In “Goldman Seems to Trust the Chinese Economic Reporting a Tad Bit More Than I Do!“, “It Doesn’t Take a Genius to Figure Out How This Will End” and “He Who Bloweth the Bubble With Wet Lips Should Stand Back Lest Spittle and Saliva Spray Upon Ye Face” I not only declared my opinion that China appears to be enthralled in a massive bubble, but Chinese economic reporting cannot be trusted. There have been a few comments stating that the “new and improved China is not the China of 1989 Tiananmen Square”.
It appears that the recent flap with Google security and the censoring of searches sheds light on this debate.
From CNBC:
China has defended its censorship, and Chinese media are stressing that foreigners must abide by Chinese laws.
Most of the filters on Google.cn were still in place on Friday, though controls over some searches, including the June 4, 1989 Tiananmen crackdown, appear to have been loosened.
“According to local laws, rules and policies, some search results cannot be shown,” reads a message in Chinese following sensitive search topics, a line Google.cn used for years.
Google, which has said it hopes to work with China to establish an unfiltered search engine in that market, confirmed it was still censoring results on Google.cn.
Pray tell, how can anyone in their right mind trust the economic reporting of company that says it is running 13 cylinders of an 8 cylinder engine leading the world to economic recovery when they overtly, and without denial, censor free speech and publicly outlaw research and even Internet searches on government activities? Come now. Is it wise to believe the Chinese government’s growth rates and when:
- anecdotal evidence flies to the contrary (ex. manufacturing output vs. electricity consumption, export figures vs shipping and container activity, etc.)
- they overtly censor and outlaw independent resaerch
- they have yet to outright deny involvement in an attempt to hunt down private email addresses of state opinion dissidents
It amazes me that ANYONE will put their faith in the reports of superman level economic rebound coming from a state that clearly acts to conceal facts. I doubt many of the US numbers (see Are the Effects of Unemployment About To Shoot Through the Roof?), so you know I am highly suspect about what comes out of China.
Tags: Asia, Current Affairs, Global Macro, Legislation, Law & the Government
[url=http://www.bloomberg.com/apps/news?pid=20601068&sid=ah8g4ZdFutIY]China Reserves Hit Record, Lending Growth Accelerates in Challenge to Wen [/url]
[quote] Jan. 15 (Bloomberg) — China’s foreign-exchange reserves surged to a record level in December and new loans exceeded forecasts, raising the stakes in Premier Wen Jiabao’s campaign to avert asset-price bubbles.
Reserves rose 23 percent to $2.4 trillion, the world’s largest, according to a People’s Bank of China statement on its Web site today. Banks extended 379.8 billion yuan ($55.6 billion) of new loans, taking the annual total to an unprecedented 9.59 trillion yuan, the PBOC reported.
“Liquidity is massive — the government needs to do something about it,” said Isaac Meng, senior economist at BNP Paribas SA in Beijing. Accelerating inflation may encourage the government to end the 18-month-old yuan peg to the dollar and allow a 3 percent appreciation by year -end, Meng said.
Along with a stronger yuan, policy makers will have to follow up on their decision this week to raise the share of deposits banks must set aside as reserves, Meng said. The risk: surging lending growth and an influx of speculative capital from abroad destabilize the world’s third-largest economy with bubbles from property to stock markets.
Wen’s cabinet pledged this week that regulators will step up monitoring of speculative funds after the biggest jump in property prices in 18 months in December. [/quote]
With the Chinese loans booming, the government is also offering subsidies which help push the auto industry. But is this sustainable growth? Is this economic expansion or government bubble blowing?
[url=http://www.bloomberg.com/apps/news?pid=20601109&sid=av3dPlponcBw&pos=10]Chinese car manufactures work 24 hours a day and still can’t keep up with demand[/url]
[quote]Income Gap
Urban residents earn about three times more than rural, who comprise more than half of China’s 1.3 billion people, according to government statistics.
Rural Chinese buying a new minivan or light truck can get a subsidy of 10 percent of the purchase price, up to 5,000 yuan. Those replacing light trucks can get another 5,000-18,000 yuan.
The government also reduced the sales tax on new vehicles with engines of 1.6 liters or smaller to 5 percent from 10 percent. It said Dec. 10 it was raising the rate to 7.5 percent. [/quote]
as soon as they reign in the liquidity and lending slows down the NPLs at their banks will become a problem as they no longer paper over them with an increase in total loans that are new…..
I hope that China prospers for 100 years but this could get interesting.
My partner and I recently close an operation China after four years there. As much as many are babbling about how blooming that is over there, and how much the locals choose to believe the government propaganda on growth, I found it delusive enough.
As a foreigner, we are very skeptical. And it’s not whether we have to go by their books of rules, or get the co-operation of the government to do or do not. It’s just hard to deal with the fluctuation on supplies, demands, policy changes and the shifting moods of this developing country.
China is still training her muscles, they are getting better than, say 2 decades ago, but they are not there yet. As much as they would like to be the world’s tomorrow, it’s not going to happen any sooner.
People there are keen on get rich fast scheme, (as per my side of the story), lack moral support, and super superficial. They are borrowing recklessly on things they can’t afford, that is including the government. So the snowball effect will sooner eat up what left behind. Say, their used-to-be competitiveness and productivity.
You really don’t have to genius to calculate your risk there.
Me, I give up. It’s just getting too crazy and not worth it at all.
Some of my friends think we are crazy to get ourselves over there when the stock/estate market are bloomingly rich back then, wondering why we go crazy again to give up our opportunities there as China’s economy is heating up.
Call me forward thinker.
I just don’t like the crowd.
China has supposedly been flaring while most of the world is in recession.y long story short, when it sounds too good to be true, it usually is. I think you made the right decision.