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China's economy is sputtering - Wall Street Journal

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dragonflare88
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Post: #1
China's economy is sputtering - Wall Street Journal

http://www.wsj.com/articles/china-econom...1439115382
So much for China's transition from a command economy lol

09.08.2015 18:02
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Helsworth
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Post: #2
RE: China's economy is sputtering - Wall Street Journal

They're embracing all that's bunk from the West. They prefer to keep newly built cities as ghost towns instead of renting them out to families in need of dwellings.
They choose to experiment with QE (massage for a wooden leg) instead of reducing fiscal drag to makeup for lower levels of aggregate demand coming from abroad than 'normal'. They embrace western type of financial speculation, without regulating their banks on the asset side.
http://serbanvcenache.blogspot.ro/2014/1...arren.html


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09.08.2015 19:00
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dragonflare88
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Post: #3
RE: China's economy is sputtering - Wall Street Journal

Helsworth Wrote:
They're embracing all that's bunk from the West. They prefer to keep newly built cities as ghost towns instead of renting them out to families in need of dwellings.
They choose to experiment with QE (massage for a wooden leg) instead of reducing fiscal drag to makeup for lower levels of aggregate demand coming from abroad than 'normal'. They embrace western type of financial speculation, without regulating their banks on the asset side.
http://serbanvcenache.blogspot.ro/2014/1...arren.html


It will be their down fall. Or will it not? Maybe it will be their saving grace.

09.08.2015 20:40
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Ajay Alcos
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Post: #4
RE: China's economy is sputtering - Wall Street Journal

dragonflare88 Wrote:
It will be their down fall. Or will it not? Maybe it will be their saving grace.


Empty housing properties which have not been rented out and occupied over an expected vacate period tend to devaluate rapidly. In China's case there is an oversupply of such apartments and yet the prices for those dwellings are being artificially kept the same; probably used as collateral by private landowners or as a gamble; in the middle income portion of Chinese society will begin expand more rapidly soon. Normally if there is an oversupply, production/output is reduced to stabilize the value of individual lots. Unfortunately, the PRC is seemingly reverting to the fallacy of trying to achieve statistical goals rather than hard goals.

It's happened before in 58-61, when Mao mobilized China's massive population to increase economic output; his so termed 'Great Leap Forward' ("Backward" would be a more accurate term). To fund industrial development Mao needed to increase agricultural output, and as the cooperatives that were set-up weren't expected to deliver he instituted those dreaded communes. At first output actually increased but after that became completely stagnant, and yet the overseer's needed to satisfy party quotas of grain and produce. Eventually the began to ration out food to add more for the quota, instituting dehumanizing policies and dishing out severe punishments to reach ever-increasing quotas. I even read of one anecdote of a mother breastfeeding her child having her infant taken away from her and secretly killed, the reason being that she needed to conserve her energy to work in the fields and that her child would be taken care of "at a far better place". This combined with ill-conceived campaigns such as the "Four Pests Campaign" created a famine which led to 40 million deaths (they learnt nothing from holodomor).

When Hu Jintao was in power, he tended to position himself as a technocrat; pretty much content in letting China's economy grow. Focusing CCP's eyes towards repairing and building anew some badly needed infrastructure at the beginning of the millennia. Xi Jinping on the other hand, without and regard to his foreign policy (of which I utterly loathe) is heavy handedly trying to make his mark on Mainland society. As result he has basically neglected economic and domestic policy with the aims of solidifying his political position, and those of his allies and like-minded party members (e.g. diverting attention towards disputes in the South & East China Sea). Taking such a position is understandable as China has been long overdue for some financial/market corrections, and any authoritarian administration in such a position would be liable to do the same.

However, what cannot be understood is why Jinping and his protégés continue to focus on infrastructure construction and maximizing exports instead of actually fixing the growing wealth gap, dodgy monetary policies and of course the systemic corruption (so far in Jinping's reign, it's mostly been just cases of politically motivated purges). For example take this [article]. I am personally flabbergasted as to why the Chinese are further devaluing the Renminbi. Their domestic market is in dire need of growth and depreciating the Yuan is only going to stunt it's further development by making the cost of goods & services higher, thus less attractive. All I can say for this recent example is why the Yuan is in dire need of monetary reform.

China's economy to summarize can be described as a piece jade accumulating more & more dirt as it grows more valuable. Eventually if left alone, it will be hidden away; buried in a mountain of dirt. So if the PRC doesn't get its act together, stop this futile currency war and start cleaning up the gem that is China - the future is looking unsettlingly bleak.

11.08.2015 19:05
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Helsworth
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Post: #5
RE: China's economy is sputtering - Wall Street Journal

The party leaders are content with keeping their country the slave producer of the world. They want higher net exports, so they sacrifice domestic living standards to be able to send more net wealth abroad in exchange for foreign currency. The nomenclature must love all the luxury goods it buys from the west with that foreign currency.


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11.08.2015 19:45
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Richard Wilson
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Post: #6
RE: China's economy is sputtering - Wall Street Journal

Growth will rebound.

12.08.2015 11:56
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Ajay Alcos
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Post: #7
RE: China's economy is sputtering - Wall Street Journal

Helsworth Wrote:
The party leaders are content with keeping their country the slave producer of the world. They want higher net exports, so they sacrifice domestic living standards to be able to send more net wealth abroad in exchange for foreign currency. The nomenclature must love all the luxury goods it buys from the west with that foreign currency.

So true. Unfortunately due to the mindset of the CCP given that most mainland Chinese I know see them as nothing but short-sighted, pragmatic, unsubtle and blunt; they're days may be numbered.

Richard Wilson Wrote:
Growth will rebound.

To quote Zhou Enlai: It's too early to say...

12.08.2015 13:33
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dragonflare88
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Post: #8
RE: China's economy is sputtering - Wall Street Journal

China recently put 1 trillion dollars worth of bonds into infastructure.

12.08.2015 18:23
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Helsworth
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Post: #9
RE: China's economy is sputtering - Wall Street Journal

dragonflare88 Wrote:
China recently put 1 trillion dollars worth of bonds into infastructure.

If that's true, then that's good policy. Hopefully those projects will actually benefit the citizens.


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12.08.2015 20:20
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debauchery
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Post: #10
RE: China's economy is sputtering - Wall Street Journal

The Chinese ghost towns were made in preparation for the deurbanization of Full Communism.

13.08.2015 07:28
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