Author Topic: China GDP going in reverse?  (Read 21330 times)

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Offline ghostrider80811

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China GDP going in reverse?
« on: November 16, 2011, 07:06:58 AM »
According to one HK professor and what this could mean for China Coin Numismatics.  Also, take account as this is only one professor account of China economic conditions and it would be wise to do your own DD regarding your Chinese Coin Collections/Investments.  I do not have a crystal ball so I cant say whether this is bullish or not but I have my own conclusions so draw your own and feel free to comment as this development is nothing new but this professor goes into more detail with what seems to be hard numbers such as what he refers as the real inflation rate.  If this is true seems like the US and China has much more in common then initially thought.  BTW, I do not have much background knowledge of The Epoch Times so can not tell you the credibility and if you do Id love to hear your side. 


http://www.theepochtimes.com/n2/china-news/chinese-tv-host-says-regime-nearly-bankrupt-141214.html


Chinese TV Host Says Regime Nearly Bankrupt


China’s economy has a reputation for being strong and prosperous, but according to a well-known Chinese television personality the country’s Gross Domestic Product is going in reverse.

Larry Lang, chair professor of Finance at the Chinese University of Hong Kong, said in a lecture that he didn’t think was being recorded that the Chinese regime is in a serious economic crisis—on the brink of bankruptcy. In his memorable formulation: every province in China is Greece.

The restrictions Lang placed on the Oct. 22 speech in Shenyang City, in northern China’s Liaoning Province, included no audio or video recording, and no media. He can be heard saying that people should not post his speech online, or “everyone will look bad,” in the audio that is now on Youtube.


In the unusual, closed-door lecture, Lang gave a frank analysis of the Chinese economy and the censorship that is placed on intellectuals and public figures. “What I’m about to say is all true. But under this system, we are not allowed to speak the truth,” he said.

Despite Lang’s polished appearance on his high-profile TV shows, he said: “Don’t think that we are living in a peaceful time now. Actually the media cannot report anything at all. Those of us who do TV shows are so miserable and frustrated, because we cannot do any programs. As long as something is related to the government, we cannot report about it.”

He said that the regime doesn’t listen to experts, and that Party officials are insufferably arrogant. “If you don’t agree with him, he thinks you are against him,” he said.

Lang’s assessment that the regime is bankrupt was based on five conjectures.

Firstly, that the regime’s debt sits at about 36 trillion yuan (US$5.68 trillion). This calculation is arrived at by adding up Chinese local government debt (between 16 trillion and 19.5 trillion yuan, or US$2.5 trillion and US$3 trillion), and the debt owed by state-owned enterprises (another 16 trillion, he said). But with interest of two trillion per year, he thinks things will unravel quickly.

Secondly, that the regime’s officially published inflation rate of 6.2 percent is fabricated. The real inflation rate is 16 percent, according to Lang.

Thirdly, that there is serious excess capacity in the economy, and that private consumption is only 30 percent of economic activity. Lang said that beginning this July, the Purchasing Managers Index, a measure of the manufacturing industry, plunged to a new low of 50.7. This is an indication, in his view, that China’s economy is in recession.

Fourthly, that the regime’s officially published GDP of 9 percent is also fabricated. According to Lang’s data, China’s GDP has decreased 10 percent. He said that the bloated figures come from the dramatic increase in infrastructure construction, including real estate development, railways, and highways each year (accounting for up to 70 percent of GDP in 2010).

Fifthly, that taxes are too high. Last year, the taxes on Chinese businesses (including direct and indirect taxes) were at 70 percent of earnings. The individual tax rate sits at 81.6 percent, Lang said.

Once the “economic tsunami” starts, the regime will lose credibility and China will become the poorest country in the world, Lang said.

Several commentators have expressed broad agreement with Lang’s analysis.

Professor Frank Xie at the University of South Carolina, Aiken, said that the idea of China going bankrupt isn’t far fetched. Major construction projects have helped inflate the GDP, he says. “On the surface, it is a big number, but inflation is even higher. So in reality, China’s economy is in recession.”

Further, Xie said that official figures shouldn’t be relied on. The regime’s vice premier, Li Keqiang for example, admitted to a U.S. diplomat that he doesn’t believe the statistics produced by lower-level officials, and when he was the governor of Liaoning Province “had to personally see the hard data.”

Cheng Xiaonong, an economist and former aide to ousted Party leader Zhao Ziyang, said that high praise of the “China model” is often made on the basis of the high-visibility construction projects, a big GDP, and much money in foreign reserves. “They pay little attention to things such as whether people’s basic rights are guaranteed, or their living standard has improved or not,” he said.

Behind the fiat control of the economy, which can have the appearance of being efficient, there is enormous waste and corruption, Cheng said. It means that little spending is done on education, welfare, the health system, etc.

Cheng says that for the last decade the Chinese regime has accumulated its wealth primarily by promoting real estate development, buying urban and suburban residential properties at low prices (or simply taking them), and selling them to developers at high prices.

According to Cheng, the goals of regime officials (to enrich themselves and increase their power) are in direct conflict with those of the people–so social injustice expands, and economic propaganda meant to portray the situation as otherwise prevails.

Few scholars inside the country dare to speak as Lang has, Cheng said. And that’s probably because he has a professorship in Hong Kong.

Offline dobedo

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Re: China GDP going in reverse?
« Reply #1 on: November 16, 2011, 09:40:23 AM »
ghostrider, Thanks for this post. I believe The Epoch Times is quite credible while at times appears to be anti-authoritarian (don't we all?) as I have read it from time to time. I also think Prof. Lang is more likely to be correct. I hope my Chinese coins would be worth much more when (not if) the current regime goes bankrupt. Cheers!

Offline pandamonium

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Re: China GDP going in reverse?
« Reply #2 on: November 16, 2011, 10:40:33 AM »
China going bankrupt has been circulated for some time.  It will happen (my opinion).  My question is this:  What will happen to our Chinese coins?  Will they go up in value?  Will they drop in value?  Will they drop temporarily then retain their value?  The world is going gold/silver and other precious metals.  Any speculation? ...........

Offline ghostrider80811

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Re: China GDP going in reverse?
« Reply #3 on: November 16, 2011, 11:33:16 AM »
Im not one to claim to know everything but I do know that Chinese Coins are partly tied to the rise and fall of PM's.  I believe PM could potentially fall dramatically < 1 yr and rise spectacularly months and years after.  One just has to look at the crisis going on at the EU/US and the downfall of Mr Corzine ex Goldman Scum among others.  Heard Gerald Celente lost his Gold contract dealing with MF Global too with the help of the CFTC and JPM.  What does this mean to PM and more importantly Modern Chinese Coins?  It's anyones guess what happens short-term. 

Would PAGE take its rightful place as the center of world commodity markets since COMEX, CFTC, and SEC are complicit in grotesque corruption/scandals?  The question becomes what are the ramifications of MF Global/EU Debt/US Debt/China Debt?  IMHO the sovereign debt crisis is really the 1000 lb gorilla in the room and hardly no one seems to notice or care, how scary...

Offline BChung

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Re: China GDP going in reverse?
« Reply #4 on: November 16, 2011, 11:47:52 AM »
While I agree with most of the article. The Only part I will label as utter nonsense is tax rate. Who the hell pay taxes when most just pay corruption duties? At 80%? WTF then all my mainland Chinese class mates in China should not be able to afford a new pair of shoes then.

If the CCP collapse the words PRC in our coins should be valuable in the long term....

Now you know why China is still a close capital system. Shanghai has just officially auction its debt in the open Market for the first time in PRC history and the demand was huge. I suppose Beijing is already starting to act and is starting to shift the burden to the Market and Private market. Beijing still have a surplus and Trillions of Assets that still can buy more time. If dummy Hu and Wen just continue Former Zhu RongJi economic reform they wouldn;t have to deal with this mess in the first place not to mention the knee jerk reaction of the 2008 money printing just makes things even worse. I believe they are trying to force the liquidity in the market to these municipal bonds, to buy more time.

IMO Beijing will bail out the poorer provinces, but first tier provinces, Guangdong, Shanghai, Beijing, Jiangsu, ZheJiang & to a certain extent Chongqing, Anhui, Wuhan, Hubei, will need to burden most of their own debt.

One level better than a total default is for Beijing to orderly allow a few defaults while bailing out the more important provinces, but even in this case it might be enough for the CCP to go or at least let more power go.

But IMO for the meantime its not very likely for a total national default, the highest % of debt are still the poorer provinces and Beijing can easily bail a few of these out if necessary like Gansu.

One more way is for the Beijing to let the yuan rise more to ease Inflation pain for the ordinary Chinese and hopefully their savings with the increase in purchase power will spur a consumer boom raking in more revenue for business to pay taxes to local authorities but this will also weaken the reserves Beijing have, but IMO the benefits far outweigh the cost.  

If I am Beijing & is serious to fix the debt problem in local government & have such tremendous power the best way will be to let one or two go bust to serve as a warning to the others. Since the local government borrowing spree have been back by what they think as Beijing willingness to bail them out when they screw up. I will sacrifice Gansu just to serve a warning others and have all the corrupted officials executed just to scare the shit out of the other provinces, but then again why will they do it since the CCP leadership is so full of themselves. Only Wen seems to be awake and he is doing everything he can to save himself by making all those empty speeches with no actions about all sorts of things, Human rights, inflation, freedom, democracy, blah blah....seems wen know whats coming so when everything comes falling down he can always says that he tried but Hu block him from doing more.....

Offline ghostrider80811

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Re: China GDP going in reverse?
« Reply #5 on: November 16, 2011, 12:39:18 PM »
@babycyt

This guy feels the same way about China collapsing too--Insurrections, Protest, Bombings.  Well, minus the bombing part of course.  He claims China is postponing their problems and making it worse due to property bubble and inflation along with the global double dip recession.  I also agree with what this guys says except the double dip.  We never recovered from the financial crisis in 08.   



Gordon Chang: China is Going Backwards Right Now


http:///watch?v=1pHToDeNQY4&feature=player_embedded

Offline BChung

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Re: China GDP going in reverse?
« Reply #6 on: November 16, 2011, 07:27:37 PM »
Firstly with due respect I will never ever Listen to Gordan Chang again, whose career is solely based on bashing China. I have read his works and is completely full of BS. I can't find anyone who can be so wrong regarding China in the start of the new century. Example: China debt bad US Debt no problem, the guy is a clown who is making money by bashing China. Read his "the COming collapse of China" - WHich have been proven ALL wrong, and read his commentaries in forbes, the hypocrisy and double standard he holds for China is obvious. 

The only reason why he is "sounding" much more reasonable now is because he is simply recycling things people like Andy Xie, hugh hendry, marc faber, etc have been saying. I could hardly consider this view his view. The guys that I just mention have been telling people about the problem at least for 3 years with Andy Xie making his making his view clear as early as 2007.

Again its hard to know how Gordon Chang is an idiot until one read his book, I recommend you do, but don't even as me for a refund.

Want true China Bear Opinion from true academics not haox like Gordon Chang, Andy Xie is my top choice (he write regularly in Caixin), Marc Faber & Hugh Hendry Second & then Jim Chanos. If possible read most of their articles in the past 3 years and then you will realize where I came in to conclusion that Gordon CHang took his more sensible argument from. 

Offline BChung

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Re: China GDP going in reverse?
« Reply #7 on: November 16, 2011, 08:36:42 PM »
GuangDong just auction its bonds too..... I suppose this offer Beijing some relieve since the First Tier provinces like & municipalities seems to have no problem raising money to buy more time. 

Places like Gansu will be terrible news, but Beijing can bail them out. My worries lies with Northern Chinese Provinces, like hei long jiang & liao ning. Those places depend on Heavy Industry and nothig else even during the Mao era, Shengyang (In Liao Ning) is in much worst shape since it is already failing to pay its debt (80%). Under the export led economy and construction economy these Heavy Industry have done relatively well, but not during these times when its set to get to much worse. If the stats are correct I am pretty sure its the North that is going to go bankrupt before their much poorer counter part of Gansu.