Chinese economy not to take hard landing

Slydice

Chinese economy not to take hard landing: finance minister
English.news.cn | 2013-07-12 06:22:15 | Editor: yan

WASHINGTON, July 11 (Xinhua) -- China's Finance Minister Lou Jiwei said here Thursday that his country's economy will not take a hard landing and a slower economic growth rate is a necessary phenomenon from economic restructuring.

hmmm...

Interesting...

dsmythy

They've a whole generation who have grown up wth massive growth. Even a major slowdown will have an impact.

carpejugulum

A huge part of Chinese population is poor so they can't have a hard landing.

Dannyboy83

When China goes, Australia will follow.

There will be a lot of Irish people trying to get home and get on social if they're not disqualified by the Habitual Residency rule.

Larbre34

Where've you heard that before......?




I wonder what the Mandarin is for 'the moaners and begrudgers should stop whinging and go and commit suicide'

However, if the Chinese economy does tank dont mind about Australia, the whole system will be.......

Brussels Sprout

I remember reading before that the Chinese workforce grows by something like 18 million every year and that they need to maintain the 8% growth-rate just to keep all these extra people employed. There's already a shortage of women for young men and now there's going to be shortage of jobs too. May they live in interesting times...

maninasia

It's a big country so not all of it is going to be affected in the same way. Probably the second tier and third tier cities and towns would take a big hit and the biggest cities will be relatively unscathed as that's where the movers and shakers and big money is. A bit like London versus rest of UK for example.

As for job seekers it's true that there are a lot of new graduates so it's going to become even more competitive and will reduce their salary inflation which has been high over the last few years, it could become even more stratified between people who went to 'good schools' and 'the rest'.

They have strict rules on internal migration and that is also an issue that needs to be looked at.

On the other hand the number of youth coming through is starting to greatly reduce in the next few years and urbanisation is mostly complete so that is probably why they waited until now to put on the brakes, the train doesn't need to be driven quite so fast anymore , besides the train has been driving rather aimlessly up and down just to give people a ride and keep people busy over the last few years, to use a metaphor.

Frank Lee Midere

Nobody has proven that they are due for a hard landing. I doubt it. They have a property boom but nothing like - as a percent of their national income - the West. Or Ireland. They have massive reserves. Private saving is high.

gaius c

Frank Lee Midere wrote: »

Nobody has proven that they are due for a hard landing. I doubt it. They have a property boom but nothing like - as a percent of their national income - the West. Or Ireland. They have massive reserves. Private saving is high.

I agree. They are in for a soft landing. China is different after all!

maninasia

Some investors have already taken a hard landing, if you look at the empty malls and empty ghost cities or empty shipyards. As I said it's a big country so a slowdown is going to vary in impact in different places and industries.

Is it enough to provoke a 'hard landing' across the whole economy, who can say at this point?

gaius c

They also have demographics on their side. A growing young population will need lots of houses, offices, malls and coffee shops in the future.
Smart & ballsy investors would be buying in China right now.

Mr. teddywinkles

gaius c wrote: »

They also have demographics on their side. A growing young population will need lots of houses, offices, malls and coffee shops in the future.
Smart & ballsy investors would be buying in China right now.

Not if jobs are scarce

gaius c

Mr. teddywinkles wrote: »

Not if jobs are scarce

Thankfully, the Chinese are not a doom & gloom group and their positivity will strengthen the economy. The fundamentals are strong!

maninasia

Very good Gaius, you are channeling Bertie and Ballsy O'Connor well .

Demographics are actually really bad in China..but as we know in Ireland demographics doesn't one from the mother of all bubbles!

Mr. teddywinkles

gaius c wrote: »

Thankfully, the Chinese are not a doom & gloom group and their positivity will strengthen the economy. The fundamentals are strong!

yes the power of positivity will correct all our woes here.
Not proper spending budgets and economic policies with a touch of realism.

Frank Lee Midere

Mr. teddywinkles wrote: »

yes the power of positivity will correct all our woes here.
Not proper spending budgets and economic policies with a touch of realism.

Where is here?

SpaceTime

Bear in mind that totalitarian regimes don't usually give themselves negative economic forecasts!

Also, there's basically no press freedom, so any Chinese media reports are on the government line or else the journalists face possible 're-education' / serious problems.

hfallada

I spent the last 2 weeks in China and its not what you read or see at all. Yes there is pollution in major cities (you can barely see across the street at times.). But there were very few factories that I seen. I went from Beijing to shanghai by train I only seen a few although its a 1,300km journey. I seen a huge amount of massive apartment building. But they build a new city, but there are no factories beside them. There is very few chinese brands of anything. Not even a chain of shops like mace that is Irish owned, but just 7 elevens from the US.

We meet an American business man who was visiting a clothing factory and cant get over how hand they are to deal with. A meeting that should take 30 mins, but takes 3.5 hours. Nearly every product that isnt easily manufactured or they are unable to copy is imported. Everything that requires skilled workers is Japanese or German made. Chinese consumers love to buy western goods and in major cities you wont find a huawei phone( chinese made and designed that are apparently the next Apple even through I seen a handful of them). All pharmaceuticals are made in the west.

I cant see the chinese economy doing very well in the future. All the major manufacturing is going to lower wage economies like Bangladesh, Vietnam and India. Even the factories that make iPhones are becoming automated as labour is getting too expensive. I dont think we have to worry about China being a super power for a long time. Try and name a Chinese brand or a good that is made in China that is high value like a car and you cant. I know a modern economy should have a large amount of services and some manufacturing and little agriculture. But I seen very little of the the manufacturing and services. You see on state owned tv that the American economy is in bits, but the Chinese economy is strong amazing. Are we even sure the chinese economy is what it is made out to be. Are we just believing the propaganda that the chinese government feeds to the west?

hedgehog2

There is a growing middle class in China,lots of them traveling around S.E.A. and spending on average 3 times as much as western tourists.
They are addicted to the brand name and its got to be western.
The Chinese govt has moved a huge amount of manufacturing to the western provinces to utilise the cheap labour.
Massive disatisfaction within the well established Eastern provinces as a result,riots that were quickly stamped down.
Whole flat pack cities with no one living in them.
Huge inflation along the Eastern side of China and people are really struggling but no one hears about this.
They are scaming the youth to take out huge loans for education effevtively enslaving them once they graduate to employment,not uncommon for students to come out with a bs degree and 15k debt starting on $250 a mth.
China hopes to now devekop the poorer regions by focusing manufacturing and the richer provinces will deal with the inflation and increased unemployment.
They hope the poor who make it out will become the spenders.
Its almost a repeat for most of south east asia,huge downside on tbe horizon in the nxt 2yrs as there is a massive property bubble with Viet and Thai banks in the line of fire.
Off course China will try and spin it their way but when Asis falls it tumbles rapidly just look at 1997.

SpaceTime

hfallada wrote: »

I spent the last 2 weeks in China and its not what you read or see at all. Yes there is pollution in major cities (you can barely see across the street at times...

I'm familiar with the NE of China- Jilin etc and it is very, very polluted up there. It was so bad that drinks in a bar would be coated in yellow dust in a few minutes of exposure to the air.

There were vast factories in cities and towns up there but mostly outskirts.

It's very odd alright that all the retail seems be dominated by US and Euro brands. Carrefour has an absolutely massive presence!

It will be very interesting to see how China progresses though. Remember, Japan and South Korea went through similar phases of development in the 1950s/60s (Japan)and 70/80s South Korea.

If China can move towards emulating what they did, it will work... If not, it's a bump ride ahead.

The big difference is that Japan and South Korea became liberal democracies with a lot of personal freedom much like Europe and North America

maninasia

hfallada wrote: »

I spent the last 2 weeks in China and its not what you read or see at all. Yes there is pollution in major cities (you can barely see across the street at times.). But there were very few factories that I seen. I went from Beijing to shanghai by train I only seen a few although its a 1,300km journey. I seen a huge amount of massive apartment building. But they build a new city, but there are no factories beside them. There is very few chinese brands of anything. Not even a chain of shops like mace that is Irish owned, but just 7 elevens from the US.

There are still millions of factories. Just because you didn't go to the ocean doesn't mean it has no fish. In fact even Beijing and Shanghai have major industrial zones so it looks like you didn't even make it out of bed.
7-11 was an American company originally but was bought out by the Japanese decades ago. The 7-11 you see in China are usually operated by a Taiwanese company, Uni-president.

hfallada wrote: »

We meet an American business man who was visiting a clothing factory and cant get over how hand they are to deal with. A meeting that should take 30 mins, but takes 3.5 hours. Nearly every product that isnt easily manufactured or they are unable to copy is imported. Everything that requires skilled workers is Japanese or German made. Chinese consumers love to buy western goods and in major cities you wont find a huawei phone( chinese made and designed that are apparently the next Apple even through I seen a handful of them). All pharmaceuticals are made in the west.

I can't get over how hard Americans are to deal with sometimes . No meeting takes 30 mins when you want to do something complex, especially using a language that is not your own.
Everything that requires skilled workers requires Japanese or German..patently wrong.
Chinese consumers like luxury brands of all types including Asian ones and Chinese ones. Huawei and Xiaomi and other white brands sell the most smartphones in China.
Most pharmaceuticals consumed in China are made in China.
I can't imagine how you would use a product that you can't make yourself without importing it? Logic check anybody?

hfallada wrote: »

I cant see the chinese economy doing very well in the future. All the major manufacturing is going to lower wage economies like Bangladesh, Vietnam and India. Even the factories that make iPhones are becoming automated as labour is getting too expensive. I dont think we have to worry about China being a super power for a long time. Try and name a Chinese brand or a good that is made in China that is high value like a car and you cant. I know a modern economy should have a large amount of services and some manufacturing and little agriculture. But I seen very little of the the manufacturing and services. You see on state owned tv that the American economy is in bits, but the Chinese economy is strong amazing. Are we even sure the chinese economy is what it is made out to be. Are we just believing the propaganda that the chinese government feeds to the west?

This part is harder to argue with. However the Chinese do have brand s that are fairly popular in developing countries and do have some big companies, but nothing like they should have given their size. They do indulge in propaganda but there is also recognition in China that they are still very poor in most of the country and have issues to deal with.

maninasia

SpaceTime wrote: »

It's very odd alright that all the retail seems be dominated by US and Euro brands. Carrefour has an absolutely massive presence!

It will be very interesting to see how China progresses though. Remember, Japan and South Korea went through similar phases of development in the 1950s/60s (Japan)and 70/80s South Korea.

If China can move towards emulating what they did, it will work... If not, it's a bump ride ahead.

The big difference is that Japan and South Korea became liberal democracies with a lot of personal freedom much like Europe and North America

China is a lot bigger and more complex to run Japan and South Korea so it's hard to say which direction it will go, but more democratic and individual freedoms should be sought as people get more educated and richer.

As for retail, it's actually very beneficial to locals to have global retailers operating in China. Many international retailers have failed to date in China, but Carrefour have succeeded. Carrefour have succeeded because they have major operations in other Asian countries for 20+ years and understand how to sell to Chinese and Asians. They didn't just arrive yesterday. A Carrefour in China and a Carrefour in France are not the same thing. Meanwhile there are local retailing chains and malls in China from Japan, Korea, Taiwan, Hong Kong, Singapore etc.

Contrast China with India, India hardly allows any international hypermarkets or wholesalers or retailers, their consumers pay too much for the same products as they deal with local monopolies in distribution and retail.

Xidu

After 2 world wars, 4 years domestic wars, 10 years revolution, china was so empty, people barely have food to survive.

It's only from 1978, china govnt took steps to attract oversea investors by using cheap labor n high tax refund, that's when so many companies had their factories built up in 5 designated cities, Chinese factory workers worked sooooo damn hard to make 100 euro a month which u probably won't believe.

After 30 years, china govnt became the most powerful govnt, yet most Chinese r still living a hard life.

A big brand needs ab hundreds of years to build up, 30 years ago we have nothing, but now we have huawei, haier, legend 3 big brands. and Ford sold Volov to china in 2009. China local companies now are facing a very important phrase, they r trying to find a new way to develop quality brand products instead of selling cheap labor. It will take decades but it will happen.

Apple n amazon' manufactoirs r in China. They will only expand. Apple owns more money than American govnt. Apple' biggest market is in China, that's why they have to manufacture in China, its double win business.

btw, I am Chinese.

jank

Xidu wrote: »

After 2 world wars, 4 years domestic wars, 10 years revolution, china was so empty, people barely have food to survive.

It's only from 1978, china govnt took steps to attract oversea investors by using cheap labor n high tax refund, that's when so many companies had their factories built up in 5 designated cities, Chinese factory workers worked sooooo damn hard to make 100 euro a month which u probably won't believe.

After 30 years, china govnt became the most powerful govnt, yet most Chinese r still living a hard life.

A big brand needs ab hundreds of years to build up, 30 years ago we have nothing, but now we have huawei, haier, legend 3 big brands. and Ford sold Volov to china in 2009. China local companies now are facing a very important phrase, they r trying to find a new way to develop quality brand products instead of selling cheap labor. It will take decades but it will happen.

Apple n amazon' manufactoirs r in China. They will only expand. Apple owns more money than American govnt. Apple' biggest market is in China, that's why they have to manufacture in China, its double win business.

btw, I am Chinese.

I think you need to stop reading the state media.

maninasia

What Tim Cook (Apple's CEO) said is that China will become Apple's biggest market someday. Whether that happens or not is another story, now cheaper smartphones and tablets are becoming more popular, at the same time the US is still a bigger market for Apple devices and Europe as a whole would be bigger also.

Xidu

maninasia wrote: »

What Tim Cook (Apple's CEO) said is that China will become Apple's biggest market someday. Whether that happens or not is another story, now cheaper smartphones and tablets are becoming more popular, at the same time the US is still a bigger market for Apple devices and Europe as a whole would be bigger also.

The biggest reason is because china telecom want to get package deal w apple, took a long time for them to settle the contract. Iphone was very late in china market comparing to usa n europe.

While iphone was not sold in china market, U wouldn't believe that a very big percentage sales in USA market r actually from china buyers..Chinese ask their relatives/friends who lives in USA to buy iPhones n send back to china...another reason is because iPhone is much more expensive in China comparing in USA.

And most of the iPhones sold in hong kong r actually bought by people in china mainland.

Xidu

Just like kindle, amazon tried so hard to get in china market, but because china is afraid of people will get those anti-china govnt books online, so they haven't success yet. However, if u go to china, u will find out there r so many Chinese actually have kindles, they bought from USA....

maninasia

Xidu wrote: »

The biggest reason is because china telecom want to get package deal w apple, took a long time for them to settle the contract. Iphone was very late in china market comparing to usa n europe.

While iphone was not sold in china market, U wouldn't believe that a very big percentage sales in USA market r actually from china buyers..Chinese ask their relatives/friends who lives in USA to buy iPhones n send back to china...another reason is because iPhone is much more expensive in China comparing in USA.

And most of the iPhones sold in hong kong r actually bought by people in china mainland.

I agree with that and I know Apple were very slow to promote their products in Asia (especially in setting up a retail network), but at the same time I think it's hard to know how popular Apple's products will be in the future.

SpaceTime

China still has a couple of decades to grow yet before it gets up to speed with developed economies but it is getting there.

In terms of GDP it's still a lot smaller than the EU and US. The exciting thing for investors is that it had potential to grow where as the US and EU are (despite the recessions) large, stable economies that only need to maintain or grow slowly.

China GDP $7.38trillion
EU GDP $16.555 trillion
US GDP $14.99 trillion

For China to reach the EU and US levels it needs to develop its own consumer market on a much wider scale. At present its growing but it's not spread across the whole country and it's very much concentrating on an emerging middle class in the key cities.

I do however think that China has much better potential than say India which is totally hampered by the class/caste system that will prevent a proper huge consumer economy form emerging.

China is far better organised.

However, I think I'd democracy and more freedom doesn't emerge in China it will suffer either some serious instability as people demand it and it will continue to lose some of its brightest and most creative people to the west as they pursue more freedom.

I know quite a few Chinese academics and engineers who moved to Europe and the States for that reason. They were just unwilling to live under an authoritarian state.

So really without change, it can't really attract the brightest and the best from other countries or prevent brain drain

There's also a huge number of wealthy Chinese opting to live abroad in Singapore, European destinations, the US, Australia etc etc because they aren't keen on the Chinese system and what might happen in terms of protection of their assets etc

There is also a massive problem doing software, cloud computing, media and social networking from China because of all the control and censorship.

Yeah, you can make hardware there but, can you be sure of IP security or any of those things?

I honestly think that without a movement towards a more liberal government system and introduction of democracy, freedom of speech and accountability China is limiting its own potential and it really does have a lot of potential!

I am hoping that what will happen is that the government realises this and there will be a gentle transition towards democracy with increasing personal freedoms just evolving as that happens.

maninasia

Xidu wrote: »

Just like kindle, amazon tried so hard to get in china market, but because china is afraid of people will get those anti-china govnt books online, so they haven't success yet. However, if u go to china, u will find out there r so many Chinese actually have kindles, they bought from USA....

Yes there is a hunger there for well made quality products, what's great about China for foreign companies big and small is that it's a new market, so as long as you can get in there and provide a good product at a good price, you have a chance to succeed, maybe you wont have that chance in the US or Europe because the market is mature and dominated by the big established brands.

It's not 'anti-China' books, rather they are afraid of many books that tell the truth or have different viewpoints than theirs. That doesn't mean 'anti-China' per se. They want to control the flow of information to their direction.

They also do not allow imports of books from Taiwan directly, and books in traditional Chinese in general. Hardly 'anti-China' right? It's a lot more than that.

maninasia

As for brands coming out of China, IP infringement and copying is just as big a problem for local companies as foreign companies.

There are many reasons for this. I deal with Chinese companies, for a recent case I am dealing with I asked for a quotation from a product by e-mail. Within 1 week 3 individuals from that company got in contact with me privately about supplying the product.
For another company last week, they turned down my order but a member of staff contacted me privately to and put me in contact with another factory.

The reasons for this are not just cultural but due to the poor treatment of workers, in particular the very low salaries. If the companies simply offered better pay and in particular commission to their sales staff they wouldn't need to try and make money on the side to the detriment of their employers.