Is China headed toward collapse?

[w¡n9Nµ7 §£@¥€r 123]

The conventional wisdom in Washington and in most of the rest of the world is that the roaring Chinese economy is going to pull the global economy out of recession and back into growth.

...

That’s one vision of the future.

But there’s a growing group of market professionals who see a different picture altogether. These self-styled China bears take the less popular view: that the much-vaunted Chinese economic miracle is nothing but a paper dragon. In fact, they argue that the Chinese have dangerously overheated their economy, building malls, luxury stores and infrastructure for which there is almost no demand, and that the entire system is teetering toward collapse.

...

The China bears could be dismissed as a bunch of cranks and grumps except for one member of the group: hedge fund investor Jim Chanos.

...

Chanos and the other bears point to several key pieces of evidence that China is heading for a crash.

First, they point to the enormous Chinese economic stimulus effort — with the government spending $900 billion to prop up a $4.3 trillion economy. “Yet China’s economy, for all the stimulus it has received in 11 months, is underperforming,” Gordon Chang, author of “The Coming Collapse of China,” wrote in Forbes at the end of October. “More important, it is unlikely that [third-quarter] expansion was anywhere near the claimed 8.9 percent.”

Chang argues that inconsistencies in Chinese official statistics — like the surging numbers for car sales but flat statistics for gasoline consumption — indicate that the Chinese are simply cooking their books. He speculates that Chinese state-run companies are buying fleets of cars and simply storing them in giant parking lots in order to generate apparent growth.

Another data point cited by the bears: overcapacity. For example, the Chinese already consume more cement than the rest of the world combined, at 1.4 billion tons per year. But they have dramatically ramped up their ability to produce even more in recent years, leading to an estimated spare capacity of about 340 million tons, which, according to a report prepared earlier this year by Pivot Capital Management, is more than the consumption in the U.S., India and Japan combined.

This, Chanos and others argue, is happening in sector after sector in the Chinese economy. And that means the Chinese are in danger of producing huge quantities of goods and products that they will be unable to sell.

...

The bears also keep a close eye on anecdotal reports from the ground level in China, like a recent posting on a blog called The Peking Duck about shopping at Beijing’s “stunningly dysfunctional, catastrophic mall, called The Place.”

“I was shocked at what I saw,” the blogger wrote. “Fifty percent of the eateries in the basement were boarded up. The cheap food court, too, was gone, covered up with ugly blue boarding, making the basement especially grim and dreary. ... There is simply too much stuff, too many stores and no buyers.”

http://www.politico.com/news/stories/1109/29330.html

[Heracles 417]

This sounds like the same rhetoric you guys use to discredit Australia's huge growth.

US logic.

1. When you are first, gloat about it. If possible, talk about it daily.

2. When you fall from being first, try to discredit the relevance of being first. Better yet, flat out deny that others are better. Discredit the same source you cheered, when you were first.

[Darnell 8,480]

Yup - local 'inland' will crash, but will be boosted up by exports to Africa and South America.

I hate Chanos though - he usually steals my research.

[SMR 368]

This sounds like the same rhetoric you guys use to discredit Australia's huge growth.

US logic.

1. When you are first, gloat about it. If possible, talk about it daily.

2. When you fall from being first, try to discredit the relevance of being first. Better yet, flat out deny that others are better. Discredit the same source you cheered, when you were first.

This is a pretty hypocritical post. You have no data to discredit the original post but disregard it simply because you don't think it's possible that the US may actually be first. You seem to be using equally flawed anti-US logic.

1. If the US isn't first, gloat about it. If possible, talk about it daily.

2. When the US rises to being first, try to discredit the relevance of being first. Better yet, flat out deny that the US is better. Discredit the source you cheered, when the US wasn't first.

Now, I don't think China is crashing, but your argument consists of "China can't be crashing because they really are better than the US," which is inane.

[alienlovechild 75]

First, they point to the enormous Chinese economic stimulus effort — with the government spending $900 billion to prop up a $4.3 trillion economy. “Yet China’s economy, for all the stimulus it has received in 11 months, is underperforming,” Gordon Chang, author of “The Coming Collapse of China,” wrote in Forbes at the end of October. “More important, it is unlikely that [third-quarter] expansion was anywhere near the claimed 8.9 percent.”

Chang argues that inconsistencies in Chinese official statistics — like the surging numbers for car sales but flat statistics for gasoline consumption — indicate that the Chinese are simply cooking their books. He speculates that Chinese state-run companies are buying fleets of cars and simply storing them in giant parking lots in order to generate apparent growth.

Where have I heard this before? An economic stimulus package and cash for clunkers. . .

[Heracles 417]

This is a pretty hypocritical post. You have no data to discredit the original post but disregard it simply because you don't think it's possible that the US may actually be first. You seem to be using equally flawed anti-US logic.

1. If the US isn't first, gloat about it. If possible, talk about it daily.

2. When the US rises to being first, try to discredit the relevance of being first. Better yet, flat out deny that the US is better. Discredit the source you cheered, when the US wasn't first.

Now, I don't think China is crashing, but your argument consists of "China can't be crashing because they really are better than the US," which is inane.

So what are you first at? Certainly not quality of life. You know, the thing that actually affects and impacts every American. Having the best fighter jets is great and all but does squat for the average Joe.

Clearly, many fail to accept the country is no longer the land of golden egg laying geese. Sure there are pockets of entrepreneurs like the facebook developer or the two founders of google, but what does this do for the average Joe. has their life improved? I don't think so. Well certianly not when compared to what I am used to.

Edited November 10, 2009 by Booyah!

[SMR 368]

This is a pretty hypocritical post. You have no data to discredit the original post but disregard it simply because you don't think it's possible that the US may actually be first. You seem to be using equally flawed anti-US logic.

1. If the US isn't first, gloat about it. If possible, talk about it daily.

2. When the US rises to being first, try to discredit the relevance of being first. Better yet, flat out deny that the US is better. Discredit the source you cheered, when the US wasn't first.

Now, I don't think China is crashing, but your argument consists of "China can't be crashing because they really are better than the US," which is inane.

So what are you first at? Certainly not quality of life. You know, the thing that actually affects and impacts every American. Having the best fighter jets is great and all but does squat for the average Joe.

I bet the US is first at twinkie consumption. Twinkies definitely improve the quality of life. Anyways, I don't consider myself entirely American (depending on how you define it), and don't really want to get into a discussion of what country is better to live in since it will come down to a matter of opinion.

I was just pointing out that assuming the US is best by caveat is no more ridiculous than assuming it isn't by caveat. Except the article actually had data, so you were the only one doing something by caveat.

[Craneman 2]

Why are you here?

This sounds like the same rhetoric you guys use to discredit Australia's huge growth.

US logic.

1. When you are first, gloat about it. If possible, talk about it daily.

2. When you fall from being first, try to discredit the relevance of being first. Better yet, flat out deny that others are better. Discredit the same source you cheered, when you were first.

[Heracles 417]

I am not bashing the US here. Even the last country I would expect to admit defeat, the Soviet Union, reached a point where they accepted they failed and others are doing things better than them. Whereas, the US is still at the stage of trying to downplay anyone who is doing better.

There is only a finite amount you can sweep under a rug before, it ends up becoming a mountain that is visible to all. EG Soviet Union.

Why are you here?

Refer to the title of this forum. However, I am moving back to AUS. You know, higher median salary, lower unemployment, higher median house price (actually out of reach for most Americans), longer life span, ranked 2nd in the world etc etc etc. Just saying

Edited November 10, 2009 by Booyah!

[Craneman 2]

do you have your own personal Jehad?

Maybe we need to wwatch you!

I am not bashing the US here. Even the last country I would expect to admit defeat, the Soviet Union, reached a point where they accepted they failed and others are doing things better than them. Whereas, the US is still at the stage of trying to downplay anyone who is doing better.

There is only a finite amount you can sweep under a rug before, it ends up becoming a mountain that is visible to all. EG Soviet Union.

Why are you here?

Refer to the title of this forum.

[Heracles 417]

do you have your own personal Jehad?

Maybe we need to wwatch you!

America: The land of opportunity producing a new and even bigger idiot each and every day!

Edited November 10, 2009 by Booyah!

[mawilson 2,133]

Is China headed toward collapse?

Wouldn't that be nice? B)

[Darnell 8,480]

Hey - come on -

I know this is Off Topic Forum -

but...

Could you fellas focus on China for the remainder of yer posts here on this topic? (Bash China if you want, come on, it'll be fun for ya, I swear ! )

Please?

Purty Please with Marmite on it???

Give you big curry laksa, you betcha !

[alienlovechild 75]

Refer to the title of this forum. However, I am moving back to AUS. You know, higher median salary, lower unemployment, higher median house price (actually out of reach for most Americans), longer life span, ranked 2nd in the world etc etc etc. Just saying

You may want to qualify the lifespan part.

"But life expectancy is not dependent on just medical care. For example, Texas A&M health economist Robert Ohsfeldt and health economics consultant John Schneider point out that deaths from accidents and homicides in America are much higher than in any other of the developed countries. Taking accidental deaths and homicides between 1980 and 1999 into account, they calculate that instead of being at near the bottom of the list of developed countries, U.S. life expectancy would actually rank at the top."

America's relatively high infant mortality rate also lowers our life expectancy ranking. A 2007 study done by Baruch College economists June and David O"Neill sheds some light on why U.S. infant mortality rates are higher—more low weight births. In their study, U.S. infant mortality was 6.8 per 1,000 live births, and Canada's was 5.3. Low birth weight significantly increases an infant's chance of dying. Teen mothers are much more likely to bear low birth weight babies and teen motherhood is almost three times higher in the U.S. than it is in Canada. The authors calculate that if Canada had the same the distribution of low-weight births as the U.S., its infant mortality rate would rise above the U.S. rate of 6.8 per 1,000 live births to 7.06. On the other hand, if the U.S. had Canada's distribution of low-weight births, its infant mortality rate would fall to 5.4. In other words, the American health care system is much better than Canada's at saving low birth weight babies —we just have more babies who are likely to die before their first birthdays."

http://reason.com/archives/2008/06/17/acci...rs-preemies-fat

[justashooter 430]

hey darnell, the clowns who have never lived there have no idea of the fiscal mismanagement and corruption that rules china, and of how overstated it's economy is. they have no idea how poor the majority of people are, or how over-leveraged the country is in a financial sense.

will it crash? depends on how good the state owned banks are at shuffling paper from one institution to another. trouble is, foreign investors are demanding transparency. the current best estimate is that the dragon has forced on it's banks non-performing loans equal to 5-6X the country's cash reserves, and 3-4X the GNP. that's a lot of dumplings to juggle at once.