BRIC+ News & comments

[Billy T]

China's slowing economic growth is the result of a carefully planned transformation and, Stephen Roach argues, the wheels aren't about to come off anytime soon. Roach, a long-time China watcher and former chairman of Morgan Stanley Asia and the firm's chief economist, is now a senior fellow at Yale University's Jackson Institute of Global Affairs. He spoke at the China Institute in New York Thursday and discussed China's Hard Landing: Fact or Fiction?

"I am and remain an optimist on China," Roach told the audience. "The focus on China's headline GDP (gross domestic product) is the wrong thing to do." China is in the midst of a vast economic shift that will see the country morph into an economy led by services from one dominated by manufacturing and exports, said Roach.

He believes that services could end up accounting for 65 percent of GDP in the next 25 years. "China is transforming from a nation of producers to a nation of consumers," Roach said. Roach said the government now recognizes that the only way the country can achieve long-term growth is through "an employment shift to labor-intensive services-led growth."

Note this is NOT ChinaDaily "propganda" - it is the opinion of the former chairman of Morgan Stanley Asia {branch} and the firm's chief economist. It is rare that ChinaDaily expresses it own opinions.

 

[joepistole]

Note this is NOT ChinaDaily "propganda" - it is the opinion of the former chairman of Morgan Stanley Asia {branch} and the firm's chief economist. It is rare that ChinaDaily expresses it own opinions.

LOL...except your source is still the China Daily. Read your URL. I don't know who you think you are fooling. I did a search on the internet and the only one making that assertion was the China Daily and a syndicate whose source was the China Daily.

Two, that statement China Daily attributes to Roach was mostly sales puffery which, if true, isn't unusual for investment bankers. That's how they earn their money.

As I have previously explained, the wheels will not immediately fall off the Chinese economy because China is liquidating its nearly 4 trillion in foreign currency reserves to stimulate its economy. Whither you and your Chinese pals want to recognize it or not - world markets certainly have - China faces some very large economic problems. China like Russia is being propped up with its foreign currency reserves. As previously explained, will happen to China's economy on the longer term remains to be seen. It depends on what China does going forward. Its foreign currency reserves provide China with an opportunity to fix its economy. If China wants to thrive and continue to grow its economy it will need to make some very significant changes - changes it has been very reluctant to make. It needs transparency and it needs to become more competitive and market oriented. It needs to be more open.

 

[Billy T]

LOL...except your source is still the China Daily. ...

Yes. I read it most days, but as usual China Daily is not inventing facts, but reporting them from western sources. For example for this case:

Investor concerns in the U.S. stock market of a "crash-landing scenario" for the Chinese economy are misplaced, former Morgan Stanley Asia Chairman Stephen Roach said Thursday. "I think those fears are vastly overblown," he said.

Growth in China has slowed, Roach acknowledged in a CNBC "Squawk Box" interview, "but it's not going in for a crash … and that will present, I think, an opportunity for shares to re-evaluate the China threat, big time."

The influential Yale economist did fault the Chinese for poorly handling the turmoil in its financial markets. "They did not do a great job of handling the equity market bubble on the upside by encouraging it and fighting it on the downside," Roach said.

He played down last month's devaluation of China's currency, saying the more important development there has been the progress in transitioning from an export-led to a more consumer-led economy.

But if Cnbc's Squawk Box is not western enough for you, see also:
http://www.bloomberg.com/news/videos/b/57f91341-16b9-4b8f-a9c2-98d71079d28c
OR:
http://www.slate.com/articles/busin...why_its_actual_economy_will_be_just_fine.html
And many more.

You need to stop your "knee- jerk" reaction of saying anything I quote from China Daily is "Chinese propaganda" as most of the time they are just re-quoting some western source. Years of reading ChinaDaily has taught me they mainly plagarize or openly quote from western sources, so only to show you are wrong, do I bother to find their western source.

 

[joepistole]

Yes. I read it most days, but as usual China Daily is not inventing facts, but reporting them from western sources. For example for this case: But if Cnbc's Squawk Box is not western enough for you, see also:
http://www.bloomberg.com/news/videos/b/57f91341-16b9-4b8f-a9c2-98d71079d28c
OR:
http://www.slate.com/articles/busin...why_its_actual_economy_will_be_just_fine.html
And many more.

Well, if the China Daily is not just inventing facts, then you should be able to prove it, and thus far you have not been able to do it. Further, one does not need to invent facts in order to be untruthful, as has been explained to you many times now. Omission and misrepresentation are just as untruthful as outright invention.

Additionally, while there is little doubt Roach is a sinophile. In the Bloomberg video clip you referenced Roach by necessity ignores much in order to get to his bullish outlook. Roach is virtually alone in his position on China. Unfortunately for you, there isn't one set of economic rules for China and another for everyone else.

Here is another thing you should think about, the Roach interview you cited occurred a few months before China's economy went into crisis mode and melt down...oops. So much for Roach's credibility. Roach's argument for China boils down to reform and China's supposed commitment towards reform. Well that reform has yet to happen in any meaningful manner. Certainly, China has done a lot of window dressing. But window dressing isn't a substitute for reform. It doesn't change the fact that the front of the store may look ok, but it doesn't change the fact that the back of the store is in serious disarray.

Unfortunately for you China isn't exempt from the laws of macroeconomics.

Here is a more recent CNBC article discussing China's economic prospects.

http://www.cnbc.com/2015/05/12/china-outlook-even-worse-than-imagined-morgan-stanley.html

You need to stop your "knee- jerk" reaction of saying anything I quote from China Daily is "Chinese propaganda" as most of the time they are just re-quoting some western source. Years of reading ChinaDaily has taught me they mainly plagarize or openly quote from western sources, so only to show you are wrong, do I bother to find their western source.

LOL...except my reactions are far from knee-jerk. That's just more ad hominen from you. If years of reading has taught you the China Daily is just plagiarizing foreign sources then you should be able to prove it, and thus far you have not been able to do so. And has been repeatedly pointed out to you errors of omission are just as untruthful as an invented "fact". And there is certainly a lot of omission going on in your China Daily articles which you so love.

As I have written many times now, China's fate remains to be seen. It's foreign currency reserves have bought China some time. Whither China makes the needed reforms remains an open question. Thus far China has been very unwilling to make the needed reforms. Forbidding people to sell stocks and requiring people to buy stocks only goes so far. It doesn't fix the previously elucidated and serious problems China faces.

* World Bank Cuts China's Growth Outlook (October 4, 2015), and that is based on China's data. And we have already discussed China's penchant for overstating its economic data in order to make China's economy look better than it is.

http://www.cnbc.com/2015/10/04/world-bank-cuts-east-asia-pacific-china-growth-outlook.html

* Here is something else you won't find in the China Daily:

http://www.cnbc.com/2015/11/20/crac...asing-trade-as-jewellers-suffer-defaults.html

 

[Billy T]

Well, if the China Daily is not just inventing facts, then you should be able to prove it,

I'm growing tired of digging up the original WESTERN sources that China Daily is quoting. Done that three times for you now, but you still call any postive news I quote from China Daily about China's economy: "Chinese Propaganda." So there is little point in my finding the sources and giving you the orignal western source to you.

... Here is a more recent CNBC article discussing China's economic prospects.
http://www.cnbc.com/2015/05/12/china-outlook-even-worse-than-imagined-morgan-stanley.html

Yes that is a reasonably balanced review.
Here is a quote from it telling the "China is doing fine" POV:
"I'm not as worried* about the buildup of debt in China as other countries," the founder of Wesley Clark & Associates said. He cited two reasons. The renminbi is not fully convertible to other currencies, and the Chinese economy still has elements of central control.

"Every year people at these business conferences say the demise of the Chinese economy is coming very rapidly," Clark added. "But it hasn't happened. And President Xi is not going to let it happen if he can avoid it."

Another China bull, Robert Petty, managing partner and co-founder of Clearwater Capital Partners, said China can forestall its debt problems. "We believe the balance sheet of China absolutely has the capacity to do two things: term it out and kick the can down the road," Petty said... "

As far as fact China has cut the loan interest rate several times to help out firms that were export focused {suffering with the multi-year global slow down} and needed to roll debt, please note the now lower rate on 1 year loan is + 5.1% not esentially zero as in US or even negative as in Germany.

Also it is true that China's growth is no longer by double digits as it was when it had an export driven economy. It has fallen to be only significantly more than twice the US rate - Poor China

This was to be expected and planned as now, for first time ever, China's consumer based economy is larger than its manufacturing for export economy is. - All going according to the CCP's plan.

* And there is no reason to worry about China's government debt to GDP ratio as it is less than half as large as the US's is. Plus China remains the world's main creditor nation and the US the world's largest debitor!

Bar chart from: http://www.tradingeconomics.com/china/government-debt-to-gdp but IMF based.

This quote, also from your link, is something the US, not China, needs to worry about:
"Whenever a country increases its debt to gross domestic product sharply over five years, in the next five years there's a 70 percent chance of a financial crisis and 100 percent chance of a major economic slowdown, according to Morgan Stanley research."
US government debt to GDP is now more than 100% and still climbing, but fortunately not as fast as it was under GWB. (Obama has cut some of the cost of foreign military adventures.)

BTW, Jewlers all over the world are hurting as gold in their inventory cost more than they can sell it for now - Chinese jewlers are better off than many as many in China are gaining great wealth now.

 

[joepistole]

I'm growing tired of digging up the original WESTERN sources that China Daily is quoting. Done that three times for you now, but you still call any postive news I quote from China Daily about China's economy: "Chinese Propaganda." So there is little point in my finding the sources and giving you the orignal western source to you.

What you are tired of doing is evading the question. You have repeatedly made this claim and you have repeatedly failed to even once back it up with - you know - something like evidence even once.

Yes that is a reasonably balanced review.

Yes it is. It wasn't in any way like the Chinese propaganda you like to proselytize.

Here is a quote from it telling the "China is doing fine" POV:
"I'm not as worried* about the buildup of debt in China as other countries," the founder of Wesley Clark & Associates said. He cited two reasons. The renminbi is not fully convertible to other currencies, and the Chinese economy still has elements of central control.

"Every year people at these business conferences say the demise of the Chinese economy is coming very rapidly," Clark added. "But it hasn't happened. And President Xi is not going to let it happen if he can avoid it."

Another China bull, Robert Petty, managing partner and co-founder of Clearwater Capital Partners, said China can forestall its debt problems. "We believe the balance sheet of China absolutely has the capacity to do two things: term it out and kick the can down the road," Petty said... "

As far as fact China has cut the loan interest rate several times to help out firms that were export focused {suffering with the multi-year global slow down} and needed to roll debt, please note the now lower rate on 1 year loan is + 5.1% not esentially zero as in US or even negative as in Germany.

Also it is true that China's growth is no longer by double digits as it was when it had an export driven economy. It has fallen to be only significantly more than twice the US rate - Poor China

This was to be expected and planned as now, for first time ever, China's consumer based economy is larger than its manufacturing for export economy is. - All going according to the CCP's plan.

* And there is no reason to worry about China's government debt to GDP ratio as it is less than half as large as the US's is. Plus China remains the world's main creditor nation and the US the world's largest debitor!

Bar chart from: http://www.tradingeconomics.com/china/government-debt-to-gdp but IMF based.

This quote, also from your link, is something the US, not China, needs to worry about:
"Whenever a country increases its debt to gross domestic product sharply over five years, in the next five years there's a 70 percent chance of a financial crisis and 100 percent chance of a major economic slowdown, according to Morgan Stanley research."
US government debt to GDP is now more than 100% and still climbing, but fortunately not as fast as it was under GWB. (Obama has cut some of the cost of foreign military adventures.)

BTW, Jewlers all over the world are hurting as gold in their inventory cost more than they can sell it for now - Chinese jewlers are better off than many as many in China are gaining great wealth now.

This is the part you are leaving out, the article you quoted is titled,
"China outlook even worse than imagined: Morgan Stanley"

http://www.cnbc.com/2015/05/12/china-outlook-even-worse-than-imagined-morgan-stanley.html

And General Wesley Clark, like the other "pro China" articles and authors you have referenced were written just months prior to China's economic melt down. So obviously your references got it all wrong. What makes you think General Clark would be some kind of economic authority is a bit perplexing. He is a general, not an economist.

The basic problems, as I have said repeatedly and as elucidated in the article I referenced, are severe. China can limp along on its foreign currency reserves as it is now doing. But at some point that ends, probably within about 3 or 4 years. That buys China some time. If China wants to avoid an economic Armageddon, it needs to to make the reforms it has so steadfastly fought. China's fate remains to be seen. When all the investment bankers who have been with China from the very beginning began to bailout of China earlier this year, that should have been a clarion call.

 

[Billy T]

China is expected to account for 13 percent of the world's total exports this year as the country shipped more high-value products to both developed and emerging markets between January and November, the Ministry of Commerce said on Thursday. ... The country's exports of rail equipment, as well as power and telecommunications products to developed markets rose 10 percent year-on-year in the first 11 months.

China's foreign trade dropped 7.8 percent year-on-year to 22.08 trillion yuan ($3.39 trillion) from January to November. Of this, 12.71 trillion yuan was exports, which were down 2.2 percent. The nation's trade surplus during the same period surged 63 percent to 3.34 trillion yuan, according to the General Administration of Customs.

The country reported 3.16 trillion yuan of trade with the European Union, its largest trading partner, in the first 11 months, down 7.7 percent year-on-year, while the figure was 3.15 trillion yuan for the United States, the nation's second-largest trading partner, up 1.9 percent. "Based on the current trading volume, China will remain the world's largest trader this year," said Gu Xuebin, vice-president of the Chinese Academy of International Trade and Economic Cooperation in Beijing.

As this quote is from ChinaDaily, Joepistole will no doubt call it "Chinese Propaganda." So in advance, here is Bloomberg telling China became world's largest trader last year: http://www.bloomberg.com/news/artic...-to-become-the-world-s-biggest-trading-nation

But global economy is shrinking so even China exported less in 2015 than 2014, when it was only 12.4% of world trade. I. e. China's slightly smaller trade in 2015 is a greater percent (13%) of world trade in 2015. Dollar grew stronger in 2015, and that of course hurt US exports as well as the weaker economies in the buying countries not being able to import as much.

I don't know, data not yet available, but bet US trade deficit for 2015 will be largest in some years with strong dollar and weaker economies in the buying countries.

 

[Billy T]

Do you read anything other than Chinese state propaganda?

Referring to fact I tend to trust ChinaDaily mainly as most of their articles were originally published outside of China, and often plagiarized (No credit given to orignal source). Joepistole believes ChinaDaily is just purveyor of "State Propaganda." (So stated in post 927) Well this appeared on the cover of the Christmas Day issue:

If Joe's POV were even half way correct, then Heads would Roll at ChinaDaily for making fun of their air quality problems.

 

[Billy T]

Fast forward a millennia or two, and the same talk of expansion comes as China’s surpluses grow again. There are no ropes to hold its $4tn in foreign currency reserves — the world’s largest — and in addition to overflowing granaries China has massive surpluses of real estate, cement and steel.

After two decades of rapid growth, Beijing is again looking beyond its borders for investment opportunities and trade, and to do that it is reaching back to its former imperial greatness for the familiar “Silk Road” metaphor. Creating a modern version of the ancient trade route has emerged as China’s signature foreign policy initiative under President Xi Jinping.

This Financial Times article focuses on China's major investments (more than the Marshall Plan) to re developing its prior economic dominance in a large part of the world, via the new "silk road" which is both land and sea as this map shows:

It is dynamic with details of three regions. If later* it does not post well, see it at the FT source (link of the quote). Well worth your time to read, if interested in China's plans, as viewed by one of the world's formost economic news organizations.

* ChinaDaily often reduces the availablity of images after some delay (That may be FT's source as I have seen the small insert at ChinaDaily, months ago.)

 

[Billy T]

China spent a record $111 billion on deployment of clean energy infrastructure last year. That's 17 percent more than it spent the prior year, and almost as much as the U.S. and Europe combined. Spending in the U.S. rose 7.5 percent in 2015 to $56 billion, the most since federal stimulus spending peaked in 2011.

The world has reached a turning point*, and is now adding more power capacity from renewables every year than from coal, natural gas, and oil combined. That trend continued in 2015 despite crashing fossil fuel prices. And since clean energy is also getting cheaper, the world got more bang for each buck. Investment dollars rose 4 percent last year, while the new capacity added for wind and solar jumped 30 percent.

* With China leading the way - far ahead of any other nation.

 

[Billy T]

ChinaCOSCOShippingGroupCo, thecountry'snewlycombinedandlargestshippingcompanybycapacity, offered 700 millioneuros ($762 million) toacquireamajoritystakeinPiraeusPortAuthoritySA, thelargestportinGreeceafterwaitingfor 18 months.

China helping to keep Greece supplied with funds. (700,000,000 euros in one deal)

 

[CptBork]

If China's economic slowdown was planned all along, where does the market rout currently sucking up the life savings of its most vulnerable citizens fit into those plans?

 

[Billy T]

Nearly 400 companies make drones for civilian purposes in China. 2015 is the dawn of the drone age. The drone is no longer a high-tech military equipment, but also be used in photography, fire extinguishing, agricultural control and other private and commercial areas. Here are some of the captions from nine drone photos at: http://usa.chinadaily.com.cn/business/2016-01/26/content_23250865_3.htm

The Ehang 184 autonomous aerial vehicle is unveiled at the Ehang booth at CES International on Jan 7, 2016 in Las Vegas.
{It could transport an injured person back to hospital.}

A drone sprays pesticide in a field in Duchang County of Jiujiang city, East China's Jiangxi province, July 2, 2015.

A drone burns off waste and sundries off a powerline wire in Puyang, Central China's Henan province, March 17, 2015.

A drone delivers a life buoy to a {swiming} man in Wuhan, capital of Central China's Hubei province, May 12, 2015.

 

[joepistole]

If China's economic slowdown was planned all along, where does the market rout currently sucking up the life savings of its most vulnerable citizens fit into those plans?

BillyT hasn't answered your question.

 

[joepistole]

China helping to keep Greece supplied with funds. (700,000,000 euros in one deal)

Well, that's a little disingenuous. China isn't buying a Greek port out of any sense of charity. China isn't trying to "help out" poor little Greece. China is trying to expand its power and influence in the world. It's isn't overpaying for the port. If fact it is quite the opposite.

 

[joepistole]

* With China leading the way - far ahead of any other nation.

I guess that explains all that famous Chinese smog. The fact is, China isn't leading anything. Other nations are far ahead of China in this regard. Western countries have for decades now pursued and developed clean energy technologies. The US alone currently sources 11% of its energy from renewable sources. China currently sources less than 1% of its energy from renewable sources. China is heavily dependent upon burning hydrocarbons for its energy and in particular coal which is the dirtiest hydrocarbon (i.e. 66%).

 

[Billy T]

CptBork asked: ↑
"If China's economic slowdown was planned all along, where does the market rout currently of its most vulnerable citizens fit into those plans?"

I did not answer as stock markets, especially in China where small investor volume dominates investment firms volume, are in the short term controled by emotions, not government planners; but the government does directly intervien (buying to stem rapid declines or selling to slow rapid rises). The US modulates stock prices less directly mainly via QEs and interest rate controls.

Most Chinese have nothing in the stock market (less than 5% do I would guess). Thus the decine in real estate has been "sucking up the life savings" much more than the stock market has. In fact the stock market decline has not yet reversed the huge gains of a couple of years ago, as the US stock markets has (Dow dropping form above 1900 to less than 1600, is a 16% decline) so it is currently the Americans, not the Chinese, who have watched "the market rout currently sucking up their life savings" - Have you looked at youe last 401K statement?

Also I think it wrong to say "China's economic slowdown was planned all along." What was planned, and I noted in post at least a year ago, was a transition to a more market driven economy - a consumer lead economy - instead government spending on infrastructure and factories prducing for export. When that was the dominate part of GDP, the govenment could, and did, make double digit GDP growth for more than a decade; however a consumer led economy must have slower growth, especially in China, where mass stravations a few decades ago are well remembered by the old who surived them. They have taught their grand children to save a large fraction of their income. The saving rate was above 50% of disposable income, but is less than that now. Perhaps in a few decades more, the average Chinese will be living on his credit card too.

However another tradition of the Chinese is alive and well. The workers in the costal cities still go to their rural family homes for the lunar new year: China's transportation system will carry a record number of passengers during the upcoming peak travel period around the Lunar New Year Festival, with up to 2.91 billion trips to be made via road, railway, air and water between Jan. 24 and March 3. The stations are "jam packed." Caption of photo below was: "A child in Nanjing train station in East China's Jiangsu province, Jan 24."

 

[joepistole]

Referring to fact I tend to trust ChinaDaily mainly as most of their articles were originally published outside of China, and often plagiarized (No credit given to orignal source). Joepistole believes ChinaDaily is just purveyor of "State Propaganda." (So stated in post 927) Well this appeared on the cover of the Christmas Day issue:

If Joe's POV were even half way correct, then Heads would Roll at ChinaDaily for making fun of their air quality problems.

Noting a widely known problem to people who widely know it and aren't subjects of the Chinese government isn't a criticism of the regime. It's just a recognition of a widely known fact. Additionally, the China Daily isn't widely viewed by folks in China. It's published in English by the Chinese government for a foreign audience. Most Chinese folks don't read or speak English...oops.

 

[Billy T]

... The fact is, China isn't leading anything. ....

China has long been powered by coal and it takes time to change that. 100s of small coal mines have been closed and China leads the world in investment in clean energy (wind & solar cells, mainly) I. e. China is investing about as much annually now as Europe and US combined does, but transforming a coal based economy to a clean energy one, does take time.

Also China developed super critical steam generations and is installing these plants rapidly as they get about 50% more KWHs from each ton of coal. The units are installed in pairs. Here is photo of them, from post 907 where more detail is given:

Also much of traveling home in China is by rail, not airplanes. Much less pollution produced per passenger mile.
China is leading in the High Speed rail area too.

 

[Billy T]

Here is some support for my statements that China leads the world in Clean energy investment from Bloomberg's November 1015 article.
(http://www.bloomberg.com/news/artic...a-s-clean-energy-investments-show-big-strides)

"China was the biggest renewables market in the world with 433 gigawatts of generating capacity at the end of 2014, more than double the U.S. in second place with 182 gigawatts. China led the world in 2014 by adding 56 gigawatts of clean energy, more than four times the U.S., which was again in second place. Almost one out of every three wind turbines in the world are in China. At the end of 2014, the world had 268,000 wind turbines, with 76,241 operating in China, according to the Global Wind Energy Council."

SUMMARY: Not only is China leading the US, but increasing the gap rapidly - So fast that the US will never catch up to the leader. Hell the US can not even keep its existing infrastructure in safe repaired conditions! Want to start a betting pool on which bridge will be the next to collapse?

PV instalation goes forward, non-stop, 24/7 in China as does wind generation.