China's decade? Don't bet on it.

[b.c]

yet another example of analysis of growth/ advancement through the western models, I wonder how long it will take for these boys to realise that times are changing and they can either get on board or be left behind.

Some might not like it and will fight it "tooth and nail" to the very end, make crass arguments to bolster a system in decline, attempt to justify their position by the use of values systems and economic systems/models that have had their day. Its tough for people who are totally invested in a declining ruling system to even see the change coming, let alone accept it as inevitable.

History is riddled with those that deny change, just because they cannot see beyond what worked for them before.

Anyone that really believes that china is not going to be the major force in world change both economically and politically, and that continuing to adopt a position of a declining system and basing judgement on that, is in for a sad next 100 years or so.

The west is going to have to accept change is coming and it ain't going to be defined by them alone.

 

 

 

lao gong be quite

 

Cute Jin

[GDBILL]

Does China face more challenges or do we face more challenges in the next 10 years?

 

That's a straight forward question. In my opinion? We face far more challenges in the next 10 years. Hell, right now we have democrats trying to pass a 2 trillion dollar 'health reform,' bill and the craziest part is they catered to the insurance companies, yet the insurance companies STILL spit in their face. That right there is already a huge challenge we face.

 

Not to mention 2 ongoing wars, insurmountable debt, worthless yet insanely expensive college education, shrinking middle class, ongoing economic crisis, jobless people, aging baby boomer population, dying domestic car manufacturers, etc., etc.

 

Call me insane, but I'd rather deal with China's problems.

 

Not sure how easy it is to solve their problems, but in many aspects their political system is appropriate for doing so.

[Tony_onrock]

If you want something closer to the truth, don't read these stuff. Get a copy of the professional reports by the different investment banks on the outlook. If people are interested I can post them here on a regular basis. It would have all the numbers and stats to back things up.

On India and Vietnam, the arguement that they are better places to invest is beyong me. We looked at deals in both countries and actually signed one in Vietnam that we had to kill later on because of the bad legal and regulatory systems in Vietnam. Problem in India is the snail pace the government moves and the lack of infrustructure.

[knloregon]

"...If people are interested I can post them here on a regular basis. ..."

 

ABSOLUTELY TONY ~ You are one of several expats here----and have a track record of years here at CFL------ I personally would enjoy your insights---on a more regular basis.... and in more depth..

[knloregon]

"....China is an export economy and most of the growth they need to sustain development comes from foreigh investment and / or export / import with other major economies...."

 

Sorry Bill, Factually incorrect.

 

Even before the meltdown, China depended on substantially less than 15% of its GDP on world trade, specifically, exports.

 

The bulk of the Chinese economy is exactly were you would expect it to be-----providing goods and services to 1.4 Billion people.

 

In fact, domestic infrastructure improvements provide more GDP than world trade----and I'm very surprised that you-----as a long time resident aren't aware of that-----since its going on all around you---every day, and in every region you claim to visit..

 

The US Nationalist Fantasy that we can cut off Chinese imports and therefore, bring China to its knees is among the most immature on talk radio.

 

The US isn't even the biggest export market for China any more the EU is---- and Japan is not far behind...but on a world scale, the US is a minority trading partner with China.... given all the out reach China has done in the past 10 years..

[Guest Pommey]

http://www.nytimes.com/2009/10/18/world/eu...ussia.html?_r=2

 

and so go the Russians , whos next?

[Stepbrow]

I could see how the Russians could admire the model. The model works well within totalitarian regimes. Vietnam has been doing well with the China Model.

 

Quoting from the article: "the Russians express no desire to return to Communism as a far-reaching Marxist-Leninist ideology, whether the Soviet version or the much attenuated one in Beijing. What they admire, it seems, is the Chinese ability to use a one-party system to keep tight control over the country while still driving significant economic growth."

[whome?]

"....China is an export economy and most of the growth they need to sustain development comes from foreigh investment and / or export / import with other major economies...."

 

Sorry Bill, Factually incorrect.

 

Even before the meltdown, China depended on substantially less than 15% of its GDP on world trade, specifically, exports.

 

The bulk of the Chinese economy is exactly were you would expect it to be-----providing goods and services to 1.4 Billion people.

 

In fact, domestic infrastructure improvements provide more GDP than world trade----and I'm very surprised that you-----as a long time resident aren't aware of that-----since its going on all around you---every day, and in every region you claim to visit..

 

The US Nationalist Fantasy that we can cut off Chinese imports and therefore, bring China to its knees is among the most immature on talk radio.

 

The US isn't even the biggest export market for China any more the EU is---- and Japan is not far behind...but on a world scale, the US is a minority trading partner with China.... given all the out reach China has done in the past 10 years..

 

I have to disagree with you about China not being overly dependent on export trade. The last figures I saw said "In both 2007 and 2008, exports contributed up to 37 percent of the country's GDP, a figure that far surpasses any other big country. Such extraordinary reliance on exports continues to threaten the recovery of the Chinese economy," -- much more than 15% of GDP.

 

This was from China Daily. Basically the chinese government agrees with GDBill.

http://www.chinadaily.com.cn/cndy/2009-09/...ent_8684623.htm

[GDBILL]

"....China is an export economy and most of the growth they need to sustain development comes from foreigh investment and / or export / import with other major economies...."

 

Sorry Bill, Factually incorrect.

 

Even before the meltdown, China depended on substantially less than 15% of its GDP on world trade, specifically, exports.

 

The bulk of the Chinese economy is exactly were you would expect it to be-----providing goods and services to 1.4 Billion people.

 

In fact, domestic infrastructure improvements provide more GDP than world trade----and I'm very surprised that you-----as a long time resident aren't aware of that-----since its going on all around you---every day, and in every region you claim to visit..

 

The US Nationalist Fantasy that we can cut off Chinese imports and therefore, bring China to its knees is among the most immature on talk radio.

 

The US isn't even the biggest export market for China any more the EU is---- and Japan is not far behind...but on a world scale, the US is a minority trading partner with China.... given all the out reach China has done in the past 10 years..

 

I have to disagree with you about China not being overly dependent on export trade. The last figures I saw said "In both 2007 and 2008, exports contributed up to 37 percent of the country's GDP, a figure that far surpasses any other big country. Such extraordinary reliance on exports continues to threaten the recovery of the Chinese economy," -- much more than 15% of GDP.

 

This was from China Daily. Basically the chinese government agrees with GDBill.

http://www.chinadaily.com.cn/cndy/2009-09/...ent_8684623.htm

 

Well said.

 

While nobody pretends that China couldn't survive if all of a sudden imports, exports and foreign investment dried up, there is absolutely no way they could maintain the 8% annual growth they so desperately need.

 

I had always wondered why govermnent officials at the highest levels were so hell-bent on maintaining their 8% target. I mean, in my view things are going pretty well so what does it really matter if, say, the numbers come in at 3%? Heck, even coming in at 0% is a heck of a lot better than a decrease.

 

Without foreign trade and investment, according to several well placed individuals, there's little chance reaching our goal. Not reaching our goal means that there are fewer jobs for an ever-increasing number of college graduates, a much lower tax base with which to fund infrastructure growth and the plan for a better national health care system, higher unemployment and increased underemployment, a significant depletion of reserves ... all of which places a serious threat on the Party's hold on power.

[Tony_onrock]

I had always wondered why govermnent officials at the highest levels were so hell-bent on maintaining their 8% target. I mean, in my view things are going pretty well so what does it really matter if, say, the numbers come in at 3%? Heck, even coming in at 0% is a heck of a lot better than a decrease.

 

Without foreign trade and investment, according to several well placed individuals, there's little chance reaching our goal. Not reaching our goal means that there are fewer jobs for an ever-increasing number of college graduates, a much lower tax base with which to fund infrastructure growth and the plan for a better national health care system, higher unemployment and increased underemployment, a significant depletion of reserves ... all of which places a serious threat on the Party's hold on power.

The reason for the 8 % growth is simple: politics.

I drove around last Chinese New Year, along the coast from Shanghai all the way down south and back, visiting more than a douzen small towns on the trip, after I-banks started issuing country risk alerts. It was astonishing to see so many young men roaming around, after losing their jobs. The government figure put it at about 30 million, plus the college grads. That out numbers the army almost 10 to 1. Social Harmony, I guess. There was indeed danger that there may be mass unrest. Not sure if there will be a double dip for China. Even at today's growth speed, the employment situation in China will be even more serious than last year. There is basically no unemployment or other social safty network for these people, mostly migrant workers.

[GDBILL]

I had always wondered why govermnent officials at the highest levels were so hell-bent on maintaining their 8% target. I mean, in my view things are going pretty well so what does it really matter if, say, the numbers come in at 3%? Heck, even coming in at 0% is a heck of a lot better than a decrease.

 

Without foreign trade and investment, according to several well placed individuals, there's little chance reaching our goal. Not reaching our goal means that there are fewer jobs for an ever-increasing number of college graduates, a much lower tax base with which to fund infrastructure growth and the plan for a better national health care system, higher unemployment and increased underemployment, a significant depletion of reserves ... all of which places a serious threat on the Party's hold on power.

The reason for the 8 % growth is simple: politics.

I drove around last Chinese New Year, along the coast from Shanghai all the way down south and back, visiting more than a douzen small towns on the trip, after I-banks started issuing country risk alerts. It was astonishing to see so many young men roaming around, after losing their jobs. The government figure put it at about 30 million, plus the college grads. That out numbers the army almost 10 to 1. Social Harmony, I guess. There was indeed danger that there may be mass unrest. Not sure if there will be a double dip for China. Even at today's growth speed, the employment situation in China will be even more serious than last year. There is basically no unemployment or other social safty network for these people, mostly migrant workers.

 

That is a big part of it -- social stability.

 

If you look all through Chinese history there have been many significant revolutions caused by social / economic disharmony.

 

Another revolution about now is just what China needs -- NOT!

Edited October 22, 2009 by GDBILL (see edit history)

[amberjack1234]

Anyone learning anything yet?

 

Larry

[knloregon]

GD BILL (or is it GZ ??) or Tony-On-THE-ROCK ~

 

All good on the ground reports----but just to let you know I'm not blowing smoke-----This: (and sorry, I read the full article, just can't locate it now)-----------

 

"CHINA'S REAL ENGINE" ----"Exports are the fulcrum of China's economic miracle, right? Not really, say some economists. Data issued by Chinese authorities show that exports amount to almost 40% of gross domestic product in 2007.

 

But Jonathan Anderson of Swiss bank USB reckons that figure falls below !0% if imported components are stripped out. By that measure, China lags the US, where, in the first nine months of last year, net exports represented 30% of gross domestic product.

 

The dynamo of the Chinese economy, as it turns out, is investment, much of it in infrastructure, and heavy industry, WITH ONLY 7% DIRECTLY RELATED TO EXPORTS."

 

Since this report----China's stimulus has further advanced infrastructure improvements----as I'm sure Candle's Expats on the ground can confirm.

 

The Economist----as reported in Business Week----01/21/08

[GDBILL]

GD BILL (or is it GZ ??) or Tony-On-THE-ROCK ~

 

All good on the ground reports----but just to let you know I'm not blowing smoke-----This: (and sorry, I read the full article, just can't locate it now)-----------

 

"CHINA'S REAL ENGINE" ----"Exports are the fulcrum of China's economic miracle, right? Not really, say some economists. Data issued by Chinese authorities show that exports amount to almost 40% of gross domestic product in 2007.

 

But Jonathan Anderson of Swiss bank USB reckons that figure falls below !0% if imported components are stripped out. By that measure, China lags the US, where, in the first nine months of last year, net exports represented 30% of gross domestic product.

 

The dynamo of the Chinese economy, as it turns out, is investment, much of it in infrastructure, and heavy industry, WITH ONLY 7% DIRECTLY RELATED TO EXPORTS."

 

Since this report----China's stimulus has further advanced infrastructure improvements----as I'm sure Candle's Expats on the ground can confirm.

 

The Economist----as reported in Business Week----01/21/08

 

 

You're confused ... again.

 

The issue is whether or not foreign trade (i.e. import, export, foreign investment) significantly impacts China's financial health.

 

Are you telling us that these huge infrastructure investments are paid for from the profits earned from producing and selling rice and vegetables on the domestic market?

[whome?]

GD BILL (or is it GZ ??) or Tony-On-THE-ROCK ~

 

All good on the ground reports----but just to let you know I'm not blowing smoke-----This: (and sorry, I read the full article, just can't locate it now)-----------

 

"CHINA'S REAL ENGINE" ----"Exports are the fulcrum of China's economic miracle, right? Not really, say some economists. Data issued by Chinese authorities show that exports amount to almost 40% of gross domestic product in 2007.

 

But Jonathan Anderson of Swiss bank USB reckons that figure falls below !0% if imported components are stripped out. By that measure, China lags the US, where, in the first nine months of last year, net exports represented 30% of gross domestic product.

 

The dynamo of the Chinese economy, as it turns out, is investment, much of it in infrastructure, and heavy industry, WITH ONLY 7% DIRECTLY RELATED TO EXPORTS."

 

Since this report----China's stimulus has further advanced infrastructure improvements----as I'm sure Candle's Expats on the ground can confirm.

 

The Economist----as reported in Business Week----01/21/08

But the Chinese governement does not seem to agree with Mr. Anderson. They are pushing forward trying to reduce the country's dependence on exports.

 

I am not too smart so I am a little confused how the Chinese government can report that exports make up 40% of GDP but Mr. Anderson calculates it is below 0%. When people recalculate numbers to support their theory it is best to not beleive them unless you see the calculations/assumptions/basis for yourself. In this article I do not see any proof. He may be right - but that is too big of a change to just beleive based on his word especially in light of the chinese government's words and actions.

 

You are right that the infrastructure projects on-going are huge. But I doubt that only 7% of investments in China are going to export related projects.

 

Here is a link to two different views on China's future and it economy. One is from Mr. Anderson. Both are very well thought out and written (but long) articles. My opinion, from my experience here in China, is that Mr. Pei is closer to being correct. However it is like trying to predict the stock market. Both make a strong case and good points.

 

 

 

http://www.nationalinterest.org/Article.aspx?id=20952

Edited October 22, 2009 by whome? (see edit history)