Feng

Chinese Railways and Speculating Pig Farmers

"Even if they were justified in the US or Europe, where the economic value of every hour saved is many times the value in China".

Remember there are much more people in China then in EU or US, and there is a growing middle class in China who would definitely be willing to spend more to save time. Also remember the same kind of train ticket will cost a lot less in China than in US or EU(well, unfortunately, US actually is not there since it doesn't have high speed rail, something I'd really love to have). I can assure you that high speed rails between Beijing Shanghai, Shanghai Hangzhou, Wuhan Guangzhou, Nanjing Hangzhou will be running at full capacity pretty soon after the initial launch. All of my friends, who are middle class in China and mostly by no means rich in aboslute $ income terms, will take it w/o a second of hesitation.

I love the Author's way of thinking. It's funny. Even though the author is spending a good amount of time in China, he is clearly preoccupied with the china bashing perspective. It's a pity that you are not learning a helpful perspective by interacting with middle class chinese people. You really don't need to go to China to write your article. What a pity.

China's economy has a lot of problems, some are structural and may have big negative consequence down the road (such as housing bubble). However, the author has failed to provide any balanced analysis in pretty much all of his articles here. Of course, that's difficult to do if you have decide your opinion even before looking at the situation.

Shift in U.S. - China Dialogue Is Louder than Words

good article. Very rate to see a Western citizen taking an honest/critical view on American policy and hipocricy.

However, the China situation is not as rosy as the impression one could get from reading this article. There is huge asset bubble blewing due to massive government mandated lending. Most of the loans go to state owned company, who subsequently funneled the fund to real estate & stock market. The private small businesses who are in most need of funding still couldn't get any of these loans. China's policy reacting to the crisis was fast and probably better than the US's, but still has tons of problems. The government missed opportunity to distribute the government's wealth to low income people across the country, therefore boosing both society welfare and internal consumption. Instead, it creates huge real estate bubble, eating away middle class's effective purchase power and making rich even richer, and poor even poorer.

Not to mention how dominant State owned companies are in the China economy. Even after the massive bail out, US economy is still much more private sector heavy than China's. I would say, however, that China's government is much more captalism friendly than the US government, which is more socialism. How ironic!

Is China Playing the Protectionist Card?

What's wrong with that? China criticised the "Buy American" policy a few months ago, and the US kept the clause there. Now China is merely following the US's leadship. So China is obligated to buy the world while American, the leading power, is only buying American? Give me a break. Get over the entitlement way of thinking.

Chinese Are Likely to Halt Purchases of U.S. Treasury Debt

Yeah, they are communist and evil! why do we need to honor anything to them? we sure are justified to default on the debt we own them. They are dictators and inferior. We are superior and represents justice in the world! Long live America freedom and justice!


On Mar 13 08:53 AM LogicalSinger wrote:

> << I request the U.S. to maintain its good credit, to honor its promises
> and to guarantee the safety of China’s assets.>>
>
> No problem, Premier Wen, we will honor our promises... just as you
> honored your promise to introduce democracy to China, a promise made
> back when our country opened its borders to your products. You can
> count on us, pal! (toothy grin and wink)

World War III: U.S. vs. China?

Hmm... So any american believes that the US government and media will give an easy pass to a China sub-marine detector 75 miles off a US navy sub-marine base? If you are one of them, I have a lot of admiration to either your hypocrisy or ignorance.

This kind of small skirmishes can easily get out of control. And nationalism in both countries could carry a small misjudgement into a major conflict. Some politician in the US probably also has some incentive to destroy China's development to stop it from becoming the #1 superpower in the foreseable future, and help itself dig out this economic turmoil.

China is no match to US millitarily at all. US can easily lock up China's raw material supply and trade route on sea, and destroy a significant portion of China's manufacturing capability by air force without sending one single soldier to China soil. (I do believe sending troops to China soil will not be feasible to the US, hey but if your goal is to build but to destroy, you don't have to send troops). So what could be China's response? Nuclear? Unless US is threatening China's survival, China is unlikely to use Nuclear first because China's capability is not enough to guarantee a complete destroy of US while US can destroy 10 China for sure. But China can send weapens, troops to middle Asia, middle east to build proxies to fight the US.

I hope it will not happen, it is truely an ugly picture. However, we can't completely rule out this possibility if economic environment continue to worsen and this thing becomes a deep depression.

On Mar 12 01:27 PM Buckoux wrote:

> Posted by vaughn: " Last time I checked the US navy will expel any
> military ship within 200 miles without prior permission from the
> US navy."
>
> Then you were not the commander of a US naval combat vessel when
> you checked.
>
> What's the matter with you non-military types, Do you really believe
> the Hollywood stereotype about the military. I can speak for most
> military personal, enlisted and commissioned, and testify that we
> prefer peace much more than combat. The only caveat to that is that
> once a fight has started, it is our duty to go to the fight and win.
> Even if politicians, New York Media and Hollywood tie one hand behind
> our backs. Our burden is not only the battle, but the notion that
> we must win, "fair and square" in a "democratic way" in a short period
> of time, against an enemy that cheats, is totalitarian and has lots
> of time because it controls its own media.

Why I'm Bearish on China

The author doesn't seem to understand that only next export contribute to GDP, not total export.

Why the Mixed Signals on China's Economy?

The domestic spending during lunar new year period was up by some 7% or so from same period last year. How about that number for the US and other countries?

China is certainly impacted seriously, but it is in much better shape than either US or Europe and will do much better than these two enties in the next few years. Just a few reasons,

1. Huge wave of urbanization still in the midst. There is a need for huge infrastructural build and government is doing exactly that.

2. Government is much more efficient and fast acting than any western government. Some benefit of being an authoritarian one.

3. Big foreign reserve and very low fiscal debt position. They have a lot of space for stimulation.

4. Chinese people are more hard working, optimistic and resilient than the spoiled westners. (no disrespect, the american were probably equally hard working, but they have been spoiled in the last few decades. They are no match to the Chinese worker today in terms of resilience and hard working. You don't need to look afar to find evidence of this. Just compare the number of people who complain about the government instead of diging deep in the US and in China.) btw, The so called magic 8% is complete bushit. in 1990's, the state owned enterprises (SOE) reform made about 40 MM people jobless, there were no major social unrest.

5. Export is about 36% of GDP. But the export contributed GDP is about 15% of GDP. Sure the export slump had a huge impact and chain reaction on the overall economy. But it's not the end of the world for the Chinese economy.

Everyone Is Working Hard to Increase Global Trade Imbalances

I agree that a lot of stuff are more expensive in China than in the West. It's quite funny that a pair of Nike shoes made in China is cheaper in the US than in China. However, getting rid of tarrif would benefit the western countries more than China. China has stated very clearly that the biggest contribution that can make to the world economy recovery is to take care of the its own business. So China is not dragging down the world as the US is doing (and letting the world pay the american's bill), but don't expect China to foot the bill for the world.

I think a good way of encouraging spend is government guranteeing minimal level of income to old people, especially those in rural areas.

Making medical care free wouldn't work. Nothing good will come free. That's socialism. And Chinese people and leader don't need other to teach them again that socialism doesn't work.

China's Economy Is Stuck on the Runway

The idea of an immediate proper health care would make people spend immediately is pretty off. If the government takes this approach, chances are they end up stuck with a screwed health system even worse than american's. Which would be a huge liability for the long term development of China. Just think about the health care mess the US is facing today.

Plus, people don't necessary have no health care. My parents are retired and have good healthy coverage (much better than what average american has). Yet they are still saving a lot. It's also a culture thing. And I am sure it will change over time, but the idea of having a health care in place will make this change over night is quite laughable.

Lastly, the history has proven than when ever the developing countries take the advices from the west experts, they got burned. When they don's listen, they do fine. Western countries say you need to open your financial market for your development, so there is asian crisis in 97. (btw, they also mandated heavy doses that they themselves today refuse to take, such as let those bad banks go belly up). China has benefited a lot by learning and experiencing in its own pace. That approach had benefited so much for the country. As shown in the minor impact to the Chinese financial services industry in today's crisis. Just keep doint it, China will be just fine.

China Gets It Right, But Hurts America

I agree with canb888's comments.

Many people confuse a country's foreign reserve as the government's money. They are different things. China needs to pay $ or euro out (take in chinese yuan) from its foreign reserve when foreign investor wants to withdraw their investment, or domestic companies needs $ or euro to buy foreign goods.

Yes china's foreign reserve is heavily invested in US treasury. But China's fiscal stimulus package is not using the foreign reserve. there might be trickling down effect in the sense more domestic companies need $ to buy foreign goods due to the expansion, hence less reserve. But there is no direct relation on fiscal expansion and foreign reserve investment.

China Gets It Right, But Hurts America

"At last count the U.S. had a $14.3 trillion dollar economy. China has a $1.3 trillion dollar economy."

Where did you get that number? from 1990? In fact, the author's number is correct the GDP of China is roughly 1/5 of the US. It doesn't take any one much effort to check it out on google.

Can China Weather a Downturn?

The Chinese banks don't have as high leverage as their Western peers have. In fact, they were not even close. In China buying a house/apt requires 30% downpay.

This articles reminded me of the old rhetoric from the Western officials who have been lecturing the Chinese bankers/officials for its banking system's lack of openness and NPL over the years. And it's very funny to hear that again.

China for sure will be impacted by the global slowdown. But China will continue to grow at >7% and I don't see a financial crisis in China's banking system in the short term.

Is China's Economy Slowing?

James, as inflation runs up, the government will have to tighten the monetary policy. that will cool the real estate market. Exactly what has already been happening. The cooling will fuel the expectation of a further price drop, and further cool the market. I don't have the exact number, but a large portion of the real estate purchase is for investment/speculation purpose. These purchase will disappear.

When Will China Overtake the U.S. Economically?

good analysis but the author seems to neglect two things

1. the appreciation of the Chinese currency. the appreciate of local currency happened in all other asian countries when they underwent their rapid development. China will be no exception. plus, acknowledge it or know, the US is going to get out of its debt through depreciation of $. this generation in the US enjoyed the status and benefit earned by the previous generation but unfortunately will squander it and not pass that on to the next generation. it's quite a shame to me.

2. although the working population in China will decline, but the educated working populaiton will continue to increase. The Chinese emphasize education much more than does the American. The improved education of China's workforce will likely more than offset the decline of the population.

Overall, from a historical perspective, China was a leading force economically, politically and technologically. It only lagged behind the rest of the world starting from early 19th centuray. The Chinese are hard working, intelligent, and have a very strong focus on education. These qualities helped China to be a major power in the past, and are still there to help China regain its status.

China surpassing the US economically is a natural thing given it's population size. And it's a good thing for the world. I see only political turmoil can stop China from becoming the biggest economy, if that happens, it's certainly not a good thing for Chinese, but it will not be a good thing for the rest of the world either.