China's Bubble Economy - The well-regarded and surprisingly independent Beijing-based media outlet Caijing is no more. The site is up, but the content is frozen in time, nothing having been written since early November. Happily, Caijing editor Hu Shuli has now re-appeared with Caing. And Caing has started things off where Caijing left off, drawing attention to the bubble economy China has become. Andy Xie writes today: The biggest risk to China’s economy is the desire to maintain past economic growth rates by maximizing investments in property — an unproductive asset. It supports short-term growth by sacrificing long-term growth as capital’s average productivity declines over time.Local government performance in China is measured according to GDP and fiscal revenue. The statistics support Xie’s view that China is overheating.
What’s more, China’s peg to the dollar means it is forced to ‘import’ the easy American monetary policy, leading to a surge in the Chinese money supply. Is this author on the ball? New! China growth sizzles, inflation bubbles. The Chinese Real Estate Sector Is Unraveling. As a prelude to a broader analysis of China’s GDP, and the accuracy of its official GDP figures, I want to start by examining the national real estate statistics for the first four months of 2012. This discussion feeds into the broader GDP picture, but the property story that has been unfolding is important and interesting enough to be worth taking a close look at on its own.
Getting an accurate view of the property sector is complicated by the fact that neither the official price index, nor the Soufun price index, nor the average price/square meter that can be calculated from the investment numbers seem to track very well with each other or with point-of-sale impressions of steep developer discounts over the past eight months. Developers and local governments also enjoy a great deal of discretion in deciding what to count as a “start” or a “completion.” All that being said, I’m seeing some rather striking patterns in the data that tell us two main things: Like this: Like Loading... Patrick Chovanec: Domino Effect In Cina. China's Debt Bomb - By Jonathan Kaiman. TIANJIN, China — The Binhai New Area in the municipality of Tianjin looks like a cross between a desolate stretch of the New Jersey Turnpike and the bottom of the ocean. Half-built residential high-rises shimmer in the sun-baked distance, so far apart that even thinking about walking between them is exhausting.
Construction workers in yellow hard hats cross the road gripping sledgehammers; they look like schools of weary-eyed fish. "That's an indoor rain forest," Dong Cui told me as she waved toward an I.M. Pei-style glass pyramid through the window of her silver Audi A6. "This is a cruise port," she said later, pointing at a curvy postmodern edifice many miles down the highway.
"That over there will be a Hilton. " Dong is a manager of San'Ai Business Exchange Co., a private organization that takes investors and government officials on driving tours of the area. Welcome to Tianjin, China's sixth-most populous city and perhaps its biggest property bubble. China Photos/Getty Images. Hidden Losses And Little Reform: China May Be Slowing More Than You Think. In his latest Email review, Michael Pettis at China Financial Markets discusses financial reform (actually the lack thereof in China), as well as an observation on China's Growth.
Pettis writes .... Three months ago during their 2010 Q4 conference, the PBoC said that they believed that the global economic recovery would continue in 2011, although they acknowledged a great deal of uncertainty. The PBoC also said that stabilizing the price level was their top priority, and the central bank planned to control the “main gate” of liquidity inflows and to bring credit growth to “normal” levels.
Chen Long at SWS notified me yesterday of a change in tone. Duration Mismatch Everywhere Pettis describes problems at every central bank not just China. Question of Stability Certainly misallocation of capital was a huge problem in the Anglo-Saxon model as well. We too socialized the losses at taxpayer expense for the benefit of the wealthy. Allocation of Capital Over the Long Term I disagree. Yum cha economics. By Michael Feller Several weeks ago, blogger Sell on News explored the connection between financial terminology and water (liquidity, droughts, flows, waves).
Yet without wanting to make a meal of it, I’ve always found financial allegories with food to be just as interesting (risk appetites, plain vanilla, consumption, margin fat… pie charts). Whether due to the almost totemic appeal of the long broker lunch or finance’s very roots in ancient produce markets – Babylonian contracts were based on grain, modern insurance was a by-product of the spice trade, Roman wages were paid in salt – the way to understanding a man’s wallet, after all, has always been through his stomach.
Even money itself is known as bread, dough, or in German, Eier (eggs). When trying to understand new economic dynamics then, perhaps new culinary terms can be useful. I therefore propose the term ‘yum cha economics’. Michael Feller is an investment strategist for Macro Investor. Global Economics - Global Macro EconoMonitor. A few months ago I discussed the failing of econophysics, and more generally, the economic paradigm that treats people like computers and views economic dynamics like physics. The natural follow up question is, “What can you say that is constructive?” The answer is an emerging approach to behavioral economics. Over the past few decades it has dawned on some researchers that we don’t make decisions the way most economists think we should.
And as a result behavioral economics has become a burgeoning field of study. Initially, the bulk of this field consisted of cataloging behavior deemed aberrant and anomalous. That is, the underlying assumption was that the economic view of decision making is the correct one, and the economists need to see where people get it wrong. And they probably are off the mark because, after all, neoclassical economics is missing half the story. This new approach is a quiet revolution that may transform the way we look at economic behavior.
A. B. Summary. Demand For Electric Cars Such As Nissan Leaf And Chevy Volt Could Dwarf Supply. Editor's Note: Anton Wahlman is a contributor for TheStreet.com. About 11 million cars are sold in the US each year. The first two practical and moderately priced plug-in electric cars -- the Chevrolet Volt (GM) and Nissan Leaf -- are about to be delivered to the first customers in December. Over the next 12 months (calendar year 2011), Nissan will deliver 20,000 Leafs and Chevrolet about 15,000 units in the US market. The total of 35,000 cars is less than one-third of one percent of the US car market. Leaving aside the important distinction that the Chevrolet Volt, made by General Motors, is close to a "no compromise" solution with a back-up gasoline engine that picks up after the first 25 to 50 miles, who will be buying plug-in electric cars out of these 11 million annual US buyers?
Let's for a moment assume the debate is right about single-car households: If you are a one-car household, you will simply not buy an all-electric car. But what about multi-car households? Is Jim Chanos Right About China? Some selected Chinese data for September off pf Bloomberg. All the numbers are in Renminbi. M2 growth for 9 months is 8.6 trillion - I'm taking this as a proxy for credit growth in the economy and for the change in debt to GDP. In any case the annual target for bank loans alone is 7.5 trillion, which would be substantially more than nominal GDP growth. Nominal 9 months 2010 GDP: 26.9 trillion Nominal 9 months 2009 GDP: 22.7 trillion Difference in 9 months nominal GDP growth 2010 versus 2009: 4.1 trillion Total investment 9 months 2010: 19.2 trillion Key ratios: Investment to GDP: 71% 19.2/26.9 Nominal GDP growth 18% 4.1/22.7 M2 growth 9m 2010 to 9m GDP: 32% 8.6/26.9 Change in M2 (debt) in first 9 months 2010 versus change in GDP Y/Y: 210% (8.6/4.1) Official data: YoY real GDP growth is at +9.6% Chinese core CPI is at +1.6% The 18% or so nominal GDP growth shows the 2.5% deposit rate to be laughable.
Do you trust this author to give you good analysis? Follow and be the first to know when they publish. TOP 5 GRAPHS OF THE WEEK – THE CHINA OUTLOOK. By Econ Grapher This week the focus is on China, with the quarterly statistics out this week – as well as a surprise interest rate increase from the PBOC. Among the data we review in this edition is GDP growth, inflation trends, the interest rate decision, retail sales growth, and the continued rise of new lending. 1. China GDP First up is GDP, China saw growth decelerate slightly to 9.6% year on year in the September quarter (or 10.6% YTD on YTD), down slightly vs the 10.3% growth rate in the June quarter. 2. 3. 4. 5.
Summary So the Chinese economy is still going strong, judging by the data that was released this week. For China the outlook appears to be for continued strong growth, rising inflation; and accordingly tighter monetary policy conditions (which is good for the sustainability of the economic growth). A Conversation with George Soros | Angry Bear. With thanks to Felix Salmon for arranging the invitation. There’s an episode of House where he has to get rid of one of the people for his new team. By the end of the episode, the sharpest person in the group has said everything that we would have expected to hear from House—and is therefore summarily dismissed, since hearing one’s own opinions being spoken by someone else is less useful than being challenged.
I had a similar feeling with George Soros’s conversation last Wednesday morning with Chrystia Freeland, sponsored by Reuters and held in the NASDAQ building that, er, graces Times Square. So what follows isn’t everything Soros said so much as what he said that either (1) you wouldn’t already know from reading this blog or Paul Krugman or (2) added details or touched on an interesting issue.
UPDATE: Krugman finds another similarity between himself and Mr. The Recent Crisis and Its Causes China I Key to this shift has been the growth of bilateral relationships. Currencies China II U.S. This Is Why The BP Disaster Will Be Easily Forgotten And Boom Times Are Ahead For Oil & Gas. China's Stress Tests: 60% Decline in House Prices. Two 200-Day Breaks -
Two big asset-classes had major long-term trend reversals Wednesday. When a stock or index is trading above its 200-day moving average, it is considered to be in a long-term uptrend. When the price is trading below the 200-day, it is considered to be in a long-term downtrend. Wednesday, the US Dollar index closed above its 200-day for the first time since last May. China's Shanghai Composite Index closed below its 200-day for the first time since last March. Click to enlarge charts Want more from this author? Follow and be the first to know when they publish. Follow Bespoke Investment Group (35,944 followers) Registered investment advisor, macro, ETF investing (You’ll be notified by email with new articles from your favorite authors.) New! Follow these related stocks (Click to add stocks to your portfolio) Share this article with a colleague. INTERVIEW WITH A CHINESE REAL ES. There has been much chatter in recent week’s regarding China’s potential bubble economy.
As we now know, the Chinese government poured in more stimulus per GDP than the United States and with their economy rebounding substantially faster it looks like they are having trouble containing the red hot growth in the broad economy and in asset prices. This has been nowhere more apparent than it is in Chinese real estate where there is now enough commercial real estate to provide a 5X5 cubicle for every man, woman and child in China. China International Business recently sat down to interview Zhang Xin, CEO of SOHO China, Beijing’s largest commercial property developer. Her comments are startling to say the least and are all too reminiscent of the environment we saw here in the United States in 2006 & 2007 where anyone and everyone wanted a piece of the real estate market – except for some of the largest developers like Sam Zell who were selling.
Source: China International Business. What really drove Chinese commodity imports? Jim Chanos Is Wrong: There Is No China Bubble - This column originally appeared in Forbes. The famed short-seller Jim Chanos has been making waves lately by saying he thinks China is in a bubble and ready to collapse in 2010. He argues that easy credit has let real estate and stock market prices shoot upward. He also says the Chinese government is cooking the numbers to show 8% growth in gross domestic products, when actually China can't keep growing when the rest of the world has been hit so hard by the financial crisis. Chanos called it right on Enron and Tyco before they collapsed. He is no lightweight observer of the economic scene.
However, he is wrong about China. For once I agree with the famed investor Jim Rogers, who cofounded the Quantum Fund with George Soros. Betting against China in 2010 is a bad mistake for investors and companies alike. Chanos' first error is his belief that China's real estate sector soared in 2009 because of speculation triggered by a loosening of credit by China's banks. Follow Shaun Rein. People's Bank of China Currency Reserves: Biggest Bubble of All. China should cut 'excessive' ore imports, group says - The China. EPI Releases - Plan B 4.0 by the Numbers - Data Highlights on Ch. China tightening? Yeah right. China's global shopping spree. Is the World’s Future Resource Map Tilting East? Think of it as a tale of two countries. When it comes to procuring the resources that make industrial societies run, China is now the shopaholic of planet Earth, while the United States is staying at home. Hard-hit by the global recession, the United States has experienced a marked decline in the consumption of oil and other key industrial materials.
Not so China. In fact, the Chinese are already experiencing a sharp increase in the use of oil and other commodities. Like most other countries, China suffered some ill effects from the Great Recession of 2008. Take oil. Like the United States, China obtains a certain amount of oil from domestic wells, but must acquire a growing share from overseas suppliers. China Binging on Energy Chinese energy companies initially started buying up foreign firms and drilling ventures (or, at least, shares in them) as the twenty-first century began. Then along came the Great Recession. China`s CIC fund bets on North American coal, gold, iron ore, po. Chinese copper demand looks extremely robust | 19 May 2010 | www. Chinese apparent demand looks extremely robust, but there are doubts on whether this can last. Beijing will be keeping a watchful eye over China’s economy to ensure over-heating is nipped in the bud – figures.. 19 May 2010 Macroeconomic affairs continue to dominate price direction in copper, while fundamentals play second fiddle.
The copper price dipped below $7,000/t in early May after flirting with $8,000/t less than a month earlier. Concerns on default risk in the EU and Chinese monetary tightening have been key, while copper’s bullish fundamentals over the longer term remain intact. The $1 trillion plan agreed in early May to prevent sovereign debt default in the euro zone helped rally prices. The government certainly has its work cut out, considering April’s CPI was 2.8% higher year-on year, from March’s 2.4%, while producer prices gained 6.8% year-on-year, from March’s 5.9%. Short term outlook on Copper. Untitled. China’s commodities/property price nexus.
Hugh Hendry Will Make $500 Million Off $2.7 Million If China Col. April 2012 Hugh Henry. Chinese plunge protection back in action. China's Currency Regime Shift Will Ultimately Be Deflationary -- China Continuing to Obtain Gas Resources - Commodities & Futures. If China Blows Up, So Will Every Other Market - Robert Lenzner - StreetTalk.
China’s Drought: It’s Our Problem Too « ChinaMusings.com.