rockypath

In China now, I am really believing this hard landing thing every economist is talking about. China  ...
Ovaltine 發表於 2012-4-23 09:10

What have you seen in China to make you come to such a drastic conclusion that China will have a hard landing by the end of the year? 

People are expecting and prepared for the economic slowdown of China. In my opinion, I don’t see a hard landing is likely or imminent as long as China is still politically stable. 

I will be in China again later this year and interested in knowing what you have seen. 

peter236

China's service sector is booming. Just look at the booming sales of cars, electronics and fashion in China. The Chinese middles class is huge and expanding.

Ovaltine

Luxury items buying is expanding, but most are imports. If you go to any five star hotels, there are way too much Lamborghini and Ferrari in the parking lot. I was optimistic about China's economy when I was in Canada, not anymore. The Rich will do very well, but even in the future, the majority of the population will have a tough time because of inflation.

Fact is, China had been trying hard to change it's economy, it relied on export market too much. But consumer market is not going to thrive when workers salary are so meager, many factory bosses are complaining about worker's wage, so profit margin for them is lower. If you live in China now, you will notice restaurant  food prices are similar to Hong Kong, sometimes more expensive. Domestic market is not going to run when the Chinese do not believe in Chinese products, in the news you hear the Chinese kid who sold his kidney for an iphone, would he have done it for food or any other Chinese made products?
Goto any Chinese fashion store that are recently opened, empty as hell. Goto LV, Chanel shops, full of people.


What I also notice about ordinary Chinese citizens is, most are like peter234. They like to praise Chinese government and China for it's advances in living standards, but we are still far from being a first world country. Political fanaticism much? Stop defrauding ourselves, we are not the best, and until we are, stop this fake propaganda and advertising. Economic power doesn't mean everything.

To be a dominant society, I think Chinese have to innovate and be creative. That will be tough due to conservative society structure. Most likely, we will continue to farm for human labor, be factory of the world while the businessmen and government officials enjoy the rock star life.

I think there is a 70% chance of hard landing. We have to see until after the power transition, because recently Bo Xilai's scandal is hurting Beijing. There could be a strain in the military, government relationship already. Hu and Wen are trying to clean things up before their term is over, but will it be easy? China are already showing weakness diplomatically this year with it's way in handling territorial dispute, it is probably reluctant for a military show of force due to recent chaos and future transitions in the government. I could be wrong, but economic slow down in China is already happening.

Ovaltine

回復 23# Ovaltine

Anybody looking at Gold stocks lately? Some Juniors are at or near cash value, Barrick is trading at 9x earnings. Today is important because Bernake is talking. QE3 seems like a possibility.

I am definitely betting on the poltical + economic ambiguity across the globe: North Korea, Iran, US and China (power transition). Something big may happen, brinkmanship perhaps?

peter236

I don't think it is more expensive eating in a restaurant in China than in Hong Kong. Maybe in some high class places, but in general food prices are way lower in China than in Hong Kong which actually imports food from China.

Technologically, China is positioning itself very well in the long term.
Big Chinese brands like Lenovo, Huawei, TCL are taking market share from foreign brands rapidly.

China launches its own communication satellites and forming its own GPS system.

China designs its own ShenWei CPUs for use in its locally designed supercomputers.

In the commercial aviation industry, China is designing its own fleet of commercial planes.

Financially, China is doing way better than some other near bankrupt countries. China has the cash to invest in its service industries like healthcare and education.

The chance of a hard-landing is near zero, since the government did a good job in controlling housing prices. The people still have the money to buy apartments with 30% downpayment. They don't have subprime mortgages in China.

The currency reforms over the next couple of years, will allow the RMB to become one of the reserve currencies for the world. When the $US loses it dominant status, American living standards will sink rapidly.

Even if China's economy is slowing, but still way faster than any other major economies.

peter236

BTW, QE3 Likelihood Diminishing ‘On a Daily Basis'

http://blogs.wsj.com/marketbeat/ ... g-on-a-daily-basis/

Ovaltine

One thing I have to say when crossing the Zhuhai border daily to Macau, the computer system for crossing to much slower at the Chinese side, because they use Chinese computer and Chinese programming. Lot of the system are broken, but they are too arrogant to use western products.

Who is going to buy the Chinese C919 plane when the Chinese trains had safety issues? Last time I check, these planes only have Chinese buyers, none are foreigners.

Please remember Chinese are printing lots of money too, adjusting her currency to help the export market profit. Why? Because most of its economy is based on the export market. The domestic market is so fragile, and I doubt the RMB will become the reserve currency, simply because the world does not trust this regime.

It depends what the definition of hard landing is. Most economist think under 7% growth will equal a hardlanding because of Chinese spending in infrastructure. I heard somewhere its closer to 3% because we don't really believe government figure. But I could be wrong. Economy is **** at least in Canton province right now, everybody knows, its not a secret.

In such volatile times, its not the financial we have to worry about. Its the problems of growing food prices, population overflow leading to worldwide catastrophe. At any pandemonium phase, the world will be at the brink of war, and the Chinese population will definitely lose out on that even though it has a nuclear arsenal, the regime may win though (good news for peter) . These Chinese families are still reproducing babies..how stupid is that, don't they realize, if their children will only suffer becoming the slave to the propaganda machine known as the communist party?

peter236

When I visited Beijing, Shanghai airports etc, the customs were all very efficient because they were using fast Chinese computers and programming. The Chinese make some of the best enterprise computer systems.

China does not depend as much on exports like before. For example, China itself is the largest car market, largest computer market and largest smartphone market in the world. Most of China's industrial products are sold inside China.

London, UK is competing to become an offshore center for RMB trading, as they know the demand for RMB is high, since a lot of countries want to move some of their $US into RMB. People just do not have trust in bankrupt countries like Japan or the US.

Most economists would regard a 3% growth as hard-landing for China. But China is already the second largest economy in the world, so 8% growth today is actually way more robust growth than 12% ten years ago.

The Chinese ARJ21 planes have already satisfied the FAA tests, unlike what you claimed.
The Chinese C919, C929 planes will need to satisfy the FAA tests as well before they are allowed to fly internationally. So safety is not a problem.

The domestic market for China is booming. If you don't believe the government, then just look at the rising sales of Starbucks, Macdonalds and KFC. These companies tell you that the Chinese middle class is booming with lots of purchasing power.

rockypath

回復 23# Ovaltine

My understanding of an economic hard-landing is an "out-of-control" sharp drop of economic growth and activities. If an economic slowdown is under control, it will be a soft-landing.

Economists in western countries have been very keen on the topic of China's hard-landing. I disagree with that with one exception - there will be a possibility of a hard-landing if there is a rise of political instability and social unrest.

The Chinese government has many more tools and administrative power to control and manipulate  the economy both the supply and demand side compare to its western rivals. It can intervene the market and set the price. Even though this kind of power can create obstruction to economy development, it is a very effective and powerful capability to guild the economy under extreme economic conditions.

What worries me the most is not an economic hard-landing of China since the chance is slim in my opinion but the rise of the possibility of social unrest due to the slowdown.

China has been able to put much of social tensions and  conflicts under control or hide under the carpet is because of its miraculous economic growth in the past decades. These problems will surface and be exposed due to the slowdown. Then it will lead to a hard-landing.

Therefore, we could see a rise of social unrest or political instability before we see a hard-landing of China.

Ovaltine

回復 29# rockypath

China's regime only reacts when handling world affairs, it doesn't take the initiative to contain situations across the globe. This is a major disadvantage for them at this stage in time. Global pessimism in America and Euro-zone will ignite troubles in China.

It is very capable of manipulating and controlling the population, so unrest will not come from the inside, rather it will need Overseas Chinese and Hong Kong as a stepping stone for revolt. Nations around China are likely to act in aggression due to inflating food prices and diminishing living standards: Country such as, North Korea, Philippines, etc etc.

Really have to wait and see what happens after the Election in America as well as France. Hollande seems to be the contender in France, and he would single-handedly destruct the Eurozone. Romney is a could be President who will take a even harder line approach in world affairs that will bring us WWIII. Notice I didn't mention China because simply I think Xi would be the most capable out of all, and would bring some political as well as economic reforms, even though it may be too late to save the world.