US, UK and France. (The German involvement is another long and complicated story, suffice to say, there is a reason Germans are so keen to keep EU together)

 

[Sliver]

It's called sarcasm. Japan never had that much manufacturing capacity, nor did it have a strong enough army to protect its interests from US, that's the whole point.

Japan's decline is two fold. One. its population size and limited natural resource means its technological development simply can't keep up with the likes of US, USSR and China in the long run. For example, Japan, once known as leading expert in robotics, has fallen behind in the recent years to the point that during Fukushima incident, they have to rent remote control robots from US and China. Don't get me wrong, they are still very strong comparing to the rest of the world and still top contenders in many fields, but anyone who went to a lot of top engineering conferences in the recent years will tell you that there is less and less Japanese presence each year.
The second reason is that japan simply don't have the military power to fully protect its economic development. While all-out open war between major powers have ceased since the conclusion WWII, regional conflict and alternative battlefields have persisted and even expanded. Economic warfare is a prominent example. Today, global economies are close knit and depend on each other to function and an economic attack is one of the most effective method to cripple an opponent. The spoil of the war from such an attack can also be enormous.

How well a nation can resist such an attack heavily depends on several factors. The first one is the available resources. For example, during 97 Southeast Asia financial crisis, although Thailand and Singapore have decent control over its own economic, they simply don't have the foreign reserve to fight off a determined attack from Wall Street. In comparison, Hong Kong managed to fight it off successfully since the combined reserve of Hong Kong and mainland China is way too big. In this regard, Japan is doing pretty good, since it has the second largest foreign reserve on the planet. (Second only to China)
The other factor, however, is the amount of control over its economy. For example, during 97 crisis, the financial attack avoided mainland China entirely. The reason is that foreign influences simply doesn't have the same pull there. Basically, if the Chinese government says the stock price has to be below a certain level (so not too much money flow into there), you bet your a$$ it is going to stay there. The other example is Russia. While the 97 financial attack targeted Russia and managed to make some progress in the bond market, the Russian government simply announced that the bond is going to void (it is more complicated than that, but the effect is on the mark). What are wall street going to do to Russia in this situation? Not a thing. You can't invade it since it got the biggest nuclear stockpile on the planet and you can't prevent its business because all Russia does is selling natural resources and you can't prevent them from doing that because, again, their military is way too strong. In comparison, during Plaza accord, the Japanese and Germans basically rolled over and gift-wrapped themselves to US, UK and France. (The German involvement is another long and complicated story, suffice to say, there is a reason Germans are so keen to keep EU together)

Your comments - are based on your perceptions of Japanese resurgence and technological prowess. I do not get into debates on opinions.

About the facts:
Japan is under the US nuclear umbrella.

 

[dreamer53320]

7.5%....because it lack the rest of 3% from the domestic consumption, to keep growth 10%, that everyone hope for...

That is why it just grow...that slow, unlike before.

Why do you think 10% growth is "healthy" or sustainable? And why marks the line at 10%? If a government wants high GDP growth, it can always inflate (like USA or India), but it only looks good on paper and does not translate well to the well-living of the normal citizen.

I think putting too much emphasize on GDP growth is actually what Wall Streets want, higher stock market /housing price etc. But this won't boat well in the long term. And honestly, "western" analyst have never been sincere in their financial analysis towards Asian Countries especially when it comes to China. So the "10% that everyone hopes for" is really what the America hopes for because it will sink China economic health in the long term.

Also, I don't claim to be an expert on Economy, so I don't claim what GDP growth is best for China. But we shouldn't blindly believe in what Wall Street news or analysis say about our Economies. Education is never worthless, it's because there's too many stupid degree in America, that's why there's too many undergrads with worthless degrees. But Wall Street news won't tell you that, so don't too easily buy into their claims.

Lastly, I think Taiwan is NOT trapped in middle-income trap, on the contrary, we are at the TOP of the high tech industry. So I think China won't get trapped either. And when the top scientific competitions around the globes are dominated by Chinese students, their education system overall is working right (however, need for some reform is needed as well)

 

[Kolaps]

Why do you think 10% growth is "healthy" or sustainable? And why marks the line at 10%? If a government wants high GDP growth, it can always inflate (like USA or India), but it only looks good on paper and does not translate well to the well-living of the normal citizen.

That is the game.

Inflated or not...it became real. As US depend on domestic consumption, the money circulated in their domestic market is big and make goods price became cheap to their people (aka high standard of living).

Why some countries have higher standard of living than the high tech Taiwan? Are their economy inflated? I want that inflated too!

I think putting too much emphasize on GDP growth is actually what Wall Streets want, higher stock market /housing price etc. But this won't boat well in the long term. And honestly, "western" analyst have never been sincere in their financial analysis towards Asian Countries especially when it comes to China. So the "10% that everyone hopes for" is really what the America hopes for because it will sink China economic health in the long term.

Also, I don't claim to be an expert on Economy, so I don't claim what GDP growth is best for China. But we shouldn't blindly believe in what Wall Street news or analysis say about our Economies. Education is never worthless, it's because there's too many stupid degree in America, that's why there's too many undergrads with worthless degrees. But Wall Street news won't tell you that, so don't too easily buy into their claims.

No, it's real sick.

Higher stock market value and real estate price, are not my meaning. They are definitely a bubble and actually hurting the common people. My meaning is...the sick came outside of stock market and real estate. It's domestic consumption and garbage education.....garbage workers and rural peasant management.

Sick that came from the core of China economy...the people itself.

Lastly, I think Taiwan is NOT trapped in middle-income trap, on the contrary, we are at the TOP of the high tech industry. So I think China won't get trapped either. And when the top scientific competitions around the globes are dominated by Chinese students, their education system overall is working right (however, need for some reform is needed as well)

Taiwan people salary and low currency exchange rate are trapped by Taiwan export oriented economy, whatever it's high tech industry or not. Middle-income trap in different theory, I guess.

I think, we should see Taiwan economy reality...outside high tech industry. Free from the Cold War praise from Western controlled media, because we are democracy. Taiwan is very sick...sick for a very long time.


Mainland China education...

Winning education competition...but lack of real world skills...I call it as miseducation.

 

[applesauce]

I always say that China will become Japan if China behaves like Japan. The risk of China going into a Japan like coma comes from the fact that like Japan in the 1980's there is a housing bubble that has build up in China through easy credits. And when the bubble burst Japan instead of allowing some the debt to restructure and allow others to default and go bankrupt they simply almost bailed everyone out. That's the same mistake that America made in 2008. If China will allow there to be a correction in house prices and allow some of the debts to be restructured and allow others to default and go bankrupt and endure a period of slower growth then China could potentially come out of the crisis stronger. Rather or not the government will allow that to happen is another matter that we will have to wait and see. And that's where the risk is. I don't see China's slowing growth as a problem. This is something inevitable as China becomes more developed.

China's retail sales are going up by double digits year after year. And what you see is that some of the local brands are out selling the international ones at least in the Chinese domestic markets.

and what exactly is wrong with being like japan? japan has a per capita GDP of $45,000+, if china has half that it would be hitting 30 trillion in GDP. Japans air and environment is generally healthy and its people content.

however china is not like japan, its per capita GDP is still low(like 6-7k) and half of its people are still living in the country side, that means there is still vast space for growth, sure it might not be as fast as before as the low hanging fruits are already gone, but it would not be anywhere near what japan experienced in the 80-90's. in all likelihood it can grow around 5-6% for the next 20 years+.

As for the housing bubble, the danger is there buts its over-hyped. people in china pay and very large % for a down payment and many pay in full. which means a housing price collapse would be far less dangerous than the 2008 situation in the US, in other words, completely manageable. further more the underlying cause isnt unsolvable either. people buy property in china because there little else they can put their savings into. they need the savings for a rainy day and banks pay far too little interest.

the solution? eventual removal of deposit interest rate ceilings and better social safety net coverage. we know that the social safety net is something they are working on and the deposit ceiling must be done at some point for further internationalization of the yuan and china's financial market in general.therefore im positive they will do it, but i do not know when.

 

[BigDaddyWatch]

Mainland China education...

Winning education competition...but lack of real world skills...I call it as miseducation.

Aren't Taiwanese academics increasingly relying on the works published on the mainland for their research ?

 

[StarCraft_ZT]

A comparison between China and 1970s Japan

 

[StarCraft_ZT]

Comparison 1: Cheap, quality labor shifting from agriculture to industry and its subsequent disappearance


The Japanese economy during the rapid-growth period was a two-sector economy, as most developing economies are today, consisting of an agricultural sector and an urban industrial sector. The manufacturing sector’s development was supported by the provision of a relatively cheap agricultural sector labor force (with high education levels) to the industrial sector, which was the driving force behind economic growth. The flow of population from villages to cities in the first half of the rapid-growth period provided a cheap labor force and helped support the manufacturing sector. This trend was bolstered by plans to have workers from villages move into jobs in secondary and tertiary industries. One government plan to double national income included “mobilizing” the agricultural labor force. The supply of cheap labor became insufficient, however, in the mid-1960s, and real wages began rising sharply. This trend is reflected in Japan’s labor share of income, which had already begun rising at the start of the 1970s, prior to the first oil crisis. In addition, the geographical shift in population had begun to stabilize around the end of the 1960s. That is to say, Japan reached the Lewis Turning Point between the mid-1960s and the 1970s (see Minami [1970] and Box 1: Lewis Turning Point).

In China, unit labor cost is still well contained on average and there is further room for productivity gains due to wider inequality. However, there are signs that unit labor cost is rising in some segments of the economy such as in low-end urban jobs and farm work. We think this is partly because there has been more upward pressure on real wages than on productivity in some areas because rural excess labor has begun to fall. What does the rise in wages mean? It has a positive significance for consumption—reflecting a rise in real purchasing power—and a negative significance for companies in that higher personnel costs squeeze profit margins. An inverse correlation exists between personnel costs and operating margins, and this correlation is particularly strong in the manufacturing sector, where it is relatively difficult to pass personnel costs through to final product prices. That is to say, higher personnel costs squeeze manufacturing sector profits in particular (see Exhibit 6).

 

[BigDaddyWatch]

and what exactly is wrong with being like japan? japan has a per capita GDP of $45,000+, if china has half that it would be hitting 30 trillion in GDP. Japans air and environment is generally healthy and its people content.

however china is not like japan, its per capita GDP is still low(like 6-7k) and half of its people are still living in the country side, that means there is still vast space for growth, sure it might not be as fast as before as the low hanging fruits are already gone, but it would not be anywhere near what japan experienced in the 80-90's. in all likelihood it can grow around 5-6% for the next 20 years+.

As for the housing bubble, the danger is there buts its over-hyped. people in china pay and very large % for a down payment and many pay in full. which means a housing price collapse would be far less dangerous than the 2008 situation in the US, in other words, completely manageable. further more the underlying cause isnt unsolvable either. people buy property in china because there little else they can put their savings into. they need the savings for a rainy day and banks pay far too little interest.

the solution? eventual removal of deposit interest rate ceilings and better social safety net coverage. we know that the social safety net is something they are working on and the deposit ceiling must be done at some point for further internationalization of the yuan and china's financial market in general.therefore im positive they will do it, but i do not know when.

The Japanese GDP and per capita income will now start to fall in USD terms with the new policies of Shinzo Abe of inflation targetting. The Japanese economy hasn't grown in nominal terms since 1990. The reason for the increase in the GDP statistics for Japan is because of both the depriciating of the USD and deflation in Japan over the past 20 years. And Japan has a government debt to GDP ratio of 240% and overall debt is now 650% of GDP.

China needs to allow the housing markets to correct or else it will swallow up more and more resources in the economy. And will lead to a massive crisis.

A social safety net will bankrupt China just like it has bankrupted America and Europe.

 

[Grevion]

The problem with China is that they are quickly consuming their natural resources to increase and maintain their higher GDP growth rate...While the pace at which they are consuming their resources should have been lowered as soon as their domestic consumption requirement was meet by their industries but it continued to increase export..

The main difference between Japan and China is that Japan lacks huge amount of natural resources that China haves.So basically Japan's economy was based upon importing Raw material and exporting finished goods while China started with using their own available resources for export which is not always the best way to go and we can see now that China's CPC is investing more in minining around the world...

An export driven economy should not be based only on using home resources but it should be a mixed of both Home and Imported resources.

 

[Kolaps]

and what exactly is wrong with being like japan? japan has a per capita GDP of $45,000+, if china has half that it would be hitting 30 trillion in GDP. Japans air and environment is generally healthy and its people content.

however china is not like japan, its per capita GDP is still low(like 6-7k) and half of its people are still living in the country side, that means there is still vast space for growth, sure it might not be as fast as before as the low hanging fruits are already gone, but it would not be anywhere near what japan experienced in the 80-90's. in all likelihood it can grow around 5-6% for the next 20 years+.

.......................................

I heard it all the time about vast space for growth.

But what is the so called vast space?

Because China can only grow for 7%. Vast Space...with "conditions".

Aren't Taiwanese academics increasingly relying on the works published on the mainland for their research ?

It's called as International Science Community!

 

[romia]

How many unemployment among university graduate? Almost all of them are unemployed because they are "useless" and "unskilled", or at least far below the standard of what mainland companies need. Garbage workers, educated from garbage universities.

SOEs don't account. How many mainland have private medium and large companies that have world class management? If the foreign educated CEO, owner or founder excluded, the list is almost zero, isn't? Rural peasant quality!

There are some great people...one or two. But that is not enough to support 1.3 billions of people.

Those make China economy stagnant, as mainland missed the opportunity to climb the economy ladder to the next stage, as the high skilled workers required is not available or not enough to support it.

That is why your economy is only growth at 7.5%...outside of SOEs, government spending in infrastructure and foreign investment, China private sector basically is...coma!

Yeah,our growth rate is so low only 7.5%,but ur TaiWan's economy is so high at a scale of 1% to -2%,negative growth rate.what a big achievement by great DaiWan