China Economy Megathread

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Nintendo Kid: Aug 4, 2011; by Smythe

Xibanya posted:

Indians will complain about how every time they call customer service they'll get "Manish" from "Bangalore" who is obviously Chad from Phoenix.

If China's economy craters in the next decade, what consequences will that have for the American economy? Will it hamper infrastructure development in places like Tanzania?

When China's economy craters, it will probably greatly reduce real estate pressure in a bunch of North American cities as the biggest effect on America.

# ? Apr 14, 2015 16:42

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# ? May 12, 2024 22:40

Fojar38: Sep 2, 2011; Sorry I meant to say I hope that the police use maximum force and kill or maim a bunch of innocent people, thus paving a way for a proletarian uprising and socialist utopia

also here's a stupid take
---------------------------->

People talk about how the Chinese and American economies are symbiotic when they aren't. It's more of a case of Americans farming Chinese labour and they'll move on to another farm once it craters.

# ? Apr 14, 2015 18:14

icantfindaname: Jul 1, 2008

Xibanya posted:

If China's economy craters in the next decade, what consequences will that have for the American economy? Will it hamper infrastructure development in places like Tanzania?

None, and not really

RE: Third world infrastructure, remember most of it isn't actually useful for the host countries, it's built 100% for the purpose of resource extraction by Chinese corporations. It's like the infrastructure built by classical European colonial governments. Most of it doesn't even employ native workers, they bring in workers from China and run it as a self-contained thing

icantfindaname fucked around with this message at 18:42 on Apr 14, 2015

# ? Apr 14, 2015 18:21

Xibanya: Sep 17, 2012; Clever Betty

icantfindaname posted:

None, and not really

RE: Third world infrastructure, remember most of it isn't actually useful for the host countries, it's built 100% for the purpose of resource extraction by Chinese corporations. It's like the infrastructure built by classical European colonial governments. Most of it doesn't even employ native workers, they bring in workers from China and run it as a self-contained thing

For what it's worth, when I lived in Dar es Salaam I resided in a high rise built and managed by a Chinese company. A lot of "middle class" amenities were also built and managed by Chinese companies, literal American suburbia style strip malls. Mainly patronized by middle class Indian immigrants of the 1st, 2nd, and 3rd generation variety. While I saw many factories owned by Indian immigrants or their descendants (Azam immediately springs to mind) it appears that the general philosophy of Indian entrepreneurs there has been to have a comfortable personal dwelling but to not put down the cash to create more "public" spaces aimed at the middle class. It doesn't have a huge bearing on infrastructure development as a whole, but Chinese investment is extremely visible in Dar es Salaam and Arusha.

# ? Apr 14, 2015 22:21

I would blow Dane Cook: Dec 26, 2008

quote:

Tightrope as Margin Debt Powers Stocks

Confident that China�s stock market rally still has legs, Jiang Lin recently began borrowing money from her brokerage to buy more shares.

Her newly-opened margin finance account with state-owned China Investment Securities Co. has allowed Jiang, a 29-year-old marketing executive in Beijing, to double up her bets on the vertigo-inducing rally in Chinese share prices.

�It�s worth the risk,� said Jiang, while admitting she doesn�t fully understand how margin finance works because she hasn�t had her broker explain it to her.

Investors such as Jiang are part of a $264 billion dilemma facing the country�s securities regulator, the China Securities Regulatory Commission, after the Shanghai Composite Index climbed on Monday to a seven-year high. Should it tighten its rules governing margin finance and risk triggering a crash, or continue tinkering with regulations and see stock purchases on credit rise to potentially perilous levels?

Traders are betting that the regulator will shy away from any serious steps to curb an explosion of margin finance, which fueled a 93 percent one-year surge in Shanghai�s benchmark gauge. Securities firms� outstanding loans to investors for stock purchases were a record 1.64 trillion yuan ($264 billion) as of April 10, up 50 percent in less than three months, despite bans imposed by the CSRC in January and April on lending to new clients by four Chinese brokerages.

Bubble Risk

China�s margin finance now stands at about double the amount outstanding on the New York Stock Exchange, after adjusting for the relative size of the two markets.

�Regulators are aware of the risk of rising margin debt but they can�t afford to puncture the equities bubble with very draconian measures,� said Lu Wenjie, a Shanghai-based analyst at UBS Securities Co. �They want to pelt the mice without smashing the china.�

With growth faltering and real estate prices heading lower, China is wary of adding a stock market crash to its economic problems, according to Mole Hau, a Hong Kong-based economist with BNP Paribas SA.

There�s also a political dimension because equity markets are dominated by small retail investors, some of whom may face ruin if a market slump prompts brokers to call in loans. Individual investors make up about 90 percent of equity trading in China, according to the CSRC.

Temporary Bans

The stock market�s upward march was delayed by only a few weeks in January by the CSRC�s three-month bans on Citic Securities Co., Haitong Securities Co. and Guotai Junan Securities Co. for letting customers delay repaying financing. This month�s news that another six brokerages faced penalties for their margin lending was also brushed aside by investors.

Sterner measures could include tightening capital requirements for brokerages and raising the asset threshold for investors seeking margin finance, said Castor Pang, Core Pacific-Yamaichi Hong Kong�s head of research. For now, clients must have at least 500,000 yuan of assets.

The CSRC indicated it could be considering tougher action when its Chairman Xiao Gang was quoted by China National Radio last month as saying it�s planning revisions to regulations on margin finance and securities lending to prevent systemic risk. Xiao didn�t give details of the possible measures.

Regulatory interventions such as stamp duty hikes and curbs on day-trading mechanisms have triggered three market slumps since the 1990s, according to UBS�s Lu.
Stock Valuations

The authorities may also be tempted to hold off because stock valuations remain lower than levels before past market collapses. The Shanghai Composite is at about 20 times reported earnings, or less than half of the level it reached during a 2007 rally.

In the absence of tougher measures, the regulator is likely to continue brokerage inspections and impose temporary bans or fines for specific infractions, said Core Pacific-Yamaichi�s Pang. The CSRC this month added Great Wall Securities Co. to the suspension list while warning another five brokerages including Huatai Securities Co. for violations of margin finance rules.

The bans on Citic, the nation�s biggest brokerage, Haitong and Guotai Junan expire on Thursday, leaving the firms free to seek new clients again. They have the capacity to do so, said Zheng Chunming, a Shanghai-based analyst at Capital Securities Corp. He calculates that Chinese brokerages can boost margin loans to as much as 2 trillion yuan if they raise their capital and leverage ratios to regulatory ceilings.

�The return of three large brokerages will definitely add to the rapid growth in margin debt,� said Zheng. �A lot has to do with market sentiment, which is irrational at the moment.�

http://www.bloomberg.com/news/articles/2015-04-13/china-walks-264-billion-tightrope-as-margin-debt-powers-stocks

# ? Apr 14, 2015 22:57

asdf32: May 15, 2010; I lust for childrens' deaths. Ask me about how I don't care if my kids die.

Fojar38 posted:

People talk about how the Chinese and American economies are symbiotic when they aren't. It's more of a case of Americans farming Chinese labour and they'll move on to another farm once it craters.

Except that China's economy cratering only encourages more investment.

US companies will move on if it doesn't crater.

# ? Apr 14, 2015 23:35

namaste friends: Sep 18, 2004; by Smythe

Time for some thread karmic retribution where we recall stupid declarations of stability and force the sinners to their knees before the celestial platform of heaven to beg their ancestors for forgiveness.

Phone posting so i can't search but there were a couple of idiots here who claimed the Chinese real estate market would never decline.

# ? Apr 14, 2015 23:42

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

asdf32 posted:

Except that China's economy cratering only encourages more investment.

US companies will move on if it doesn't crater.

One big impact on the American economy I could see would be an increase in college tuition rates as Chinese nationals able to afford attendance decline, especially as things start getting bad economically in China and purges begin as mid- and upper-level bosses want to keep the take going on up to avoid being purged.

# ? Apr 15, 2015 01:17

computer parts: Nov 18, 2010; PLEASE CLAP

Fojar38 posted:

People talk about how the Chinese and American economies are symbiotic when they aren't. It's more of a case of Americans farming Chinese labour and they'll move on to another farm once it craters.

Problem is you don't have any big farms left (that aren't already being used).

# ? Apr 15, 2015 01:19

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

Jumpingmanjim posted:

http://www.bloomberg.com/news/articles/2015-04-13/china-walks-264-billion-tightrope-as-margin-debt-powers-stocks

HSI dropped a bit yesterday, Ok Im going to hold on before I sell and make more imaginary profit

# ? Apr 15, 2015 01:26

Fojar38: Sep 2, 2011; Sorry I meant to say I hope that the police use maximum force and kill or maim a bunch of innocent people, thus paving a way for a proletarian uprising and socialist utopia

also here's a stupid take
---------------------------->

http://www.telegraph.co.uk/finance/china-business/11533317/Three-ways-the-rise-of-Chinas-stock-market-will-change-the-world.html

So how come the biggest China bulls tend to be British. I've been scouring the internet for information about this for the past while and whenever I find someone predicting the inevitable ascent of the Chinese to economic dominance of the globe it's 9 times out of 10 a UK publication or a British guy.

# ? Apr 15, 2015 01:41

Nintendo Kid: Aug 4, 2011; by Smythe

Fojar38 posted:

http://www.telegraph.co.uk/finance/china-business/11533317/Three-ways-the-rise-of-Chinas-stock-market-will-change-the-world.html

So how come the biggest China bulls tend to be British. I've been scouring the internet for information about this for the past while and whenever I find someone predicting the inevitable ascent of the Chinese to economic dominance of the globe it's 9 times out of 10 a UK publication or a British guy.

Overinflated expectations of the results of Hong Kong being taken over allowing the rest of China to become the same?

# ? Apr 15, 2015 01:56

Fojar38: Sep 2, 2011; Sorry I meant to say I hope that the police use maximum force and kill or maim a bunch of innocent people, thus paving a way for a proletarian uprising and socialist utopia

also here's a stupid take
---------------------------->

Nintendo Kid posted:

Overinflated expectations of the results of Hong Kong being taken over allowing the rest of China to become the same?

Maybe, although it goes even beyond that, and even the US state department has noticed and said that the UK in particular seems really eager to accommodate China. The UK breaking rank and joining the AIIB is the largest factor in that particular diplomatic boondoggle (as it was what caused the chain reaction), more than anything that was occurring in China or the US.

# ? Apr 15, 2015 02:02

Arglebargle III: Feb 21, 2006

Fojar38 posted:

http://www.telegraph.co.uk/finance/china-business/11533317/Three-ways-the-rise-of-Chinas-stock-market-will-change-the-world.html

So how come the biggest China bulls tend to be British. I've been scouring the internet for information about this for the past while and whenever I find someone predicting the inevitable ascent of the Chinese to economic dominance of the globe it's 9 times out of 10 a UK publication or a British guy.

The British Conservative party is full of cytpo-autocrats.

# ? Apr 15, 2015 02:05

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

Nintendo Kid posted:

When China's economy craters, it will probably greatly reduce real estate pressure in a bunch of North American cities as the biggest effect on America.

Are there any concrete numbers on this? Everything I can find seems to just be anecdotal reports with large quantities of cash. I'm guessing shell companies are being used to shield the true identities but would expect Know Your Customer laws to kick in whenever that much cash moves to fund the companies.

If poo poo gets bad in China would the people with money parked in the US try to liquidate? What happens if the owner behind a shell company gets caught up in the rolling anti-corruption thing going on, does the CCP take control of the asset or does it just zombie along until the shell corp runs out of cash to pay property taxes and the place goes up at auction?

# ? Apr 15, 2015 02:23

computer parts: Nov 18, 2010; PLEASE CLAP

Shifty Pony posted:

Are there any concrete numbers on this? Everything I can find seems to just be anecdotal reports with large quantities of cash. I'm guessing shell companies are being used to shield the true identities but would expect Know Your Customer laws to kick in whenever that much cash moves to fund the companies.

If poo poo gets bad in China would the people with money parked in the US try to liquidate? What happens if the owner behind a shell company gets caught up in the rolling anti-corruption thing going on, does the CCP take control of the asset or does it just zombie along until the shell corp runs out of cash to pay property taxes and the place goes up at auction?

A large part of it is probably just racism. The most expensive cities in the US are such because there are large numbers of people moving there, and Canada is due to the silly games its bank is doing with cheap credit.

# ? Apr 15, 2015 02:25

Arglebargle III: Feb 21, 2006

Shifty Pony posted:

Are there any concrete numbers on this? Everything I can find seems to just be anecdotal reports with large quantities of cash. I'm guessing shell companies are being used to shield the true identities but would expect Know Your Customer laws to kick in whenever that much cash moves to fund the companies.

If poo poo gets bad in China would the people with money parked in the US try to liquidate? What happens if the owner behind a shell company gets caught up in the rolling anti-corruption thing going on, does the CCP take control of the asset or does it just zombie along until the shell corp runs out of cash to pay property taxes and the place goes up at auction?

You're not trying very hard because the NYT and WSJ have both run multi-page stories on why you're wrong.

# ? Apr 15, 2015 02:27

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

Shifty Pony posted:

Are there any concrete numbers on this? Everything I can find seems to just be anecdotal reports with large quantities of cash. I'm guessing shell companies are being used to shield the true identities but would expect Know Your Customer laws to kick in whenever that much cash moves to fund the companies.

If poo poo gets bad in China would the people with money parked in the US try to liquidate? What happens if the owner behind a shell company gets caught up in the rolling anti-corruption thing going on, does the CCP take control of the asset or does it just zombie along until the shell corp runs out of cash to pay property taxes and the place goes up at auction?

Sure, they'll try to liquidate--everything they can strap on their body for the flight to LA.

# ? Apr 15, 2015 02:55

Fojar38: Sep 2, 2011; Sorry I meant to say I hope that the police use maximum force and kill or maim a bunch of innocent people, thus paving a way for a proletarian uprising and socialist utopia

also here's a stupid take
---------------------------->

computer parts posted:

Problem is you don't have any big farms left (that aren't already being used).

Vietnam, Indonesia, Mexico, and Nigeria are all showing promise from what I understand.

# ? Apr 15, 2015 03:07

computer parts: Nov 18, 2010; PLEASE CLAP

Fojar38 posted:

Vietnam, Indonesia, Mexico, and Nigeria are all showing promise from what I understand.

Tiny fraction of the population, Possible I guess, already being used, and literally in Africa, respectively.

# ? Apr 15, 2015 03:09

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

computer parts posted:

Tiny fraction of the population, Possible I guess, already being used, and literally in Africa, respectively.

A whole lot of SSA is productive, yet underutilized, agricultural lands. Mostly its mismanagement of a similar sort to Chinese soe's which causes issues with logistics, rather an issue existing on the production end.

Africa holds great promise for development; why outsource to China when you can get labor for much cheaper in Africa?

# ? Apr 15, 2015 03:12

computer parts: Nov 18, 2010; PLEASE CLAP

My Imaginary GF posted:

A whole lot of SSA is productive, yet underutilized, agricultural lands. Mostly its mismanagement of a similar sort to Chinese soe's which causes issues with logistics, rather an issue existing on the production end.

Africa holds great promise for development; why outsource to China when you can get labor for much cheaper in Africa?

It's easier to bribe one official to muscle down on the rest of them then having to bribe a half dozen officials to get the same labor force.

# ? Apr 15, 2015 03:29

Soy Division: Aug 12, 2004

My Imaginary GF posted:

Africa holds great promise for development; why outsource to China when you can get labor for much cheaper in Africa?

Because China's success isn't just about cheap labor - it's also about good infrastructure, a relatively secure investment environment, and the specialized human/physical capital that builds up after being the world's factory for several decades. If companies just wanted cheaper labor, they'd outsource from southern China to the hinterlands but that hasn't happened nearly as quickly as analysts thought.

# ? Apr 15, 2015 03:31

VideoTapir: Oct 18, 2005; He'll tire eventually.

My Imaginary GF posted:

Africa holds great promise for development; why outsource to China when you can get labor for much cheaper in Africa?

Because China has better infrastructure generally; it's easier to find employees and get them where you need them. Also there are industry specific infrastructure and supply chains set up locally that are too efficient for a potential upstart competitor to beat, all else being equal. Basically why is Silicon Valley still a thing anyone cares about?

I read an article a few years ago (which I can't find) that talked about Shenzhen and the fact that if you want to build some new electronic product, and you've got it designed and you know what parts you need to do it, you can spend a couple hours shopping, in person, and have the parts you need to build tens of thousands, immediately. If you wanted to do that anywhere else you'd have to wait days, at least, to gather everything you needed to begin.

# ? Apr 15, 2015 03:43

namaste friends: Sep 18, 2004; by Smythe

And yet apple has a market cap bigger than most countries.

Hmmmmmmm I wonder whyyyyyyyyy

# ? Apr 15, 2015 03:45

whatever7: Jul 26, 2001; by LITERALLY AN ADMIN

Gail Wynand posted:

Because China's success isn't just about cheap labor - it's also about good infrastructure, a relatively secure investment environment, and the specialized human/physical capital that builds up after being the world's factory for several decades. If companies just wanted cheaper labor, they'd outsource from southern China to the hinterlands but that hasn't happened nearly as quickly as analysts thought.

Basically, you can source labor intensive productions (shoes, shirts etc) outside of China. For products that require heavy engineering skills (phones tablets droids electronic toys, cheap walmart appliances etc) there is no replacement for Guangdong, China. The Taiwanese are specialized in building cheap labor intensive factories all over South East Asia, you can ask them.

It just take one hurricane (Thailand) or a political riot (Vietnam) to show how other South East Asian counties have inferior investment environments to Guangdong.

whatever7 fucked around with this message at 03:58 on Apr 15, 2015

# ? Apr 15, 2015 03:56

Fojar38: Sep 2, 2011; Sorry I meant to say I hope that the police use maximum force and kill or maim a bunch of innocent people, thus paving a way for a proletarian uprising and socialist utopia

also here's a stupid take
---------------------------->

whatever7 posted:

For products that require heavy engineering skills (phones tablets droids electronic toys, cheap walmart appliances etc) there is no replacement for Guangdong, China.

Well, there are, just not in the developing world.

Robots

# ? Apr 15, 2015 04:01

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

Lots of firms in Southern China are already using robots for production. Foxconn has an automation program to combat rising wages, but robots is not the end all be all of production. Basic parts and components still require cheap engineering, in the mean time GuangDong still remains king.

# ? Apr 15, 2015 04:11

Fojar38: Sep 2, 2011; Sorry I meant to say I hope that the police use maximum force and kill or maim a bunch of innocent people, thus paving a way for a proletarian uprising and socialist utopia

also here's a stupid take
---------------------------->

caberham posted:

Lots of firms in Southern China are already using robots for production. Foxconn has an automation program to combat rising wages, but robots is not the end all be all of production. Basic parts and components still require cheap engineering, in the mean time GuangDong still remains king.

Robots they buy from Japan or the US.

# ? Apr 15, 2015 04:26

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

Fojar38 posted:

Robots they buy from Japan or the US.

You mean Japan or Germany/Switzerland. Which source their parts from China.

American robots suck because Americans rather off shore everything to save costs.

# ? Apr 15, 2015 04:58

Fojar38: Sep 2, 2011; Sorry I meant to say I hope that the police use maximum force and kill or maim a bunch of innocent people, thus paving a way for a proletarian uprising and socialist utopia

also here's a stupid take
---------------------------->

http://finance.yahoo.com/news/jim-rogers--absolutely--still-bullish-on-china-despite-slowing-economy--bubbly-stocks-192910998.html

How did I not know about this wonderful man until now. :allears:

# ? Apr 16, 2015 05:22

SKELETONS: May 8, 2014

http://www.japantimes.co.jp/news/2015/04/15/asia-pacific/forget-fukushima-china-powering-ahead-plans-new-reactors/#.VTCL7PmUd8G

I know very little about china. for those predicting a crash, how bad would it be and would it negatively effect a ramp up like this? seems like really good news for pollution/climate change concerns.

# ? Apr 17, 2015 05:29

Ardennes: May 12, 2002

SKELETONS posted:

http://www.japantimes.co.jp/news/2015/04/15/asia-pacific/forget-fukushima-china-powering-ahead-plans-new-reactors/#.VTCL7PmUd8G

I know very little about china. for those predicting a crash, how bad would it be and would it negatively effect a ramp up like this? seems like really good news for pollution/climate change concerns.

Ultimately it probably is going to make not as much of a difference as you think considering how little China gets from nuclear power. 80% of their power still comes from coal and much of it, lower grade varieties. Nuclear power is still only roughly 1-3% of total potential.

I guess the decline of some heavy industries may help, but with the lack of environmental controls China has, it is going to be quite a while before you start seeing major changes.

Ardennes fucked around with this message at 13:05 on Apr 17, 2015

# ? Apr 17, 2015 09:07

Arglebargle III: Feb 21, 2006

If the government is serious about reducing coal use, the nuclear industry can grow by eating coal's market share. If it's not, nuclear is going to be like a cowboy with assless chaps in a dildo factory.

# ? Apr 17, 2015 11:36

Bates: Jun 15, 2006

Arglebargle III posted:

If the government is serious about reducing coal use, the nuclear industry can grow by eating coal's market share. If it's not, nuclear is going to be like a cowboy with assless chaps in a dildo factory.

So either way it's a win for nuclear.

# ? Apr 17, 2015 12:17

FrozenVent: May 1, 2009; The Boeing 737-200QC is the undisputed workhorse of the skies.

Coal prices are pretty close or are at an all time low, china has lax environmental standards, and they burn he shittiest thermal coal possible.

There's no way nuclear can compete with coal in China. They're going to get their lunch eaten.

# ? Apr 17, 2015 12:25