- computer parts
- Nov 18, 2010
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PLEASE CLAP
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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.
That's not padding employment, that's doing what's traditionally been the cheapest way to make a product. Automation is actually really really expensive and annoying (especially when major infrastructure like the internet didn't really exist in large parts of the country 7 years ago) and commonly it's actually cheaper to just stick with people. It's like saying that the US pads employment statistics by using wait staff instead of tablets for order processing/payment.
It also sounds like you're using a weird definition of "efficiency". Something can be incredibly profitable and still have a low revenue:# workers ratio, and something can have a high revenue:worker ratio and be barely breaking even because you spent $20 million on machines.
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Sep 25, 2014 02:53
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- Adbot
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ADBOT LOVES YOU
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May 11, 2024 11:43
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- Arglebargle III
- Feb 21, 2006
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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.
It's because of the inverted population pyramid and the lack of social services. There will be old people begging on the streets. That's not hard to understand.
I was more interested in what you even mean by "hold through the recession" and "wait for the population drop." Like, are they just gonna give up and say "okay recession, you won, we surrender?" Is there something they should be holding back until after the population has fallen? That didn't really make any sense.
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Sep 25, 2014 03:20
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- Mc Do Well
- Aug 2, 2008
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by FactsAreUseless
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China needs to up its economic game and inflict late stage capitalism on its people to improve quality
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Sep 25, 2014 03:59
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- VideoTapir
- Oct 18, 2005
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He'll tire eventually.
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It also sounds like you're using a weird definition of "efficiency". Something can be incredibly profitable and still have a low revenue:# workers ratio, and something can have a high revenue:worker ratio and be barely breaking even because you spent $20 million on machines.
That gets cleared up when you go bankrupt and sell all the equipment to a new company (yours?) for pennies on the dollar.
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Sep 25, 2014 04:30
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- FrozenVent
- May 1, 2009
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The Boeing 737-200QC is the undisputed workhorse of the skies.
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That's not padding employment, that's doing what's traditionally been the cheapest way to make a product. Automation is actually really really expensive and annoying (especially when major infrastructure like the internet didn't really exist in large parts of the country 7 years ago) and commonly it's actually cheaper to just stick with people. It's like saying that the US pads employment statistics by using wait staff instead of tablets for order processing/payment.
It also sounds like you're using a weird definition of "efficiency". Something can be incredibly profitable and still have a low revenue:# workers ratio, and something can have a high revenue:worker ratio and be barely breaking even because you spent $20 million on machines.
Plus the cost of labor is so cheap in China that it doesn't make sense to automate. Why would you buy a $350 Roomba if you could hire a maid for $20 a month?
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Sep 25, 2014 05:02
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- Daduzi
- Nov 22, 2005
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You can't hide from the Grim Reaper. Especially when he's got a gun.
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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.
I think the government is trying to make protection from external threats into a bigger source of legitimacy, but I'm not seeing much evidence on the ground that people are more concerned about it than the economy. It's a lot more abstract than paying shitloads for your only child's high school and college education only for them to be unable to get a job.
I think they probably will try to pull the scapegoat card when the economy goes down, but I can't see it being that successful. They've tried the same strategy with the various food scares, after all, but people still blame the government as a whole for them.
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Sep 25, 2014 05:39
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- OXBALLS DOT COM
- Sep 11, 2005
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by FactsAreUseless
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Young Orc
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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?
Honestly, you don't seem to have a firm grasp of the situation or economics in general. The first tip-off being your weird overgeneralization "the other countries in East Asia," the second being you not seeming to understand what the term padding statistics means, and the third being the ambiguous, non-standard use of the term "inefficiency."
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Sep 25, 2014 05:51
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- VideoTapir
- Oct 18, 2005
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He'll tire eventually.
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Plus the cost of labor is so cheap in China that it doesn't make sense to automate. Why would you buy a $350 Roomba if you could hire a maid for $20 a month?
Because a Roomba isn't going to throw away paperwork you've left lying around thinking it's garbage.
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Sep 25, 2014 06:06
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- namaste friends
- Sep 18, 2004
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by Smythe
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hahaha china is going to burn
http://www.ft.com/intl/cms/s/0/33b9...t#axzz3EIj1CLp7
quote:
Chinese crowds took to the streets in four northern cities this week after the collapse of an underground fundraising scheme in which they had invested, highlighting potential for social unrest as the country’s economic growth slows.
One of Beijing’s biggest fears is the failure of fundraising schemes could trigger street protests by upset middle-class investors that could destabilise the ruling Communist party’s grip on power.
Protesters carrying red banners marched in the Hebei cities of Zhangjiakou, Cangzhou, Langfang and Hengshui on Monday.
Hundreds thronged the streets in front of government offices in each city, demanding their money from the Huangjinjia group https://www.hjjgold.com which operated branches in cities throughout Hebei province.
Restrictions on normal bank credit to certain industries have allowed loan sharks and unregulated investment pools to flourish in provincial China.
But the slowing growth and a poor outlook for mining and real estate – the two sectors into which much of the money has flowed – have cause some funding schemes to freeze up.
Hebei province, which rings Beijing, has been ground-zero for central government efforts to shut the polluting heavy industries that are the primary local employers and taxpayers.
The provincial government attempted to graduate that campaign into greater fiscal support as the local economy reels. Its first-half economic growth ranked last among all the Chinese provinces, at 5.8 per cent.
International investors’ attention has been more focused on the high-interest wealth management products marketed to wealthy depositors by Chinese banks and trust companies, because of the systemic risks they pose to the banking system.
But especially in the provinces, pawn shops, auto loan companies and jewellery shops can all front for cash-raising operations to channel money into high-interest, black market loans, with even less regulation.
Huangjinjia produced a variety of products ranging from gold and silver bars, to Q-tips to cooking oil. The main attraction at its gold shops seemed to be wealth management products offering annual interest rates of 7.5 per cent to 11.6 per cent on one-month deposits.
Local media estimated that roughly $500m in deposits was missing.
Xiao Xue, Huangjinjia’s chief executive, travelled with the business delegation that accompanied Xi Jinping to the Netherlands this spring, as the representative of an agricultural firm that she also heads, according to the company website.
Her company’s demise is not the only sign of economic weakness in Hebei province. On Monday, Chinese media reported that real estate developers facing a collapse in housing prices had absconded after raising $1.5bn in Handan, a large industrial city in the south of Hebei.
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Sep 25, 2014 06:09
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- My Imaginary GF
- Jul 17, 2005
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by R. Guyovich
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I have a princeling friend whose father works in a provincial office and has input on what documents to forward to Beijing. Standard rule of thumb I use for calculating Chinese GDP rates is to take 6 off any number reported by PRC.
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Sep 25, 2014 06:15
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- My Imaginary GF
- Jul 17, 2005
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by R. Guyovich
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Thomas Friedman, is that you?
We met in Zanzibar: he, on safari, me, on business.
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Sep 25, 2014 06:24
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- Warcabbit
- Apr 26, 2008
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Wedge Regret
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Well, I've been predicting this for years. Madoff was a piker.
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Sep 25, 2014 12:25
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- Arglebargle III
- Feb 21, 2006
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Well this isn't surprising. 11% returns? That guy was always going to run with the money.
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Sep 25, 2014 12:44
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- TheBalor
- Jun 18, 2001
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Now, before people go too crazy, wouldn't the deposal of the CPC, or at least breaking of their monopoly on power, be overall very beneficial for China? With real competition in the halls of power, there's a reason to go all-out against corruption, raise civil servant salaries, cut waste, etc. Everyone won't be holding each other's dicks at the highest level.
I've always thought that a China with its corruption pared back to US levels would be even stronger than it is right now.
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Sep 25, 2014 12:55
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- Fangz
- Jul 5, 2007
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Oh I see! This must be the Bad Opinion Zone!
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Now, before people go too crazy, wouldn't the deposal of the CPC, or at least breaking of their monopoly on power, be overall very beneficial for China? With real competition in the halls of power, there's a reason to go all-out against corruption, raise civil servant salaries, cut waste, etc. Everyone won't be holding each other's dicks at the highest level.
I've always thought that a China with its corruption pared back to US levels would be even stronger than it is right now.
Uh, no, democratic China would probably fracture instantly between the rich ultracapitalist cities and the countryside who are still dreaming of Cultural Revolution Part 2. Also it's a hell of a big ask for the Chinese institutions of power to deliver free and fair elections.
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Sep 25, 2014 13:32
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- dilbertschalter
- Jan 12, 2010
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Uh, no, democratic China would probably fracture instantly between the rich ultracapitalist cities and the countryside who are still dreaming of Cultural Revolution Part 2. Also it's a hell of a big ask for the Chinese institutions of power to deliver free and fair elections.
The second point you raise is a very real problem, the first is just CPC style scaremongering.
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Sep 25, 2014 13:59
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- computer parts
- Nov 18, 2010
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PLEASE CLAP
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The second point you raise is a very real problem, the first is just CPC style scaremongering.
There's an urban-rural divide pretty much everywhere (there certainly is in the US and parts of Europe), it's just especially dangerous in China because there's about equal numbers of each group and there's an institutional bias against the rural people (hukou et all).
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Sep 25, 2014 14:06
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- namaste friends
- Sep 18, 2004
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by Smythe
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http://www.bloomberg.com/news/2014-09-25/china-foreign-exchange-watchdog-finds-10-billion-in-fake-trade.html
quote:
China uncovered almost $10 billion in fraudulent trade nationwide as part of an investigation begun in April last year, including many irregularities in the port of Qingdao, the country’s currency regulator said today.
Companies “faked, forged and illegally re-used” documents for exports and imports, Wu Ruilin, a deputy head of the State Administration of Foreign Exchange’s inspection department, said at a briefing in Beijing. The trades have “increased pressure from hot money inflows and provided an illegal channel for criminals to move funds,” Wu said, adding that those involved in such fraud would be severely punished.
“Some companies used the trade channel to bring in hot money,” said Zhou Hao, a Shanghai-based economist at Australia & New Zealand Banking Group Ltd. SAFE’s investigation “will likely further cool down hot money inflows and commodity imports could slow as banks will likely conduct more careful checks on documentation.”
Industrial metals fell and the yuan weakened after the announcement. Copper slid as much as 0.5 percent and all main metals on the London Metal Exchange declined. Chinese banks have about 20 billion yuan ($3.3 billion) of exposure to companies caught up in a loan fraud probe in Qingdao, two government officials told Bloomberg in July.
SAFE identified the fake trade invoicing as part of a crackdown on the practice in 24 cities and provinces, Wu said. The news raised speculation that metals supplies may increase as stockpiles tied up in financing deals come back on the market.
Higher Rates
The People’s Bank of China has built up the world’s largest foreign-exchange reserves as it bought dollars to limit the yuan’s gains with the nation’s higher interest rates drawing inflows. China’s benchmark 10-year sovereign yield declined 51 basis points, or 0.51 percentage point, this year to 4.04 percent on Sept. 24. This compares with 2.56 percent for similar-maturity Treasuries.
After almost uninterrupted annual gains since 2005 that saw the yuan rise 33 percent versus the dollar, speculators had come to see China’s currency as a one-way trade, leaving the world’s second-largest economy vulnerable to a sudden shift in investor sentiment. The PBOC guided the currency 2.4 percent lower in the first half of this year to deter such bets. Yuan positions at Chinese financial institutions, which typically rise as the monetary authority sells yuan to limit gains, fell last month by 31.1 billion yuan.
Trade Surplus
The currency rose to 6.1283 per dollar on Sept. 10, the strongest level since March, days after the nation posted a record $49.84 billion trade excess for August. The yuan fell 0.13 percent to 6.1458 in offshore trading in Hong Kong today, while 12-month non-deliverable forwards dropped 0.2 percent to 6.2415. The spot rate in Shanghai lost 0.05 percent to 6.1375.
Inventories of copper in warehouses linked to exchanges such as the LME and Comex will rise over the next six months in part because of fewer financing deals in China, Goldman Sachs Group Inc. said in a Sept. 23 report. Banks, trading companies and warehouse operators have been checking their exposure to metals stored at Qingdao and lenders have reigned in commodity financing this year.
Copper for delivery in three months fell as much as $31 to $6,711 a ton on the London Metal Exchange. Aluminum was down 0.4 percent at $1,966 a ton.
“Qingdao is not over,” said Chae Un Soo, a metals trader at Korea Exchange Bank Futures Co. The news will “definitely” impact demand for metals tied up in financing deals, he said.
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Sep 25, 2014 16:17
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- dilbertschalter
- Jan 12, 2010
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On what basis do you think that suggesting tremendous ideological and economic division would lead to political divisiveness is just scaremongering?
In case there is confusion, I am not saying that Shanghai will seceed. I am saying that we would get a turbo charged version of the rural-urban political divide that defines most democracies, and that conflict would dominate instead of stuff like sorting out corruption.
"fracture sharply" implies some sort of dramatic crack-up. Obviously the rural-urban divide would be a big issue, but many countries are quite intensely divided and manage to be democratic all the same (democratic government is, in fact, a highly effective means of resolving grievances/divisions between competing regions). As for "sorting out" corruption, the corruption isn't something that is actually tackled or reduced by "anti-corruption campaigns" of that sort we're seeing now- rather, it depends on the existence of a rule law and of general trust in government, both of which are awfully non-existent in the current Chinese system.
quote:There's an urban-rural divide pretty much everywhere (there certainly is in the US and parts of Europe), it's just especially dangerous in China because there's about equal numbers of each group and there's an institutional bias against the rural people (hukou et all).
Which is itself a direct product of an authoritarian government (wanna-be totalitarian at the time) trying to enforce social stability, not something that was or is destined to exist forever because of immutable conditions.
dilbertschalter fucked around with this message at 16:47 on Sep 25, 2014
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Sep 25, 2014 16:44
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- Fangz
- Jul 5, 2007
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Oh I see! This must be the Bad Opinion Zone!
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"fracture sharply" implies some sort of dramatic crack-up. Obviously the rural-urban divide would be a big issue, but many countries are quite intensely divided and manage to be democratic all the same (democratic government is, in fact, a highly effective means of resolving grievances/divisions between competing regions). As for "sorting out" corruption, the corruption isn't something that is actually tackled or reduced by "anti-corruption campaigns" of that sort we're seeing now- rather, it depends on the existence of a rule law and of general trust in government, both of which are awfully non-existent in the current Chinese system.
I never used the word sharply, I said instantly. You are going to have give me some examples about how democratic government is "in fact, a highly effective means of resolving grievances/divisions between competing regions", when it seems the recent history of democracy in producing solutions for divided countries is *horrible*. See e.g. Ukraine, Thailand, Venezuela, Iraq ....
Globally speaking, Chinese trust in government is actually anomalously high:
http://www.theguardian.com/news/datablog/2012/jan/24/trust-in-government-country-edelman
(More recent version:
http://www.edelman.com/insights/intellectual-property/2014-edelman-trust-barometer/trust-around-the-world/
)
In case we go there, I'm not saying democracy sucks lol, but I am saying that democracy is falsely portrayed as a magic bullet to all of a country's ills, that democracy is an inherently unstable situation under some conditions and that making democracy work in China is going to take a hell of a lot of socio-economic preparation.
Fangz fucked around with this message at 17:23 on Sep 26, 2014
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Sep 26, 2014 17:08
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- caberham
- Mar 18, 2009
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by Smythe
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Grimey Drawer
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Can someone please tell me more about India? It is the world's largest democracy after all.
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Sep 27, 2014 02:50
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- pentyne
- Nov 7, 2012
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Can someone please tell me more about India? It is the world's largest democracy after all.
Rampant corruption on a level that makes China look modest in some respects.
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Sep 27, 2014 03:08
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- My Imaginary GF
- Jul 17, 2005
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by R. Guyovich
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Rampant corruption on a level that makes China look modest in some respects.
The difference between India and China, I find, is a difference in press freedom and honesty of reporting.
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Sep 27, 2014 03:17
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- FrozenVent
- May 1, 2009
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The Boeing 737-200QC is the undisputed workhorse of the skies.
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India's basically China without the veneer of propaganda, and the ridiculous growth rate fueled by a command economy.
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Sep 27, 2014 03:26
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- My Imaginary GF
- Jul 17, 2005
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by R. Guyovich
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India's basically China without the veneer of propaganda, and the ridiculous growth rate fueled by a command economy.
I've dealt with some IACP arms contracting, from what I've dealt with, I somewhat disagree on the level of India's command economy in your assessment.
E:
\/\/\/\/ For all its issues, problematic Indian policies are correctible through their current systems given sufficient will and temperance for fortitude. China's? In an oft repeated phrase by the Chinese princesses I've dealt with on a personal level, "I don't think so......"
My Imaginary GF fucked around with this message at 03:58 on Sep 27, 2014
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Sep 27, 2014 03:50
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- Femur
- Jan 10, 2004
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I REALLY NEED TO SHUT THE FUCK UP
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It seems to me, India is not uniquely hosed( ), but will unlikely solve their problem; they simply don't pay taxes, so there is no concentrated investment in their future at all.
They are like the US in this regard, but are unable to practice the expansionism required; thus are more hosed than most.
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Sep 27, 2014 03:55
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- computer parts
- Nov 18, 2010
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PLEASE CLAP
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There has been a Khalistan independence movement for decades, and has resulted in some fairly terrible acts of terrorism of the years.
There's also a bunch of Maoists camped out in large parts of the country.
India's basically China without the veneer of propaganda, and the ridiculous growth rate fueled by a command economy.
India's growth rate is still pretty massive it's just a lot less controlled (the hukou prevents at least some of the rural residents from rushing to the cities but in India you have massive deficiencies in services).
e: Jesus Christ.
quote:Percentage Urban
2011 2025 2050
50.6 65.4 77.3 China
31.3 37.2 51.7 India
computer parts fucked around with this message at 06:31 on Sep 27, 2014
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Sep 27, 2014 06:21
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- namaste friends
- Sep 18, 2004
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by Smythe
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https://www.ft.com/intl/cms/s/0/79e...ion=intl#slide0
quote:
Macau’s high-rolling casinos suffer amid China anti-graft storm
When Xi Jinping visits Macau in December to celebrate the 15th anniversary of Portugal returning its colony to China, local officials will greet the Chinese leader with huge fanfare.
However, the warm welcome will mask concerns about the impact that his anti-corruption campaign is having on the territory’s lifeblood: casinos.
Shares in the six big casino operators have plunged 27-38 per cent this year because of the slowing Chinese economy, tighter immigration rules and measures to tackle money laundering. But experts say the biggest factor has been the anti-corruption push that is forcing high-rolling Chinese “VIP” gamblers to stay at home.
“The ferocity of the anti-corruption drive has scared a lot of people,” says one top casino executive, adding that rich Chinese are nervous about flaunting their cash.
Over the past decade, the huge numbers of Chinese punters visiting Macau – the only place in China that allows casinos – have turned the territory into a gaming Mecca with seven times the revenues of Las Vegas.
The soaring growth helped the tiny 28 sq km enclave of 600,000 people overtake Switzerland last year to become the fourth richest territory per person in the world.
Until recently the only pause in the dizzying rise was briefly in 2009 after the global financial crisis.
But gaming revenues have fallen each month from June, a worrying sign for the six operators with casino licences – Sands China, Wynn Macau, Melco Crown, SJM, Galaxy and MGM China – who are planning big expansions in the next few years in an area called the Cotai strip.
Macau’s gaming revenues have risen by an average of 30 per cent annually over the past decade, transforming a place once known for triad warfare into a wealthy entertainment hub that hosts stars such as Justin Bieber and the Rolling Stones.
However, the territory is in danger of seeing the first annual fall in gaming revenues since it abandoned a monopoly system in 2002. CLSA, one of the most bullish brokers on Macau, expects 2014 revenues to fall 1 per cent year-on-year, as casinos brace themselves for the Chinese president’s visit.
“The big dogs in Beijing are coming to Macau and some people don’t like gambling when officials are around,” says CLSA’s Aaron Fischer, who thinks Macau will face a bumpy ride for six months.
The anti-corruption campaign has also hit “junket” operators who have traditionally facilitated the industry by bringing rich Chinese to Macau and providing the credit lines necessary to circumvent currency controls. One junket executive says Macau is facing “very major issues” and that the impact “will be long-term”.
Mr Xi’s anti-graft and austerity drives have targeted everything from pricey shark fin soup to top Communist party officials. Signs over the past year that he is aiming for Zhou Yongkang, a former member of the ruling Politburo Standing Committee, sent a signal that nobody was immune.
“The trickle-down effect is that some of the big players have decided that it is not going to be good to be seen playing in Macau,” says David Green, a Macau gaming expert at Newpage Consulting.
Macau is split into two main segments. VIP players generally have to buy HK$1m ($129,000) worth of chips to play baccarat – the favourite “game of fortune” in Macau – at the private high-roller rooms. The mass market is roughly split between “premium mass” where punters wager a minimum of HK$2,000 ($260) per hand, and the rest of the market where minimum bets range from HK$500 to HK$2,000.
Growth in the mass market has slowed because of the Chinese economy and rules that make it harder to abuse a visa-free system that allows Chinese to use Macau as a transit point. It has also been hit by a clampdown on using UnionPay, China’s biggest credit card company, to dodge currency controls.
But the pain has been much worse in the VIP market, which accounts for more than two-thirds of revenues. While all casinos are being hit, Mr Green says Stanley Ho’s SJM and Galaxy are the most exposed as they have 50 per cent of the VIP market.
Wynn Macau, the casino owned by Steve Wynn, relies more on VIP clients than its non-Chinese competitors – including Sheldon Adelson’s Sands China and James Packers’ Melco Crown – but Mr Green said it would suffer less than SJM and Galaxy as its gambling operations tend to be very profitable across tables.
In May, Mr Wynn said he was “sure the new president of China is going to make a very important impact on China . . . but right here in Macau, things seem the same”. Last week, he tweaked his tune, saying that VIP business revenues had shrunk. He said he was not concerned and refused to say whether 2014 would see a fall.
While the casinos try to respond to the fall in VIP business – which will accelerate a greater push into mass market gambling and entertainment favoured by the Macau government – signs of a slowdown have been emerging slowly.
Galaxy in June blamed a 7 per cent year-on-year fall in earnings before interest, tax, depreciation and amortisation at its StarWorld Macau casino on “the worst VIP luck quarter in history”. The casino executive says he stopped giving some Chinese gamblers credit three months ago, and adds that some big junkets pulled back from lending to rich Chinese even earlier.
The executive says the junkets are reluctant to lend to powerful Chinese tycoons because “you just don’t know who is next” to enter the anti-graft crosshairs.
Some brokers, such as Deutsche Bank, think that Macau could also face weaker mass market growth at a time when labour costs are rising. But the executive says China will remain a sound source of gamblers as the middle class grows. Macau government data show that even as VIPs abandon the enclave, the number of tourists has been increasing at an average monthly rate of 8 per cent.
“See the forest, not just the trees with the branches,” says the casino executive. “It will be mass leading VIP after it turns round.”
Falling number of VIP gamblers hits junket operators
While China’s anti-corruption campaign is hurting the Macau casino operators, the biggest losers are many of the so-called “junket” operators who help bring rich Chinese punters to the gambling haven.
Falling numbers of VIP gamblers – roughly defined as players who bet more than HK$1m ($128,000) in private rooms – are creating cash flow problems for many smaller junket operators in Macau. One casino executive said 30 of the more than 200 licensed junkets in the Chinese territory had gone bust over the past year.
The squeeze threatens to upend a business model that has existed in Macau in various forms for decades. According to a paper by two Macau experts, Wang Wuyi and the late William Eadington, in the 1930s, agents called jin ke – Chinese for “introduce guest” – scoured mainland China for potential gamblers who could help support a growing population of Chinese war refugees in Macau.
However, the jin ke have since been subsumed into a more sophisticated model where agents in China bring gamblers to junket operators – or VIP promoters – in Macau. In most cases, the casinos provide private rooms for the junket operators to run baccarat games under a profit-sharing arrangement.
One junket executive said the industry was being shaken out by a combination of the slowing Chinese economy and the anti-corruption campaign. He said the weak real estate market was hurting the junkets because they have tended to rely on property as collateral for extending credit to gamblers.
“Even though [punters] give good property, most junkets will not take them,” said the executive.
But he said the slowdown would be “good for Macau” because it would bankrupt less reputable operators with poor credit systems out of business. “People will be more cautious in how they give credit,” he said.
The casino executive said over the past year junkets were being asked by agents for twice the traditional 15-day period that gamblers have to pay their debts – as the slowing economy made people less able to cough up after losing in Macau.
Karen Tang of Deutsche Bank wrote recently that smaller junkets were shutting as tight cash flow meant they could not afford to give agents more time, which has resulted in the bigger junkets gaining market share.
Steve Vickers, chief executive of a business risk group, said the shrinking junket market was “not the end of Macau” but “the beginning of the end of the system where one per cent of the punters produce 80 per cent of the net profits”.
The US-owned casinos have long strived to distance themselves from suggestions that the junkets retain links to the triads – organised crime gangs who became notorious in the 1990s as they slugged it out on the Macau streets over VIP rooms.
“The larger junkets that remain will be acceptable to Beijing and have a potential collar on them to assist in capital control,” said Mr Vickers. “The bigger – US – casinos may decide the junket model has had its day.”
The casino executive said junkets were under orders from Beijing to not take physical assets as collateral, and that this and other pressures meant that there would be fewer than 10 junkets left in two years. “Junket is a dying trade,” he said.
Additional reporting by Julie Zhu
Twitter: @AsiaNewsDemetri
loving 
gently caress china
namaste friends fucked around with this message at 18:51 on Sep 27, 2014
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Sep 27, 2014 18:44
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- My Imaginary GF
- Jul 17, 2005
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by R. Guyovich
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I can't help but read this article as also describing the rest of PRC's economy.
\/\/\/\/ I can believe that.
My Imaginary GF fucked around with this message at 19:37 on Sep 27, 2014
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Sep 27, 2014 18:56
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- namaste friends
- Sep 18, 2004
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by Smythe
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quote:Rumors Engulfing China's Central Bank Signal Beijing Turmoil
On Wednesday, the Wall Street Journal reported that Chinese leaders are considering replacing Zhou Xiaochuan, the highly respected governor of the People’s Bank of China, the country’s central bank. The move, according to the paper, would raise “questions over how quickly and deeply Beijing wants to remake the economy amid slowing growth.” The reporting, even if inaccurate, suggests that infighting in senior Communist Party circles is intensifying.
Zhou, the longest-serving chief of the central bank and “the face of the Chinese economy to markets globally,” has been the subject of various bouts of rumormongering during his tenure of almost 12 years. Despite passing the mandatory retirement age of 65 last year, he was awarded a third term, a sure sign of political strength then.
Nonetheless, persistent stories of his impending firing have circulated in Beijing in recent weeks. The Journal’s much-discussed article not only brought the matter out into the open but also seemed to confirm the suspicion that Zhou would be forced out soon. The paper, relying on unnamed “PBOC officials and advisers,” stated that Guo Shuqing “unexpectedly and unusually” attended a central bank monetary policy meeting on September 16. If true, Guo, once the country’s top securities regulator and now governor of Shandong province, looks to be the “top contender” to replace Zhou. Moreover, it appears from the Journal’s reporting that the replacement will occur soon, perhaps next month.
Just about everyone sees Zhou’s troubles as the result of regressive elements targeting a stronghold of economic reform. Cornell University’s Eswar Prasad, for instance, believes his departure “could suggest a subtle shift in the balance of power between reformist and reactionary forces, with the momentum for change being eroded by the loss of growth momentum in the economy.”
As Prasad suggests, China appears to be sliding into a period where anti-reformers have the upper hand. At the Party’s Third Plenum last November, Xi Jinping, the country’s newish ruler, unveiled an ambitious reform agenda. Since then, however, only a few elements of the plan have been implemented.
The failure to put in place his program calls Xi’s reformist credentials into question. Moreover, since the Third Plenum he has taken the country backward with his prolonged attack on foreign business, his excessive reliance on stimulus, and his increasing subsidization of state enterprises. On balance, therefore, Xi’s time at the top has been marked by the reversal of reform.
And in the last year, Zhou seems to have lost clout as Chinese leaders rejected his most important initiatives. For example, the State Council, to which Zhou reports, essentially spurned his call for the removal of caps on bank deposit rates. In both March and July of this year, Zhou predicted that the central government would remove the caps within two years, but the State Council in July would only say that the change will be “orderly,” in other words, only sometime in the indefinite future. Analysts correctly called this a public rebuke of the central bank chief.
Even when Zhou has been able to implement reforms since the Third Plenum, they have been inconsequential. Take, for instance, the widening of the trading band for the renminbi this March. The increase in the range from 1% from the daily reference midpoint to 2%, is meaningless because Zhou’s central bank each trading day fixes the midpoint and through various means ensures that the currency stays close to that mark. Long-term movements in the renminbi are still directed from top leaders, with political interference increasing this year to drive its value down.
Furthermore, Zhou seems to be on the losing end when it comes to what is certainly the most important issue of the day for him, monetary relaxation. To his great credit, Zhou has resisted even more accommodative policies, believing that bigger injections of cash into the economy would trigger a new round of speculation.
Yet Zhou’s restrictive stance has only been a holding action at best. In fact, the central bank in recent weeks has had to relent with, among other moves, the injection in the middle of this month of 500 billion yuan ($81.4 billion) into the country’s five largest banks. And with money supply and debt growing at double-digit rates while the economy is in fact expanding only in the low single digits, central bank policies cannot be called “tight.”
So in this environment it does not much matter whether Zhou goes or stays. His policy recommendations, unfortunately, are for the most part ignored.
The mystery, therefore, is why senior leaders would even think of replacing Zhou, thereby creating doubt at home and around the world in the soundness of Chinese economic policy. After all, any switch from Zhou to Guo would probably not have much practical effect. “If Guo were to replace him, I wouldn’t expect much change in Chinese policy,” said Nicholas Lardy of the Peterson Institute to Bloomberg. “Guo Shuqing has very similar strong reformist credentials as Governor Zhou.” And as the Economist pointed out, “If the Chinese government had suddenly gotten cold feet about financial reform, Mr. Guo would be an odd choice as Mr. Zhou’s replacement.”
The Wall Street Journal, citing “Party officials with knowledge of the plans,” notes that the “discussions” about Zhou’s fate “occur as Mr. Xi, now two years in office, tries to place more allies into top positions in the government, military and Communist Party.” Whether Xi is behind the movement to dump Zhou or not, the PBOC chief’s troubles point to worsening political turbulence in Beijing. Either Zhou is political roadkill or there is an organized campaign to dump him, and in either case internecine warfare erodes the ability of the Chinese government to function. As a result of the turmoil, long-needed—and long-delayed—reform initiatives will undoubtedly go unimplemented this year and maybe next.
Zhou’s removal would undermine the Chinese economy, but when ambitious figures struggle, such considerations become unimportant.
Say what you want about Gordon Chang but it's a pretty big deal to purge your central banker.
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Sep 28, 2014 23:37
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- Zohar
- Jul 14, 2013
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Good kitty
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Yeah, the rumours about purging Zhou are something I've heard about already and I suspect they're going to be realised. I've never been that convinced that Xi is particularly invested in economic reform. It's totally obvious that he's not interested in political reform (at least in the sense that Western liberals assume), and it seems kind of strange for that reason alone that he'd really be gung-ho about a major liberalisation of the economy. So now that he's politically consolidated it's not at all surprising that he'd renege on whatever promises he made in that regard when he became leader.
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Sep 28, 2014 23:46
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- namaste friends
- Sep 18, 2004
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by Smythe
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http://qz.com/272888/chinas-slowing-down-fast-here-are-the-countries-that-will-be-hit-hardest-and-those-that-will-be-celebrating/
quote:
The secret lies in its economic model, which creates growth mainly through building and manufacturing goods to export. The Chinese government has subsidized this growth by rigging interest rates to make loans for (mostly state-owned) companies cheap, transferring wealth from savers to borrowers. (Japan used a similar model; for a deeper understanding, see this post.) One way to observe this is to compare income and GDP; even though wages have risen quickly, GDP has grown even faster—meaning the state is taking a bigger cut of China’s output than households are. Worse, because the government keeps the capital account closed, households have lousy investment options.
The constant struggle to preserve wealth inclines many households to save—typically for things like medical expenses, education, and retirement—rather than consume. This is why at 34%, China has possibly the lowest consumption rate in the world.
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Sep 29, 2014 18:46
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- Adbot
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ADBOT LOVES YOU
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May 11, 2024 11:43
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- namaste friends
- Sep 18, 2004
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by Smythe
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So how exactly did Japan make it so much further on this model before imploding? I mean China is still significantly poorer than Japan was in 1990, what happened?
I think we're waiting for that part of the story to be written. At least with the so called lost decade, China is just about to enter that phase.
Some people argue that the lost decade wasn't really a lost decade because individual income kept increasing while GDP stagnated.
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Sep 29, 2014 21:27
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Sep 25, 2014 02:53
