China's "old tactics" sound a lot like the very same tactics (cut interest rates, inject money, pile on debt) being used in the West ever since the GFC began. Shouldn't the article really be about how the entire world east and west are reading from the same playbook?
2
I think the Chinese have forgotten, or perhaps never really understood, that productivity, not extreme spending, is the foundation of national wealth.
1
The Chinese have a higher savings rate than Americans do.
china may be big, but its' unregulated 'wild east' way of barging into the world is unacceptable. they should be kicked out of the stock markets and exchanges until they learn properly, not that wall street is a sterling example.
remember: china can't even make milk.
remember: china can't even make milk.
4
According to Bloomberg News this afternoon, "Forty-seven billionaires lost $1 billion or more during the worst week for U.S. stocks since 2011, according to the Bloomberg Billionaires Index. The combined drop was almost seven times the $29 billion lost in the first five trading days of 2015. The 400 people on the index had a combined $3.7 trillion at the end of the week, compared with more than $4 trillion a year ago." Poor babies - only $3.7 trillion to share among 400 of them. I'm sure Senator Bernie Sanders is crying his eyes out. As usual it's the average 401K and small investor who will take the hit. The Dow Jones is down from over 19,000 last year to 16,300 today and that's a big hit for the little folk. Time to vote for serious financial reform in America and around the world, including reining in the central banks.
http://www.bloomberg.com/news/articles/2016-01-08/world-s-richest-lose-1...
http://www.bloomberg.com/news/articles/2016-01-08/world-s-richest-lose-1...
"China is eating our lunch"
- Donald Trump
Unless they were eating at Chipotle, I'd say Donald Trump was mistaken.
- Donald Trump
Unless they were eating at Chipotle, I'd say Donald Trump was mistaken.
3
New China takes sustainable development as part of its longstanding commitment to explore environmental problems and poverty in the Nation your own
Hard times now and probably in the near future for Beijing? Perhaps China is reaping some karmic debt for invading Tibet.
4
How does this logic apply to Native American genocide and the assortment of similar events in modern history? There is plenty of bad karma to go around.
1
One does not justify the other. I hope Bertrand does not mean that because the Native Americans are mistreated, China can mistreat Tibetans.
China has a huge number of problems which many in the west are not aware of.
#1 - demographics/aging population...the workforce has already begun to shrink, and thanks to the 35+ years of the one child population, the current generation does not have enough people in it to support them. China's social structure has always relied on having large families around to help take care of the elderly. Now you've got a lot of only children, with no aunts/uncles/cousins, who will be expected to take care not only of their own family, but also parent/grandparents, all by themselves.
#2 - the education system...don't believe what you read about Chinese test scores...those come from a single school in Shanghai, not from a representative sample of all schools in the country. Most schools, especially those in urban areas, are overcrowded (50-70 students per class), and the curriculum is still focused primarily on preparing for the high school and college entrance examinations. The result is students who are very good at test-taking, but lack many of the requisite skills needed to succeed in the modern world, such as independent thinking and the ability to work in groups and teams.
#3 - Environmental degradation....although everyone likes to focus on the air pollution, the bigger problem is China's rapidly decreasing supply of potable water. It's kind of telling that for all of China's other accomplishments, you still can't drink the tap water anywhere.
#1 - demographics/aging population...the workforce has already begun to shrink, and thanks to the 35+ years of the one child population, the current generation does not have enough people in it to support them. China's social structure has always relied on having large families around to help take care of the elderly. Now you've got a lot of only children, with no aunts/uncles/cousins, who will be expected to take care not only of their own family, but also parent/grandparents, all by themselves.
#2 - the education system...don't believe what you read about Chinese test scores...those come from a single school in Shanghai, not from a representative sample of all schools in the country. Most schools, especially those in urban areas, are overcrowded (50-70 students per class), and the curriculum is still focused primarily on preparing for the high school and college entrance examinations. The result is students who are very good at test-taking, but lack many of the requisite skills needed to succeed in the modern world, such as independent thinking and the ability to work in groups and teams.
#3 - Environmental degradation....although everyone likes to focus on the air pollution, the bigger problem is China's rapidly decreasing supply of potable water. It's kind of telling that for all of China's other accomplishments, you still can't drink the tap water anywhere.
6
A New Economic Era for China Goes Off the Rails...
Surprising no one, except for perhaps an economist?
China does not really have a solid middle class and their income inequality makes the situation in the US look admirable.
China has a ruling class, who launder their ill gotten gains buy purchasing multi-million dollar real estate in the US and UK (who knew that Communism was so lucrative?) and a peasant class.
No economy can thrive without a strong middle class. That the leaders in China seem not to know this is not surprising, as neither do our leaders in the US.
Surprising no one, except for perhaps an economist?
China does not really have a solid middle class and their income inequality makes the situation in the US look admirable.
China has a ruling class, who launder their ill gotten gains buy purchasing multi-million dollar real estate in the US and UK (who knew that Communism was so lucrative?) and a peasant class.
No economy can thrive without a strong middle class. That the leaders in China seem not to know this is not surprising, as neither do our leaders in the US.
5
Hopefully, this will lead to fewer Chinese showing up on shores and running up real estate values by paying egregious sums in cash.
2
As the US population ages into its 60's, 70's, and 80's, they are less likely to buy products and more likely to spend on services. The Chinese are much more in the product business...and we have plenty of those.
1
We're still supposed to be scared of China's economic might, right?
2
That trading in China tends to be a speculative activity is no different than speculation in the U.S., except for the few, large speculators who rely on
algorythms their
computers
use.
,
algorythms their
computers
use.
,
2
And now we reap the whirlwind of Globalization. U.S. corporations got their way by stripping jobs and factories from the U.S.
Now we are paying for it.
And the economic shills' and media, financial or otherwise, that touted this still get fat consulting fees.
We are concerned about terrorism from the Mideast? Wake up.
U.S. Corps., Banks and politicians are the terrorists we should really fear. Economic terrorists who are no more than economic traitors committing economic treason that have destroyed our middle class. Bush 1, Bush 2, Clinton and Obama. All of the same feather.
And that's why Trump and Sanders will happen.
Now we are paying for it.
And the economic shills' and media, financial or otherwise, that touted this still get fat consulting fees.
We are concerned about terrorism from the Mideast? Wake up.
U.S. Corps., Banks and politicians are the terrorists we should really fear. Economic terrorists who are no more than economic traitors committing economic treason that have destroyed our middle class. Bush 1, Bush 2, Clinton and Obama. All of the same feather.
And that's why Trump and Sanders will happen.
2
globalization was almost as big a con job as religion
americans were chumped
not that thats very hard to do
americans were chumped
not that thats very hard to do
4
Remember a few years ago when a number of pundits, talking heads, and allegedly smart people (like Thomas Friedman and his "next big thing") were talking about BRIC economic ascendancy in the 21st century (BRIC= Brazil, Russia, India, China)? Yeah, well how about a pundit's update on how those predictions are all working out? Not so well apparently.
4
Even though it's slowing US would be thrilled to have China's economic growth rate.
It is pretty amazing how doggedly that prediction refuses to come true. The Economist just did a whole issue on what a disaster Brazil's economy (and political life) has become, and Russia was never really on an upward trajectory to begin with.
1
Exactly, but will we learn a much needed lesson about hysteria and fear mongering? Doubtful.
Meanwhile here on American manufacturer row; if we're not out of business we're about to be as a sea of inexpensive products purchased from Amazon.com & Ebay, shipped from China directly to the US at prices way below wholesale prices. (How does a small manufacturer sue China for dumping?) Delivery confirmation provided by USPS for an extra $27 Million dollars of the in debt tax payer funded USPS provides Chinese sellers due to Amazon & Ebay lobbying.
Where does this lead us? Most likely Chinese leadership knowing this is the last year they will be able to manipulate their currency are letting it fall not caring about their people who invested. The Chinese doing business with us are the rich of their country, not the billion or so others living in shacks with no running water or electricity.
As Americans are hooked on Chinese products due to all the naive trade agreements that allow their products in virtually tariff free, we have lost our manufacturing base & millions of jobs.
I wonder if Trump scored points by telling the Times he'll impose a 45% tariff on all Chinese products? If the Made In America company I work for is able to hold on that would make a world of difference.
If we think our system is rigged China is still a totalitarian government that does not allow dissent. Buying their imports only funds their military buildup that funds our military industrial complex to keep up & we're out of work. I hear Harry Truman is rolling over in his grave daily.
Where does this lead us? Most likely Chinese leadership knowing this is the last year they will be able to manipulate their currency are letting it fall not caring about their people who invested. The Chinese doing business with us are the rich of their country, not the billion or so others living in shacks with no running water or electricity.
As Americans are hooked on Chinese products due to all the naive trade agreements that allow their products in virtually tariff free, we have lost our manufacturing base & millions of jobs.
I wonder if Trump scored points by telling the Times he'll impose a 45% tariff on all Chinese products? If the Made In America company I work for is able to hold on that would make a world of difference.
If we think our system is rigged China is still a totalitarian government that does not allow dissent. Buying their imports only funds their military buildup that funds our military industrial complex to keep up & we're out of work. I hear Harry Truman is rolling over in his grave daily.
6
Actually turned on CNBC to hear their thoughts. There was one person who sounded reasonable. The Chinese stock market is 25 years young. There are going to be hiccups. Welcome to one of them world.
1
Hiccups???
Bad karma for destroying coral reefs to build perfectly useless islands to assert regional power -- this by a country that is beginning a decades-long economic contraction caused by demographic collapse.
2
I like the Karma thing instinctively. I wish you would expand your thoughts on the demo collapse. I understand what you mean about the "one child" policy come of age but I'm not sure how that effect ripples through the economy. Eager to hear how that might affect business and growth.
What else could we expect from a corrupt and criminal conspiracy-enabled communist system, so insecure it makes book sellers in "market driven" Hong Kong "disappear"?
3
"What else could we expect" ?
Why more i-Phones, of course.
Why more i-Phones, of course.
Stock market does not equal to the economy! http://greenspringwealth.com/blog-article/the-stock-market-does-not-equa...
1
"...... promising policy coordination at the highest levels to prevent another bout of turmoil."
Who could be ignorant and stupid enough to "promise to prevent another bout of turmoil". Maybe, only NYT can do this?
Who could be ignorant and stupid enough to "promise to prevent another bout of turmoil". Maybe, only NYT can do this?
China's explosive growth which has carried many of the world's largest economies through what should long have been a healthy reboot, has now reached its own tipping point. That should be a wake up call for all of us. Whether its in Canada where a resource based economy has been booming as a result of China's need, or America whose consumer driven economy depends heavily on cheap goods, we have been too eager to postpone the inevitable. We can't keep rolling over the deficit indefinitely. The bill came due long ago and has been called.
China will be fine. The Central Authority has tremendous power to affect change. We on the other hand will have to take matters into our own hands. Literally. I think we are ready. I know far too many young people who are sick of the dregs they are told they should be satisfied with. They don't mind working hard if they see the light at the end of the tunnel. No light? No hope of real sustainable change? That tunnel is nothing but a sewer pipe.
I really don't know what we are waiting for. Wall Street doesn't mind waiting this one out. They will short sell the whole darned sinking ship and mock us for the fools that we are for not cashing in ourselves. They've said so in these very pages. What will it take? A revolution? A miracle? Guess what? We are being handed one if only we could see it.
China will be fine. The Central Authority has tremendous power to affect change. We on the other hand will have to take matters into our own hands. Literally. I think we are ready. I know far too many young people who are sick of the dregs they are told they should be satisfied with. They don't mind working hard if they see the light at the end of the tunnel. No light? No hope of real sustainable change? That tunnel is nothing but a sewer pipe.
I really don't know what we are waiting for. Wall Street doesn't mind waiting this one out. They will short sell the whole darned sinking ship and mock us for the fools that we are for not cashing in ourselves. They've said so in these very pages. What will it take? A revolution? A miracle? Guess what? We are being handed one if only we could see it.
5
About seven or so years ago I was sitting in a public meeting in a small rural Colorado town. And the city father explained they had to scrap and downscale a proposed downtown (and not really big) construction project because the cost of materials had surged since the initial estimates had been made. And he cited China and its construction boom as a money major reason.
This is a classic example of how a central bank can create the illusion of wealth that disrupts events and situations around the earth.
Apparently building a lot of empty cities disproved the mantra "build it and they will come".
This is a classic example of how a central bank can create the illusion of wealth that disrupts events and situations around the earth.
Apparently building a lot of empty cities disproved the mantra "build it and they will come".
4
Analysis of the Chinese economy based on the performance of its stock market is not terribly reliable. Unlike in the U.S., their market is not directly tied to individual companies and is not valued based on the stock value of the companies. Also, it is regularly manipulated by the government. Today's LA Times refers to the market as a "clown show". More important, many experts on China's economy consider its market not to be a reliable indicator of how the economy is faring. As the L.A. Times notes, the notion that the Chinese economy is "going off the rails" is tied heavily to the disastrous recent performance of a stock market whose movements up and down often have little to do with the underlying economy.
12
I would like to point out that our own markets are no longer based on how individual companies perform. It is solely based on expectations of how the Fed will act. I noticed this quite some time ago when what I thought would be good news about the economy resulted in a bloodbath on the NYSE because "experts" predicted the how the Fed might react.
2
The opacity of Chinese actions lend themselves to creating hysteria. The brave world of international finance is peopled by skittish greedy people. Its all about bright reports of earnings and cost cutting. China pushes the wrong buttons because it is a command economy that has shown itself dishonest. There is no SEC or independent press.
1
The Chinese have always been incredibly unsophisticated about market dynamics. There's is no system in place, just a bunch of rules that no one follows. They can't fix this and the worst issue for them is that with one party rule, they can't blame anyone else. Look for increased turmoil in the party and in the streets. That in turn will rattle global markets far more than has been predicted by the so called experts; they will tell anyone they can in six months, as Greenspan did after he ran the US economy off the rails, " No one could have seen this coming." Really?
2
The underlying and fundamental problem with China's economy is the Party's prime directive: "Don't do anything that will result in a loss of control'. There will be no perestroika on President XI's watch. So long as the prime directive remains in place, it is wishful thinking that China will implement any of the true reforms necessary to create a fundamentally sound, market driven economy, much less an innovation/high value add economy. Such an economy requires strong property rights and a rigorous rule of law - all of which mean the Party surrenders control to outside, independent forces and therefore cannot to be considered. China will continue to flounder along with an inefficient state controlled economy: i.e. the classic Fascist economy , until it finally hits the brick wall and collapses much like the Soviet Union in the 90's or Brazil in the this decade.
1
The current economic and financial upheaval in China is perhaps indicative of a transition of the Chinese economy from the state controlled economy to the market driven one.
3
Central planning by monarchs, dictators or committees of socialist central planners, with their plans, policies, regulations, subsidies, taxes, guidelines, circuit breakers, etc., inevitably create so many distortions in the market from what it would be if it was free from their boondoggling that they always end up creating economic chaos. When the Soviet Union imploded and the secrecy that shrouded the central planers' mistakes lifted, it was revealed that the planners had failed to produce nearly enough of the things people wanted and needed and an abundance of things nobody wanted. Rest assured the same must happen--is happening--in China. And the same economic chaos is being revealed throughout the "democratic socialist" states in South America and Europe.
Unfortunately, the economic insanity that is socialism, whereby many of the things people want and need are promised "for free" or heavily subsidized, without any possibility of the promises being delivered over the long run, has infected many Americans. The mere fact that a socialist can run for the presidency with the consent of one of the major parties without being laughed out of countenance demonstrates conclusively that many Americans have lost their moral compass and their economic common sense has atrophied. They have forgotten TANSTAAFL!
Unfortunately, the economic insanity that is socialism, whereby many of the things people want and need are promised "for free" or heavily subsidized, without any possibility of the promises being delivered over the long run, has infected many Americans. The mere fact that a socialist can run for the presidency with the consent of one of the major parties without being laughed out of countenance demonstrates conclusively that many Americans have lost their moral compass and their economic common sense has atrophied. They have forgotten TANSTAAFL!
4
Our "socialist" is actually a social democrat, which is a fundamentally different thing than a real socialist who believes in govt ownership of the means of production. Social democrats believe in private ownership of the means of production, but that capitalism must be appropriately regulated with a progressive taxation system to ensure a basic standard of living for everyone. Social democracy well done actually prevents the radicalization that leads to the socialism to which you refer, which is pretty much an economic and political disaster to be avoided. The fact that Americans (including Sanders himself) conflate these terms, when the difference is really important, drives me nuts.
9
The fact that a socialist can run for the presidency and be so popular with so many people is actually evidence that not all of us have lost our moral compass. The beginnings of our losing our moral compass (and we really have) began with the election of Ronald Reagan.
6
It is both amusing and disgusting to me that after over 3 decades of capitalists in the U.S. sending thousands of jobs and billions of dollars to China; in their never ending greed to maximize their own wealth (hello Wal-Mart) and letting a communist gov`t. control their destiny; it is now all but impossible for the Wall Street geniuses to put the genie back in the bottle. They have sown the seeds of their own economic nightmare; and I for one cannot help but laugh at how the chickens are coming home to roost.
16
'it is now all but impossible for the Wall Street geniuses to put the genie back in the bottle. They have sown the seeds of their own economic nightmare; and I for one cannot help but laugh'
Except it's not just their economic nightmare. A lot of our little nest eggs and pension funds are, one way or another, controlled by those Wall Street geniuses. When the giant collapses, all the little peasant houses under him get crushed.
Except it's not just their economic nightmare. A lot of our little nest eggs and pension funds are, one way or another, controlled by those Wall Street geniuses. When the giant collapses, all the little peasant houses under him get crushed.
2
Hey Mr. Chicken:
You and your fellow citizens voted with your dollars to support Walmart and now Amazon. Wamart didn't buy anything. You did.
Look around and you will see the folks who did this to themselves.
You and your fellow citizens voted with your dollars to support Walmart and now Amazon. Wamart didn't buy anything. You did.
Look around and you will see the folks who did this to themselves.
2
There are no chickens to roost for US or those companies.
The decline in value of the Renminbi that will probably continue in the crisis will probably benefit those companies more in the long run by decreasing cost of products & labor in China and thus increasing those company profits.
And of course, our billionaire class will continue to become richer while our middle class will not. . .
The decline in value of the Renminbi that will probably continue in the crisis will probably benefit those companies more in the long run by decreasing cost of products & labor in China and thus increasing those company profits.
And of course, our billionaire class will continue to become richer while our middle class will not. . .
There really is no limit to what capitalists will sell without thinking. Look what the gun industry has done in the US to revive its civil war.
3
China holds trillions of U.S. federal debt. Debt that has risen from less than $11 trillion to more than $18.5 trillion under Obama's watch. When the Chinese decide to cash in this debt to prop up their ailing economy, look out. You cannot spend your way to prosperity with debt, but Obama has done his best to try.
1
Do you actually think China has the power the cash in all its chips and force the US to pay? Do you think for one minute that it would do so? And do you not realize how joined at the hip China and the Western economies are now, and how much China depends on US consumers?
3
Good thing those Republicans demanded that taxes stay low so that there would be more debt to sell to Red China!
Paul, ignorance is always a poor substitute for fact. Your analysis demonstrates this. China has actually reduced its purchase of U.S. debt over the past five years. It was at its height during the Iraq War under Bush. They have counted that debt as part of their 'foreign reserves,' and since 2008 they have been exercising it pretty liberally to invest in their domestic infrastructure as well as in foreign mergers and acquisition. Your basic premise, "you cannot spend your way to prosperity with debt," has been disproved time again historically. The United States became the foremost global power leading up to WWI by refusing to redeem its greenback for gold from Europe insisting instead that these powers buy U.S. Debtor (''Liberty'') bonds to exchange for the weapons they sought. The U.S. emerged from the Great Depression, not through the sustenance provided by The New Deal programs constantly under Republican attack, but from all controls on money supply being lifted by WWII. The U.S. became established as a world economic playing in 1863-5 during the gearing up to preserve the Union. In short war - during which the reactionaries always agree to suspend all restrictive monetary policies - is by default along with prohibited substances (i.e. Prohibition and the ''War on Drugs'') - the principal growth mechanism of our 'great capitalist system.'
The facts belie debt ranters and support coordinated global economic growth planned effectively.
The facts belie debt ranters and support coordinated global economic growth planned effectively.
3
….the silver lining is that a slow down of China's manufacturing and cars/trucks on the road may give them a bit of relief from their toxic pollution…and maybe China will decide to make the goal of 100% sustainable energy creation their new economic driving force in a new clean & green China. They can do it if they clear out the corruption and focus on their future.
1
The combination of disregard of standard accounting rules by companies, overheated lending by the government and the Chinese love of casino games make their stock market a joke.
3
Where is the coverage of the behind the scene money passing to China from the West? Isn't this the real reason for the shaky markets? Those same financial institutions that brought our economy to the edge of collapse are also doing massive business with China.
I have no problem with China having brakes on their system because these places of trade in our country were not left up to market forces. The citizens had to bail them out from their insolvency when the failed. As much of a failure of free markets as far as I can see.
I found this statement funny, "China’s stock markets have tended to be less correlated with the local economy than most countries’ markets. That is because trading tends to be a speculative activity in China...."
Most companies on Wall Street are not valued on their actual profit at all. It is all speculation on their future earnings. This is bubble territory. Earnings coming from investments is not coming from profitable companies but from the activity of trading bets on paper. With so much wealth being created out of speculative betting we now have an over-abundance of fake cash floating around looking for too few investments, so bubbles form.
I have no problem with China having brakes on their system because these places of trade in our country were not left up to market forces. The citizens had to bail them out from their insolvency when the failed. As much of a failure of free markets as far as I can see.
I found this statement funny, "China’s stock markets have tended to be less correlated with the local economy than most countries’ markets. That is because trading tends to be a speculative activity in China...."
Most companies on Wall Street are not valued on their actual profit at all. It is all speculation on their future earnings. This is bubble territory. Earnings coming from investments is not coming from profitable companies but from the activity of trading bets on paper. With so much wealth being created out of speculative betting we now have an over-abundance of fake cash floating around looking for too few investments, so bubbles form.
5
I still don't understand why all of this has not been priced into the stock market all along. It's been well-known for nearly a year that the Chinese economy was slowing dramatically and that the government was cooking the books. My Wall Street friends were telling me all this six months ago, and presumably adjusting their positions accordingly. Why is this suddenly roiling markets now?
3
Why? Because speculators and hedge funds will destroy all to make a profit.
As the second largest economy in the world, Chinese economy is still growing about 7% in 2015. It is still growing at 6+ percent this year. China still contributes a lot to the world economy. As for the Chinese stock market, it has no relation to the Chinese economy. Only 10% of the Chinese population invests in stock market, which is small in comparison to other world markets. So the stock market crash really does not reflect the real economy. We still depend on China's growth and economic vitality.
3
China is not going to fail, it is not going to stop growing, it will one day be the largest economy in the world by far. There will be ups and downs, it will not be linear growth, and the rate of growth will slow as the economy approaches maturity, but by then a 2% growth rate in a massive economy may represent more growth in dollar terms than a 7% growth rate in their current economy.
I am finding that the NYT presents a generally negative view of the world. I went to the Latimes for more close-hand reporting of the terrorist event in San Bernadino and I have continued to read it, both the paper and the reader comments. I am finding it to be a much more positive experience compared to reading the NYT and its reader comments, and that the negativity expressed in the NYT is exaggerated and unjustified in many cases. Both papers report the same facts, but the NYT often extrapolates from the facts into in the direction of the dark side, just as it is doing with China here.
I am finding that the NYT presents a generally negative view of the world. I went to the Latimes for more close-hand reporting of the terrorist event in San Bernadino and I have continued to read it, both the paper and the reader comments. I am finding it to be a much more positive experience compared to reading the NYT and its reader comments, and that the negativity expressed in the NYT is exaggerated and unjustified in many cases. Both papers report the same facts, but the NYT often extrapolates from the facts into in the direction of the dark side, just as it is doing with China here.
9
China represents the wild wild west in the global market. You will be foolish to believe any information the Chinese officials provide. Why would anyone invest in a web of lies? The promise of big returns is also a lie, perhaps the biggest of all their lies. Some foreign investors are finding out.
3
A good article. It has made clear that too much is being
read into stock market gyration and extrapolated to
the doomsday scenario for Chinese economy. Chinese
stock market is small and dominated by the small
investors who are incapable of analysis of a large and
complex economy . Slight bad news and they sell off
with herd instinct. It is worth noting that last summer
also there was such a scenario and yet the Shanghai
market ended the year up 9.4%. Knowing that stock
market works on sentiments(fear and greed) and
herd instinct in the short run. It is not prudent to read
too much into stock market activity of few days and use it
as gauge of economy for 2016.
read into stock market gyration and extrapolated to
the doomsday scenario for Chinese economy. Chinese
stock market is small and dominated by the small
investors who are incapable of analysis of a large and
complex economy . Slight bad news and they sell off
with herd instinct. It is worth noting that last summer
also there was such a scenario and yet the Shanghai
market ended the year up 9.4%. Knowing that stock
market works on sentiments(fear and greed) and
herd instinct in the short run. It is not prudent to read
too much into stock market activity of few days and use it
as gauge of economy for 2016.
5
Crony communism/capitalism at work. As usual, its all about the bigs keeping the littles in their place. I feel for the Chinese workers.
10
Lost in all the analysis is the fact that there are diminishing returns on growth. In a finite wold with finite resources, and the need for a livable environment, exponential growth cannot go on forever. We are seeing this in China right now. They have to close factories, cancel flights and limit driving when their air pollution gets too bad. This slows their economy.
Think about 7% compound growth. This means the economy doubles every 7 years. Can anyone comprehend what life would be like in China if the economy doubled seven years from now? Economists need to understand physics and math. Yet, investments are made assuming perpetual 7% return.
Think about 7% compound growth. This means the economy doubles every 7 years. Can anyone comprehend what life would be like in China if the economy doubled seven years from now? Economists need to understand physics and math. Yet, investments are made assuming perpetual 7% return.
72
Very good points, John. I further also note that 7% annual growth would translate into a Chinese economy 16 TIMES the size of the current economy in about 28 years (i.e., about one generation). Clearly an absurdity.
"The greatest shortcoming of the human race is our inability to understand the exponential function." (Al Bartlett)
"Growth for the sake of growth is the ideology of the cancer cell." (Edward Abbey)
"The greatest shortcoming of the human race is our inability to understand the exponential function." (Al Bartlett)
"Growth for the sake of growth is the ideology of the cancer cell." (Edward Abbey)
3
It is not unreasonable to think that China's economy will double over the next seven years, or close to it. Growth will slow as their economy approaches maturity, but it will then be a massive economy, and 2% growth in a massive economy is substantial.
Actually 7% compound growth means doubling every ten years...still point well taken. This is not sustainable.
3
The bottom-line: This economic slow down is only a bump in road. China in well on the way to world dominance by the end of this century. Why is that very bad news for the few free societies that exist in the world? China is a nightmare Orwellian state where an individual can disappear and be held in "administrative detention" for a life time without due process of law, where the communications of its citizens are closely monitored for statements critical of government policies and its central goal is to dominate the world by becoming the world's indisputable super power. And it's well on it way to achieving that goal. How did China become so strong so fast? American corporations and Wall Street investors seeking obscene profits from slave wages, stealing the intellectual property of American corporations and then establishing its own state owned corporations that take market share away, and using the profits from that theft to modernize their weapons and build their military. Now top American science and technology universities are allowing Chinese nationals to take a growing number of seats away from American students. It part of the deal for allowing American corporations to operate in China. (Oh, google "chinese students cheating on sat test" - that's the college entrance exam- and, of course, the cheating problem continues at the university.) Our biggest national security risk is not ISIS or radical Muslims rather its the Chinese government.
21
Capitalists sold the rope to hang themselves.
4
While I can't dispute the writer's analyses, I'm left with the question of how much of this is reverberations in the echo chamber of analysts and watchers -- i.e. there is not a single quote or reference to statements (off the record or not) from any Chinese official who knows internal deliberations. Similarly...there is no tangible economic data quoted that supports the underlying "news": that the Chinese real economy has taken a turn for the worse and the government is flailing.
My point is that while the tone and suggestion of this article (and indeed of all the coverage I've seen...) is economic and policy mayhem, it is absent rigorous economic, political, or policy reporting, and unsupported by knowledge about what policy makers are actually intending to do or real economic data.
The issue isn't whether there is or is not a meltdown, but if the author actually knows, or is mostly participating in the froth of commentary allowing the mass audience to believe it knows what is happening.
The stock market there is clearly a casino...and they are trying to figure out how to manage -- no surprise there. On currency - how about a substantial piece, economically and fact based...data and actual policy knowledge?
[side note: from my experience with commentary on their usually fluffy green technology articles which do a severe disservice to real transformation by encouraging uneconomic, wasteful solutions, the NYTs is not keen on these types of criticisms]
My point is that while the tone and suggestion of this article (and indeed of all the coverage I've seen...) is economic and policy mayhem, it is absent rigorous economic, political, or policy reporting, and unsupported by knowledge about what policy makers are actually intending to do or real economic data.
The issue isn't whether there is or is not a meltdown, but if the author actually knows, or is mostly participating in the froth of commentary allowing the mass audience to believe it knows what is happening.
The stock market there is clearly a casino...and they are trying to figure out how to manage -- no surprise there. On currency - how about a substantial piece, economically and fact based...data and actual policy knowledge?
[side note: from my experience with commentary on their usually fluffy green technology articles which do a severe disservice to real transformation by encouraging uneconomic, wasteful solutions, the NYTs is not keen on these types of criticisms]
3
The economic turmoils happened since last year, last summer's 300%increase and quick drop of the stock market, the currency devaluation manipulated by the government, and again the recent stock market volatility, all told us that the West must reconsider its strategy with China - China is not what we have wished as a stable pillar for the world peace and growth.
For years, the West has had a one-sided love for China, or rather China's money and resources - a huge population and vast land. The breathtaking reform started by Deng Xiao-ping in 1978 led to the impressive double digit annual GDP caught the world by surprise, and the so-called "China model". But China has reminded defiant in becoming one of "them". This defiance comes from two sources: one is China's nationalistic pride. Remember that China in Chinese means "the Center of the World". And the second is its deep connection with Communism ideology.
China is a two-head snake: It wants to utilize the free market economy, but remains strongly totalitarian; it wants to be part of the world, but its pride and nationalism cause more trouble to the world; it wants to remain "communism", but the corruption erodes its foundation everyday and everywhere.
The engagement with China has transfused the vital dose of blood to this monster that should have been vanquished as the former Soviet Union. Instead, we resurrected this monster. You would enjoy this two-head snake if we live in a circus. Or don't we?
For years, the West has had a one-sided love for China, or rather China's money and resources - a huge population and vast land. The breathtaking reform started by Deng Xiao-ping in 1978 led to the impressive double digit annual GDP caught the world by surprise, and the so-called "China model". But China has reminded defiant in becoming one of "them". This defiance comes from two sources: one is China's nationalistic pride. Remember that China in Chinese means "the Center of the World". And the second is its deep connection with Communism ideology.
China is a two-head snake: It wants to utilize the free market economy, but remains strongly totalitarian; it wants to be part of the world, but its pride and nationalism cause more trouble to the world; it wants to remain "communism", but the corruption erodes its foundation everyday and everywhere.
The engagement with China has transfused the vital dose of blood to this monster that should have been vanquished as the former Soviet Union. Instead, we resurrected this monster. You would enjoy this two-head snake if we live in a circus. Or don't we?
11
They need a more even male/female ratio if they ever expect to develop a consumer economy.
2
Most all Asian countries have the same: South Korea and India as well. The preference for boys (and a generalized disparagement for girls) is deeply ingrained in Asian societies and won't go away anytime soon.
Hmmm, maybe oligarchies don't work after all. The corruption in the Chinese, Russian, Brazilian systems is moving here. As we have seen in countless economies around the world, any system that only benefits a few at the top is destined to collapse. We started our own trickle down economy under Reagan and we've seen what happens, you end up with trickle up poverty. The only way to have a healthy economy is to have a robust middle class. I wonder what will happen when the Russian and Chinese can't meet their taxes on the homes they've bought in Manhattan and Vancouver and London?
43
Do not fear.
Those Russian oligarchs, Arab sheiks, and Chinese Communist Party members have salted away many millions in their ill gotten gains in offshore tax havens.
They learned from the best - our own .01% have been great teachers on how to launder money.
Those Russian oligarchs, Arab sheiks, and Chinese Communist Party members have salted away many millions in their ill gotten gains in offshore tax havens.
They learned from the best - our own .01% have been great teachers on how to launder money.
The three advantages they had were: low wage workers coming from rural areas with no other opportunities;unfair business practices including abuse of low wage worker, stealing intellectual property.And forcing the investors to reinvest in China and not take profits home.
3
Buried amidst the sturm and drang of this breathless prose an important point. "Few analysts had expected such a quick retreat. “Removing the circuit breakers now means they have to admit they made a mistake.” These "analysts" don't understand China. It's a country run by engineers. They try little experiments like the open door policy in Shenzhen back in the 1980s and adopt it across the country if it works. The "brake" didn't work so they abandoned it. The current Chinese leadership are not ideologues. They will adopt what will work for their country. This may well ultimately be China's saving grace. Ideologues of all stripes will have a hard time understanding this.
2
You make a good point in the sense that they are fundamentally pragmatists with regard to economic policy. They are ideologues, however, when it comes to CCP control of the polity and retaining the authoritarian structures. The question then becomes whether democracy offers a political and economic flexibility to adjust to shocks that you just don't get with a relatively small group of decisionmakers. I did a paper once that inadvertently found that while authoritarian countries initially had higher economic growth rates, they had a much harder time recovering from recession that democracies.
"After so many failed get rich quick schemes, I know I'm going to get rich with this scheme, and quick!"
No doubt some of China's economy is legitimate and the growth that accompanied it has been real, however, I believe they also imported some of the worst elements from our current Western capitalistic system and have huge bubbles that are going to blow up sooner or later and reveal what is fake, and what is real. My guess is that this will happen sooner, rather than later, based on the current news coming out of that country.
No doubt some of China's economy is legitimate and the growth that accompanied it has been real, however, I believe they also imported some of the worst elements from our current Western capitalistic system and have huge bubbles that are going to blow up sooner or later and reveal what is fake, and what is real. My guess is that this will happen sooner, rather than later, based on the current news coming out of that country.
4
Without a legal system that allows for major lawsuits in a civil and criminal manner similar to the USA< when corporations break the law there are very few real risks. A corporation here can face major lawsuits for a variety of reasons. this jet does not exist in China, and so the corporations run wild and leave an area polluted without real punishment, and the executives take their money and hide in their expensive apartments in NYC.
7
Isn't China supposed to be the next superpower? Aren't the experts saying China will soon overtake the economy of the United States? If China is the new superpower let them deal with their choking air pollution and economy. Perhaps they can build an island in the South China sea for their billion plus population.
In the meantime, China is aggressively building up their military to compete with the US Navy. Does China sound like a friend to you? If they are the great superpower let them figure it out. Hopefully one day we can all say rest in peace China.
In the meantime, China is aggressively building up their military to compete with the US Navy. Does China sound like a friend to you? If they are the great superpower let them figure it out. Hopefully one day we can all say rest in peace China.
2
Do they sound like a friend to you? Well, considering that practically all consumer goods and much of our heavy industry and technological intellectual property is being produced in China, we'd better be friends with them. If for some reason the Third World nations on which our economy now depends were to decide to cut us off, we've let our economic infrastructure deteriorate to the point where we couldn't reboot it. Our 'service economy' would be like the 1930s in which families took in each other's washing.
We've sold our cow for a handful of 'magic beans'. Anyone betting on whether there's a beanstalk with a singing golden harp at the top?
We've sold our cow for a handful of 'magic beans'. Anyone betting on whether there's a beanstalk with a singing golden harp at the top?
1
I heard an expert, on MPT last night, refer to the Chinese authorities as "amateurs," which of course they are. And, these are the folks running a country in which millions of Americans have invested their savings. Feels like a gotcha moment to me.
9
Don't trust the experts. In my life time of 75 years
I have seen many who make pronouncements on a
given situation and disappear when the events go
in the opposite direction proving them wrong. Also,
obituary of Chinese economy is premature. As usually
we take a very short term view and provide instant
analysis of Chinese system without the
perspective of history of major transformation of
China in the last 35 years under the same system.
I have seen many who make pronouncements on a
given situation and disappear when the events go
in the opposite direction proving them wrong. Also,
obituary of Chinese economy is premature. As usually
we take a very short term view and provide instant
analysis of Chinese system without the
perspective of history of major transformation of
China in the last 35 years under the same system.
What "millions of Americans" have invested their savings in China? Your comment is perhaps the wishful thinking of a few Chinese nationalists, but it's far-fetched to say the least.
One mystery is that at what point will people simply decide to stop buying technical and other useless gizmos and new cars and focus on the necessities? When economies hit a recession, that happens to some extent. How much infrastructure does a country invest in knowing there are ups and downs?
Besides, who really controls the financial markets?
Heaven knows what the lemmings on Wall Street will do now.
Besides, who really controls the financial markets?
Heaven knows what the lemmings on Wall Street will do now.
3
th currency of th future might well be canned food
youll be happy to trade that iphone for a can of cling peaches
in heavy syrup
youll be happy to trade that iphone for a can of cling peaches
in heavy syrup
6
thx1138's observation brings to mind a loopy moment in the underrated comedy Gremlins II: The New Batch. In this scene hordes of the scuzzy monsters have invaded a brokerage and are pounding keyboards and screaming 'buy! sell!' at random into phones. Amid the havoc, the smoothly urbane intellectual gremlin (voiced by Tony Randall) purrs into a phone, 'I'm advising my clients to put everything into canned beans and shotgun shells'.
It would be funnier if I didn't have the suspicion the movie scene is coming soon to a reality near you.
It would be funnier if I didn't have the suspicion the movie scene is coming soon to a reality near you.
2
China has become too big for the world market to be the primary driver of her growth. The time has come for China to emerge as a developed country, no just a developed economy. Given the astonishing accomplishments China has attained in the last forty years, there is every reason to think China will undergo her next transformation successfully. Let's hope this happens soon; a modern, socially advanced China on the world stage is badly needed.
5
Take a breath NYT. China's fine. This is a predictable part of China's adjustment to a consumption driven economy. They could be in in for a few rough years but probably nothing compared to what the US went through after 2008 and if I remember correctly the US even though it hasn't really addressed the root of those problems is "gasp" still here. It's also important to remember current global economic conditions were not created by China but they are relatively well placed to muddle through the chaos. The US, however, who is really responsible for where we are has already used up it's spare tires. China's has US$ 3.5 trillion in the bank, a huge investment in infrastructure (which includes some excess investments but I'll take that over banker bailouts any day). Most importantly as regards the shift to domestic consumption driving GDP China as of an October 2015 Credit Suisse report for the first time has the largest population of middle class defined as holding net assets of US$50K to 500K in the world. China has 109 million the US 92 million and China not surprisingly added twice as many middle class than the US since 2000 and China's rate of middle class creation continues to far outstrip the US. So yes. The oppressed "slave labourers" are doing okay. They are also making massive investments in green technology to address growth related pollution problems. China's going in the right direction and they have the patience to think long term not the next news cycle.
39
sounds like you work for a chinese brokerage
keep pumping !
keep pumping !
5
This development must really cut into your clients' health. For those brokers who are up to their necks in liabilities farther than anyone could see, coming at them faster than a Chinese landslide, this does not bode too well at all.
What's a broker to do? Sing that Glad, Happy Song that all will be well. There's nothing to worry about. No...there is nothing behind the curtain...no..nothing at all....
What's a broker to do? Sing that Glad, Happy Song that all will be well. There's nothing to worry about. No...there is nothing behind the curtain...no..nothing at all....
8
Jack I don't think you understood my point. Things could well get near as bad as it was in the US in 2008 for China but even then it's really just a stock market correction and investors will lose money. My point is stock market fluctuations are just not that important in a macro long term sense. So no I'm not a broker.
2
Mr. Xi is using the worker's pension fund to try to shore up the stock market and putting average people at risk while he helps line the pockets of the top 1% global financial elite who control markets around the world. Meantime, the predatory capitalists want him to shut down state-run industries so they can buy them for pennies on the dollar, privatize them and suck the assets out to line their own pockets. Same game, different country. I hope Mr. Xi understands what is going on and develops a new model of public-private profit-sharing economy. Perhaps, once again, China will be able to teach the world a thing or two.
http://www.theguardian.com/world/2015/aug/23/china-to-allow-pension-fund...
http://www.theguardian.com/world/2015/aug/23/china-to-allow-pension-fund...
5
292,000 new jobs added December, 2015. Great numbers that would be made sweeter to see us 99% begin to share in the benefits of our recovery.
And contrast America with China. Where are all those prognosticators telling us that China will surpass us in short time? Must have been the same people that said oil was going to $300 because the Chinese would spend whatever it took to run their factories. Not now, huh?
Great news on the economic front and in such sharp contrast to China. Full credit will go to President Obama and his administration to not only bring back the American economy from the brink, this rescue also saved the world's economy from a contagion that could have been severe.
So, we witness China spiraling toward economic disaster not too long after we ourselves saw our own economy getting very close to the brink.
Is there any lesson to this story of two countries? I say there is.
If any citizen wants to see America be like China elect Republicans so they can come back and destroy what they didn't the last time around. Elect Democrats if you like to see this economic result continue.
Select "D" to go forward, select "R" to go in reverse.
And contrast America with China. Where are all those prognosticators telling us that China will surpass us in short time? Must have been the same people that said oil was going to $300 because the Chinese would spend whatever it took to run their factories. Not now, huh?
Great news on the economic front and in such sharp contrast to China. Full credit will go to President Obama and his administration to not only bring back the American economy from the brink, this rescue also saved the world's economy from a contagion that could have been severe.
So, we witness China spiraling toward economic disaster not too long after we ourselves saw our own economy getting very close to the brink.
Is there any lesson to this story of two countries? I say there is.
If any citizen wants to see America be like China elect Republicans so they can come back and destroy what they didn't the last time around. Elect Democrats if you like to see this economic result continue.
Select "D" to go forward, select "R" to go in reverse.
28
Jack
China has already surpassed the US!
The reason for China's dilemma economically is because the global downswing in the cost of oil and gas reflected also in the cost of raw resources that China has contracted for a much higher costs.
There is also an economic fight with the US over who will have the global reserve currency. The US is doing so well because of its US Dollar, which has no gold or silver backing. It literally has printed money with the backing only that it is used as the Petro Dollar. As BRICS extends its loans to third world countries it will undermine the value of the US Dollar by China dumping them on the world.
What you don't seem to understand is that this is not about Democrats or Republicans, but the value of the US Dollar. As long as the Dollar is strong so is America!
China has already surpassed the US!
The reason for China's dilemma economically is because the global downswing in the cost of oil and gas reflected also in the cost of raw resources that China has contracted for a much higher costs.
There is also an economic fight with the US over who will have the global reserve currency. The US is doing so well because of its US Dollar, which has no gold or silver backing. It literally has printed money with the backing only that it is used as the Petro Dollar. As BRICS extends its loans to third world countries it will undermine the value of the US Dollar by China dumping them on the world.
What you don't seem to understand is that this is not about Democrats or Republicans, but the value of the US Dollar. As long as the Dollar is strong so is America!
3
Did you just wake up from a long sleep? It's not about Democrats or Republicans? Do you remember the 2008 economic near crash? Who took our country there? Bush and company. Massive tax cuts that ate up the surplus left by Clinton. Unnecessary wars put on the credit card. Casino style banking and finance regulations, and the American taxpayer paid the whole tab.
And you tell me I don't understand the value of the US dollar? The record low for the US dollar was March, 2008. Gee, who was in office then? The dollar has risen from that point that now it is strong. And gee, who was in office during that time?
I don't mind debate and banter. But if you're going out on a far limb to make an incorrect point please expect that that limb will be cut.
Think, think, think, then speak.
And you tell me I don't understand the value of the US dollar? The record low for the US dollar was March, 2008. Gee, who was in office then? The dollar has risen from that point that now it is strong. And gee, who was in office during that time?
I don't mind debate and banter. But if you're going out on a far limb to make an incorrect point please expect that that limb will be cut.
Think, think, think, then speak.
1
The BRICS are doing very poorly, Magoo. Russia, India, Brazil, South Africa -- four out of five are currently quite bad off. These predictions of some New BRICS Century on the horizon are vastly exaggerated. Moreover, the BRICS are not a military bloc like NATO; they are an economic-cooperation group and don't have to power to replace the dollar. With what? The lowly ruble?
1
Is there a lesson here that while the free market has its vices, government attempts to control the economy, either in the US or China, frequently turn out badly?
1
Jim, you are brain washed. US government always
interfere in our economic system. In 2008 when
market system created a gigantic mess, US govt.
rushed with $1T stimulus and Fed pumped another
$3.5T into the economy and zero interest rate. Not to mention
new technologies that govt. created: internet, GPS
and others that companies like Apple, Google and Pfizer,
etc use to create products.
interfere in our economic system. In 2008 when
market system created a gigantic mess, US govt.
rushed with $1T stimulus and Fed pumped another
$3.5T into the economy and zero interest rate. Not to mention
new technologies that govt. created: internet, GPS
and others that companies like Apple, Google and Pfizer,
etc use to create products.
1
China
I have known very little about China's economy through the years. I have a friend who visited recently. The discussion after her visit centered around the limited freedoms for its citizens. Currently the discussion centers on how it's current economic problems will affect our economic life. Will it? don't know. We have been recovering from our own economic problems for the last seven/eight years. I can't see how a communist economy can affect our free market system for more than the usual news cycle.
I have known very little about China's economy through the years. I have a friend who visited recently. The discussion after her visit centered around the limited freedoms for its citizens. Currently the discussion centers on how it's current economic problems will affect our economic life. Will it? don't know. We have been recovering from our own economic problems for the last seven/eight years. I can't see how a communist economy can affect our free market system for more than the usual news cycle.
China absolutely can affect our free market system. Even though it hasn't been seen before in recent history, China's communist/capitalist/fascist economy is most certainly co-dependent with ours. American consumers have become very comfortable purchasing cheap Chinese goods almost every day. It is an unfortunate situation, given China's human rights issues to which you allude.
3
Because it's not really a communist economy, and is actually a capitalist hybrid which is deeply entwined with other capitalist economies, in particular the U.S.
The internal contradictions of Capitalism drive it toward repeated disruptions and crisis. History tells us this. The Chinese leadership needs to go back and read Marx again. The chickens have come home to roost. So be prepared for a roller coaster ride. Big Capitalist Democracies have been trying to control this beast without much success.
Sure they can read Marx, but living under Marx's theories doesn't lend itself to a very prosperous lifestyle, as history has shown again and again.
1
China needs to recognize that as the number one economy in the world it can not continue to under evaluate its currency while trying to make its currency the new global Reserved Currency. Our country has and will use everything in its power economically and military to keep any country including China from usurping the US Petro Dollar.
1
Betting against China in 2015 is like quitting on the US in the 1930s. What China is going through is cyclical - they've put too much money in stocks and too much money in real estate. Sure, it will create a hangover for a couple of years while they work through it, but the fundamental strength their economy has displayed over the past 20 years hasn't changed just because of what the stock market is doing today. Remember that their stock market crashed in 2008 as well.
1
China's leader's have to priorities: protect their own wealth and try and contain domestic unrest.
As to the latter, most of the populace used the stock market as their savings accounts: bank's intentionally kept rates at near nothing so most turned to the stock market to see some gain on their savings and get in on the wild speculation.
Now that those savings are in danger ALONG WITH a weak economy that might take their job, those TENS OF MILLIONS of migrant workers that the government has denied legal right to settle along the coast might start thinking that there's a better way of doing things.
Enter the panic at the top.
As to the latter, most of the populace used the stock market as their savings accounts: bank's intentionally kept rates at near nothing so most turned to the stock market to see some gain on their savings and get in on the wild speculation.
Now that those savings are in danger ALONG WITH a weak economy that might take their job, those TENS OF MILLIONS of migrant workers that the government has denied legal right to settle along the coast might start thinking that there's a better way of doing things.
Enter the panic at the top.
1
Could anyone with a thimble full of commonsense not have anticipated this? The shady economic numbers, the building boom of ghost developments, and the Central Control good news coming out of China has always been a house of cards. A house of cards no one was willing to acknowledge. Well the time for the bad medicine is finally here...
8
The Chinese economy and market system is very different from US - the stock market of China is a a poor and uncorellated indicator of Chinese economy. Chinese stock market is highly speculative and its valuation is less than 10% of its GDP. Thus drawing major conclusion on Chinese economy from the stock market performance is risky. The more important parMeter is the impact of Non Performing Assets in the bznk's book and drop in the future capital investments. The important question is how much growth in consumption is compensating the fall of capital investments - there is considerable opportunity for the Chinese economy to increase consumption.
Right now, 15% of the population in China is over 60. In less than 15 years, it will be 30%. So if you think China has problems, just wait.
16
With the pollution in China,many will not make it to 75. On third of the land is now polluted, the water supply is horrible, and the vegetables under study are now contaminated. Unless they make stricter codes of production with respect to manufacturing the population will face a Malthusian end. Breathing in Beijing is health risk. the water can not be consumed. People buy bottled water, however no one is sure of its quality. The vegetables do not get bottled water when growing.
When I visited China I asked over 100 people if they could leave where would they like to go and live. Over 75% said New york City. Everyone wants out.
When I visited China I asked over 100 people if they could leave where would they like to go and live. Over 75% said New york City. Everyone wants out.
The same shift is happening in the U.S. so it will be a race between two oldsters.
A command economy does not understand free markets. This tinkering (as always) will have an overall negative effect further excerbating the angst of the public. There is no longer a 'thumb hole' in the dam; now a barn door!!!
8
The problem is that Communists are still Communists. They still want to control and manipulate markets for their own advantage. They are going to pay a huge price for all of the vacant and unused infrastructure projects that were built. It's really a question of how long the Chinese people will put up with it now that many of them have gotten a taste of a better life.
21
The Chinese are lousy Communists and lousy Capitalists….they have created a fusion of the worst characteristics of both….no wonder it's a toxic, corrupt mess….the Chinese people far deserve better from their government & business leaders.
3
1. A fool and his money...
2. Investing is the wrong word.
3. Gambling is gambling no matter the odds.
4. Who do you think WON"T use the word gambling?
2. Investing is the wrong word.
3. Gambling is gambling no matter the odds.
4. Who do you think WON"T use the word gambling?
5
Look to nature to explain economic and historical trends:
We breathe in and out; seasons come and go; the moon waxes and wanes; wildfires consume the landscape.
We breathe in and out; seasons come and go; the moon waxes and wanes; wildfires consume the landscape.
1
The turmoil described in this article is minor compared to the turmoil in the US during the financial crisis, and now the US is said to have the world's strongest economy. China will not experience linear progress in its economic development, there will be ups and downs, surges and selloffs, the currency will fluctuate. But the progress will continue.
4
You seem quite sure of yourself; I would encourage you to put your money where your mouth is. You stand to make a lot of money by investing in the Chinese stock market during this sell-off.
It appears that China has some basic economic problems that they have not addressed. Is it possible that the Chinese stock market although small is properly reflecting economic issues that China and Chinese Companies have?
What this article tells me is that at the highest levels China's economic managers do not really know what they are doing in some very significant ways. There is also a serious lack of transparency. So, inexperience + ineptitude playing out behind closed doors? Fasten your seat belts, we're in for a rocky night.
3
There is very little air at dizzying heights!!!!
In my opinion these are mere growing pains. China's demise is overdone.
2
Strange.
When the Chinese install stock market circuit breakers and attempt to stimulate their economy by infusing some $585B in infrastructure improvements it is referred to as short term "tactics".
However, when the US employs circuit breakers, creates an $850B stimulus package of "shovel ready jobs", bails out the Banking Industry, keeps interest rates at zero for years on end, and then goes on to print $80B a quarter under the banner of "Quantitative Easing".... it is hailed as a brilliant economic strategy.
Go figure.
When the Chinese install stock market circuit breakers and attempt to stimulate their economy by infusing some $585B in infrastructure improvements it is referred to as short term "tactics".
However, when the US employs circuit breakers, creates an $850B stimulus package of "shovel ready jobs", bails out the Banking Industry, keeps interest rates at zero for years on end, and then goes on to print $80B a quarter under the banner of "Quantitative Easing".... it is hailed as a brilliant economic strategy.
Go figure.
55
292,000 new jobs in December, 2015 which signals 70 consecutive months positive growth. 17.5 million automobile sales for 2015, highest since 2000, by a rescued auto industry also close to failure. Romney would have sold GM to the Chinese. American economy is the top of the world.
Yea, we're figuring.
Yea, we're figuring.
9
Well, I think it's not what's done on either side but rather how it was done. The circuit breakers in China had triggers that were comparable to daily price variations. In the US, the triggers are much larger than typical daily variations.
Regarding the other tactics employed for the US economy, I don't think they were hailed as a brilliant economic strategy, but rather expedient and necessary given the circumstances.
China is going through the growing pains experienced by other countries decades ago. There are parallels between the stock market speculation of China and what went on in the US in the 1920's. In 1920's US, this included massive retail stock speculation, and, when everything went bad, an attempt (although not by the government) to "reinflate the bubble." The same thing is happening in China.
Regarding the other tactics employed for the US economy, I don't think they were hailed as a brilliant economic strategy, but rather expedient and necessary given the circumstances.
China is going through the growing pains experienced by other countries decades ago. There are parallels between the stock market speculation of China and what went on in the US in the 1920's. In 1920's US, this included massive retail stock speculation, and, when everything went bad, an attempt (although not by the government) to "reinflate the bubble." The same thing is happening in China.
3
The difference between a tactic and a strategy relates to how long you are willing to hold the course. Committing money and adjusting economic policy over a number of years to "bleed out the bad" and rebuild is a strategy. Implementing best practices, retracting them days later, giving investors a few days notice that their money won't be available for another three months; those are tactics.
What China needs is a plan that they can stick to. Build world class centers of research and development in some of these empty cities and start developing governance structures that promote trust in the government and legal system. When you mix broad-based institutional corruption with heavy investment in infrastructure, you end up with shoddy infrastructure and billions of dollars sitting in offshore accounts and NYC penthouses.
What China needs is a plan that they can stick to. Build world class centers of research and development in some of these empty cities and start developing governance structures that promote trust in the government and legal system. When you mix broad-based institutional corruption with heavy investment in infrastructure, you end up with shoddy infrastructure and billions of dollars sitting in offshore accounts and NYC penthouses.
14
In response to the collapse of the debt-driven bubble in the West in 2008, the Chinese inflated their own bubble. The difference is that the West's bubble was mostly based on real estate speculation and had little lasting impact on its economic base, while China's bubble was based largely on uneconomic capital investment leading to massive overcapacity in many sectors. China faces a dilemma: Keep pumping cash and building overcapacity and thereby cause capital flight and a currency crisis that devalues the savings of hundreds of millions; or liquidate unprofitable firms and thereby drive up unemployment and poverty. Either way, the social contract involving popular acquiescence to the Communist Party in return for never-ending economic growth will be broken, and the Communist Party will face a legitimacy crisis. I fear that war will be the obvious solution for the ruling party: War would mobilize redundant capital and labor as well as patriotic support for the political leadership.
24
War, obviously in the South China Sea, *would* be a way for the Chinese Communist Party to distract the populace from focusing on China's economic woes.
We are living in interesting times...
We are living in interesting times...
The most frightening thing about this is how heavily the Best and Brightest have invested our futures in what is still an authoritatrian regime. Our wages and working conditions and our industries have been destroyed as part of this. We will lose once again and the engineers and enablers of this fiasco will walk free or, worse yet, get tax-free bonuses on the profits they make during the sell-offs and bankruptcies.
42
Yes. And the enablers include our bought politicians (nearly all of them, from both parties), our media (which is almost entirely the property of our investor class), and the university economic and business departments which are funded by this investor class.
1
"Free market capitalism" is not just a misnomer; it has made the modern marketplace a bad joke. There are many troublesome aspects to free/controlled international financial markets. The principal contradiction is that it is neither free nor controlled. When run purely for gain, in a world of diminishing resources, the rules of supply and demand collapse. When cyber speed allows millions of automatic transactions in up or down markets, delayed corrections are often too late and can further exacerbate the trouble. Wealth as a goal, is less productive than wealth as a consequence of environmental sensibility.
With no sense of purpose, it is a system set to fail and now that climate change is playing havoc with agriculture and hydrology, the large driving forces of natural world are undergoing shifts that will further destabilize the world economy.
Unless the international economic system is set to respect and preserve the natural systems of the planet that support all life, we're in for a rough ride. Denial of this fact is pure folly.
With no sense of purpose, it is a system set to fail and now that climate change is playing havoc with agriculture and hydrology, the large driving forces of natural world are undergoing shifts that will further destabilize the world economy.
Unless the international economic system is set to respect and preserve the natural systems of the planet that support all life, we're in for a rough ride. Denial of this fact is pure folly.
61
The Chinese economic debacle is a lesson for the rest of the world economic, political and social leaders. Don't protect industries that are unable to to keep themselves in business. If an industry is not capable of re-engineering itself, it means that the leadership of the company must go and that the government should pump more money to keep the industry alive.
Today's China is a case study for the rest of the political leaders. Are they listening?
Today's China is a case study for the rest of the political leaders. Are they listening?
When Barack Obama hands GM $50 billion in free money paid in by Americans and rips off bondholders to give most of the company to the union, you can safely assume that at least one American political party will never learn China's lesson. Left to run the country, there can only be one fate for the U.S.
2015 SAAR figures are at 17.8 million, best performance since 2000. All from a rescued automobile industry by the Obama administration. If the auto industry were left to flounder in that economic maelstrom the effects would have been devastating for the American people. If Romney were in charge he would have sold GM to the Chinese.
Oh, and the taxpayers were paid back, with interest, before schedule. And the workers did get their share, GM and Ford workers were paid up to $10,000 profit sharing. FCA was less, about $4,000 per worker.
Select "D" to go forward, select "R" to go in reverse.
Oh, and the taxpayers were paid back, with interest, before schedule. And the workers did get their share, GM and Ford workers were paid up to $10,000 profit sharing. FCA was less, about $4,000 per worker.
Select "D" to go forward, select "R" to go in reverse.
2
This is an excellent analysis, thank you.
1
You can't run a socialist planned economy alongside capitalism. The socialism will always be a cancer living off the economic activity and the whole thing is destined to collapse.
China got here coming from Marxism, and America is almost in the same place coming from freedom of choice. The irony will be if both collapse at the same time while the kingdoms and dynasties that preceded both China and America end up being the norm again.
The crime of all this is that America did this to itself by electing polished liars who swore they could give everyone free stuff without end. Even the Chinese are too smart to have bought that line.
China got here coming from Marxism, and America is almost in the same place coming from freedom of choice. The irony will be if both collapse at the same time while the kingdoms and dynasties that preceded both China and America end up being the norm again.
The crime of all this is that America did this to itself by electing polished liars who swore they could give everyone free stuff without end. Even the Chinese are too smart to have bought that line.
5
Which kingdoms and dynasties preceded China?
China is Communist, not Socialist, there is a big difference. The cancer seems to come from raw unregulated Capitalism….Adam Smith even said so and I think he understood Capitalism better then most.
2
Kevin, I expect the original comment was intended to read 'kingdoms and dynasties that preceded the current systems in both China and America'. Though America's never really had the equivalent of the kingdoms and dynasties that governed China up until about the turn of the last century. Whatever their virtues, the cultures of North American Indians didn't reach anywhere near the level of complexity and sophistication of China.
That said, Sandra Garrett, China's never actually been Communist or Marxist (and I'm not advocating it). In many ways the cult of personality around Mao reflected an adaptation of the old systems of feudalism, Confucianism, and oligarchy - a veneer of new dogma over the same old ways. Too little room to discuss in depth here - China's a big country with a long history.
That said, Sandra Garrett, China's never actually been Communist or Marxist (and I'm not advocating it). In many ways the cult of personality around Mao reflected an adaptation of the old systems of feudalism, Confucianism, and oligarchy - a veneer of new dogma over the same old ways. Too little room to discuss in depth here - China's a big country with a long history.
Time for the Party to go. We need competition in the economy and we can only achieve that when there is competition in politics.