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Old 01-18-2016, 10:37 AM   #61
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Now the reality is that China still possesses 1.3 billion consumers. They may be tightening their purse strings a tiny bit as the economy cools but they're not going away and eventually they will all want cars and houses and iPhones and buckets of the colonel's fried chicken and cosmetics and baby formula and gas for their new cars and medicine and clothing and ... You get the idea. .
But so does Africa, and lots of other poor places. Millions of consumers who want a better life, plenty of pent up desire and demand. And it has been so for generations. But (virtually) nobody thinks Africa will have a huge burst of economic growth anytime soon, because African nations generally have 2 things: lack of protections for private property and high levels of corruption. That's enough, despite having lots of natural resources and human potential, to hold them back from achieving material wealth similar to the developed economies. While I'm not saying the PRC has these problems to the same degree as the least developed nations, they are serious problems and there's significant question as to whether they can be solved as China continues to transition from a centrally-planned economy to a market economy. It's not a clear road, as any Russian citizen would tell us. There was lots of optimism there, too--for awhile.
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What the heck Happened to the Shanghai Market today.
Old 01-19-2016, 10:22 PM   #62
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What the heck Happened to the Shanghai Market today.

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But so does Africa, and lots of other poor places. Millions of consumers who want a better life, plenty of pent up desire and demand. And it has been so for generations. But (virtually) nobody thinks Africa will have a huge burst of economic growth anytime soon, because African nations generally have 2 things: lack of protections for private property and high levels of corruption. That's enough, despite having lots of natural resources and human potential, to hold them back from achieving material wealth similar to the developed economies. While I'm not saying the PRC has these problems to the same degree as the least developed nations, they are serious problems and there's significant question as to whether they can be solved as China continues to transition from a centrally-planned economy to a market economy. It's not a clear road, as any Russian citizen would tell us. There was lots of optimism there, too--for awhile.

The difference is that the Chinese consumers have money to spend !

It won't be smooth but as has happened during the past 25 years, China is and will continue to emerge.

So will certain countries in Africa by the way.

It will be different development from that seen my western countries - but then it's not west, now is it....

One can't bury their head In the sand and ignore China Or discount China.

Even with economic transition issues, the economy is growing at 3 to 4 times that of the USA. Even cutting their current estimates in half ... Since no one believes the official numbers Still they are more than triple usa's GDP growth - and that's in a "slow period" - they are the #2 economy in the world.

Your example of Russia is not even in the same ballpark. Ussr broke up. Couldn't hold it together. And Russia never ever ever came close to #2 ...I think they made the top 5 only recently. Apples and oranges.

The number of companies that benefit from emerging China is tremendous. China consumers are a growing force, income is rising , the rule of law is steadily improving. China will find her path forward.

Having lived and worked there for the past 8 yrs I can tell you first hand that I would not bet against China in the long run.

Short term pains, yes without question but over the next 5 years. 10 years 20 years...

If multinationals companies don't have a proper China consumption strategy being implemented, they're gonna be
F$&:ed....
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Old 01-19-2016, 10:53 PM   #63
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It won't be smooth but as has happened during the past 25 years, China is and will continue to emerge.
I hope you are right, and I think you are. But I don't believe it's a sure thing. They are in uncharted territory (esp the mismatch between their official political system's basic tenets and capitalism). Something has got to give. If it happens slowly, then there is hope. If the "rule of man" trumps the "rule of law", then things will not go well. There have been many nations with far fewer hurdles that have failed to progress due to just a run of bad luck. But, again, I hope things go well.
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Old 01-20-2016, 01:42 PM   #64
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I currently live in Hong Kong and a huge story here is the disappearance of a bunch of bookstore owners who sold books critical of the Chinese government. The spin coming from China is breathtaking... I mean it makes US politicians look like the most honest people on the planet .

So in greater context... The CCP CAN'T afford to be wrong because they don't want 600m poor Chinese getting a worse life than last year and suddenly wanting things like elections and representation.

So two things happen
1) massive information control: crack down on vpns, major arrests of "dissidents" and other fear and intimidation.

2) massive propaganda campaigns

That's backed up by whip saw policies designed to make things look good at all costs.

I think the problem is it makes it really hard to see what's actually happening and so investors swing from over optimistic to under pessimistic.

Chinese investors got massively burned last year... I mean middle class retail investors. Rich people are doing everything they can to get their money out (which is strongly restricted).

I was amazed driving around China outside the big cities. There's literally thousands of middle sized towns with hundreds of 80% compete houses and apartment buildings. I think some chunk of that massive annual growth is more or less fabricated and paid with debt and when the underlying assets fail to produce wealth its pretty hard landing.

I think without more transparency volatility will be worse than in US and more transoarecy will require political change in the opposite direction that the current givenment is going.

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Old 01-25-2016, 08:38 AM   #65
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Peter. Have you lived in honkers for a long time ? Great city.

Ref your empty buildings comment -

Typical construction mode in China is build and they will come. Hence many "seemingly vacant" construction projects. Unlike the west construction timeline Typically takes 3-4 years to fill the buildings with tenants and get them fully occupied.

First year is sale off plan
Second year is move dirt and build. Third and fourth year is tenant fit up.
At least 70 % of units for residential buildings are sold off-plan and no one actually wants to move in till everyone else is done with fit outs - loud noise, stinky paint and flooring chemicals out gassing etc.

The telling story is vacant land status, not vacant under construction buildings.

Looking east with a western eye can me confusing and misleading. ...
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Old 01-25-2016, 08:50 AM   #66
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I hope you are right, and I think you are. But I don't believe it's a sure thing. They are in uncharted territory (esp the mismatch between their official political system's basic tenets and capitalism). Something has got to give. If it happens slowly, then there is hope. If the "rule of man" trumps the "rule of law", then things will not go well. There have been many nations with far fewer hurdles that have failed to progress due to just a run of bad luck. But, again, I hope things go well.

China has been ruled by dynasty for 5 millennia. That won't change. The official "economic" system of socialism communism is, putting in simply, an easy front and way for the current dynasty and Eco-political system to remain in power and control. China has invented a new economic system -State sponsored capitalism.


The simple mission of the party is to remain in power. Don't get altruistic. They are greedier capitalist pigs than the west! Don't kid yourself getting wrapped in ideology. Even chairman Deng said it was cool to get rich. I'll argue the welfare system here is hands down more left than that in China.

There have not been more populous nations doing this, at a faster pace, with a government whose grip is stronger .... ever.

Unchartered territory yes and teen age growing pains yes but far far from falling off the rails into economic anarchy.

Every system rallies to break. And breaks to rally. This is a break. Give a year or two to cool and the Bulls will run again. Impossible to fight the demographics and the will of the party.
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Old 01-29-2016, 07:41 PM   #67
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China has been ruled by dynasty for 5 millennia. That won't change. The official "economic" system of socialism communism is, putting in simply, an easy front and way for the current dynasty and Eco-political system to remain in power and control. China has invented a new economic system -State sponsored capitalism.


The simple mission of the party is to remain in power. Don't get altruistic. They are greedier capitalist pigs than the west! Don't kid yourself getting wrapped in ideology. Even chairman Deng said it was cool to get rich. I'll argue the welfare system here is hands down more left than that in China.

There have not been more populous nations doing this, at a faster pace, with a government whose grip is stronger .... ever.

Unchartered territory yes and teen age growing pains yes but far far from falling off the rails into economic anarchy.

Every system rallies to break. And breaks to rally. This is a break. Give a year or two to cool and the Bulls will run again. Impossible to fight the demographics and the will of the party.
I thought that state sponsored capitalism is what fascism was all about...
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What the heck Happened to the Shanghai Market today.
Old 01-30-2016, 10:33 PM   #68
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What the heck Happened to the Shanghai Market today.

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I thought that state sponsored capitalism is what fascism was all about...
Hardly .... Good article from the economist. From 2012 but still very relevant of course. http://www.economist.com/node/21543160


And one more explaining the term. http://www.conservativedailynews.com...new-communism/
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Old 01-30-2016, 10:52 PM   #69
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Hardly .... Good article from the economist. From 2012 but still very relevant of course. The rise of state capitalism | The Economist


And one more explaining the term. State-sponsored Capitalism – The New Communism
Interesting reads but I don't think so. I think fascism or corporate statism as instigated by Mussolini and further developed in Hitler's Germany is closer to the mark i.e the state sponsoring and prodding private enterprise to go in the direction it wants to go. Obviously the racial genocide aspects are not applicable (YET) but I think the economic philosophy is
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Old 01-31-2016, 09:32 PM   #70
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You're missing the state ownership aspects that are in command in china. There is a high percentage of enterprises in china that are at least partially state owned -- some of the biggest chinese firms that you may know of are I part state owned enterprises. Lenovo/Legend Holdings, Sinopec, CNOOC, Huawei ( not publicly disclosed), china mobile, china Unicom, ping an insurance, air china, china eastern, all the rail lines, COSCO shipping. On and on. The list is a mile long. The state plays a vital role. Not at all Italy or Germany of the 1930's....


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Old 01-31-2016, 10:02 PM   #71
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You're missing the state ownership aspects that are in command in china. There is a high percentage of enterprises in china that are at least partially state owned
Exactly. When an employer can have employees imprisoned and otherwise has full control over their future ability to get work or benefits, it leads to some interesting dynamics. When a company's owners also set the rules for the trading of stocks (which can change in an instant), and are responsible for policing for health and safety as well as insuring compliance with accounting rules . . . well--I think anybody who is being objective can see the problems/conflicts of interest/opportunities for abuse with this. And we see them all the time in China. People in the rest of the world who want to bet that >this< command economy won't meet the same fate as every one which preceded it are free to do so. Maybe this time it will be different. For the sake of the Chinese people, who have suffered quite enough already through five generations of centrally planned "good ideas," I hope so.
There are plenty of other good places to invest, where accounting standards are higher, where the rule of law is enforced, and where there's transparency in the markets. The Chinese government has instituted reforms only when there is pressure from the outside. Those who ignore that contribute to the problems of China and its people.
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Old 02-01-2016, 01:29 AM   #72
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Old 02-01-2016, 02:42 PM   #73
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>Hand raised< I do!
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Old 02-01-2016, 03:18 PM   #74
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Right. I think the biggest risk is where the road of good intentions leads.

I believe the government DOES want to do what is good for the people and the country I just think centralized planning leads to insidious programs that do the opposite.

For example closing the market was done to protect investors from.massive drops... But of course it does the exact opposite.

Because the government has absolute power the one thing they can't do is admit they are wrong or appear to have made large errors in judgement. Thus when stuff goes wrong they have to cover it up or defer blame. That's the same as the US.

The difference is that in the US (and most democracies) there are OTHER parties and people who are working hard to find dirt on each other to make them look bad... So that stuff can't stay hidden long. Couple that with the fact that elections can exit people quickly it creates a lot of visibility in what is going on.

Finally because no one person or group has control over everything nothing massive can be decided in isolation. That makes long term infrastructure projects a nightmare but also reduces a lot of other problems.

I think China will face those problems and it will be interesting to see how things go when they have an actual recession...

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Old 02-01-2016, 04:34 PM   #75
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Who cares?
+1 - Exactly. I always think that US cahoots with China was a bad move. We took the whole manufacturing know-how, technological know-how and kowtow with two hands to them.

For what? they sill against us on every issue in every United Nations votes. They will never be our allies the same way friendly nations in Asia such as Japan, South Korea (name and Asian country except Vietnam and North Korea).
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Old 02-01-2016, 06:42 PM   #76
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Thank you for the interesting discussion.
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