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Time Magazine on China |
HenryTo
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Joined: 06 Aug 2004
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Location: Houston, Texas & Los Angeles, California
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 Posted: Mon Jun 20, 2005 10:55 pm Post subject: Time Magazine on China |
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First housing and now a huge cover story (and other side story) on the rise of China. A drawing of Chairman Mao graces the cover of the latest issue of Time Magazine:
http://www.time.com/time/world/article/0,8599,1074208,00.html
Let's see if Time once again lives up to its standard as being a great contrarian indicator. There is talk that even as the rest of the world slows down, China will not. I don't buy that for a second. China is very much dependent on foreign investments and export growth (i.e. the consumers of the United States). Consumer spending makes up less than 50% of GDP and even that is very much tied to their export markets and foreign and direct investments in real estate, manufacturing, plants, and so forth. Let there be no mistake: China is the most marginal and cyclical out of all the major countries in the world today. If the rest of the word slows down, then it is a given that China will also slow down as well. |
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Time Magazine on China Replies |
chestnutstime
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Joined: 24 Oct 2007
Posts: 82
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| Posted: Sat Oct 18, 2008 11:39 am Post subject: |
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| rffrydr wrote: |
Almost funny taken in context. China may yet pull us out of our global funk but I think, Master H., you got it right the first time (above). |
Three locomotives powering China's economy are personal consumptions (internal demand), GDP-enhancement Projects ( governments' spending on infrastructures), and exports (solutions for production capacity excess due to lack of sufficient internal demand.)
In terms of percentage of China's 2007 GDP, personal consumptions are about 35%, infrastructure spendings about 30%, and exports about 35%.
With upward movement in RMB and costs of both raw materials and labor since 2006, China's production excess that exists in manufacturing sector, coupled weaker demand from overseas started in 2007, has navigated its doom's day scenario by borrowing and investing in China's stock markets and housing markets. The situation was specially evident in export manufacturing meccas, such as the Pearl River Delta, and Yangtze River Delta.
Bear in mind that about 55% of China's foreign trade is done by foreign multinationals, and roughly about 87% of China's high-tech export is done by multinationals. With a global recession in real economy on the horizon, will multinationals cut back their production levels in China?
Since the second half of 2007, the People's Bank of China started a series of tighter monetary policies that demanded funds borrowed by firms to be repaid immediately; thus, they triggered unwinding in China's stock markets and housing markets.
Now, about 70% of China's private manufactures in both the Pearl River Delta and Yangtze River Delta closed shops and disappeared. Stock markets and housing markets have wiped out most net worth of China's middle-class. Going forward, personal consumptions will have to decline too.
Will governments' infrastructure spendings alone power China's economy forward and maintain at least 8% annual growth that is absolutely required to keep unemployment under 20%? |
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rffrydr
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Joined: 30 Oct 2005
Posts: 7645
Location: Sunny California
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| Posted: Sat Oct 18, 2008 8:39 am Post subject: |
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Time Mag didn't do the trick but my idea the Olympics would mark a turn in the way of that China of old, Chicago, did after its World Exposition, is fast unfolding.
"Stimulus" package now in the offing:
http://www.chinaeconomicreview.com/dailybriefing/2008_10_17/China_may_move_to_boost_domestic_demand.html
Almost funny taken in context. China may yet pull us out of our global funk but I think, Master H., you got it right the first time (above).
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Today is the Tomorrow you worried about Yesterday!
Last edited by rffrydr on Sat Oct 18, 2008 3:05 pm; edited 1 time in total |
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rffrydr
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Joined: 30 Oct 2005
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Location: Sunny California
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| Posted: Sun Aug 03, 2008 7:15 am Post subject: |
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GavKal is taking the what I take to be consensus view that China will power on. They cite falling commodity prices and share expansion into hugely overvalued euro-area. My take: if ever there was a mistaking symptom for cause this is it. They point to expansion of domestic consumtion to over 60%....shopping by fiat. They are too close....to committed.
A pause, surveying all that they have achieved, is in the air.
http://www.latimes.com/news/nationworld/world/la-fg-beijingborn3-2008aug03,0,319847.story?page=1
The Bible tells of what happens when the ambitious take pause.
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rffrydr
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| Posted: Sat Mar 08, 2008 5:30 am Post subject: |
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No "decoupling" here at MT.
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