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Is China Heading For Its Own Arab Spring?
This is a continuation of a series of article regarding China’s “miracle.” To read the first part, click here.
Inflation has been and remains the single largest problem for the Chinese Government’s attempts to mollify the Chinese population. It is the one issue that can truly negate a rise in incomes or other economic growth: if inflation is 10%, a 10% raise doesn’t actually mean you’re better off.
Please recall that it was high food inflation that resulted in the general Chinese population joining college students in the infamous Tiananmen Square protests. And today, with nearly 40% of Chinese living off of $2 a day or less, any spike in inflation quickly results in people taking to the streets and protesting.
With that in mind, it’s critical to note that the wealth and power Chinese Government officials have accumulated has come primarily from a massive lending bubble at China’s banks…
From the beginning of 2009 to the end of June this year, Chinese banks have issued roughly 35 trillion yuan ($5.4 trillion) in new loans, equal to 73 percent of China's GDP in 2011. About two-thirds of these loans were made in 2009 and 2010, as part of Beijing's stimulus package. Unlike deficit-financed stimulus packages in the West, China's colossal stimulus package of 2009 was funded mainly by bank credit (at least 60 percent, to be exact), not government borrowing.
http://thediplomat.com/2012/09/10/are-chinese-banks-hiding-the-mother-of-all-debt-bombs/
If you’re looking for the reason China’s economy continues to explode, look no further. To put this data into perspective, the above bank expansion would be the equivalent of US banks lending over $10 trillion into the US economy from 2009 onwards.
That is the equivalent of what China has done in the post-2008 Crash period.
Mind you, the above statistic is only for China’s official lending numbers (the ones Chinese banks official reveal). Indeed, China’s non-regulated financial system, also called its shadow banking system, has expanded to over $18 TRILLION, more than twice the size of China’s economy. Just last year (2012) the Chinese shadow banking system expanded by $1.3 trillion (that’s the equivalent of 20% of China’s GDP).
THIS is where China’s wealth and corruption and alleged economic “recovery” have come from: not real economic growth, but a massive credit fueled debt binge. And as anyone can tell you, there is a major consequence for this kind of financial expansion: INFLATION.
Now, the official China data pegs inflation at 2%. This, like China’s GDP, is an absurd measure. If inflation were indeed just 2%, the People’s Republic wouldn’t be facing widespread civil unrest over wages (on average there are 30 strikes or more per month in China).
Demands for wage arrears always spike in the weeks before the holiday as migrant workers, especially in construction, clamour for back pay. This year, with the rapid development of social media in China, the extent of the problem became very apparent with one online activist sometimes recording up to 100 protests a day. However, very few of these reports contained sufficient detail to be included on CLB’s strike map.
Of the 71 strikes and protests that we did include during the month of January, 38 were in the service sector and 26 were in manufacturing. Of the service sector strikes, 15 involved taxi and bus drivers protesting administrative charges and rampant unlicensed cars. There was also an upsurge in teachers’ strikes last month as middle school teachers protested pay reform measures introduced by local governments.
Most of the strikes and protests in factories meanwhile were related demands for pay increases. Continued improvements in the productivity and profitability of the manufacturing sector and indications that consumer prices are rising once again have pushed higher wage demands and also forced regional governments to increase the minimum wage. On 5 February, Guangdong announced it would increase the statutory minimum wage on 1 May to 1,550 yuan per month in the capital Guangzhou, and the following day, Shenzhen announced a 100 yuan increase in its minimum wage to 1,600 yuan per month to go into effect on 1 March.
There were two successful strikes for higher pay at Foxconn factories in January; in Jiangxi on 11 January and in Beijing on 22 January. Workers at Jiangxi Foxconn reportedly got a 500 yuan increase in basic pay to 2,200 yuan per month, prompting a strike for higher pay at another Taiwanese-owned electronics plant in the same city of Fengcheng almost immediately. Foxconn later announced that it would broaden the participation of ordinary workers in its enterprise trade union. However, this announcement was prompted by suggestions from the Fair Labor Association following its audit of the company’s Shenzhen and Chengdu facilities and does not seem to be the result of demands from the workers themselves.
One definite highlight of last month’s worker activism however was the strikes by sanitation workers in Guangzhou, which gained considerable public support and sympathy and eventually forced the city government to promise an increase in pay of around 400 yuan per month on average. However, this success was dampened somewhat when a few days later the government announced that the minimum wage in the city would be increased anyway.
http://www.clb.org.hk/en/content/china-sees-upsurge-worker-protests-prior-lunar-new-year
So, let’s lay to rest the assumption that China’s inflation is just 2%. Remember that nearly 40% of China’s population lives off of les than $2 per day. And China’s per capita income as a whole is just $6,200 (roughly $17 per day if you count weekends as working days).
A South China Morning Post survey of some commonly bought grocery items found that a 500 gram loaf of bread that sells for HK$8.60 in Hong Kong and the equivalent of HK$9.93 in London, cost the equivalent of HK$13.52 in Beijing.
Similarly, a 250 gram bag of Starbucks coffee beans cost HK$80 in Hong Kong and HK$50 in London, but HK$105 in Beijing. Across the board, imported and foreign brand items were often more expensive in Beijing, although locally produced items, such as eggs, were cheaper.
Similar comparisons contrasting Beijing, Guangzhou, Shanghai and Shenzhen, with those in New York, London and Hong Kong have increasingly become fodder for debate in recent years .
The latest annual cost of living survey by the compensation-consulting firm Mercer found Beijing and Shanghai to be pricier than New York and London. Shanghai was ranked 16th followed by Beijing at 17th, ahead of London (25th) and New York (32nd).
http://www.scmp.com/news/china/article/1091651/cost-living-china
Ignore the “official” data. The massive expansion of the Chinese banking system has unleashed a much higher cost of living in China. And your average Chinese civilian, struggling to meet these increased costs, is going to be none to please to find that the very banking expansion that was supposed to grant him or her a higher quality of life has:
- Benefitted corrupt Government officials much more than the Chinese population
- Resulted in the very same increased cost of living that is eating up his or her paycheck.
This is precisely the formula that resulted in the Arab Spring in the Middle East: increased costs of living and a corrupt Government. Could China be heading for a similar development? It sure looks like it.
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Best Regards,
Graham Summers
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I thought we were talking about the US there for a minute. Want to see frustrated people? Visit Walmart and watch all the young mothers trying to provide. Were they stupid for getting in that situation? Yes. But why should we blame them when the TV says there is a massive economic recovery, jobs for everyone are coming and the stock market is going berzerk?? Let's Fuck and have babies Tommy! You won't be working at Mcdonald's forever!
Fuck the US gov't.
And surely 100 million+ gun owners are zero threat to the empire. That's why they want the guns. It has nothing to do with a few dead kids. These murderous assholes of killed hundreds of thousands of innocents over lies and they'll have no problems killing us too.
As the saying goes: "When there's food on the table, there are lots of problems.
When there's no food on the table, there is one problem."
The Chinese have suffered through numerous famines in their country's long history.
More First World Ignorance.
China has food inflation, but it's not as bad as listed here.
25 to 33% over two years for common dishes in many restaurants, the cheaper the dish the higher the rise as if something rises from 1 penny to 2 it went up 100%. 2 to 3, 50% and so on. The cheapest dishes have doubled in price, others 25% or abouts.
Over a two year span.
Comparing Starbucks or bread is stupid, because 99% of Chinese do not eat bread by the 500g loaf, nor drink coffee of any sort let alone Starbucks. This survey is done by the same idots at Mercer who price a SubZero fridge or a pound of smoked salmon and Starbucks beans and then tell you how expensive it would be to live an upper middle class, upper west side, Manhattan lifestyle in China, Chile or Cambodia.
A South China Morning Post survey of some commonly bought grocery items found that a 500 gram loaf of bread that sells for HK$8.60 in Hong Kong and the equivalent of HK$9.93 in London, cost the equivalent of HK$13.52 in Beijing.
Similarly, a 250 gram bag of Starbucks coffee beans cost HK$80 in Hong Kong and HK$50 in London, but HK$105 in Beijing. Across the board, imported and foreign brand items were often more expensive in Beijing, although locally produced items, such as eggs, were cheaper.
"Comparing Starbucks or bread is stupid, because 99% of Chinese do not eat bread by the 500g loaf, nor drink coffee of any sort let alone Starbucks."
People only aspire to live the lifestyle you talk about. Never before have I witnessed a more sublunary, cash/food frenzied society. Starbucks or any decent coffee-shop seems to have been doing business here. Or why are there hundreds, if not thousands of Starbucks in the country?
Fair to say that the vast majority don't eat real rustic German loafs nor real French Baguettes by the tonne. Yet. But, if you count the sweet, sugary, oily bread-stuff that only costs about 1 USD per loaf, nearly everone eats this junk in places like, "Paris Baguette", and other successful franchise chains, and even these popular goods (using non-imported materials), have increased in price year-on-year, noticibly. Even sugar and cooking oil, eggs etc.
As China is vast, when it comes to agricultural commodities, I'm quite sure it depends on the scale of purchase when sourcing the goods. This makes it highly suceptable to price vaiations, and massive mark-ups from place to place, and at each stage of the resale/distribution process.
I suspect a revolution is brewing in China. Recently the establishment has stablized things but it has become increasingly clear to the outside world just how phony their growth has been with all of the ghost cities and stuff. The Chinese are due for a crisis just like everywhere else. When the Chinese have crises, it is always pretty spectacular. Tens of millions of people starved due to government ineptitude and there are hundreds of millions of Chinese who still remember that incident. And other things like Tianmen of course, the black jails that don't exist. Does anybody really think that the US jails THAT many more people proportionally than China?? No. The Chinese establishment just lies. Because there is nothing approaching freedom of the press in China. Not even close.
People in the US really don't have much knowledge of China. It is too bad. I'm lucky that I do have a bit of knowledge.
Again, you really don't have any damned idea what you're talking about.
Hahahahahahaha, once again, idiots talking about things they have no clue about.
Bread: I go downstairs and get a loaf for 5 RMB (80 cents)
Eggs: It's 4 RMB per 500g now. A dozen "jumbo" eggs is 850g.
Every single time they try and pull this crap, it's the same exact thing. Some useless "reporter" who doesn't know how to buy things heads off to the import store and gasps at the prices. That's not called inflation, that's called idiocy.
He probably went on TaoBao and looked up a few Import Food Grocers and saw that food prices were 5X, thus China has food inflation for Dijon Mustard and US Bacon!
I can buy ONE YEARS worth of tea, the good stuff you pay an insane premium for in The West, for 80RMB. That's $12.80 and this is the very good stuff from Yunnan. It comes in two huge tins and lasts me a good while.
No, I mean, it's *possible* to get ripped off like that in an import store if you really want to. But for the common, normal person, it's all far cheaper than those bullshit numbers. You see the same kind of tripe on "numbeo" where expats post hilarious prices as well.
Here's what this report and all the idiot economists are failing to understand. China is not the west. China is capable of massive revision and reform without having to be worried about "political viability". What needs to be done is simply done and it's rarely done with haste, it's typically planned out and tested long in advance of implementation if it's a critical shift. The party is not some united front, well, it is from the outside, but there are factions a plenty on the inside and issues are debated and argued over until a respectable majority can be presented.
All that local government debt? Most of it is to the banks, which are government owned, and it literally takes just a snap of the fingers to make it go poof. It's meaningless. It's essentially money that the government owes to itself. Debt owed by the SOEs, again, STATE OWNED enterprises, it's money owed to itself. It means absolutely nothing. China is in full and total control of its own currency, there is no "debt ceiling" to worry about and the finance industry has not been allowed to weed its way into making up bullshit ways to pretend to add value to transactions. It's all rather cut and dry. Private companies which are failing are allowed to fail. Only state owned companies which are increasingly being cut down to critical ones are kept propped up no matter what.
Housing prices: Yep, they're high, they're high for a reason though. It's not all hype and flipping. There are HUNDREDS OF MILLIONS of people who are wanting to get into the cities, and at the same time, wages are going up. Increased wages means increased rent. Furthermore, it's really not uncommon to own multiple properties at all.
Li Xiao Xiao comes to the big city to make his fortune, scraps and saves and lives like shit and buys a small 35 sq m apartment with family resources and savings so he can demonstrate stability for a serious relationship with Wang Mei Mei. Li Xiao Xiao marries Wang and busts his hump to get everything he can. 35 sqm isn't enough for a family though. It's been about 4 or 5 years since he bought and he bought cheap, but the prices are higher now and Li and Wang are DINKs still so that mortgage is basically paid off. A new mortage is taken out using Wang's credit and they buy a new 130 sqm apartment. The old one is rented out and they have their baby. The mortgage payments are hard at first, but there's no reason to sell the 35 sqm place. After all, it's an old apartment and scheduled for redevelopment anyways, plus it's owned outright and free money is coming in from rent. Li and Wang are free to work as Li's parents have come to the city to help take care of the baby, and they are both pulling in retirement money. One day, the revelopment of the old place is finalized, they get a pair of 50 sqm apartments plus a payout of the market value of the apartment. They rent out both of these and start considering to buy some property for further investment... or better yet, to get the parents out of the house but not too far away. Baby Li is now getting ready for school and they want to ensure that he gets into a good one. Private schools are a bit of a waste and iffy, but it's a much better option to buy a very small apartment in a desired school district and use that address for application.
All of these properties have their purpose and none of them are being flipped for fast cash. Sure, there's some of that going on, but the taxes on flipping tend to kill the profits. There's no "quick fix" to make a property worth more. The simple fact is that there is demand, LOTS of demand. Wages are going up, and with it rent does as well. The reasons for having property under your belt, yes, there's the investment aspect.. buying a place further out for cheap, waiting for development and then selling it so you can upgrade your main residence, but in the end, it's still a store of value. Housing prices can crash, but honestly, not by much.
There is also massive pressure to develop the smaller cities and make them more desireable for that massive population shift... removing some of the burden from the 1st tier cities.
Onto the food imports. Duh, farmers are getting rich. They are growing more cash crops as demands are creating markets for them. Beans, corn, rice... there's no money in this. It's hard hard hard work and very little benefit. Far better to grow the cash crops, get rich doing it and rely more on imports for the staples. As long as China has money, it's not an issue, and if prices for whatever reason get out of line, there are pricing controls in place to stabilize them. Of all the old price controls that were removed, they never nuked the critical ones, not entirely anyways.
Pay close attention to the deals that Beijing is making internationally. Nations which have been screwed for decades by the west are getting amazing deals for their own development. China is creating advanced trading partners and securing both resources and markets and doing it without violence and plunder. And not being heavy handed about it either. In the next 5 years, you will see the RMB ascend as a reserve currency. Currency swap deals are already happening. Expect to see this sped up greatly as the EU continues its collapse and begs China for a bailout... China, being not retarded will extend loans in RMB, and put firmly in place the bedrock of the system it wishes to establish.
Arab spring in China? Good luck with that. Chinese are well aware of what chaos looks like and have no desire to see it happen again. The gripes with the party are also well understood to be due to flaws at local level, overall, the people are highly supportive of the central government.
the us has exported its inflation to the slave nations.
these nations have to tax or otherwise extract the devaluated currency or risk hyperinflation.
but a slowing of a slave nations economy, especially an over built and way way way over populated one
means unemployment which means revolt. maybe the chinese leaders can build millions of
titanium neck guards and copper testical cuffs for their future reality.
And the Chinese still manage to save more than Americans. Why don't you write an article about that?
The Peoples Republic will not take responsibility ... it will always be the yáng guizi ... war will result from any prolonged angst.
China will ride it to the end then bust out the Golden Yuan and 10,000 tonnes of Gold. Xie Xie!
the missing gold, the one the germans and swiss want back, is already in china and more is in the move. the ny fed must have been selling it to suppress the price of gold. i expect a total disintegration in the western block when the news hits the street.
Best case scenario.
they don't have an interstate highway system...people have abandoned land in search of "opportunities" in the Cities. they look great up close...but having been in Hong Kong "don't look too close." once you build highways you open up land availability to folks. If you believe in Marx (and i do) you can see three distinct phases of development: urbanization (where China's at right now going on thirty years), single family housing or "suburbanization" (50's, 60's) with ye old white picket fence, some land, a small house and a big garage...and now "exurbs" where you're talking hobby farming/real farming...small "retail cities" and "back to ye olde timey roots and what has value." (sorry to bore everyone again but only land has value in my view.)25,000 an acre for Iowa farmland still strikes me as pretty rich...you can pick up the tractor/trailer combo for about 35,000 right now so if you have one of those then you have some "working capital." should the price of oil collapse to "North Dakota levels" (60 bucks a barrel. sell for even less in Alberta so i'm told) then those things can be run for not a lot. if Americans suddenly get "turned on" by the all electric Nissan Leaf (best car on the market by far in my view) then energy prices are going to collapse in the USA. that should get coffee back to ten cents where it ought to be. and what's up with hot dogs? why aren't those ten cents a pack too? Governments are running out of citizens to tax. either a way to revive the dead American consumer is found or it's "night Johnboy" for half the planet. http://www.youtube.com/watch?v=cp7_u0kcQRo
Umm... is he funding this website ?
I don't know.
Lord knows those people are like the Russian Peasants of the late 1800's, but they are so very obedient culturally.
Unlike deficit-financed stimulus packages in the West, China's colossal stimulus package of 2009 was funded mainly by bank credit
Could some one explain to me the difference between bank credit and deficit financing in China?
China's last "Arab Spring" didn't work out so well for those rolled by armor tracks. I don't see how the state response would be any different anytime soon.
What do you call a person who is both ignorant and apathetic? I don’t know and I don’t care.
A liberal.
they dont know, and dont know they dont know.
Its sad. but a government that truely sticks it to their people and loots the economy for its own benefit, has not been sufficient motivation for the sheeple to pick up at least a baseball bat to defend themselves. Maybe move to a saner jurisdiction, like Toronto, for those who can.
There might be a revolution in China, but nobody I'm reading has a clue if and when.
I read the Yutes there are very frustrated b/c they cannot afford an apartment depsite thier hard work and college educations ....while at the same time they see corrupt locals officials buying 10-20-30 apartments on an $800 a month salary. Example of one lucky government offical's son:
"Those contradictions were thrown into sharp relief last year after word spread that the younger Mr. Bo used a red Ferrari to squire the daughter of the American ambassador around Beijing. Such a choice of vehicle seemed particularly unfortunate when paired with the many photographs, readily available on the Internet, that showed the young man in a dinner jacket and living it up at Oxford University while his father was preaching egalitarianism."
http://www.nytimes.com/2012/04/26/world/asia/bo-guagua-tries-to-defuse-s...
Where does a humble local official get several hundred thousand wheels? Something has to give I imagine.
This is a Communist country, not a socialist, capitalist, etc. Western country. In a Western democratic, socialist, capitalist, etc. country, I know the difference between bank debt and Govt debt. Bank debt vs. Govt debt in China is a distinction with no real difference.
weak. the same argument would suggest there should have been an american spring a long time ago.
GS
Just checking in
You are such a douche
The Chicoms will do like the US government... start a war or something to rally up the sheeple so they don't revolt.
Guess what, in 2008 there were 230 000 occurrences of MASSIVE PROTESTS across China... guess what, almost none of it was reported in the western MSM.
If in 2008 they didn't revolt... it'll have to get a whole lot worse than 2008 for things to change.
clue less graham .. spouting off as if he was karnac
throw shit on the wall see if any sticks,,,,, change mind and opinion like dirty socks
Graham, just send me $79 in cash . Thank you very much.
PS is anyone else getting a "Musliim Matrimonials" ad sideboard? Whose Google search results are they using? Not mine!
Not using ad block plus ?
Doesn't work so good on my ipad - I see the aforementioned, Chinese Lovelinks, Thai Titties and Asian Cupid.
i hear muslim girls are like catholic girls. they can't get enough.
you should see what they wear for underwear.
I must be luckier than you because my ad sideboard only ever wants to sell me gold & silver !
With a tiny little moustache.....
she love you long time?