China - The Sleeping Lion Awakened

asiablues's picture

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Anonymous's picture

China a neoKeynesian accident/implosion waiting to happen.
Shanghai indices, as opposed to FXI, peaked last August...

trav777's picture

China is as big a dependent upon the debt bubble as anyone.

They have empty factories, empty cities, wind turbines not connected to grids, all artifacts for a future of consumption that CANNOT exist.

There is so much surplus capacity in China, oil production would have to double just to satisfy it.  Their answer to everything is to build MORE capacity and then call that GDP growth.  I've got a question for them...where the fuck do they think the demand for all this capacity is going to come from?  It only exists now because of debts which cannot in any way be repaid.

The world built for a 120mbpd future on a 87mbpd budget

Anonymous's picture

"But many analysts are bullish on China for the long-term as 500 million educated and unemployed Chinese spur greater domestic spending and production."

Really, based on what?

bugs_'s picture

Not worried about cut and paste mercantilists.

Missing_Link's picture

I'm tired of reading these "China China China!" advertisements everywhere.  I've been reading them for years and the more I read them, the hollower they sound.

They were believable a few years ago before the financial crisis hit; now, with China's exports dropping off a cliff and many of its cities revealed to be empty shells, it's much less convincing.

Margin Call's picture

I expect a little more from Zero Hedge. This reads like the "Chinese economy" boiler plate meme that has been circulating the Western media since, oh, 2000?

"The government's massive economic stimulus program has transformed the country into an enormous construction site"

This is the current popular meme that, frankly, gets me the most. Anyone with half a clue about China knows that the country has been an enormous construction site for at least the past two decades. Why the notion that stimulus to build more infrastructure on top of the already huge amount that is of recent provenance has come to be seen as "economic genius" is beyond my capacity to understand.

If any country actually does need a major infrastructure overhaul, it's probably the United States. China has more than enough roads to nowhere cavernous empty buildings as it is.


Miyagi_san's picture

compare what the US what China has done. We got AIG, they got empty manufacturing plants the end I'd say they feel better about the outcome.

Bruce Krasting's picture

China does a major stimulus. Bigger than US. It works (deficit spending always produces growth). But China and US are going to hit head winds as these stimulus efforts stop.

What we will do? What we always do. We will create more debt.

What will China do? Rather than finance their growth programs with internal debt, they could fund it with external debt with no problem.

Alternatively, they could sell some of their reserve holding to pay for the stimulus. A dip into the cookie jar so to speak.

That would be a lights out situation for our bond market.

Anonymous's picture

China is repeating the mistakes of the previous asian crisis and the contagion will spread just as far. China has bought recovery on stimulus and bank lending, which has fuelled asset bubbles on appreciation expectations as the China lovers can't break their expectations of two years ago despite China failing to decuple from the subprime crisis.

So did China fix the unbalanced economy? No they didverted hundreds of billions to the lopsided and weakening export sector. China is just a put option on U.S. and EZ consumers.

The superpower claims are laughable.

Anonymous's picture

I'm not quite sure if the $500b China contributed to bailing out economies were the highest,afterall the U.S pumped some $700b far exceeding China's contribution.

On a side note Economic Forecasts & Opinions seemed to have overlooked a few things in the China markets that helped them a bit from a world wide recession which is that China does not allow sales of their notes in the market,so they can indeed control the value of their currency.

But a large part of the U.S debt are being held by China,it could be a good bargaining chip for them,they could simply dump them driving the U.S dollar down and creating a major U.S inflation but that would also be terrible for China's economy.
Often overlooked aspects is that a large part of the GDP of China is driven by U.S as well as European investments.

These corporations are foreign owned by U.S and European companies in which could just as easily pull back to their home markets to fill demand.

Also China's growth had been at such a fast pace that they have actually been trying to staff off accelerated growth by reducing production because it can do more harm than good to China overall.

While U.S consumer purchases of products from China has leveld down which had to happen at some point,it will probably stay at the current levels for quite some time.
Once Europe has caught up with purchases from China it to will level down and off to stable levels,that's when China's economy will go negative and fluctuate maybe a recession or worse at least for awhile before it stabalizes.

Anonymous's picture

I have been investing in important chinese contemporary art, as a way of protecting my dollars....there is a scarcity in this area, and more new chinese collectors are starting to buy! Sotheby's is an excellent source of this material.... thxs ellie

Anonymous's picture

I have been doing this since 2000. Very profitable, as Chinese is becoming richer, they are purchasing their own artists' work. Hong kong always has a big auction for this kind of market.

arcturius's picture

This is very popular picture today in China. You can see it in the stores, govn offices, in the taxis, other public places. It is like propaganda.. It is called MAID IN CHINA. Take a look at it with maximum attention.. it explains what they think about us and the US.


Link to picture is here

LongMarch's picture

Is that Brittney Spears? I'm not surprised. 

Miyagi_san's picture

do not open THAT link...dude the Chinese have more class

Anonymous's picture

So the reason the dollar still is this strong, is because they use it to weaken their currencies.
Nice way to fight against the inflation strategies of the FED.
Now we only have to wait for the tipping point to where they say the FED printed to much and they all start dumping the $. 3$ for 1€ at least when that where to happen...

JR's picture

The hidden agenda behind the IMF/World Bank is world socialism.   Its current managing director, Dominique Strauss-Kahn, is a Socialist/Communist.  President of the World Bank is Robert Zoellick, former managing director of Goldman Sachs and a signatore of a letter drafted by the Project for a New American Century to President Clinton calling for "removing Saddam [Hussein]'s regime from power."

Has America’s moment of suicide arrived?

As global reshuffling accelerates, fears are gathering among observers who for years have outlined the dangers of a world government.  They worry that the leaders, the G-7, the G-8, the G-14, the IMF, are coordinating world finance and resources for that purpose; already the world’s central banks cut interest rates in unison; already, major U.S. companies generate two-thirds of the products China exports to the rest of the world. The reference here by Pikkoro Jyunia to Strauss-Kahn indicates a frightening step already has been taken:

“In a speech a few days ago at a conference organized by the Monetary Authority of Singapore, International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn called on Asia to play a leading role in guiding the global economy to a new, more sustainable path for global growth.”

The proposed global government at Bretton Woods I was designed upon the principles of socialism.  There were to be two weapons of control.  One was a monetary weapon -- the IMF and its sister the World Bank -- established by Fabian Socialists, John Maynard Keynes and Harry Dexter White, then Assistant Secretary of the Treasury and member of a Communist espionage ring in Washington. The other was a world police force. 

Of the two weapons, monetary control is the most important.  A world central bank, which would be represented as the IMF/World Bank, has the ability to issue a common money which all nations are urged to accept – under the slogans of international trade and growth.

Monetary control “is more powerful than mega-tons of atomic energy; it reaches into every shop and home; it can be used with precision against one nation, one group, or even one person while sparing or benefiting all others “ says G. Edward Griffin, financial expert on international banking.

The IMF/World Bank is the protégé of the Federal Reserve – with a sordid history of its members getting rich alleged fighting poverty.  As Graham Hancock, an astute observer of the international-aid industry, said in his book, “Lords of Poverty”: [M]oney has never been easier to obtain… [W]ith no messy accounts to keep, the venal, the cruel and the ugly are laughing literally all the way to the bank… All they have to do…is screw the poor.”  Investigators have reported graft runs as high as 60 percent.

International organizations such as the World Bank are financed by regular contributions from the major industrial nations, primarily the United States.  This obviously is tax money that arrives without the budget oversight that accompanies the foreign aid portion of national budgets.  In short, organizations such as the IMF/World Bank are free to make their own decisions about the projects that they will undertake with no oversight or responsibility from any elected officials, whether Asian, European, or US.

In India, the World Bank funded the construction of a dam that displaced 2,000,000 people; in Brazil, it “developed” a part of the Amazon basin resulting in the deforestation of an area the size of Great Britain; in Kenya, the Bura irrigation scheme caused such desolation that a fifth of the population abandoned the land; in Indonesia, it’s transmigration program devastated tropical forests—at the same time it was funding  reforestation projects; livestock projects in Botswana led to the destruction of grazing land and the death of thousands of  migratory animals destroying the natives’ ability to hunt for food;  when Nigeria and Argentina were drowning in debt it used billions to build lavish new capital cities to house the ruling elite; in Zaire, Mexico and the Philippines, political leaders became billionaires; the terrorists governments of Tanzania and Zimbabwe and Uganda that were engaging in mass detentions and torture and killing and confiscation were financed with billions from the World bank, as were the famines and genocide in Ethiopia, Communist Viet Nam, Laos, Poland, China, Afghanistan… and the list goes on.

As for the IMF, says Nathan Martin of Economic Edge: “They are the world’s current mafia, their crimes are on a much higher level than anything ever seen in the history of man.”

Strauss-Kahn took over at the IMF shortly after Paul Wolfowitz, the former Pentagon chief who became head of the World Bank, was forced to resign following allegations he had shown favouritism to an employee with whom he had a long-standing relationship… And then Strauss-Kahn "plunged the IMF into leadership crisis" by acting improperly by showing favouritism to” (having an affair) with  Piroska Nagy, a Hungarian woman employed in the fund's Africa department.

chindit13's picture

Interesting legend/myth.  Undeniably China has a long history, more of which is made up each passing day.  They hit a little snag about 2300-2500 years ago, around the time of the introductions of Confucianism and Buddhism, but in the last twenty years have picked up a lot of the slack.

The "unprecedented growth" has much to do with thrift and industriousness, but also a great deal to do with lack of regard for intellectual property rights, or the fact that from the Renaissance onward a lot of the leg work was done outside of China in terms of invention and discovery.  Lighting a dark house by buying a lightbulb is slightly less miraculous than what Edison first did, and can be done a lot faster.

As for the perennial 8.88% growth, I always look at Chinese data remembering that in 2000 (or maybe 1999) they released their Q4 GDP number on December 28th so as not to have it overlooked by the New Year celebrations outside the country. That's efficiency!

I am not willing to bet that China can transform itself into a domestic demand economy in anything less than a few decades.  With 99% of the population earning $6000 a year or less, they lack the buying power to make up for that 37% of their economy that is export driven.  Then there is this to deal with:

China might well be stuck in the Middle Kingdon for quite a while.


snorkeler's picture

Great link, thanks.

Man still refuses to pay the full cost of industrial & economic expansion.

Should be interesting 40 years from now. I feel so sad for all of our children.


Winisk's picture

Thanks for the link.  A picture says a thousand words.  The dirty underbelly of the China's growth story is lost on economists and those that want to profit off this disgusting abuse.

Anonymous's picture

Instead of thinking 1000 years ahead maybe they should go back 100 years and read some economics from an era where people still understood you can't print your way to wealth. Sure there is incredible potential in China but it's also a bubble of monumental proportions and potential doesn't pay that bill when it comes due.

A country where trust has been thoroughly destroyed by decades of authoritarian rule and where central planning and placating of bureaucratic whips and demands are still paramount faces serious hurdles even without blowing bubbles. After their next revolution I'll be very interested, but not now.

Anonymous's picture

The Chinese think thousands of years ahead.

What does one Barack Obama matter? Oh yes, a moment of joy for the pheasant masses.

Tomorrow after Obama goes home to the white house, they will shake off the party hangover and get back to work.

We get back in line for our weekly unemployment checks and waiting on more ships to cart the stuff from China and the US Railroad to carry it eastward.


LongMarch's picture

"History is written by those in power to justify the present. Memory is  the same thing on a smaller scale."-Cynics Book of Wisdom

Oh really? They did'nt plan well for the Opium War or the Great leap forward or The Cultural Revolution did they? How come the Han dynasty is not still around?

This myth doesn't help anybody.

Chinese are hard working,smart and polite. They are not gods.With the US gone, they maybe all that stands in the way of many years of darkness.

primus's picture


Too little (oil), too late (industrial revolution) for the Reds. They would do well to save all those Rickshaws and rice hats for after the Big Reset.

Anonymous's picture

what blather.....china's gdp numbers are as reliable as frosty the snowman at a nazi book burning....

Gordon_Gekko's picture

Obama is nothing but an INSECT as far as China is concerned. A puppet leader of a bankrupt nation, if you will.

Anonymous's picture

Why should Chinese respect a lame duck president?

Anonymous's picture


Obama will pontificate about 'The Strong Dollar' and 'American Exceptionalism', just like the good little bankster's stooge he is... right up until the Red's stop churning out container ships full of junk bound for Wal-Mart and start stamping out AK-74's and Mig fighter jets for WWIII.

Anonymous's picture

C'mon... it's not like they're threatening to come over and eat his lunch if he doesn't reduce the deficit...

Anonymous's picture

What happens with all this excess export capacity that China built up as the US consumer continues to not to buy stuff?
Where does all of this excess capacity go?
And what concrete steps has China taken to encourage domestic consumption? Is there even a hint of decrease in tax rates or even an increase in interest rates offered to consumers?
What happens if China and the rest of the emerging industrial market enter into trade wars for increasingly smaller foreign markets?

What about the internal competition for the next level of leadership? Will Hu Jintao be able to maneuver his Communist Youth League proteges into power or will they be replaced by a resurgent Jian Zemin ? What about the rise of a possible Maoist faction? What policies will the new generation pursue, more of the same tried and trusted export support ? more emphasis on domestic consumption? more emphasis on domestic social services?

The future of the United States seems somewhat bleak...but the future of China is completely uncertain. As you've shown, they've improved dramatically over the last 20 years. But this occurred in an environment of artificially high US consumer demand, coupled with strong support for free trade. What happens in this much less welcome, darker world?

fluorideintapwaterisbadforyou's picture

Yes , the ongoing policy of de-industralizing

America  is well on its way

Scheduled plan is to

wipe out  the economy and bankrupt  the American people so global gangster banksters  can buy up the Country  for  3 cents on the dollar.