China boom rolls inland

Silverthorn

Silverthorn

Well-Known Member
china is a big place still a lot happening there.

Chengdu's Ge Honglin believes that if you `build it, they will come', predicting a boom this decade that will match Shanghai's glory in the 1990s.

We all know the bearish case on China. The work-force peaks in 2015. The dependency ratio is rocketing. The supply of cheap labour from the country is drying up. There is overcapacity across swathes of industry, from steel to ship-building and solar energy. Bad debts in the banking system have yet to be revealed. Water and energy are scarce, and not yet priced to reality.

Yet we also tend to underestimate the fancy footwork of China's commissars in skipping over apparently insurmountable hurdles. If mayor Honglin is right -- and others like him across West and central China are right -- bears may have to wait another cycle or two for China-dmmerung. A hinterland boom in regions containing 700m people or more is not to be sniffed at.
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http://www.telegraph.co.uk/finance/...ves-Chinas-second-boom-in-the-hinterland.html
 
I can remember Joe Hockey speaking at a business function at the end of the 1990's, the height of the tech bubble and he actually said "build it and they will come." :lol:

For some context, one should search and read up on "Chinese Local Government Debt" and then read this article and the GDP growth aspirations of the new Chinese Politburo: http://www.businessinsider.com/china-politburo-standing-committee-2012-11?op=1

But even the article linked has these cautionary words ...

...

Of course, you never really know in China where the economic miracle ceases to be real and mutates into blow-off extravaganzas. Has the Communist Party rolled the dice once again on rampant over-investment and an obsolete model? Hard to tell.

Chengdu will open the world's largest building within a few weeks, the New Century Global Centre. It a huge glass pagoda, the latest Chinese adventure of British-Iraqi architect Zaha Hadid, flush from success d'estime with her intergalactic Opera House in Guangzhou -- where there is no opera.

A few hundred miles away in Mao's old haunt, this will soon be topped for sheer exuberance. The city of Changsha is about to erect the world highest building -- Sky City -- in 90 days flat. It will be finished in March. That is stimulus for you.

Yet Chengdu is currently building more space than any city in China, and probably in the world, with 30 skyscrapers above 60 floors under way, and 90 big commercial complexes.

"It is Manhattan, not Chengdu," said Zhau Yun as she looked out of her apartment window across a forest of high-construction cranes.

Mrs Zhau, who heads the British Chamber of Commerce, said the plans are significantly larger than the Pudong financial district in Shanghai. She hopes they know what they are doing.

So does Wang Yongping from China Commercial Real Estate Association, who told Caixin Magazine that Chengdu has become "a bubble".
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Central planners and GDP growth ... Genius! Reminds me of Education Minister Gillard's Building the Education Revolution! Well what do you know, she's still building it, although I guess that it's Garrett now.
http://www.deewr.gov.au/Schooling/BuildingTheEducationRevolution/Pages/default.aspx
 
6824_bubbles.jpg
 
If it works out at least it gives me more breathing space to get our house in order for the coming apocalypse.
 
The top-down planning breaches basic market principles. It should not work, yet the clusters are filling up. Chengdu is actually realizing its seemingly quixotic mantra of becoming China's Silicon Valley, fed by 51 universities, graduating 200,000 scientists and engineers each year.
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Chinese are investing in LFTR... that in my books put em top of any world economy. Whereas the coming depression will be hard for all, it will destroy the west and build character in the east
 
thatguy said:
Chinese are investing in LFTR... that in my books put em top of any world economy.
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Admirable, yes. But so are lots of others including Australia even (Thorium Energy Generation Pty. Limited) albeit on a pissy level in partnership with Czech's. The Chinese probably have more money to throw at such a project but I would hazard that money isn't everything in overcoming the challenges in getting LFTR's operational.
 
Plenty of ghost cities to prove this idea of `build it, they will come'. Not to mention ships they can't shift either. I have this feeling we'll have a while to wait before China assume the role of 'World Overlord' (even though they seem to be buying up Australia like it's going out of style).
 
I have business relationships with the Chinese and the majority have little wealth, low incomes, less than A$20k and work insurmountable hours which include ridiculous travel times of sometimes 3 hrs each way each day. The major inland cities where they work such as Wuhan, have very high real-estate prices which rules out their option to acquire or even rent close to work. One gentleman I deal with regularly lives at home with his wife and children and both spouses parents as the price of food and utilities is becoming too high to survive on their own. I also met some people in Shanghai and Beijing that are living with up to 13 other people in small apartments to survive.

In Shanghai I visited a Vendor to find an office no greater than 25m2 with eight people crammed in with a multitude of PC's and office equipment. This space was A$10000 per month to rent and included a shared boardroom and amenities.

The Chinese that are making the money are the Communist Party chiefs and the crony entrepreneurs that glean the Chinese economy and spend their millions at Gucci and Dolce Cabana on their weekend jaunts.
 
Very interesting article and ideas. Thank you!

But China is still far away from the crisis that Europe and the USA have... If they're smart, they'll get out well... They were so dependent upon exports... now they're putting more energy into stimulating internal consumption. Smart idea.
 
^ a comment I left on another post:
http://forums.silverstackers.com/message-381089.html#p381089

Dogmatix said:
China has been using the (slave) labour of its own citizens to wield economic power in the world. It does this by keeping export prices low, which is done by keeping their exchange rate low.

To switch to a consumption economy is very tricky.

I found this from Michael Pettis many months ago quite useful:
http://www.chinaglobaltrade.com/article/changing-rules-game-china-does-need-consume-more

There's a podcast (mp3) if you prefer:
podcastmachine.s3.amazonaws.com/10229/56868/Michael%20Pettis%20interview.mp3

My own view is that a 'consumption economy' is some kind of joke economics that stems from the US's 'exhorbitant privilege' of having the world reserve currency. That's where this kind of thing stems from, and I believe other countries tried to emulate it.

Question: Are there any countries with a consumption economy that are not in deficit? I'm fairly sure a consumption economy also encourages people to live beyond their means.

Edit: GoldenEgg has good points :) ... and Bordsilver I apologise I didn't read your post in full but it appears i've repeated several of your points.
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I recommend reading that thread actually, others cover the ground well.
 
If you want to know what's going on in China then Michael Pettis is the one to read. Very in depth analysis of China.
 
TreasureHunter said:
...
But China is still far away from the crisis that Europe and the USA have... If they're smart, they'll get out well...
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So, why exactly do you think the Chinese Politburo and their cronies have greater mental faculties or less appetite for corruption than any other power-seeking groups?
 
Gino said:
TreasureHunter said:
...
But China is still far away from the crisis that Europe and the USA have... If they're smart, they'll get out well...
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So, why exactly do you think the Chinese Politburo and their cronies have greater mental faculties or less appetite for corruption than any other power-seeking groups?
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+1. Their past screwball policies will continue to hurt, hamper and offset their good ones and they'll continue to accumulate more and more until they are forced into their own recession/depression.
 
Silverthorn said:
china has the money though, the west don't.
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Depends on what you mean. China has the USD and Euros that the west can print for free ;)

More importantly, China has significant quantities of the world's production facilities that means our terms of trade is likely to fall if they ever decide to let their own citizens enjoy the fruits of their labour.
 
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