Deflation leaves China on the brink of financial crisis

[InvestingIsMyLife]

This article is none sense. China IS the banker of the US. The US, UK, and several other countries have debt that far out weighs what China is experiencing. China's GBP is also exponentially higher than the US and the UK. If the OP wants to predict a financial crisis, a better country to focus on would be Japan. Japan has the 3rd largest economy in the world, by nominal GDP standards.

What is a GBP? Who holds US debt? China owns about 8 percent of publicly held U.S. debt; the bulk of the $14.3 trillion U.S. debt - $9.8 trillion in all - is owned by the American people and its government.

GDP, current prices U.S. dollars (Billions)

1

United States

17,416

2

China

10,355

http://knoema.com/nwnfkne/world-gdp-ranking-2014-data-and-charts

Please excuse the spelling errors. :-)

GBP was intended to read GDP. China is the banker of the US. This is no secret. China is the holder of the most USD reserves in the world, which they are now using to acquire gold and to de-leverage themselves from the USD. Debt and dollars are two different things.

Edited January 12, 2015 by InvestingIsMyLife

[thailiketoo]

This is no secret. China is the holder of the most USD reserves in the world, which they are now using to acquire gold and to de-leverage themselves from the USD. Debt and dollars are two different things.

How Much U.S. Debt Does China Really Own? Foreign governments hold about 46 percent of all U.S. debt held by the public, more than $4.5 trillion. The largest foreign holder of U.S. debt is China, which owns more about $1.2 trillion in bills, notes and bonds, according to the Treasury. In total, China owns about 8 percent of publicly held U.S. debt.

http://usgovinfo.about.com/od/moneymatters/ss/How-Much-US-Debt-Does-China-Own.htm

Edited January 12, 2015 by thailiketoo

[Publicus]

@publicus: thanks for your answer. With regards to property price decline in BNPs report of 10% is because I have my doubts about the accuracy of that data. I assume you frequently travel to China as well and see that the economies in the different provinces are very different, saying you could have an increase of property prices in Beijing of 5%, Fujan might be flat and simultanously you may see a decline in Sichuan by 10%. So to just say it's gone down by 10% doesn't give you much insight into the property market.

<<snip>>

Hope this gives a little bit different perspective on China. I think your views are overly negative on China and you underestimate their capability to address issues and pro-actively steer their economy towards a more consumption led economy rather than mainly investment led.

The above is your second post to me today in which you have deflected national bubble data about the PRChina to focus instead at the level of some selected survey provincial activity. Given that you choose to deny the national level of the housing bubble data in the PRC, I will respond by accommodating you in focusing, albeit briefly, on the provincial level of the property and housing bubble data.

Here goes.....

I have examined reported housing data from 28 provinces in China, ranging from the first quarter of 2000 to the fourth quarter of 2012.

First, it can be said that most of the provinces have bubbles and that they also have affordability problems.

Second, housing prices in certain provinces within the same contagious region were cointegrated, i.e, there were spillover effects of the overlapping bubbles.

Thirdly, it also can be said that spillover effects among the certain provinces existed in contagious regions around Beijing and Shanghai provinces, where each province has severe bubbles and extreme affordability problems.

You needn't thank me for my replies to your posts because i would indeed reply to anyone in need of such dire assistance.

As to your last point about consensus that the CCP Boyz in Beijing need to shift the economy to a consumer focus, it hasn't happened because the Boyz are in an ongoing state of confusion as to whether they might want to do that very thing. The confusion in Beijing stems from the fact macroeconomic infrastructure projects are the source of huge and enormous corruption bucks, while consumer economics and finances would redirect the economy away from primarily development projects to microeconomics that would instead benefit the people themselves.

Cheers.

[InvestingIsMyLife]

This is no secret. China is the holder of the most USD reserves in the world, which they are now using to acquire gold and to de-leverage themselves from the USD. Debt and dollars are two different things.

How Much U.S. Debt Does China Really Own? Foreign governments hold about 46 percent of all U.S. debt held by the public, more than $4.5 trillion. The largest foreign holder of U.S. debt is China, which owns more about $1.2 trillion in bills, notes and bonds, according to the Treasury. In total, China owns about 8 percent of publicly held U.S. debt.

http://usgovinfo.about.com/od/moneymatters/ss/How-Much-US-Debt-Does-China-Own.htm

As I made UNEQUIVOCALLY CLEAR, "China is the holder of the most USD reserves in the world, which they are now using to acquire gold and to de-leverage themselves from the USD. Debt and dollars are two different things."

Again, DEBT AND DOLLARS ARE TWO DIFFERENT THINGS. Do you understand the difference? Dollars are USD. Debt takes the form of US treasuries, government bonds, etc. Why go off on the tangent of debt?

[Publicus]

@Publicus: re your statement that an Economic crash would mainly impact China itself and East Asia, I think you completely underestimate 1) how interconnected the Global economy has become and 2) how important China has become as a Global growth engine. If there will be an economic contraction in China, believe me you will have an ugly Global recession. If the economic contraction in China comes in form of a financial collapse, it will get even more uglier everywhere. Most Global companies not only produce significant amounts of goods in China but also sell a lot of goods in China, and the growing amount of spending power of Chinese consumers is hugely important to the Global economy. Have a look at the Global car makers, food producers, producers of electronic goods, etc etc., for many of them China is either their no 1 market globally or amongst the top 3.

I think you completely underestimate

You are wrong.

I have discussed this extensively and in depth.

In sum.....

The CCP's currency is monopoly money. The RMB besides is not even a regional currency, much less a global one. The CCP's capital markets are small, weak, insignificant to regional and global economics and finance. The RMB is not a global forex reserve currency, it is not the currency of global trade, investment, forex. The Japanese yen remains globally and regionally more significant than the RMB, as do the euro and the GBP.

The advanced and developed economies are looking to initiate $5 Trillion in infrastructure development in emerging markets between now and 2020 that will benefit all economies on either side of the equator. Economies such as Australia, which is experiencing a downturn due to a sharply decreased demand of commodities from the PRC will enjoy this and other similar developments, to include Japan which, since 2012, has been steadily withdrawing its substantial FDI from the PRC (relocating much of it to Thailand).

[thailiketoo]

This is no secret. China is the holder of the most USD reserves in the world, which they are now using to acquire gold and to de-leverage themselves from the USD. Debt and dollars are two different things.

How Much U.S. Debt Does China Really Own? Foreign governments hold about 46 percent of all U.S. debt held by the public, more than $4.5 trillion. The largest foreign holder of U.S. debt is China, which owns more about $1.2 trillion in bills, notes and bonds, according to the Treasury. In total, China owns about 8 percent of publicly held U.S. debt.

http://usgovinfo.about.com/od/moneymatters/ss/How-Much-US-Debt-Does-China-Own.htm

As I made UNEQUIVOCALLY CLEAR, "China is the holder of the most USD reserves in the world, which they are now using to acquire gold and to de-leverage themselves from the USD. Debt and dollars are two different things."

Again, DEBT AND DOLLARS ARE TWO DIFFERENT THINGS. Do you understand the difference? Dollars are USD. Debt takes the form of US treasuries, government bonds, etc. Why go off on the tangent of debt?

Because China only owns 8% of USA publicly held debt. If you have another point of view provide link to support it.

[Publicus]

This article is none sense. China IS the banker of the US. The US, UK, and several other countries have debt that far out weighs what China is experiencing. China's GBP is also exponentially higher than the US and the UK. If the OP wants to predict a financial crisis, a better country to focus on would be Japan. Japan has the 3rd largest economy in the world, by nominal GDP standards.

What is a GBP? Who holds US debt? China owns about 8 percent of publicly held U.S. debt; the bulk of the $14.3 trillion U.S. debt - $9.8 trillion in all - is owned by the American people and its government.

GDP, current prices U.S. dollars (Billions)

1

United States

17,416

2

China

10,355

http://knoema.com/nwnfkne/world-gdp-ranking-2014-data-and-charts

Please excuse the spelling errors. :-)

GBP was intended to read GDP. China is the banker of the US. This is no secret. China is the holder of the most USD reserves in the world, which they are now using to acquire gold and to de-leverage themselves from the USD. Debt and dollars are two different things.

And now here comes another one about gold, the Boyz in Beijing, the USA, the USD, the Boyz being the banker of the USA, gold gold gold.

Let's go ahead to anyway grant your claim in the post immediately above, that Beijing is buying gold to blah blah blah.

Suppose -- let's just suppose, same as you are supposing -- the Fed were keeping the price of gold low, as some people allege.

Why would the Fed manipulate the price of gold, since let's say the Clinton second term. Would the Fed do that to benefit other governments that would buy in volume so the other governments could deleverage themselves from the USD. That would be China, would it not, among others that will remain unidentified here but we know who they are.....the usual suspects of course

And let's suppose the Fed were manipulating the price of gold, and nevermind that it would need the cooperation of Switzerland and the EU to accomplish this feat. Let's just say the Fed were manipulating the price of gold so it itself could buy gold. The US confirms it has some $450 billion in gold reserve value.

Suppose the US has quietly --and I mean quietly -- been purchasing gold over a period of years, that the US wanted to increase its sovereign holdings of gold to something in the area of $750 billion.....or maybe even $1 Trillion of gold holdings.

Why might it want to do this, again, purely as a matter of speculation.

Perhaps then the USGovernment could revalue its dollar to the price of gold. If the USG reset the value to $3000 an ounce, that would increase the value of its gold holdings to $3 Trillion dollars. That would amount to half the USG actual debt of $6 Trillion.

Which would solidify the USD as the global reserve currency, the currency of international trade, the dominant global currency.

Supposing. Where would that leave the usual goldbug suspect governments?

Screwed. Supposing.

[Naam]

That would amount to half the USG actual debt of $6 Trillion.

and if this "actual debt" is heated up red hot, treated with a sledge hammer and looked at with binoculars from the wrong side then...

unfortunately the actual debt of the [quoting Publicus] "successful and prosperous" nation in question will soon cross the 20trn mark and debt service will, as done since years, only be possible by issuing new debt. luckily (depending on the perspective), with interest rates kept artificially low, that situation might last for years to come.

notwithstanding the above-mentioned facts the gloom&doom gurus who prophesied since decades and are still prophesying the demise of the US-Dollar have been and will be completely wrong.

[timendres]

Aside from the short term issues of inflation (too much money demanding few goods) and deflation (too little money demanding too many goods), there is a fundamental flaw with the "debt based" monetary system that requires inflation over the long haul. The topic was brilliantly addressed by the book "Debt Virus" many years ago.

To see the problem, it is easiest to boil the problem down to a very simple model. Imagine that you are two people on an island. You want to engage in commerce, but for that you need money. Enter the bank...

Now, each of the two persons has ONLY one way to acquire money, and that is via a loan from The Bank. There is NO other means of acquiring money in a debt-base monetary system. Period.

So, each person goes to The Bank and gets a one year loan with simple interest - let's say they each borrow 1000 at 5% interest payable in one year. Simple enough.

Now, at the end of one year, each person owes the bank 1000, plus the interest of 50, or 1050. In other words, at the end of one year, The Bank must be paid 2100.

BUT THERE IS ONLY 2000 IN THE SYSTEM!!

Hence, either one party or the other must default on their loan, or more money must be loaned into the system to create the interest that is due. Hence, without inflation (an increasing money supply), the system cannot perpetuate itself. As anyone with any knowledge of math understands, this system cannot last forever. Eventually, the expansion of the money supply becomes geometric and the system will collapse. Sound familiar?

This is one of the primary reasons why the framers of the US Constitution created a "labor-based" monetary system. They understood the fundamental flaws of debt-based monetary systems. With a labor-based monetary system (in the case of the US, people dug up gold and silver and the US Treasury coined it into money), the problem of needing an ever expanding money supply is eliminated. Of course, it also eliminates many other problems created by fiat currencies as well. That is not to say that "hard currency" systems don't have their own issues, but that is a lengthy discussion.

When the Federal Reserve, and other fiat money institutions, see low, or negative, inflation, they understand the problem and try to encourage consumption. Alas, infinite consumption is not achievable in reality, which is what geometric money growth requires. So eventually reality trumps the numbers game the bankers play and the music stops. But until the music stops.... they'll keep printing!

[thailiketoo]

Aside from the short term issues of inflation (too much money demanding few goods) and deflation (too little money demanding too many goods), there is a fundamental flaw with the "debt based" monetary system that requires inflation over the long haul. The topic was brilliantly addressed by the book "Debt Virus" many years ago.

The author has '0' education or experience in economics. He is a doctor from Africa.

[InvestingIsMyLife]

This article is none sense. China IS the banker of the US. The US, UK, and several other countries have debt that far out weighs what China is experiencing. China's GBP is also exponentially higher than the US and the UK. If the OP wants to predict a financial crisis, a better country to focus on would be Japan. Japan has the 3rd largest economy in the world, by nominal GDP standards.

What is a GBP? Who holds US debt? China owns about 8 percent of publicly held U.S. debt; the bulk of the $14.3 trillion U.S. debt - $9.8 trillion in all - is owned by the American people and its government.

GDP, current prices U.S. dollars (Billions)

1

United States

17,416

2

China

10,355

http://knoema.com/nwnfkne/world-gdp-ranking-2014-data-and-charts

Please excuse the spelling errors. :-)

GBP was intended to read GDP. China is the banker of the US. This is no secret. China is the holder of the most USD reserves in the world, which they are now using to acquire gold and to de-leverage themselves from the USD. Debt and dollars are two different things.

And now here comes another one about gold, the Boyz in Beijing, the USA, the USD, the Boyz being the banker of the USA, gold gold gold.

Let's go ahead to anyway grant your claim in the post immediately above, that Beijing is buying gold to blah blah blah.

Suppose -- let's just suppose, same as you are supposing -- the Fed were keeping the price of gold low, as some people allege.

Why would the Fed manipulate the price of gold, since let's say the Clinton second term. Would the Fed do that to benefit other governments that would buy in volume so the other governments could deleverage themselves from the USD. That would be China, would it not, among others that will remain unidentified here but we know who they are.....the usual suspects of course

And let's suppose the Fed were manipulating the price of gold, and nevermind that it would need the cooperation of Switzerland and the EU to accomplish this feat. Let's just say the Fed were manipulating the price of gold so it itself could buy gold. The US confirms it has some $450 billion in gold reserve value.

Suppose the US has quietly --and I mean quietly -- been purchasing gold over a period of years, that the US wanted to increase its sovereign holdings of gold to something in the area of $750 billion.....or maybe even $1 Trillion of gold holdings.

Why might it want to do this, again, purely as a matter of speculation.

Perhaps then the USGovernment could revalue its dollar to the price of gold. If the USG reset the value to $3000 an ounce, that would increase the value of its gold holdings to $3 Trillion dollars. That would amount to half the USG actual debt of $6 Trillion.

Which would solidify the USD as the global reserve currency, the currency of international trade, the dominant global currency.

Supposing. Where would that leave the usual goldbug suspect governments?

Screwed. Supposing.

"Suppose -- let's just suppose, same as you are supposing -- the Fed were keeping the price of gold low, as some people allege."

That's not what I said. I said the BANKS are manipulating the price of gold. The banks lose billions of dollars per quarter manipulating the gold spot gold prices. They do this to make their investments appear to be more invest worthy. I made no mention of the Fed, which you have conveniently go on a diatribe about . While they are both privately held institutions, they are different institutions and the Fed is often involved in regulating the banks, not the price of gold. The Fed simply stores gold and the amount of gold stored is highly contested.

[Publicus]

There are certain people who can't admit the CCP uses a fiat currency system. The deniers have to keep talking about Beijing going for the gold standard. The reality is the People's Bank of China, the central bank, is much more the personal bank of the Boyz in Beijing and of the Chinese Communist Party. The CCP owns and operates the PBOC so it's more than obvious who benefits from the bank issuing gobs of monopoly money for the Boyz to play with.

It is the people of the people's republic who are getting hammered and will suffer as the CCP's monopoly money is dumped into the same bin as the ruble.

[bitcoinbob]

and this is how it starts http://www.zerohedge.com/news/2015-01-11/chinese-stocks-give-2015-gains-plunge-kaisa-default-fears

[Robert24]

@Publicus: your choice of words and summary is not only radical but quite extreme. You refer to the RMB currency as "monopoly money", refer to the central bank in China as the personal bank for the CCP Boyz, you mention it's not a currency of Global trade, forex or investment, etc etc. You mention a collapse of the China economy would only have a small impact, mainly impacting China and East Asia. I don't think you find an economist supporting any of your extremist views.

Just to give you a headline number that just came out now. 2014 auto sales in China were up 6.9% vs 2013, China remains by far the number 1 market for cars in the world. People can make their own conclusions about your statements.

[F430murci]

This is no secret. China is the holder of the most USD reserves in the world, which they are now using to acquire gold and to de-leverage themselves from the USD. Debt and dollars are two different things.

How Much U.S. Debt Does China Really Own? Foreign governments hold about 46 percent of all U.S. debt held by the public, more than $4.5 trillion. The largest foreign holder of U.S. debt is China, which owns more about $1.2 trillion in bills, notes and bonds, according to the Treasury. In total, China owns about 8 percent of publicly held U.S. debt.

http://usgovinfo.about.com/od/moneymatters/ss/How-Much-US-Debt-Does-China-Own.htm

As I made UNEQUIVOCALLY CLEAR, "China is the holder of the most USD reserves in the world, which they are now using to acquire gold and to de-leverage themselves from the USD. Debt and dollars are two different things."

Again, DEBT AND DOLLARS ARE TWO DIFFERENT THINGS. Do you understand the difference? Dollars are USD. Debt takes the form of US treasuries, government bonds, etc. Why go off on the tangent of debt?

Because China only owns 8% of USA publicly held debt. If you have another point of view provide link to support it.

Lol, true, true.

Lets see . . . In theory China hold a bunch of US bond certificates, but US holds their cash. If US said flog off China, US keeps China's money and China is left holding worthless paper. Whose is the banker? The one holding the money or the one with a piece of paper.

China purchases these investments to keep its currency from appreciating and to park its cash in a safe location. People park cash in low interest bearing bank accounts. That does not make people the bank.

[Publicus]

@publicus: thanks for your answer. With regards to property price decline in BNPs report of 10% is because I have my doubts about the accuracy of that data. I assume you frequently travel to China as well and see that the economies in the different provinces are very different, saying you could have an increase of property prices in Beijing of 5%, Fujan might be flat and simultanously you may see a decline in Sichuan by 10%. So to just say it's gone down by 10% doesn't give you much insight into the property market.

Now with regards to the demographics of China. I agree in the long run they may run into a problem, say in 20-30 years time from now when it really starts to hurt the ratio between the working population and retirees will peak. But certainly not now. There is no shortage of labour available, there are plenty of migrants available that can move into areas where they work in manufactoring. Actually I think other countries like Japan or most European countries have a much more near term problem with demographics than China.

One other thing you keep referring to 'PR Chinese', or 'CCP's GDP vs US GDP', I think these terms are not helpful. It's fine if you just refer to Chinese or Chinese GDP, people tend not to use those terms. I obviously know what you mean.

Now about Shadow banking: In general I don't think shadow banking is such a bad thing and if you look what happened in established economies, you also see that regulations and new capital requirements have led to banks getting rid of huge amounts of assets from their balance sheets which ended up with asset managers, hedge funds and other institutions that are less regulated. This in itself hasn't made the financial system more stable, but it did make banks more stable and probably has taken some leverage out of the system. In China you refer to 40% debt of GDP in the shadow banking sector which may or may not be a problem. People keep referring to it as an issue, I'm not sure if it is. Would you feel more comfortable if this debt would move to the regulated banks? Not sure about it.

Hope this gives a little bit different perspective on China. I think your views are overly negative on China and you underestimate their capability to address issues and pro-actively steer their economy towards a more consumption led economy rather than mainly investment led.

Now about Shadow banking: In general I don't think shadow banking is such a bad thing

It's been a long long time since I've seen such an absolute 100% shameless apologist for anything, much less the CCP Boyz in Beijing and their whacko systems and schemes.

[Jonmarleesco]

I'm not a complete noob in financial matters, but after all those years I still don't understand why a low inflation is so bad.

Low inflation isn't deflation, though I've not previously read anything to suggest China was anywhere close to deflation.

[LawrenceChee]

I will use Chiangmai as an example seeing this is where I stay as an example of what will happen when the Chinese infamously implodes and collapses

(I don't support this theory nor think it will happen anytime soon)

Mango Tango and Iberry located in Nimman which serves out 169 baht mango sticky rice & see lines formed by Chinese tourist 30 mins prior to opening will go bankrupt overnight and the owners will return to a realistic 30 baht per packet although they would have to sell their Ferarris too

Standard Bus Tours which ferries almost all of the 150,000 Chinese group tourists every 6 months will collapse and all the drivers will lose their jobs and they can join the songtaew association hoping for a Farang fare to Central Festival and all the buses will be available for fire sales in the monthly government auction along with the Thais selling their trucks from losing their jobs

All the tuk tuk drivers who took up the extra loans to buy extra tuk tuks for the FIT tourists will join the bankruptcy rolls

The estimated 300,000 Chinese guests who visited CM for the first half of the year will disappear and along with that an average of 450,000 room nights ( twin sharing averaging 3 night stay) ; hotels will start mass terminations and the beer drinking crowds will not be available to fill the rooms at the fancy resorts or the many guest houses ....along with that all the Thais who work in the hotels and the ancillary services that support these workers ( transport , food stalls etc)

Overnight most of the scooter rental operators will go bankrupt although it means no more Chinese tourists stopping in the middle of the highway reading maps or snapping a picture

Take away the 300,000 from the street stalls, Sunday Mkts etc etc and you can also see a slowdown to the craftsman or artisans who makes these items

Take away the same 300,000 from Sankanpeng buying up bird nest, commissioned shops and also the handicraft factories and add the tour guides who lost employment

And of course no one buying up Thai rice overstocks to feed their prisoners ....

Any collapse of China will see an immediate collapse of Chiangmai ...multiple that effect on the entire Thailand with the disappearance of 4.5 million Chinese tourists in 2014 and most nations right now with major deals inked .. ASEAN , Africa , Australia, Caribbean Islands, Russia, USA, EU

One will be a fool if you think the west or anyone has prepared for that calamity to follow as some posters have indicated that the west has started to prepare for life without China

The inter connectivity of trade makes that impossible for China to be taken out as they are too important and too interlinked to collapse

The Chinese leadership is determined to fixed this problem and unlike previous governance , you have not seen President Xi or Li denying it exists ...it tells you of the level of attention it is already getting in their efforts in restructuring the economy to make it right

I am hopeful for the youth in China to make the country prosperous ...just meeting recently two 6 year old girls at a Hang Dong cafe 2 weeks ago fills my heart with pride that the Chinese will always stay adaptive , nimble and be the risk takers of commerce

I stated in an earlier post on another thread, mothers came to Chiang Mai a year ago on a tour and then decided to come back as they liked the environment , buy an apartment and enroll their girls in American Pacific Intl School ...in 6 months of full immersion here in CM, the girls speak enough Thai to order food for their mums , speak above average English with an English accent from their teachers and classmates and of course maintain their cute charm speaking in Mandarin to their mums ...they are prime examples of innovation , risk taking and adaptability of the Chinese people

Edited January 12, 2015 by LawrenceChee

[Publicus]

Very interesting and welcome back....been wondering where the independent minded but determined Voice of China had been during all of the CCP bashing going on.....these new guys are simply superficial smooth talkers who lack the punchy impact of your classic post that we around here are used to.

So the post gives us the old long train of possible horrors, i.e., all the millions of detailed everyday things that would disappear from life if the PRChina economy radically slowed, hit a serious crisis, or if it were to nosedive, crash and burn. The workings of the feverish mind that sees before his eyes and in vivid detail the vanishing of life as we know it.

Hardly.

Persistently weak commodity prices in Thailand are hurting the country's economy, not the financial chaos occurring in the PRChina. This is World News and not a Thailand thread so I won't spend much time on your extended post, except to say the 1997 financial crisis here didn't result in 10% of what you presented in the post. Restoring subsidies to northern rice farmers also will impact a strained budget that will further strain the current ruling clique.

As to the topic more directly, the Chinese who are adaptive, nimble, successful risk takers, enterprising entrepreneurs and the like have all left China or are Chinese born, raised, educated outside of the PRChina, away from the malevolent control from birth of the CCP. Almost all of the Chinese I know, in Hong Kong to name but one instance, that were born, raised, educated, outside of the PRChina practically froth at the mouth when they talk about the CCP as well they should be expected to.

Impassioned and earnest presentations of the virtuous Chinese are needed and welcomed to constantly remind some of us that the CCP does not represent or bamboozle all Chinese. It is always a welcome moment to hear the Chinese speak their contempt and disdain of the CCP, but one needs to go elsewhere for that.

[LawrenceChee]

Very interesting and welcome back....been wondering where the independent minded but determined Voice of China had been during all of the CCP bashing going on.....these new guys are simply superficial smooth talkers who lack the punchy impact of your classic post that we around here are used to.

So the post gives us the old long train of possible horrors, i.e., all the millions of detailed everyday things that would disappear from life if the PRChina economy radically slowed, hit a serious crisis, or if it were to nosedive, crash and burn. The workings of the feverish mind that sees before his eyes and in vivid detail the vanishing of life as we know it.

Hardly.

Persistently weak commodity prices in Thailand are hurting the country's economy, not the financial chaos occurring in the PRChina. This is World News and not a Thailand thread so I won't spend much time on your extended post, except to say the 1997 financial crisis here didn't result in 10% of what you presented in the post. Restoring subsidies to northern rice farmers also will impact a strained budget that will further strain the current ruling clique.

As to the topic more directly, the Chinese who are adaptive, nimble, successful risk takers, enterprising entrepreneurs and the like have all left China or are Chinese born, raised, educated outside of the PRChina, away from the malevolent control from birth of the CCP. Almost all of the Chinese I know, in Hong Kong to name but one instance, that were born, raised, educated, outside of the PRChina practically froth at the mouth when they talk about the CCP as well they should be expected to.

Impassioned and earnest presentations of the virtuous Chinese are needed and welcomed to constantly remind some of us that the CCP does not represent or bamboozle all Chinese. It is always a welcome moment to hear the Chinese speak their contempt and disdain of the CCP, but one needs to go elsewhere for that.

Was busy making capitalist decisions in the business world

This is a weak argument ....I can find you aplenty of PRC who would critique the government (frothing is a bit rude honestly) and think they are not on the right path or doing the right thing privately and as I have repeatedly posted , no real Chinese would believe in the government but understand the necessity of having one to in the place

Their opinions however doesn't mean they are the government or have a say in governance ...as we all know there are aplenty of armchair critiques who just like to implode everything but has zero actual civil governance experience or actually even want to do anything to make a difference

By the way ...my usual retort to HK folks who are still delusional and refuse to believe they are Chinese or spite their perhaps culturally less cosmopolitan cousins is that they have a duty to help reform it and not just blabber rubbish.

I do understand a 100 year rule may make one think they are British but as long as you enjoy that bowl of "chok" and your dough sticks ....it's still Chinese blood flowing inside so stop thinking you are British and accept reality like what a real Chinese would

[LawrenceChee]

The scenario I presented on just Chiangmai alone is factual and not some hallucinating visions

The Chinese disappearing in Thailand would just mean the rise back of the rude drunken louts or Russians which I personally think is more distasteful

I think while the Thais may find certain Chinese habits unpleasant ...there is no denying at least there is money to clear off the table with them rather than wipe vulgarities and puke off the floor of drunks

[Publicus]

Very interesting and welcome back....been wondering where the independent minded but determined Voice of China had been during all of the CCP bashing going on.....these new guys are simply superficial smooth talkers who lack the punchy impact of your classic post that we around here are used to.

So the post gives us the old long train of possible horrors, i.e., all the millions of detailed everyday things that would disappear from life if the PRChina economy radically slowed, hit a serious crisis, or if it were to nosedive, crash and burn. The workings of the feverish mind that sees before his eyes and in vivid detail the vanishing of life as we know it.

Hardly.

Persistently weak commodity prices in Thailand are hurting the country's economy, not the financial chaos occurring in the PRChina. This is World News and not a Thailand thread so I won't spend much time on your extended post, except to say the 1997 financial crisis here didn't result in 10% of what you presented in the post. Restoring subsidies to northern rice farmers also will impact a strained budget that will further strain the current ruling clique.

As to the topic more directly, the Chinese who are adaptive, nimble, successful risk takers, enterprising entrepreneurs and the like have all left China or are Chinese born, raised, educated outside of the PRChina, away from the malevolent control from birth of the CCP. Almost all of the Chinese I know, in Hong Kong to name but one instance, that were born, raised, educated, outside of the PRChina practically froth at the mouth when they talk about the CCP as well they should be expected to.

Impassioned and earnest presentations of the virtuous Chinese are needed and welcomed to constantly remind some of us that the CCP does not represent or bamboozle all Chinese. It is always a welcome moment to hear the Chinese speak their contempt and disdain of the CCP, but one needs to go elsewhere for that.

Was busy making capitalist decisions in the business world

This is a weak argument ....I can find you aplenty of PRC who would critique the government (frothing is a bit rude honestly) and think they are not on the right path or doing the right thing privately and as I have repeatedly posted , no real Chinese would believe in the government but understand the necessity of having one to in the place

Their opinions however doesn't mean they are the government or have a say in governance ...as we all know there are aplenty of armchair critiques who just like to implode everything but has zero actual civil governance experience or actually even want to do anything to make a difference

By the way ...my usual retort to HK folks who are still delusional and refuse to believe they are Chinese or spite their perhaps culturally less cosmopolitan cousins is that they have a duty to help reform it and not just blabber rubbish.

I do understand a 100 year rule may make one think they are British but as long as you enjoy that bowl of "chok" and your dough sticks ....it's still Chinese blood flowing inside so stop thinking you are British and accept reality like what a real Chinese would

This argument about blood has been rejected by the reunified post Berlin Wall Germany and wisely so. The Chinese of Hong Kong are Chinese despite what you or Beijing says about them. The same is true about the Chinese of Taiwan, the Republic of China, are Chinese, and in Singapore too, as well as elsewhere throughout the world.

Being true blooded Chinese does not necessarily mean accepting the 5000 year old deeply rooted culture of dictatorship. The Chinese of Hong Kong are doing more than their share of trying to reform the CCP-PRChina by simply and courageously -- determinedly -- standing up for what democracy and freedom of speech they do have, and for wanting more of it.

The scenario I presented on just Chiangmai alone is factual and not some hallucinating visions

The Chinese disappearing in Thailand would just mean the rise back of the rude drunken louts or Russians which I personally think is more distasteful

I think while the Thais may find certain Chinese habits unpleasant ...there is no denying at least there is money to clear off the table with them rather than wipe vulgarities and puke off the floor of drunks

And here I wuz told using the word 'frothing' was rude. Even I don't post like this about the, ahem, Russians.

[NeverSure]

China's Low Cost Manufacturers Run Out of Time; Hundreds of Factories May Close in Dongguan

"Chinese contract manufacturers are closing their doors. Over 10,000 employees were laid off from Suzhou Science & Technology, as a result of the bankruptcy of a mobile phone parts manufacturer.

Aside from a weak economy, firms are struggling due to over reliance on a single customer and technological improvements that require large capital spending. For example, the article discusses how Nokia suppliers are closing, while those who make iPhone components are throwing in the towel as the technological sophistication required for new phones costs too much to implement."

Emphasis mine LINK

[NeverSure]

This is no secret. China is the holder of the most USD reserves in the world, which they are now using to acquire gold and to de-leverage themselves from the USD. Debt and dollars are two different things.

How Much U.S. Debt Does China Really Own? Foreign governments hold about 46 percent of all U.S. debt held by the public, more than $4.5 trillion. The largest foreign holder of U.S. debt is China, which owns more about $1.2 trillion in bills, notes and bonds, according to the Treasury. In total, China owns about 8 percent of publicly held U.S. debt.

http://usgovinfo.about.com/od/moneymatters/ss/How-Much-US-Debt-Does-China-Own.htm

As I made UNEQUIVOCALLY CLEAR, "China is the holder of the most USD reserves in the world, which they are now using to acquire gold and to de-leverage themselves from the USD. Debt and dollars are two different things."

Again, DEBT AND DOLLARS ARE TWO DIFFERENT THINGS. Do you understand the difference? Dollars are USD. Debt takes the form of US treasuries, government bonds, etc. Why go off on the tangent of debt?

How many times does this have to be said?

China must have $USD to engage in international trade. Its own currency is worthless. The USD is called the "petrodollar" and is the international unit of trade. Most countries including Thailand hold US Treasuries to back their international trades.

China can't afford to hold that "debt" called "Treasuries" right now because its broke. But if it were to sell them it would have to shut down trade which is how it makes much of what money it makes.

China holds only as much money in Treasuries as it needs for trade. With Treasuries acknowledged by the USA, other countries will sell to it. It buys and sells Treasuries to get USD for purchases.

China is NOT a wealthy country which can afford to loan the USA money. It has more problems of its own including a falling economy and a worthless currency. Pundits estimate that China's own debt is 250% of its GDP while the UK's is about 100% and the US' is about 90%.

US Treasuries are sold on the open market. The reason interest rates or "yields" on them are so low is because they are considered a safe haven and countries will buy them when they pay little to no interest. This has nothing to do with how the Fed manipulates interest rates for bank loans within the US. That is done by changing what's called the "prime" interest rate or the overnight Fed lending rate to banks.

China is broke and it's starting to show despite it's non-transparent system.

[SiSePuede419]

"Socialism anyway is not about a social safety net."

That's the most ignorant thing I've heard all day. But keep trying, it's only 7am here...

[SiSePuede419]

"as the technological sophistication required for new phones costs too much to implement."

Why doesn't China call up some of those arrogant Chinese I've met in California who claim the Chinese educational system is "better" than America's?

They seem to know everything, 555

[boomerangutang]

I'm not an adherent to the cult known as Christianity, but I like what Jesus said when asked whether it's good to pay taxes: He asked the questioner to show him a coin. He looked at it and saw a depiction of the Roman top banana at that time - handed the coin back, and with a grin, said, "Give unto Caesar that which is Caesar's."

How it applies to the topic: The impending implosion (or 'correction') of China's economy will hurt big shots to the extent they're entwined with aspects of China's finances. More dire, will be the millions of 'little people' - workers, who just try to scrape together a few bucks to eke out a living. But the quote above applies to the well-off, and could be tweaked to say, "to the extent a person is enmeshed in Chinese money matters, ....that's the extent that person will be burned when the house catches fire."

[LawrenceChee]

I'm not an adherent to the cult known as Christianity, but I like what Jesus said when asked whether it's good to pay taxes: He asked the questioner to show him a coin. He looked at it and saw a depiction of the Roman top banana at that time - handed the coin back, and with a grin, said, "Give unto Caesar that which is Caesar's."

How it applies to the topic: The impending implosion (or 'correction') of China's economy will hurt big shots to the extent they're entwined with aspects of China's finances. More dire, will be the millions of 'little people' - workers, who just try to scrape together a few bucks to eke out a living. But the quote above applies to the well-off, and could be tweaked to say, "to the extent a person is enmeshed in Chinese money matters, ....that's the extent that person will be burned when the house catches fire."

There has been numerous changes in recent years to the tax system in China including now a much discussed revised property tax in the first tier cities

As I say China surprises some if you thought it was communist and there is no personal income tax. It does exist although I would say the smarter Chinese have often found a way around it .

Pretty much like the worldwide trends of billionaires moving to Singapore citizenship to take advantage of a lower personal tax or Apple basing much of its revenue operations in Ireland to pay lesser tax .

Lots of examples in the corporate world eg Cayman Islands etc etc and in some countries where this revenue is more needed , it's a little annoying

http://www.worldwide-tax.com/china/china_tax.asp

[hhgz]

A year ago, predicated on the Chinese threat to stop pegging the RMB to the USD - and use a market basket of various foreign currencies - all of you were gleefully predicting the crash of the USD, and the rise of the RMB. Along with the prediction of gold at $3000/oz, both predictions were nonsensical.

Edited January 13, 2015 by hhgz

[Credo]

The scenario I presented on just Chiangmai alone is factual and not some hallucinating visions

The Chinese disappearing in Thailand would just mean the rise back of the rude drunken louts or Russians which I personally think is more distasteful

I think while the Thais may find certain Chinese habits unpleasant ...there is no denying at least there is money to clear off the table with them rather than wipe vulgarities and puke off the floor of drunks

Your scenario maybe factual, but it may not be entirely correct. When the Chinese leave, there is another group waiting to come in. CM is a tourist destination, if there are rooms available and there is a little marketing, other groups will fill the void.

If the Chinese slowdown affects larger swaths of Asia then your scenario starts to speed up.

I, for one, don't go to CM often because of the Chinese. I have nothing against the Chinese, but the last time I called to book a room, it was filled with tour groups from China.

All that said, China and the Chinese are pretty resourceful folks and very, very few are more than a generation from some very real hardship. The people of China with weather the storm, but I am not so sure the gov't will have it quite so easy.