> Secondly there is a now huge upper middle class who are travelling the world, sending their kids to Australia or US for study and still buying Apple products. They are not going away
"their buying power doesn't compare with that of their US counterparts. Between 2010 and 2014, only 12% of these people reported a household income of more than $3,200 a year, or $8.50 a day."
http://www.businessinsider.com/demand-report-on-chinas-middl...
We've banned this account for using this site exclusively to promote a political agenda. You've been doing that for a long time, quite egregiously in fact, and it's not what HN is for.
If debt is used to finance productive investments then a high debt to GDP multiple is not a problem, it is in fact a sign of health.
Secondly if GDP growth is high and interest rates are lower then debt is much less of a problem in general.
> "their buying power doesn't compare with that of their US counterparts. Between 2010 and 2014, only 12% of these people reported a household income of more than $3,200 a year, or $8.50 a day." http://www.businessinsider.com/demand-report-on-chinas-middl....
These numbers are off by a factor of 10.
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Of course the future is anyone's guess. Personally I think China is going to continue growing at a high pace until its GDP pr. capita matches Taiwan, South Korea or Japan.
> There is good and there is bad debt/investment. If debt is used to finance productive investments then a high debt to GDP multiple is not a problem, it is in fact a sign of health.
We already have the answer on that one, and have for a long time. The return on debt - the growth derived from taking on increasing amounts of debt - for China has plunged the last ten years. At this point, taking on more debt accomplishes absolutely nothing in regards to growth. They've saturated their ability to grow using those methods.
Their GDP per capita can never match the equivalent of Japan today. That's implying a Chinese economy that is nearly the size of the entire global economy today. That's the same kind of hype and absurdity the article is talking about. Where is the next $40 trillion in GDP going to come from? They're struggling to grow their economy at all today (and yes, the 6.x% figure is pure fiction), while taking on tens of trillions in new debt. If they can't grow their economy today, with that much debt financing, when will they be able to? The answer is: the party is long over, the only thing left now are consequences to all the bad choices that led to China becoming the world's most indebted nation in record time.
The article talks about investors needing to know that
1.) China's construction boom is over
2.) Need to understand China better
3.) Take off the rose-tinted glass
I would add a few more here:
4.) With all the capital controls currently in place, once you invest, you might not get your money out, ever.
5.) With president Xi becoming more dictator-like, and encouraging anti-foreign behaviors, once you get in to China, you might easily get in trouble. Jailed without trial. Or disappeared.
6.) With the great firewall becoming more restrictive, and VPN working less and less, you might not be able to hit any foreign websites from China. No communications with your family or loved ones. No search for foreign customers.
7.) With the impending yuan devaluation (20%-50%), it might not be worth it with a low growth environment in China.
Points 4-6 (financial freedom, rule of law and freedom of communication) are all long-standing problems in China, and personally I believe that, if not fixed, they will prevent China from becoming, in the long run, a developed economy.
However I don't have evidence that the situation is now getting worse in relation to these specific 3 points. I would be interested in reading reliable sources related to the above.
6 is definitely true, just from personal experience. It used to be that you could just ssh to a server, tunnel your traffic over it, and you could visit whatever sites you want. Last time I was there, this past October, almost nothing worked. I could still ssh, but if I tunneled web traffic, they somehow detected that and killed the connection. OpenVPN didn't work. I tried a dozen VPN providers, most aimed at the Chinese market, and only found one that worked at all reliably. That one was pretty expensive and it's probably just a matter of time before it stops working too.
4-6 seem to be getting noticeably worse. Xi is very different from Hu. Basically, things have been going backwards since 2008, but the backward momentum picked up in the last few years.
Also related, looks like China's finally cutting itself off the rest of the internet in the world....switching from blacklisting to whitelisting.
"The proposed rules would prohibit the country’s Internet-service providers from allowing connections to websites with domains, or Web addresses, registered outside China. Violators would face fines of up to 30,000 yuan ($4,621) and public notices exposing their failure to obey."
The more these things happen the more you should see it as panic in the eyes of the current wielders of significant power in China. Controlling access to information like this is fundamentally incompatible with being a nation that trades with all of the world. Trade requires communication and (forgive the 'Chinese Math') a fraction of the Chinese population is in daily contact with the rest of the world.
It's a matter of time, really. How much I have no idea, they are doing what they can to abuse technology to fight this rearguard action, and what the fall-out will be like I have no idea about either, other than that it probably won't be pretty and that it will upset lots of applecarts, made in China and elsewhere.
You have to wonder if it's actions like these that give cause for concern to the people of Hong Kong, who I'm sure will eventually have to comply with these restrictions.
I don't imagine it will happen in my lifetime, but I think there will be a time where China will want the rest of the world to understand them more than they want to block off the rest of the world. It's easy to think about government regimes in a polarised fashion - western democratic model: good, insular communist model: bad. In truth there is plenty of corruption to go around. Those in power find ways to stay in power for the long haul -- this is something all cultures share. The difference is how they do it.
As you say, the internet changes the world and I believe that it will create opportunities that even the most insular governments will not be able to pass up. It will take decades, but I think that it must happen. Our task in the meantime is to ensure that the internet stays functional. Things like strong encryption is vital. Probably net neutrality is a close second. Even in more open cultures, there are powerful forces trying to limit what the internet can be. As long as we can keep it unfettered in one place, I believe the benefits it brings will eventually draw everybody in. As such, my (unasked for) advice is not to worry too much about what China is doing and to concentrate on keeping the internet free where you are.
> > Our task in the meantime is to ensure that the internet stays functional ...
I'd add end-user control to your list, as archaic as that might sound these days. Centralized systems provide a single point of political pressure and of failure.
The law change basically forces sites serving a domestic audience to use a domestic domain registrar where the government has the legal authority to seize them when they wish to. There is already a whitelist system in place (ICP licensing) but site owners can always take their operations elsewhere as long as they retain control to the domain.
That said, it is vague enough that an IP whitelist can be inferred from a very liberal interpretation. The NYT writeup reiterates this point.
China actions looks to me like a free trade violation and makes me question the point of the WTO. Perhaps we (US, EU) should apply sizeable customs to the goods from China?
"Mr Xi has come under fire for hosting the summit as several women's rights activists were held earlier this year for planning a demonstration against sexual harassment on public transport."
For sure our politicians make a lot of criticisms. Not sure what parent post meant by no support but if they meant military yeah let's hope the US stays out of another country's business for once! I couldn't see anything good coming from US involvement in a Chinese civil war. It'd spark a world war at worst.
Depends who defines Chinese, the party or other Chinese :). My impression is the party fears democracy and free speech not only because they could lose power to other Chinese, but also because they perceive that the US could install a President through media and PR campaigns.
I don't think it would happen that way, but it seems like a valid criticism given what the US government did to Latin American countries 40 years ago. I don't have any idea of how to convince China of that belief other than pointing out how weak that makes them seem.
I sometimes wonder if certain politicians and US businessmen are fine with China the way it is. As it is in its oppressed state, it is a cheap source of loyal labor. Despite growth, there are still plenty of poor people there filling manufacturing industries.
""China will face a more challenging situation in trade this year than 2015. Both imports and exports in February fell more than our expectations."
""China's exports declined the most since May 2009, suggesting that the overly strong CNY exchange rate has become an obstacle for the external sector"
""February's trade data is really poor and that will exert depreciation pressure on the yuan."
The report comes from anonymous Chinese government officials and cannot be accepted at face value as fact.
However it is unlikely that China can rebalance from massive overproduction without massive layoffs. The quoted government official, Yin Weimin put the number closer to 1-2 million.
So the western world should just take the Chinese government media at face value? since the foreign media now needs a 'permit' to publish online in China. This is a government that cheats, lies, and steals. Oh, and kidnaps foreign citizens and forces them to tell lies on state TV
Problems greater than inflation. Overproduction incentivizes dumping, which results in backlash from trading partners. It is also used to finance regional and local governments, which incentivizes overproduction and waste of resources. Sure, the thousands of construction workers making ghost cities get paid, but someone has to pay them. Not to mention the rampant corruption that occurs like magic when you mix money and power with a dash of unaccountability.
These aren't the smart engineering politicians with a 10 year view China has foisted its fable onto the world. These are the corrupt paranoid politicians who know they are one mass protest away from having all their families disposed. These are fat and lazy billionnaires who have siphoned off local schools, hospitals, people, environments, and is about to abscond with riches. These are the people that see their debt-fueled economy collapsing, and know there's no more workers to be paid in pennies to be exploited.
""In total, 106 members of China's National People's Congress and 97 members of Chinese People’s Political Consultative Congress, are on Hurun's China Rich List. Their combined wealth hits $463.8 billion"
Agreed, single purpose politically-charged accounts add a lot of noise, and really put a damper on this community's discussion. HN guidelines say to generally avoid submitting off-topic items such as political commentary, so shouldn't that same guideline apply to comments?
Besides, one could write a 'bash' script to do the same thing. 1) Find links to negative sentiment news. 2) Find key data and exaggerate in negative direction. 3) Splatter links and data on any HN discussion containing "China"
"China 'covertly providing oil to North Korea'
Seoul claims Beijing falsifying its export statistics to keep Pyongyang's industry, military operational"
> These are the people that see their debt-fueled economy collapsing, and know there's no more workers to be paid in pennies to be exploited.
I know they're evil but from what you've written it seems that China is developing in spite of what the China PR government is doing. It could be better with a better system of government but we have what we have and I fear a disruption in something as big as the government of China would be very bad for the world economy in the short term. As the saying goes, it will likely become much worse before it gets better.
> These aren't the smart engineering politicians with a 10 year view China
Engineers should not be expected to make good political leaders; it's a much different skill set and job. The two recent American presidents who were engineers were Herbert Hoover and Jimmy Carter (am I overlooking any?).
yeah I thought about rebuking his point, but someone who quotes fiction texts not from 'another thread', but from a book written in 1957 that was talking more about socialism and fascism in Hitler's Germany and Russia, and proceeds to copy and paste an entire paragraph in order to support his point about US in 2016 Well, that's some sort of superpower right there.
Less a super-power and more a sad reflection of the lack of integrity, enlightenment, and honesty of both those that are put in power and those who put them there.
Reading is a superpower!
The book is neither about Hitler nor fascism.
I would say it is a book about the magically industrialists that she wishes existed in her youth when her family was disposed by the Russian communists. They have ray guns and invisibility machines and everything, oh and trains don't forget trains.
China's already hit its limit. "Also, the Chinese economy is over-indebted. The total social debt is now 300%. Together with external debt, this figure rises to about 350%." http://marketrealist.com/2016/01/george-soros-sees-crisis-re...
> Secondly there is a now huge upper middle class who are travelling the world, sending their kids to Australia or US for study and still buying Apple products. They are not going away
"their buying power doesn't compare with that of their US counterparts. Between 2010 and 2014, only 12% of these people reported a household income of more than $3,200 a year, or $8.50 a day." http://www.businessinsider.com/demand-report-on-chinas-middl...