China Economy Megathread

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namaste friends: Sep 18, 2004; by Smythe

Grand Theft Autobot posted:

So what you're saying is that building tons of office parks and buildings in order to create a supply of tenant businesses was an rear end-backwards idea?

Well when your supply far exceeds demand what do you think will happen? Take your time.

# ? Aug 30, 2014 06:26

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# ? May 11, 2024 06:36

namaste friends: Sep 18, 2004; by Smythe

Jesus loving christ is everything fake in China?

http://www.ft.com/intl/cms/s/0/d72ec42a-2f87-11e4-83e4-00144feabdc0.html#axzz3BoXMoz00

quote:

�Brushing� casts doubt on Alibaba figures as $20bn IPO looms

After four years managing a private delivery company in the Chinese city of Ningbo, Chen Qian has acquired a new skill: he can tell which packets are fake even before he picks them up. Some are hollow boxes, some rattle with a piece of candy or a keychain. Recently, he says, merchants sending fake deliveries have started putting toilet paper rolls to give some heft.

Mr Chen says these account for about a quarter of the 4,000 packages his company handles every day. The phenomenon is widespread throughout China; a consequence of the country�s booming e-commerce industry and, specifically, a practice known as shuaxiaoliang, or literally � �sales brushing�. Online sellers are recruiting their friends, relatives and even professional fraudsters to make fake orders because shipping more goods would give them better placement � and therefore a better chance to garner more real sales � on websites such as Alibaba-owned Taobao.
In some category of goods, fake sales can account for between a 10th to a quarter of all online sales, according to a series of interviews with ecommerce vendors, logistics companies, and people who help fake internet traffic for e-commerce sellers.

This high proportion calls into question the key operational metrics published by Alibaba ahead of its expected New York listing this month, when it is likely to raise around $20bn and eclipse Facebook and Google to become the biggest ever internet IPO.

Since Alibaba�s Tmall and Taobao sites account for 80 per cent of the overall online retail volume in China, �brushing� also calls into doubt China�s official e-commerce statistics.

Alibaba said in a filing to the Securities and Exchanges Commission this week that it handled $296bn worth of goods, consisting of 14.5bn orders, in the year ended June 30. Ebay handled $81bn worth of goods over the same period.

Alibaba noted in the risk factors section of its prospectus that sellers on its site may �engage in fictitious or phantom transactions with themselves or collaborators in order to artificially inflate their own ratings on our marketplaces, reputation and search results rankings�.
The company declined to comment further due to a pre-IPO silent period, but Alibaba has been cracking down on brushing for the last three years. This has had some effect, according to sellers and others active on Taoboao, although the practice still flourishes as sellers stay ahead of Alibaba�s audit methodology.

Brushing highlights the headaches of policing third parties on e-commerce sites and applies not just to Alibaba but to all sites that have open supplier platforms, such as Ebay and Amazon. However, Alibaba is most affected due to its sheer size in the Chinese market, and because fierce competition and rising advertising rates charged by Alibaba mean that the vast majority of sellers on Taobao are now lossmaking. Ebay and Amazon declined to comment.

Zhang Yi, chief executive of iMedia Research, a mobile internet consulting group, said a private study by his group reckons that a very large number of shop owners on Alibaba�s flagship ecommerce site Taobao, which accounts for two-thirds of Alibaba�s total sales volume, �brushed� in the first half of 2014. �The great majority are brushing or have �brushed� at some point� he said.

�We�ve only started brushing recently,� said one Taobao shop owner in Hangzhou which sells hats and traditional silk scarves, who asked not to be identified. �There is no other choice for us. A lot of the other shops have been doing this for years, and we realised that no matter how well we did in sales, we could not compete with those who brushed. The way I see it, it would be best for all of us if nobody brushed.�
BRUSHING: HOW IT WORKS

Brushing has generated a whole series of side industries in China, including businesses that thrive by artificially boosting online traffic to Taobao and Tmall shops.

�But the competition is so fierce, there is really no other way, all our competitors are doing it. If your sales aren�t high enough, you will get low placement and no sales�

There is some disagreement over the extent to which brushing affects Alibaba�s overall sales numbers. One person familiar with the company said Alibaba was aware of the problem but did not consider it material enough to impact overall sales.

However Anne Stevenson-Yang, head of J Capital Research, the Beijing based economic research group, drew attention to the 63 per cent jump in Alibaba�s gross merchandise value between the end of 2012 and end 2013, from $157bn to $248bn.

In that same period, she says, there was only a 6 per cent revenue growth for all retailers listed on the Shanghai, Shenzhen, and Hong Kong stock exchanges, not corrected for mergers and non-core investments.

�You can�t say this is channel migration, because a lot of the consumer/retail companies have very robust online sales, and those sales are growing more slowly than offline sales� she says. �Manufacturers of products sold online are seeing slow or negative growth. So where are all these online sales coming from?�

Over the past three years, Alibaba has improved its auditing procedures, which use algorithms to determine suspicious activity. Merchants caught brushing could be downgraded or even kicked off the website.

Mr Chen, of the delivery company, told the FT via telephone that the number of empty packages he handles has been reduced from half to one-quarter of the total in that time. However, the practice still flourishes as sellers stay ahead of Alibaba�s audit methodology. In chat rooms and blog forums, vendors discuss how not to get caught: do not have too high a conversion ratio of sales to internet traffic clicks, and do not �brush� from the same IP address too often.

Li Siyuan, who sells cut flowers online on Taobao from his Beijing flat, said he personally does not brush sales, however he knows many merchants who do, but the practice is declining. �The golden age of brushing was 2009 to 2011� he said. Nowadays he estimates that the total amount of fake sales in the online flower industry is 10 per cent or less. �Today the best way to get high sales is to offer a great product,� he adds.

But Mr Chen, of the delivery company, says it will be difficult to completely eradicate the practice. �Even though our employees can pretty much tell which ones are empty, the line is still rather blurry,� he says. �Our clients can insist that they just intend to send a pack tissue paper; or even harder still, if they send out a receipt in an envelope.�

It appears that brushing violates no laws and, arguably, benefits everyone � store owners get better listings, logistics and delivery companies get more sales, and Alibaba gets a boost in traffic.

�I don�t think I want to criticise the practice too much because we get so many sales,� says Mr Chen.

Brushing: how it works

�Brushing� essentially consists of creating fake orders � the merchant sends out an empty box or delivery envelope accordingly, but refunds the money paid by the �purchaser�.

The practice of shipping an empty box or entering a fake order code is necessary because Alibaba requires a unique delivery code to be entered with each order.

In practice, Chen Xujie, a man from Wenzhou who fakes internet traffic for ecommerce sellers on his website 668shua.com, says half of the fakery is done by shipping empty parcels, and half is done via a grey market in active order codes sold by logistics companies to vendors via specialised websites.

Brushing has generated a whole series of side industries in China. Mr Chen, for example, runs a thriving business in artificially boosting online traffic to Taobao and Tmall shops. Shop owners who brush but do not also fake their traffic numbers can get caught because they would appear to be too successful, which casts suspicion and can cause them to be automatically downgraded by Taobao.

Some sellers also use virtual private networks on computers to fake different IP addresses for order locations, he said.
Going by the online chat handle of �Stupid Jerk�, Mr Chen uses internet bots and software to fake traffic. �Nine out of every 10 sites on Taobao do it� he said via instant messenger.

He claims to make Rmb3,000 per month generating fake traffic for Taobao sellers, and says he got into the practice after owning a shop on Taobao selling Korean cosmetics. He left Taobao because he said �there was no hope�.

�I spent too much time brushing my sales and it still wasn�t enough�.

# ? Aug 30, 2014 06:31

paragon1: Nov 22, 2010; FULL COMMUNISM NOW

^^Wow that sounds like it could be pretty bad news.

Fall Sick and Die posted:

It was less a case of white knighting and more a case of you being retarded and using the wrong "you're" when you were defending the Queen's English

Hahaha I just noticed that. It's hardly "defending the Queen's English" to point out the difference between the adjective and noun form to someone, but whatever makes you feel good I guess. You seem to be under the impression that I was trying to poo poo on someone when I was just trying to be helpful. :shrug:

# ? Aug 30, 2014 06:36

caberham: Mar 18, 2009; by Smythe; Grimey Drawer

Speaking of hilarious deliveries, anyone remember Diablo 3? Well the video game was banned in China and sellers/buyers used the code word Da Bo Luo 3. Which literally meant 3 pineapples.

Well some nerd paid double the price for the American version of 3 pineapples expecting he will get the game. Nope, he 3 got 3 dole pineapples :smith:

# ? Aug 30, 2014 06:45

paragon1: Nov 22, 2010; FULL COMMUNISM NOW

Not the first time Dole has crushed the dreams of foreigners in the pursuit of profits.

# ? Aug 30, 2014 06:47

whatever7: Jul 26, 2001; by LITERALLY AN ADMIN

caberham posted:

Speaking of hilarious deliveries, anyone remember Diablo 3? Well the video game was banned in China and sellers/buyers used the code word Da Bo Luo 3. Which literally meant 3 pineapples.

Well some nerd paid double the price for the American version of 3 pineapples expecting he will get the game. Nope, he 3 got 3 dole pineapples

Hilarious. Anyone brought an iPhone 5 got 5 bags of Apples instead?

I also heard a joke on Taobao goes like this, "One day a buyer ordered a phone from a Taobao seller with a slogan 'Guaranteed authentic, one fake gets ten in compensation!' which is a very popular phrase on Taobao . He opened the delivery package, 11 phones fell out..."

# ? Aug 30, 2014 13:11

Arglebargle III: Feb 21, 2006

Sounds like Taobao's ranking algorithms are actually at fault.

# ? Aug 30, 2014 13:15

Vaginapocalypse: Mar 15, 2013; B-but it's so hard being white! Waaaaaagh!

paragon1 posted:

^^Wow that sounds like it could be pretty bad news.

Hahaha I just noticed that. It's hardly "defending the Queen's English" to point out the difference between the adjective and noun form to someone, but whatever makes you feel good I guess. You seem to be under the impression that I was trying to poo poo on someone when I was just trying to be helpful.

No one is upset at you, we're just laughing cuz now you look dumb.

# ? Aug 30, 2014 18:22

My Imaginary GF: Jul 17, 2005; by R. Guyovich

It sounds like most of the Chinese economy is living in a bubble, where only growth matters and everything else is secondary.

# ? Aug 30, 2014 18:45

namaste friends: Sep 18, 2004; by Smythe

Except that it's doubtful it's really growing that much anymore.

# ? Aug 30, 2014 18:46

namaste friends: Sep 18, 2004; by Smythe

http://www.ft.com/intl/cms/s/0/1440...l#axzz3Dy7nw5Ry

quote:

China risks �balance-sheet recession� as stimulus impact wanes

China has launched a fresh effort to boost its flagging economy with cash injections by the central bank, but signs are mounting that monetary stimulus is losing its effectiveness as debt-ridden companies lose their appetite for borrowing even at low rates.
�Mini-stimulus� measures launched since April have focused on increasing the supply of money and credit. Last week the central bank moved to inject $81bn into the banking system via loans to the five biggest banks. That followed targeted cuts to the required reserve ratio for small banks and a loosening of the regulatory loan-to-deposit ratio that gave banks greater freedom to expand lending.

Authorities want banks to channel those funds into the real economy, but bankers and analysts say that weak credit creation in recent months is due more to lack of demand from borrowers than to constraints on bank lending.

That raises the spectre that China may slip into a so-called �balance-sheet recession�, the kind of economic slump in which monetary policy loses its effectiveness because highly indebted companies concentrate on paying down debt and remain unwilling to borrow even when interest rates fall. Weak demand for goods amid a slowing economy further depresses appetite for investment.

�Anyone who runs a company with high leverage is very sensitive to the prospects for final demand,� said Richard Koo, the Nomura economist who pioneered the concept of a balance-sheet recession in his analysis of Japan�s post-bubble stagnation in the 1990s.
More recently he has applied the same analysis to the post-crisis economies of the US, European Union, and the UK, where huge expansions of the base money by central banks have largely failed to spur bank lending to the real economy.

�If everyone is happy and spending big, then leverage isn�t a big issue,� said Mr Koo. �That was the way Japanese companies operated until the end of the 1980s. But once things reverse, they have to be super cautious. At least some Chinese companies are now acting the same way.�

Indeed, a central bank survey released on Friday showed that bankers saw declining demand for loans in the third quarter, while a separate survey showed that manufacturers are increasingly pessimistic about the economy.
The survey results help to explain data released earlier this month showing that bank loans outstanding rose by only 13.3 per cent year on year in August, the weakest pace since 2005.

Analysts still believe the Chinese government could spur credit and investment growth with aggressive monetary easing, including an interest-rate cut and so-called �window guidance� from regulators instructing banks to boost lending.

But bankers say that good lending opportunities have become increasingly scarce, even as regulators have relaxed the enforcement of rules like the maximum 75 per cent loan-to-deposit ratio, which has long served as a big constraint on bank lending.

�The LDR has been relaxed, and liquidity has increased, but it�s still hard to place loans. When the (stimulus) news broke, banks all rushed to buy bonds. The money hasn�t flowed into the real economy,� said an executive at a midsize commercial bank in Shanghai.

Rising debt is at least partly to blame for waning appetite for new borrowing. The massive stimulus that China�s economic managers launched in response to the financial crisis sent China�s overall debt-to-GDP ratio soaring to 251 per cent by the end June, from 147 per cent at the end of 2008, according to Standard Chartered estimates.

Mr Koo and others say a fully-fledged balance-sheet recession would require a much steeper fall in Chinese asset prices. Property prices have fallen for four straight months, but the magnitude of the fall is still far below the catastrophic collapses seen in Japan in 1990 or the US in 2008.

The theory of a balance-sheet recession implies that when impaired corporate balance sheets weaken the private sector�s appetite for borrowing and investment, the government must fill the gap with fiscal spending.

China dabbled in this approach earlier this year, as the fiscal deficit briefly spiked amid increased spending on rail and other areas. But if private spending weakens further, Chinese policy makers may be forced to overcome their traditional aversion to big fiscal deficits and adopt more muscular stimulus.

George Magnus, senior economic adviser for UBS, argues that China should welcome the fall in borrowing and accept the current growth slowdown as the inevitable cost of preventing a fully-fledged balance-sheet recession down the road.

�If the credit-creation/debt-accumulation model is permitted to continue for much longer, I think it�s increasingly probable that over-leverage in the non-financial company sector could precipitate an interest-rate insensitive slump in investment,� said Mr Magnus.

# ? Sep 21, 2014 17:38

icantfindaname: Jul 1, 2008

So basically it's Japan Round Two: Electric Boogaloo?

# ? Sep 22, 2014 02:55

Warcabbit: Apr 26, 2008; Wedge Regret

Not exactly - Japan had well regulated markets. China has some crazy-rear end side-lending of unknown dimensions.
So if person X can't get a loan at the wrong time, then the side-lending for Y and Z collapse, and it's... really kind of unpredictable. House of dominos stuff.

# ? Sep 22, 2014 04:50

icantfindaname: Jul 1, 2008

Okay so it's Japan Round Two: Electric Boogaloo, now with even more incredibly unstable mega-bubbles?

# ? Sep 22, 2014 05:03

My Imaginary GF: Jul 17, 2005; by R. Guyovich

icantfindaname posted:

Okay so it's Japan Round Two: Electric Boogaloo, now with even more incredibly unstable mega-bubbles?

Its Japan's balance sheet recession to the power of the American housing bubble.

# ? Sep 22, 2014 05:19

Femur: Jan 10, 2004; I REALLY NEED TO SHUT THE FUCK UP

It's a good thing they stockpiled a lot of USD.

Crash gold already so the rest of us can laugh you crazy bastards! It's time.

# ? Sep 22, 2014 07:58

CIGNX: May 7, 2006; You can trust me

This has been said before, but it bears repeating; China can't do poo poo with its foreign reserves to deal with its debt crisis. Since the liabilities are ultimately denominated in RMB, using USD for an intervention would result in a bunch of companies and financial institutions going to the People's Bank of China looking to exchange their USD for RMB. This leads back to the government's original problem of trying to generate a bunch of RMB without causing other serious problems in the economy.

# ? Sep 22, 2014 09:09

Femur: Jan 10, 2004; I REALLY NEED TO SHUT THE FUCK UP

Well, here's my crazy rant on this, I know the Chinese are weird, overvalue land ,gold, ivory, semi rare weeds. They try crazy things like trying to corner the rare earths market, prop up that rare weed thing, solar panels. I mean what do you want? Returns are gonna be bad. Like this is systemic thing, capitalism only seems better because it's been going longer, more loot, reforms and entrenchments. So print those Yuan. It's really too late to be worried about over leveraging for anyone. Speculate away, this is part of the growth process apparently.

The West has had decades to build up, while China worked the factory, they control cutting edge poo poo while China has to steal and catch up. You expect it to compete at the high premium, high end markets? Where else would high returns be coming from? There's a global good old boys club called white people. Globalization is a lie. I means it's hard to sell poo poo when people are afraid you'll spy on them, think your education numbers aren't really true, think you only make cheap mass produce stuff, take their jobs, drive up home prices, violate human rights; I see a lot of negative Chinese reporting, that has to affect closing deals. The government isn't blameless of course, but colonial times extracted a huge toll that will take several generations to rebuild.

Trading for USD was much smarter than trading for silver. They can still buy stuff on the global markets, gives people something to do. Build up that military, that seems profitable, everyone's doing it. Stay the course.

This council of elders/quasi dictatorship was probably not destined for greatness anyways; but it did bet on a good horse, is what I am saying; thanks Nixon!

Femur fucked around with this message at 12:48 on Sep 22, 2014

# ? Sep 22, 2014 12:36

Grouchio: Aug 31, 2014

At this rate I'd give the current Communist regime...oh...20-30 years before it implodes into a democracy centered in Hong Kong minus TIbet and Uighuristan. Given that the retirement of the revolutionary generation causes massive socioeconomic upheval.

# ? Sep 22, 2014 14:04

computer parts: Nov 18, 2010; PLEASE CLAP

Grouchio posted:

At this rate I'd give the current Communist regime...oh...20-30 years before it implodes into a democracy centered in Hong Kong minus TIbet and Uighuristan. Given that the retirement of the revolutionary generation causes massive socioeconomic upheval.

HKers really are the most self centered people in the world.

# ? Sep 22, 2014 14:41

RocknRollaAyatollah: Nov 26, 2008; Lipstick Apathy

Grouchio posted:

At this rate I'd give the current Communist regime...oh...20-30 years before it implodes into a democracy centered in Hong Kong minus TIbet and Uighuristan. Given that the retirement of the revolutionary generation causes massive socioeconomic upheval.

No one ever remembers Inner Mongolia and Taiwan.

China's survived this long as it is. I doubt it's going to collapse because people spent their life savings on crappy apartments, golden Guanyin statues, and Audis. It'll probably go into a period of stagnation like all of its neighbors, desperately trying to keep its economy going by building stuff.

The Chinese people generally hate the Chinese Communist Party, even members who aren't at the top admit this, but they love the nation state of China. The Qing committed genocide to bring Xinjiang into China, I would argue that the current regime or some hypothetical one doing the same to keep it within China wouldn't be a stretch. No one knows what will happen to Tibetan independence once the Dalai Lama dies as well. He's already said he won't likely be reincarnating so who knows what that will do to the movement. Even then, the Tibetans are not asking for independence because it would be impossible.

# ? Sep 22, 2014 15:40

Bip Roberts: Mar 29, 2005

Grouchio posted:

At this rate I'd give the current Communist regime...oh...20-30 years before it implodes into a democracy centered in Hong Kong minus TIbet and Uighuristan. Given that the retirement of the revolutionary generation causes massive socioeconomic upheval.

If PRC imploded Hong Kong would become a city state again way, way, way before they decided to become an administrative beartrap ruling over a failed state. Like they'd just Bugs-Bunny any attachment to short and float out to sea.

# ? Sep 22, 2014 15:57

The MUMPSorceress: Jan 6, 2012; ^SHTPSTS; Gary’s Answer

RocknRollaAyatollah posted:

He's already said he won't likely be reincarnating so who knows what that will do to the movement.

This is a bit off topic, but isn't that an incredibly arrogant thing for him to say? Doesn't that mean that he thinks that he, of all the Dalai Lamas that have ever been, was the one to finally reach enlightenment? Or is it one of those things that every Lama says and then the Panchen Lama just says "whoops, guess he was wrong, the new Dalai Lama is right over there"?

# ? Sep 22, 2014 17:11

icantfindaname: Jul 1, 2008

I don't think it's at all given that a democratic China would have kept and continued to oppress Xinjiang/Tibet/Inner Mongolia, or that the Nationalists wouldn't have given up power. I don't think enough information exists to make such a prediction, like with many things in China, and speculation is therefore useless at best.

At the same time I don't think the information really exists to think that the CCP won't give up power eventually. Even if it takes more than in South Korea and Taiwan, which is probably likely.

# ? Sep 22, 2014 18:01

GlassEye-Boy: Jul 12, 2001

icantfindaname posted:

I don't think it's at all given that a democratic China would have kept and continued to oppress Xinjiang/Tibet/Inner Mongolia, or that the Nationalists wouldn't have given up power. I don't think enough information exists to make such a prediction, like with many things in China, and speculation is therefore useless at best.

At the same time I don't think the information really exists to think that the CCP won't give up power eventually. Even if it takes more than in South Korea and Taiwan, which is probably likely.

Taking away everything else the single fact that the Himalayas supply a huge part of China's water supply will guarantee that tibet will never be a independent state
.

# ? Sep 22, 2014 18:04

OXBALLS DOT COM: Sep 11, 2005; by FactsAreUseless; Young Orc

The demographic cehanges they're engineering mean that Tibetans and Uigurs are already minorities in their own homelands, and that's not even getting to the "job creation programs" and similar projects they're setting up to try and move then breed them out by targeting young women, etc..

Also I doubt a democracy will actually do anything to protect minority groups considering the average Han Chinese is already super racist and probably cheers every action the government takes w/r/t minorities.

# ? Sep 22, 2014 18:45

Miltank: Dec 27, 2009; by XyloJW

LeftistMuslimObama posted:

This is a bit off topic, but isn't that an incredibly arrogant thing for him to say? Doesn't that mean that he thinks that he, of all the Dalai Lamas that have ever been, was the one to finally reach enlightenment? Or is it one of those things that every Lama says and then the Panchen Lama just says "whoops, guess he was wrong, the new Dalai Lama is right over there"?

It is an attempt to delegitimize his state endorsed replacement when he dies. I am not very knowledgable about Tibetan Buddhism but I am fairly certain that the Dalai Lama reincarnates of his own volition in order to fulfill the role of spiritual leader. Someone please correct me if I'm wrong.

# ? Sep 22, 2014 18:55

Fall Sick and Die: Nov 22, 2003

LeftistMuslimObama posted:

This is a bit off topic, but isn't that an incredibly arrogant thing for him to say? Doesn't that mean that he thinks that he, of all the Dalai Lamas that have ever been, was the one to finally reach enlightenment? Or is it one of those things that every Lama says and then the Panchen Lama just says "whoops, guess he was wrong, the new Dalai Lama is right over there"?

The Dalai Lama is a Bodhisattva which means "he" achieved enlightenment a long time ago in a previous incarnation and he has chosen not to cease existing but rather to continue returning to Earth to show other people the path to enlightenment, which is considered a sacrifice on his part.

# ? Sep 22, 2014 19:02

RocknRollaAyatollah: Nov 26, 2008; Lipstick Apathy

The Dalai Lamas have always had that choice. The Dalai Lama has always been on the cusp of moving on to the next stage, hence why they're the Dalai Lama. There's historical precedence for it too so it's not like he's just making things up.

The Dalai Lama is also a more recent part of Tibetan culture and isn't integral to a Tibetan state within or without China. He's doing it to give more power to the secular government in exile and to take away the ability of China to claim the new Dalai Lama.

China by law has the power to control all reincarnation within China. So if you want to talk about assholes claiming cosmic power they have no right to, Zhongnanhai is right up your alley.

Edit: ^That is probably a bit more accurate description of the theological status of the Dalai Lama.

RocknRollaAyatollah fucked around with this message at 19:14 on Sep 22, 2014

# ? Sep 22, 2014 19:12

The MUMPSorceress: Jan 6, 2012; ^SHTPSTS; Gary’s Answer

Fall Sick and Die posted:

The Dalai Lama is a Bodhisattva which means "he" achieved enlightenment a long time ago in a previous incarnation and he has chosen not to cease existing but rather to continue returning to Earth to show other people the path to enlightenment, which is considered a sacrifice on his part.

I see, that makes more sense. He's basically boycotting reincarnation until Tibet is free.

RocknRollaAyatollah posted:

China by law has the power to control all reincarnation within China. So if you want to talk about assholes claiming cosmic power they have no right to, Zhongnanhai is right up your alley.

This makes me laugh uncontrollably.

# ? Sep 22, 2014 19:13

Shifty Pony: Dec 28, 2004; Up ta somethin'

CIGNX posted:

This has been said before, but it bears repeating; China can't do poo poo with its foreign reserves to deal with its debt crisis. Since the liabilities are ultimately denominated in RMB, using USD for an intervention would result in a bunch of companies and financial institutions going to the People's Bank of China looking to exchange their USD for RMB. This leads back to the government's original problem of trying to generate a bunch of RMB without causing other serious problems in the economy.

And it won't happen because China has been using the purchases to keep RMB low compared to USD. A bunch of USD floating around trying to buy RMB means the USD won't buy you as much in China and that is bad news for exporters.

# ? Sep 22, 2014 19:27

Ardennes: May 12, 2002

Shifty Pony posted:

And it won't happen because China has been using the purchases to keep RMB low compared to USD. A bunch of USD floating around trying to buy RMB means the USD won't buy you as much in China and that is bad news for exporters.

Granted, the question will the Chinese government expand the monetary supply through even more lending to state banks and local governments and simply flood the balance sheets like Japan did? It seems like that is for the most part their course of action so far.

That said, it is unclear if they would be any more successful than Japan was beyond maybe further increases in productivity.

Ardennes fucked around with this message at 20:09 on Sep 22, 2014

# ? Sep 22, 2014 20:03

namaste friends: Sep 18, 2004; by Smythe

Ardennes posted:

Granted, the question will the Chinese government expand the monetary supply through even more lending to state banks and local governments and simply flood the balance sheets like Japan did? It seems like that is for the most part their course of action so far.

That said, it is unclear if they would be any more successful than Japan was beyond maybe further increases in productivity.

http://online.wsj.com/articles/china-pboc-injects-81-billion-into-top-banks-1410914151

81 billion last week.

# ? Sep 22, 2014 20:12

Ardennes: May 12, 2002

Cultural Imperial posted:

http://online.wsj.com/articles/china-pboc-injects-81-billion-into-top-banks-1410914151

81 billion last week.

That seems to be their course of action so far, but it is difficult to tell its effectiveness considering the notorious nature of statistics. GDP growth may never go down below 7%, regardless of what happens.

# ? Sep 22, 2014 20:17

CIGNX: May 7, 2006; You can trust me

Ardennes posted:

Granted, the question will the Chinese government expand the monetary supply through even more lending to state banks and local governments and simply flood the balance sheets like Japan did? It seems like that is for the most part their course of action so far.

That said, it is unclear if they would be any more successful than Japan was beyond maybe further increases in productivity.

The increased lending isn't their solution to their debt crisis, precisely because increased lending is how they got into the debt crisis in the first place. The lack of actual risk assessment combined with the corrupt and political nature of lending by the state banks hasn't changed substantially since 2009, so I don't see how doing the exact same thing in 2014 will have completely opposite results. In other words, loans to unprofitable projects now can never pay back the loans to unprofitable projects from previous years. But, of course, this appears to be what the CCP thinks it can do for its debt crisis.

And this really is a product of factionalism and corruption in the CCP, in my uneducated opinion anyway. Any attempt to deal with the corruption that lead to this debt bubble would be a massive undertaking requiring the backing of prominent political factions in the CCP. But all of the political factions get their power in part from the money they earn through corruption. None of them would realistically give up this basis for political power, and there would be a lot of everyone-but-mine sort of thinking if they ever consented to genuine corruption fighting. Since political action in China is based on political consensus from these factions, nothing proactive or substantial will ever be done to deal with this debt crisis. At best this system is suited only to react to major crises, not prevent them. All the leadership can really do is stay the course of more lending and announce token changes for the purposes of domestic consumption.

# ? Sep 22, 2014 20:54

Fall Sick and Die: Nov 22, 2003

China's productivity has a lot more room to grow than Japan's though, for example they could put tiny holes in the bottom of all tea cups and remove beds from offices.

# ? Sep 22, 2014 22:05

RocknRollaAyatollah: Nov 26, 2008; Lipstick Apathy

Fall Sick and Die posted:

China's productivity has a lot more room to grow than Japan's though, for example they could put tiny holes in the bottom of all tea cups and remove beds from offices.

It's hard for people to work if you take away their desks. Failing that, abolish unofficial siesta time.

China will never be able to up its productivity right now because that would require the country to have realistic hiring and employment policies. The system isn't designed for quality, it's designed for quantity, and I would wager it's topped or topping out. I would honestly say their best bet is hold through the recession, build up the rural areas, and wait for the population drop that's coming.

# ? Sep 23, 2014 04:42

Daduzi: Nov 22, 2005; You can't hide from the Grim Reaper. Especially when he's got a gun.

RocknRollaAyatollah posted:

I would honestly say their best bet is hold through the recession, build up the rural areas, and wait for the population drop that's coming.

How feasible is that, though, for a government whose sole source of actual legitimacy is "we'll make you richer"?

# ? Sep 24, 2014 08:50

Arglebargle III: Feb 21, 2006

RocknRollaAyatollah posted:

China will never be able to up its productivity right now because that would require the country to have realistic hiring and employment policies. The system isn't designed for quality, it's designed for quantity, and I would wager it's topped or topping out. I would honestly say their best bet is hold through the recession, build up the rural areas, and wait for the population drop that's coming.

Yeah what does any of this even mean.

# ? Sep 24, 2014 12:25

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# ? May 11, 2024 06:36

RocknRollaAyatollah: Nov 26, 2008; Lipstick Apathy

Arglebargle III posted:

Yeah what does any of this even mean.

China, as well as the other countries in East Asia, pad their employment statistics. This leads to inefficiency because businesses over hire and do not use many of the automation techniques most post industrial societies use. Automation and greater integration of computers would streamline production and probably up productivity. It would mean less jobs and corruption though so it will never happen until the population begins to decline. This is all theoretical too because Japan still operates on this model despite it being pointed out that it's not going to work anymore. Experts are saying the population should drop below 1 billion by 2050 but I've also read that China doesn't want this to happen for some reason. A net population drop is a good thing for China and would only increase its production levels.

If China can stay afloat financially and continue to expand infrastructure into the regions that have almost nothing, the rural poor have a chance at education and a job other than being unskilled labor. China is already reaching the point where factory labor is becoming "too expensive" and that's a sign that China is transitioning. If those areas don't get brought up, those people will be left behind even more than they already have been. What jobs will the rural poor have if the world is becoming less reliant on China for factory labor?

Daduzi posted:

How feasible is that, though, for a government whose sole source of actual legitimacy is "we'll make you richer"?

I would argue that the greater source of legitimacy is protection from external threats like the USA, Japan, South Korea, and anyone else the state media wants to present as a threat. Once the PLA loses to an external or internal threat, the CCP is hosed. Economic problems can be blamed on scapegoats and Xi is cleaning out the party as it is. If the economy tanks tomorrow, Xi will have people to blame and they'll all be disposed of before people can question it.

# ? Sep 25, 2014 02:43

The Something Awful Forums > Discussion > Debate & Discussion > China Economy Megathread

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