"How China fooled the world" debt 200% of GDP

johnnyrubin

Just check out CCFD's in China and what this will do to the price of gold - very interesting

http://www.zerohedge.com/news/2014-03-22/how-china-imported-record-70-billion-physical-gold-without-sending-price-gold-soarin


Sell what ever you have now !!

Sandstone

Piers Morgan on China: http://www.youtube.com/watch?v=YNG3I3-3TdI

It covers some of the reasons why I am confident that China's outlook is far from the picture painted by Peston.

Hope some of you find it interesting and enlightening.

gazter

wotsthat wrote: »

Multiple 'Birminghams' are being built but people want to live in 'London'.

You can see lots of them from the bullet train - there's a massive oversupply of housing where people don't want to live and not enough where they do.

Evidence laid bare of the failure of a planned economy!!

TickersPlaysPop

It's not only about property in right place, it's about bonds maturing and giving expected yield. Also I keep hearing about corruption in China in media and first hand from my day job.

They are creating money from nothing which is not a solid bed rock for the future.

cells

paddyrg wrote: »

Of course, if you did that it would relieve pressure on the housing market, so house prices would fall, so creating negative equity on a wide scale and forcing more repossession sales and completely screwing up the current 'recovery'.

All I mean by this is that it's never as simple as doing one thing to solve issues, whatever you do creates more, different issues.

If the UK built 400-450k homes a year prices would not fall, they would just stop going up as fast.

France which is a demographically similar nation is building 400k houses a year and prices are actually going up but at a slower rate

IMO as things are, UK prices could double over the next 5 years becuase the shortgage is getting worse every day. if build rate jumped to 400k a year this year and onwards i would say prices will only go up perhaps 25% over the next 5 years

cells

TickersPlaysPop wrote: »

Hi Sandstone

Thank you for your response. I agree with a lot of what you mention,

China is growing by building lots of things, roads, dwellings, railways, airports.... They are all very very busy with everything to do with this... raw material supply, logistics, man power, management, financial services, feeding the work force, utilities provision,...

What happens when this slows down and worse still stops?

They need to rapidly give these people something to do to fill the vacuum.... and you are sure the digital benefits are good enough to fill this in terms of speed and volume?

As you know, Business take time to grow, and I feel that they won't be able to fill the vacuum fast enough.

If the west can return to growth and ramp up demand for good again, maybe manufacturing can return to China replace the building activity?

they will go towards a 80% service economy much like the west

also building and infrasture doesnt really stop. even if buildings last 100 years that means you need to renew 1% of your buildings every year. china is probably going to have some 600 million plus homes which means a rate of refurb of at least 6 million a year.

plus all the roads rail and airports and EVERYthing needs maintinance and repaire.

plus all goods need replacement and repaire. once every chinese home has a TV they dont close the TV factories. they sell new models every 5 years to them.

cells

TickersPlaysPop wrote: »

I think what people want is sustainable steady growth, so an increase in house building to slow the rate of housing market growth. The boom and bust roller coaster is for vocational housing profiteers that must be stopped. Housing must NOT be allowed to be a commodity to trade in, they are homes and peoples' lives we are dealing with.

There is the current young generation who have no option but to rent, they will pass through life with 1/3 to half of their income lost to greedy profiteers... profiteers who have jumped into a situation allowed to occur by the government. The current young generation will not own a home at retirement, so how will they live at retirement?

Houses for homes NOT for profiteers

"Housing must NOT be allowed to be a commodity to trade in"

empty words that mean nothing.

sabretoothtigger

The debt bubble moved from the west to China in 2008.... Who are now in debt to the tune of 200% of their GDP.... They had no choice when the west stopped buying their goods they had to borrow

The west is still in debt, even if UK is better we still increase our debts every day? If we stopped buying their goods, who is making them instead as apparently its not us or maybe now they just use the goods themselves

That is why a producer is more powerful then a consumer, money is only a proxy for production of some kind and if a country tries to pay without producing anything they are also paying zero value in exchange.

I'd only agree if somehow everything China makes is junk and the west holds the key to any useful product. Then they are screwed and we can dictate terms however biased.
Main problem for China is their population distribution, UK and USA have pop growth but china or Japan have problems of less people and possibly less ability to produce

in 2008, the Chinese banking sector was roughly $10 trillion in size. Right now it's in the order of $24 to $25 trillion.

This is a false perspective for a number of reasons. Most simply the dollar value in 2014 is not equal to 2008 and how we measure its progress is likely not accurate either I think.

So even if all business were flat, the figures over time would increase. It'd increase substantially inline with the greater amount of dollars in existance total compared to 2008. .

So just measuring anything in dollars is inaccurate, the growth of China is far beyond the west I think. It might be close to 7% ? Which means every decade China GDP would be doubling, so thats how I view those figures. As a minor point China has corruption, I could believe that also

cells

http://www.forbes.com/sites/oliverbarron/2014/04/21/does-chinas-q1-gdp-figure-rule-out-a-hard-landing/


This article says china is building ~300 million square meters of homes a year. Assuming average size is 80 sqm that means they are building ~3.7 million new homes a year. That is a lot of homes but France is building ~0.4m a year and china is 20x the size so effectively china is building homes at about half the rate of france per capita.

what over investment in homes???

I suspect construction has room to grow and continue providing jobs for many decades yet. although some sectors are probably only about a decade awawy from saturation.

TickersPlaysPop

You are assuming they are building houses in places where housing is needed. The house building is not in line with business activity, so many places are empty. So there will be a big gap between building now and occupancy.... It is that gap that is putting the China economy at risk.