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How China Fooled the World [video]
- radicaldreamer 13y agoFull Episode on YouTube: http://www.youtube.com/watch?v=YW3h4wv8_ko http://www.youtube.com/watch?v=YW3h4wv8_ko Edit: see subsequent comments for a better quality video
- hnjake 13y agoThanks Mate
- MrHeartBroken 13y agoThe aspect ratio on that link seems a bit off. This one showed up in the suggested videos and has the correct aspect ratio. https://www.youtube.com/watch?v=HUSjMnmS5lI https://www.youtube.com/watch?v=HUSjMnmS5lI
- zmanian 13y agoMy interpretation is that China did the heavy lifting of pulling the world out of the last crisis. Neither the US nor Germany had the political wherewithal to do large scale stimulus and/or structural reform. The Chinese also had the most to loose. The cost of propping up the global economy had been highly damaging to China's weak institutions if we are lucky it will recover in 20 years. If we are unlucky there will be a partial collapse.
- radicaldreamer 13y agoThe US has done large scale stimulus operations since 2008 (https://dl.dropboxusercontent.com/u/113986/kkr52%207tofusstimulus.jpg https://dl.dropboxusercontent.com/u/113986/kkr52%207tofussti...), just not to the scale China adjusted to respective GDPs.
- adventured 13y agoNot sure what you're talking about. The exact opposite is true. The US massively stimulated, including running up about $10 trillion in new federal public debt alone, which was a form of deficit stimulus. The Fed of course has been running hundreds of billions in annual stimulus. I'd roughly estimate that the total US stimulus in all forms, from the treasury to the fed, totaled $15 to $20 trillion (some of which was repaid, eg loans to european banks, or the AIG and Fannie bailouts, or GM etc). That's two to three times the size of the entire Chinese economy. That new federal debt paid federal salaries, contractors, welfare, social security, you name it. Those people then purchased hundreds of billions of dollars worth of Chinese goods. "U.S. Bailout, Stimulus Pledges Total $11.6 Trillion" http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZchK__XUF84 http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZchK... The Fed kept the entire global financial system solvent during the crash. They lent huge sums to European banks. "the central bank lent billions to foreign banks that operate in the U.S., including Germany's Deutsche Bank Securities, which got $290 billion in mortgage securities; London-based Barclay's, which received a $47.9 billion loan; France's BNP Paribas Securities, Switzerland's UBS Securities LLC and Daiwa Securities America, a subsidiary of one of Japan's largest brokerage houses." http://www.foxnews.com/politics/2010/12/02/federal-reserve-loaning-trillions-foreign-banks-financial-crisis/ http://www.foxnews.com/politics/2010/12/02/federal-reserve-l...
- zmanian 13y agoQuantitative Easing has been large but it drove investment mostly in emerging markets and not in the US. Neither fiscal or monetary stimulus is effective in a post industrial economy like the US. Structural reform like patents, immigration, occupational licensing, taxes etc are where the big stimulus lies unfortunately.
- adventured 13y agoYou're contradicting your own statement then. You said China did the heavy lifting regarding pull the global economy out of the crash, then you say that Fed QE drove growth in emerging markets. All that stimulus drives massive consumption, which bolsters global manufacturing. And you ignored the part where the Fed kept the entire first world solvent during the crash, that alone is more than China did. And the US is hardly post-industrial. It's the world's largest manufacturer (yes, larger than China).
- __pThrow 13y agoIt seems as though China is undergoing a Keynesian expansion. So I'm probably wrong about that. I'm going to watch to see if I can figure out the difference between what they seem to trying to say is a problem due to massive government spending and Keynesism. Or are they saying "too much" Keynesism is a bad thing? Okay, these seem to be the main differences and concerns I am getting from this vid. 1. Many loans eventually come via a shadow banking system and so are not transparent, ie, no one know how much is loaned and regulation is poor, this could lead to a huge credit crunch, and China's own too big to fail 2. Some large amount of housing is speculative in nature and kept empty as an investment and hence could be causing an enormous bubble 3. This real estate bubble brings benefits to rich but doesn't improve the economy for the poor 4. The boom has made the local authorities very rich and powerful (political corruption, crony capitalism, ...) 5. The sheer size of it is unprecedented in modern financial history 6. Citizens save too much (1/3rd of earnings). So economy is dangerously unbalanced, fueled by debt spending and not enough by consumer spending or shopping (41:10) 7. Investment is 50% of economy, consumption 30%, so when investment slows down, it can't be replaced with consumption. Credit is at a level of twice the size of the economy. 8. State owned companies are filled with inefficiencies. "Shaking" them up would leave huge numbers of people unemployed. 9. There is beginning to be a fear of collapse (that could lead to collapse.) 10. Punk Rock pointing out corruption in the system and how the rich are getting richer. 11. Hard to see further economic reform without political reform, yet it seems that Chinese are intent on not reforming their political system further. Recommendations to balance economy: 1. China needs to become more like us and consume more themselves.
- gscott 13y agoChina owns part of many industries, Governments that start having issues start selling their stakes and come up with plenty of money. Like everyone I am fascinated with China building new cities where no one lives, but they are going to totally get away with it and come out the other side unharmed.
- yourapostasy 13y agoI saw an explanation somewhere for the ghost cities. The CCP realizes that construction labor there is currently very cheap, land is cheap (in terms of political capital to displace people --- wealthier citizens will make it more expensive to displace them), and materials are relatively cheap. As they develop further, all three cost inputs will only get more expensive. So the CCP is deliberately allowing the rapid development of these projects in anticipation of the massive shift from rural to urban population migrations over the next several decades. If the CCP is trying to stem catastrophic inflation when the mass migration hits a peak, then these ghost cities can in retrospect appear a prudent, long-range measure. There are also also quirks of the Chinese property market [1] and mass media's penchant for sensationalism that might more reasonably explain the ghost city phenomena. [1] http://blogs.wsj.com/chinarealtime/2013/09/24/chinas-ghost-cities-may-not-be-so-spooky/ http://blogs.wsj.com/chinarealtime/2013/09/24/chinas-ghost-c...
- seanmcdirmid 13y agoA lot of this opportunistic construction isn't done very well, and often its just a form of money laundering (build this, charge a lot, do a very crappy job, lots of pockets are padded). Many of these buildings will be torn down before they are ever used; every few months there is a scandal where this actually happens.
- AJ007 13y agoAre there any statistics of buildings collapsing? I've seen the "tipped over building" picture, and heard some other sketchy stories but its all anecdotal.
- snorkel 13y agoYeah, yeah, pee pee in the coke, we know already.
- marukokinno 13y agoEvery year , for the last 20 years, many articles say that we can be sure of the imminent Chinese economy collapse. Then every year they are proven wrong. This is just one more of these articles. The guys have no idea what they are talking about. The education effort is as huge as the infrastructure building effort, and it will bring its benefits. At some point the growing will slow down; at some point it will be 1% yearly growth; but a political collapse is very unlikely, and economic collapse is even more unlikely.
- AJ007 13y agoFor the past 20 years I've been hearing how China was going to take over the United States in everything. Invasion of Taiwan would happen whenever they wanted. I've never heard anyone say their economy was about to imminently collapse. I'm surprised any one thought that China's "bailout" was doing anything more than kicking the can down the road? It is the end of the road now, and they get to deal with unserviceable debt. There are many options. All are ugly in unique ways. For who and when are the questions left undetermined.
- radicaldreamer 13y agoThis trope is just not true, but people keep bringing it up when discussion of China's enormous debt growth comes up. https://twitter.com/prchovanec/status/442838642974007296 https://twitter.com/prchovanec/status/442838642974007296
- marukokinno 13y agoLast time I checked, China had 1 Trillion dollars in reserves. Chinese people is not living on credit cards, actually quite the opposite, they save a lot, even the little waitress at the cheap restaurant has a lot of savings. Every year, at spring festival, hundreds of millions of young chinese give their savings to their parents to keep, and those old people can save! I dont know where is the debt guys are talking about.
- JamisonM 13y ago
- yawniek 13y agoisn't chinas foreign debt still net negative? if so, wouldn't be the obvious strategy be to start outsourcing the debt as the US did? we possibly have a few more years and as poulson said, there are quite capable people steering the ship.
- contingencies 13y agoAbout time for an HN China meetup? Who wants to come visit Yunnan for some clean air and nature? :)
- seanmcdirmid 13y agoThe last time I was in Kunming, the air wasn't exactly clean.
- marukokinno 13y agoCan't be worse than Beijing. Shangrila is very nice.
- seanmcdirmid 13y agoDefinitely better than Beijing, but it used to be much better. There are no tech jobs in zhongdian.
- contingencies 13y agoSure, Kunming is the provincial capital so a worst case example. The rest of the province is pretty damn clean, and being semi-rural to outright wilderness much cleaner in most cases than western cities. Personally I'm on the next lake over... https://en.wikipedia.org/wiki/Lake_Fuxian https://en.wikipedia.org/wiki/Lake_Fuxian ... it's like Kunming 15 years ago. We still have horse-drawn carts, and you can go fishing, horseriding, or paragliding with ease. We also have some of the oldest fossils in the world, a submerged neolithic village and a not-so-secret Chinese navy submarine testing base.
- seanmcdirmid 13y agoWhat kind of tech work can you do in Lake Fuxian? Or are you doing remote? If remote, then ya, there are a lot of nice places in China to hang out in, though personally I would pick Bali or Thailand. Kunming was ok 12 years ago. I'm getting old though.
- bobjordan 13y agoAn American ex-pat in China here. I came to China during the economic crash in 2009 and have seen it all progress the last 5 years. Yes there are random empty apartment buildings and a few absurdities like --> http://en.wikipedia.org/wiki/New_South_China_Mall http://en.wikipedia.org/wiki/New_South_China_Mall. However, overall the infrastructure they have built has put this country in a position to achieve dominant superpower status over the next century. For example, within 5 more years the entire of Guangdong Province will be connected by high speed rail and subway - meaning 100 million people and businesses will be connected by public transit with no more than a 2 hour ride. There is already a critical mass of manufacturing capability here, and with that added layer of network infrastructure, even if labor costs rise 100% YOY to match USA and Germany in a decade, Guangdong China will still be the worlds factory. Furthermore, the internal consumption machine of 1.3B people is undeniably ramping up now. They are spending money, the largest middle class on the planet is clearly taking shape, and lives are measurably improving all around me. There may be a few bumps in the road but there will be no collapse.
- seanmcdirmid 13y agoEx-pat since 2007 here. Change is happening quite slowly, internal consumption is still moribund as people save to cover retirement and health expenses (social insurance isn't very strong). Even a big city like Beijing has a lot of fairly empty malls, and if you go to 2nd tier cities, you'll see new developments everywhere that are basically empty. China does have better infrastructure than say India, and its long term outlook is good. But there are definitely challenges in this and the next few years to get through.
- marukokinno 13y ago>>internal consumption is still moribund Do you ever go to the supermarkets? Every time I go to eat outside in the evening at the mall, I have to wait a line of at least 5 numbers to get a table, and I live in the suburbs, very far from downtown.
- seanmcdirmid 13y ago
- tokenadult 13y agoHow many of the people commenting here read the Chinese-language press? (I mean, publications in the Chinese language from either inside or outside the region where the Communist Party of China exercises prior restraint on publication.) The one thing I've learned from studying the language, history, and culture of China since 1975 is that almost everyone who doesn't know the language is full of crazy ideas about China, even if they live there.
- chao- 13y agoCould you point out or give examples of some of these crazy ideas? For the sake of us who assume we know nothing, and wouldn't know how to tell a crazy idea from an unconventional-yet-reasonable one. No sarcasm intended and I'm sure an exhaustive list is a bit much to ask, but I would be interested to read even a few examples and/or explanations.
- zhte415 13y agoBest resource I know, neither pro nor foe, is the Sinocism newsletter, a daily email of Chinese and English sources, that distills analysis from sources with multitudes of viewpoints.
- seanmcdirmid 13y agoChinadaily often runs editorials directly translated from Chinese. They are quite bizarre and often just diatribes. My wife is a Chinese but has no respect for the press, so doesn't even bother reading those articles anymore (most young Chinese are the same). I've been in China for 6+ years now, I have expat friends who have been here for 10+ (which is an old hand these days). We aren't incredibly divergent in our thinking. Chinese have different viewpoints, but this is primarily cultural rather than linguistic. But if you truly want an unbiased view of China, read a Taiwanese newspaper :)
- ksec 13y agoBut honestly, i dont even see that as problem with China alone. Heck today it is hard to find ANY decent newspaper that are unbiased. ( In the Context of Chinese and English only ). I dont think they are crazy ideas. Any country, be it US, UK, Japan or China have their own set of problems. Although I do generally agree that the Western World dont generally always understand the language and culture difference.
- deleted 13y ago[deleted]
- emersonrsantos 13y agohttp://en.wikipedia.org/wiki/Superdollar http://en.wikipedia.org/wiki/Superdollar
- seoguru 13y agoI believe the Chinese currency is non convertible and free floating, if their "debts" are denominated in their own currency, the basis for this story is flawed. The producer should take 10 minutes for a little education from Bill Mitchell: http://goo.gl/zMlB1X http://goo.gl/zMlB1X I wish U.S. policy makers understood our monetary system. It does sound like China has problem with inequality which hopefully they will address.
- airjd 13y agoChina is too big to collapse, but maybe four years later!
- bwangsta 13y agoI have lived in Shanghai for the past 3 years but I also lived here from 2001-2002. Back then, there were buildings constructed that were totally empty and it seemed ridiculous to think anyone would live in those distant undeveloped areas. Fast forward a decade and now Shanghai has 20 metro lines instead of two, with each metro station under a sprouting mini-city, complete with its own H&M, Burger King and Starbucks. It seems like the urban planners strategically placed them all perfectly close to each other, like settlements in Civ. The condos that stood empty 12 years ago are now at full capacity and people are moving even further out into the exurbs where more empty buildings await them. The energy and buzz in Shanghai is just as palpable as it was 12 years ago and although there are some ghost cities and failed projects across greater China, the megalopolises will easily compensate for them. The United States has its share of empty, abandoned cities (Detroit, anyone?) but when you visit San Francisco or Manhattan, you would not know it.
- mytoaster 13y agoIt's probably a good idea to try to quantify the actual _scale_ of what is happening. http://www.zerohedge.com/news/2013-11-26/chart-day-how-five-short-years-breakneck-liquification-china-humiliated-worlds-centr http://www.zerohedge.com/news/2013-11-26/chart-day-how-five-...