J.D

Is There More Trouble Brewing in China?

Growth is slowing, unrest is rising, corruption is rampant, and so-called efforts to combat it are reversing years of reform. Yes, there is trouble brewing.

Where Are the Chinese Stock-Market Riots?

Perhaps regular people are too worried about the earthquake efforts and children who died as a result of corrupt construction in Sichuan, or generally surging inflation across the country. Small retail investors are not very important players but yes they have lost their shirts because of China's pyramid-scheme stockmarket. They have a right to be unhappy.

Bullish on China After My Recent Visit

Low grade propaganda.

China's Worst Bear Market

There's no big government selling. China's not privatizing companies through the stock market. Check your facts. Any major selling is just SOE cross holdings. The Socialist Market Economy is government owned, sorry if you were misled.

China's Worst Bear Market

It's already a cheating machine and always has been.

The companies are just government operations and government held stocks won't float because there is no plan to privatize. New regs ensure government maintains control, they're not to protect the stock market.

China: What a Real Bear Market Looks Like

The real bear market is going to turn into a vicious cycle, with SOEs earnings depressed from crossholding share losses, and accounting and governing weaknesses then coming to the fore. For the long term, a healthy process. For the near future, trouble.

The Next Credit Crisis Will Originate in China

I'd be interested in knowing which of China's 600 000+ SOEs the senior executive is NOT appointed by the party. I'm surprised it's not 100%. It doesn't really matter though given the other controls available.

As President Hu reminds us, State Owned Enterprises will remain the dominant force in China's socialist market economy (and the largest of them grew by 21% by assets in 07). That includes State-owned banks so systemic issues will certainly one day return in force. The urge for market-based reform has waned.

But a credit crisis? NPL issues in China have been managed by loan expansion and government bailouts and in the case of a slowing economy, the cycle would just repeat. It's not credit if you're not really expected to pay it back, so there can't be a real credit crisis in China.

Waiting For China's Real Test to Begin

China crash? No way. Governments have a wonderful record when it comes to deep interference in business decisions. Systemic corruption isn't nearly as bad as you think. Capital controls and market bubbles are good for wealth creation over the long term. Information control and manipulation helps decision makers. Over-investment is impossible, per capita. Past GDP growth is a wonderful predictor of the future. Effective financial intermediation is overrated. Nothing unexpected ever happens in emerging markets. And hey, it's not just the 1.4 trillion reserves, there's a big army to keep things in order should the situation really look bleak. China has found the secret of eternal growth and bliss so it's only a matter of time before the whole world becomes a police state and starts pumping its economy on empty highrises, shoddy goods, market manipulation, and environmental degradation. China crash? Impossible, it's such a low risk model.