This page has been archived and commenting is disabled.

"Chinese Economic Activity Has Probably Slowed To Less Than 3%"

Tyler Durden's picture




 

In a world in which sell-side research (and even that of independent third-parties) is not only meaningless - because as we first said in 2010 the only thing that matters in the New Paranormal is 'the Fed's H.4.1 statement' - there are few sources of insightful, non-conflicted analysis. One place which stands out is Cornerstone Macro - yes, it costs a lot of money, but it's worth it.

Cornerstone is the one place which actually turned bearish a little over a month ago, purely on fundamental factors (FX, oil, global recession), and has been pointing out many of the discrepancies in the narrative (then again, as we showed before, in a world in which central banks are set to have the greatest amount of nominal "intervention" surpassing even the post-Lehman period...

... one doesn't have to be a rocket surgeon to realize that things are not only not good, but have rarely been worse even with the benefit of $13 trillion in central bank liquidity).

We bring it up because Cornerstone's analysis of recent developments in China bears keeping a very dose eye on. We won't spoil it, especially for those who are paying subscribers to the paid (and quite expensive) service, but we will present what they have chosen to broadcast publicly on their research section, which in light of last night's official news of yet another confirmation the slowdown in China is getting worse (not only on the unprecedented debt build up which we have covered extensively in the past, and where monetary 'austerity' is suddenly a very hot topic, but where capital outflows have become the number one focal issue) has released several key research reports.

Here are the key publicly-available excerpts from some of their salient recent reports (accessible here and here):

From Hello Beijing, We Have a Problem:

China is likely to continue to ease, for 3 reasons:

1.    Chinese economic activity has probably slowed to less than 3%.
2.    China is likely to experience broad-based deflation.
3.    China is Nicely to continue to experience net capital outflows. That last bullet, net capital outflows, is the focus of the report today.

Bullets 1 and 2 are already widely discussed/debated. In the video and slide deck, we focus on this net capital outflows and how they are basically tightening financial conditions. That is what the PBoC is battling right now. Will growth reaccelerate?

From 3 Updates, China, Eurozone, And The U.S.

In China, based on the composite PMI (HSBC & CFLP), employment is weakening, helping explain the declining trend in consumer confidence. In addition, company earnings, as reported by IBES, declined 0.7% y/y in February. So, although the composite PMI ticked up slightly, it’s still at a sluggish 51.5%. That’s apparently weak enough to keep downward pressure on company earnings and therefore, employment

And finally from Another Dark Day For The CRaBs

Chinese govt has acknowledged growth is slowing, and is now forecasting 7% real GDP growth for 2015, the slowest pace in 25 years. We still believe underlying economic activity is growing closer to 2% – 3%.

There is much more in the actual notes, with extensive supporting documentation, which we leave to readers to uncover, but the bottom line is clear: on one hand we have China's premier warning China will slow to "only" 7%, on the other we have a reputable research boutique using fact-based research and evidence, to determine that actual China's growth is not even half this number!

What does this mean? Well, in a world in which the US is now very rapidly recoupling with what until recently was an ex-US global contraction (as Goldman confirmed), a China which is growing at a well below stall-speed pace, and in fact is at what even Deutsche Bank said is on pace for a mini hard landing, to think that the ECB's monetization (of bonds which nobody really knows who will sell) will make up for China's furious pace of credit creation (which is really what in a Keynesian world is what "growth" really is) is beyond naive.

If and when the reality of China's predicament (recall that it was China's creation of over $3 trillion in credit during the post-Lehman depression that was instrumental in the global rebound) spills over to the entire world, then all bets are off.

And just so readers have a sense of the Chinese credit/asset creation juggernaut, here is the chart of the day from our November 2013 post (update for the latest data below) showing "How China's Stunning $15 Trillion In New Liquidity Blew Bernanke's QE Out Of The Water."

If the blue line plateaus, or - inconceivably - starts declining, that will be the time to panic.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 03/05/2015 - 14:40 | 5858261 Cognitive Dissonance
Cognitive Dissonance's picture

I always find it fascinating how the talking heads on CNBC seem to love and hate China at the same time.

Thu, 03/05/2015 - 14:42 | 5858268 Enceladus
Enceladus's picture

They certainly are YinYangs

Thu, 03/05/2015 - 14:49 | 5858296 Headbanger
Headbanger's picture

Two words:

Fuck em.

Thu, 03/05/2015 - 14:56 | 5858318 kaiserhoff
kaiserhoff's picture

China is entering it's own manufacturing version of Moore's Law.

Just came back from my weekly trip to Dollar Tree.  Bought a calculator with battery installed for a buck,  Right next to it was a scientific calculator, same price.  The place is full of kitchen utensils. knives, small tools, testing kits...  If the stuff is free in Hong Kong, which must be about right, it's still hard to see how they ship it 12,000 miles and make a profit.

Thu, 03/05/2015 - 15:18 | 5858410 Publicus
Publicus's picture

World War 3.

Thu, 03/05/2015 - 15:48 | 5858535 ml8ml8
ml8ml8's picture

The implication of this for commodities prices and deflation generally is ENORMOUS. 

Thu, 03/05/2015 - 15:20 | 5858418 Cognitive Dissonance
Cognitive Dissonance's picture

For as little as $2k - $3k to ship a standard container from China that might contain tens of thousands of trinkets the Chinese use to buy Manhattan America with, the profit potential is still enormous even when selling them wholesale for fifty cents a unit.

Thu, 03/05/2015 - 15:27 | 5858446 kaiserhoff
kaiserhoff's picture

Has to be, CD, but it's easy to see why competing with that is a fool's errand.  They also have a sense of humor about patents/copyrights/all that jazz.  The pace of change is impressive.  I think Wally Mart fucked ist.  They can't keep up.

Thu, 03/05/2015 - 15:28 | 5858449 cornflakesdisease
cornflakesdisease's picture

Yes and no.  How much of this stuff do you need?  I just went to an auction and they had 2 pallet loads of hand caculators.  They each sold for $8.  No one wants them because everyone else is selling them everywhere.  The market is satuated with caculators and caculator sellers.  With shipping, you'd be sunk selling them on eBay or any other online format.

Thu, 03/05/2015 - 15:54 | 5858549 NoPension
NoPension's picture

My android phone has calculator. Use for for the stuff I can't do in my head.

Here is what I don't get. I did a project in a shop with a huge metal brake. It had a lot of mass. 2" thick end sections, and rails, beams, etc. a lot of heavy metal, for structural integrity, and a not very sophisticated operating set up. It was Chinese. I coun not get my head around shipping that slug of metal halfway around the planet for a profit. A Heidleberg press, I understand. Shipping is that cheap?

Thu, 03/05/2015 - 16:38 | 5858707 83_vf_1100_c
83_vf_1100_c's picture

Harbor Freight motorcycle lift table, big heavy piece of steel and hydraulics. 5 years ago $300 with a coupon. 5 yrs later, $300 w/coupon. The Chinese gov has to be subsidizing it. That works til you corner the market and then?

Fri, 03/06/2015 - 12:23 | 5861540 cornflakesdisease
cornflakesdisease's picture

Interesting because whoever the manufatuers for Harbor Crap are; they also pound out much of the same for Craftsman, Home Depot, and Lowes various inhouse brands of tools too.  Except for the plastics color, many items (like the wood planer) are completly identical.

Thu, 03/05/2015 - 16:26 | 5858662 mkkby
mkkby's picture

All these economic forecasters are about as useful as CNBS and Cramer.  Every central bank is printing, with the proceeds going into stocks and bonds.  No analysis needs to be deeper than that.

When the music stops and there is a major correction, buy.  Who gives a shit when that happens.  Just be patient.

Thu, 03/05/2015 - 20:02 | 5859408 williambanzai7
williambanzai7's picture

With mobile phones and computers doing everything, who uses calculators anymore? The only purpose they seem to serve in HK is communicating the price to foreigners in a market haggle.

Thu, 03/05/2015 - 15:23 | 5858420 fremannx
fremannx's picture

The CEO of Maersk Line, the world’s largest shipping company, warned that global trade growth is slowing. Søren Skou told the Financial Times recently that the sluggish global economy is having a “huge impact for us as an industry.”

When global trade declines, global GDP can't be far behind.

http://www.globaldeflationnews.com/deflationary-forces-creating-global-s...

 


Thu, 03/05/2015 - 16:29 | 5858675 mkkby
mkkby's picture

Take it with a mountain sized grain of salt.  When cock suckers like him make a statement like that, he usually means growth will only be 2%.

Thu, 03/05/2015 - 15:22 | 5858425 Cthonic
Cthonic's picture

Probably cost them less than a penny per calculator to ship them from Hong Kong to LA in a standard shipping container.

Thu, 03/05/2015 - 16:30 | 5858683 mkkby
mkkby's picture

But they aren't even worth a penny.  Who the fuck doesn't have a calc on their phone and multiple computers?

Thu, 03/05/2015 - 15:26 | 5858431 TruthInSunshine
TruthInSunshine's picture

China needs 7% REAL GDP growth just to maintain its existing base of domestic jobs.

They need 8%+ (easily) REAL GDP growth to be able to match job seeker demand with CURRENT, OPEN available jobs (which have already begun to fade as of last Summer).

China is in a dark place and given (lack of) demand for their exports from the usual US-EU-BRI (BRIC - C) block, it's going to get a whole lot more grim in Beijing, Shanghai & parts elsewhere in the Middle Kingdom.

CHINA IS SWIMMING AGAINST AN UNFAVORABLE DEMOGRAPHICS PYRAMID, ALSO.

Thu, 03/05/2015 - 15:30 | 5858460 Gab Timov
Gab Timov's picture

It was pretty cool while it lasted though, big banks helping to destroy the manufacturing bases in their own countries and helping to open up factories in China (Vietnam, Mexico, Bangladesh, ect) in order to show bigger profit to their share holders. The US was gutted and it only took a few decades. Now who can buy all the China goods? I buy something once in a while made in China if I have to, but I still keep an eye out for stuff made in the country formerly known as the USA.

Thu, 03/05/2015 - 15:40 | 5858503 TruthInSunshine
TruthInSunshine's picture

Here is a classic, real example of the corporate/business mindset we're suffering under that's among my favorites, b/c of the reveal:

Rubbermaid & Wal-Mart fell out of sorts b/c Rubbermaid, based in Newell, Ohio, with production facilities there and in Akron, would not agree to supply certain goods at the price Wal-Mart was demanding (one such item was a 50 gallon trash barrel for less than $7 wholesale, retail at Wal-Mart for $19.99).

Eventually, Rubbermaid USA went tits up, and a Chinese company bid for and won all their manufacturing equipment, which they promptly shipped to their Chinese plant, which already had a supply contract with Wal-Mart to supply every rubber/plastic thing Wal-Mart used to purchase from Rubbermaid USA.

Global "capitalism" on the hoof.

Thu, 03/05/2015 - 15:57 | 5858557 froze25
froze25's picture

Its almost like Wal-mart and the banks work in collusion?  Walmart signs the supply contract so than the chinamen can borrow against it and bid on the plant. Every one wins except Americans.

Thu, 03/05/2015 - 16:33 | 5858694 mkkby
mkkby's picture

@Truth:  China needs 7% REAL GDP growth just to maintain its existing base of domestic jobs.

We've all heard that bullshit line and it's time we gave it up.  China will/does print and create artificial demand for jobs, just like everyone else does.  Vacant cities?

Thu, 03/05/2015 - 16:51 | 5858765 TruthInSunshine
TruthInSunshine's picture

I'm speaking in terms of if they were really, organically growing (or not shrinking) their economy in REAL terms.

But yes, they will engage in all forms of economic, fiscal and monetary debauchery in order to put lipstick on their pig like any/every other nation.

Thu, 03/05/2015 - 20:05 | 5859419 pacrim888
pacrim888's picture

I agree. I do not understand the 7% objective. There is no way Chinese workforce is increasing by 7% right now. I employ quite a few people in China and I still have more than 50 open positions for which I can not find staff. This is an issue for most of the owners of companies I know. In fact slower growth hopefully will be good for finding staff.

Thu, 03/05/2015 - 14:54 | 5858310 Dead Canary
Dead Canary's picture

YinYangs

Oh, I have to write that one down.

Thu, 03/05/2015 - 15:01 | 5858338 Uchtdorf
Uchtdorf's picture

You just did. LOL

Thu, 03/05/2015 - 15:13 | 5858391 NoPension
NoPension's picture

Rocket surgeon?

Thu, 03/05/2015 - 15:24 | 5858436 Gab Timov
Gab Timov's picture

combination of brain surgeon and rocket scientist

Thu, 03/05/2015 - 16:15 | 5858633 NoPension
NoPension's picture

Thank you for the clarification.
I'm not exactly a brain scientist.

Thu, 03/05/2015 - 18:50 | 5859179 malek
malek's picture

Isn't that the same way here on ZH too?

On the one hand everything in China is a total disaster and they're gonna implode any second now (so for sure before the US implodes),
on the other hand log jams at the West Coast container ports are going to really badly damage the US economy.

Thu, 03/05/2015 - 14:43 | 5858269 Osmium
Osmium's picture

"on the other we have a reputable research boutique using fact-based research and evidence, to determine that actual China's growth is not even half this number!"

Fact based research?  Get the hell outta here with that shit.

Thu, 03/05/2015 - 15:08 | 5858367 Dungholio
Dungholio's picture

You are right!  The sheeple do much better when smoke is blown up their asses!

Thu, 03/05/2015 - 14:47 | 5858284 reader2010
reader2010's picture

China just increased its defense spending target. Warz!

Thu, 03/05/2015 - 14:48 | 5858286 will ling
will ling's picture

on a more topical subject, how many of those "private" hitlery emails does edward snowden have in his possession or access to?

Thu, 03/05/2015 - 14:53 | 5858312 Winston Churchill
Winston Churchill's picture

Don't know about Snowden, but Guccifer probably has a stash somewhere.

The FSB probably got the entire contents as well.

I'm sure lots got deleted soon after Benghazi.

Thu, 03/05/2015 - 14:58 | 5858330 will ling
will ling's picture
NSA has them all!
Thu, 03/05/2015 - 15:45 | 5858523 Son of Loki
Son of Loki's picture

Great time to be a defense contractor looks like. Billions of OPM to be handed out [and embezzled].

Thu, 03/05/2015 - 14:49 | 5858292 czarangelus
czarangelus's picture

Why hasn't the entire global economy exploded yet? What's holding it up?

Thu, 03/05/2015 - 14:56 | 5858324 alangreedspank
alangreedspank's picture

Consensus.

Thu, 03/05/2015 - 15:03 | 5858343 Vinividivinci
Vinividivinci's picture

By the way "Greedspank"...
Your avatar is fucking awesome !

Thu, 03/05/2015 - 15:09 | 5858373 alangreedspank
alangreedspank's picture

Thanks. I prefer this exercise to viagra.

Thu, 03/05/2015 - 15:01 | 5858339 kaiserhoff
kaiserhoff's picture

Nothing is marked to market..., yet.

Thu, 03/05/2015 - 15:05 | 5858354 RockyRacoon
RockyRacoon's picture

It's a game of musical chairs except for one snag:  There's only 1 chair and the players don't know where it is.

Thu, 03/05/2015 - 15:12 | 5858383 fremannx
fremannx's picture

Social mood still holds out hope the Fed can save the day. Once the public realizes the Fed has no clothes the house of cards will come tumbling down. The largest debt bubble in the history of the world is about to collapse and there is nothing anyone can do about it now.

http://www.globaldeflationnews.com/anatomy-of-a-bubble-how-the-federal-r...

 

Thu, 03/05/2015 - 16:30 | 5858684 Ban KKiller
Ban KKiller's picture

WAR PROFITEERS? 

Thu, 03/05/2015 - 14:54 | 5858300 Youri Carma
Youri Carma's picture

I always use the thumb rule: Half the official GDP growth number of China and you get close.

Same with the West Inflation number in reverse: Double them and you get closer to the actual inflation number.

Thu, 03/05/2015 - 14:51 | 5858301 KnuckleDragger-X
KnuckleDragger-X's picture

China wants to be the new reserve currency but they have a problem with the numbers and how they interface with the world. The problem they are going to have is they have set a world record in over-leveraging their economy and need to fix the whole shadow banking system before they go full Pinky and the Brain.

Thu, 03/05/2015 - 15:07 | 5858361 Salah
Thu, 03/05/2015 - 17:50 | 5858975 Youri Carma
Youri Carma's picture

Paul Craig Roberts said that China made the epic fail of depending mainly on their exports and not on their huge domestic consumer market. That way you make your economy depending on the health of other countries.

Paul Craig Roberts: "Who does the globalization benefits? It benefits the biggest corporations who can offshore the jobs and explore labour in countries were there is a surplus of labour. That’s the only reason for globalization. No one else benefits." http://youtu.be/K8dzfNUB17Q?t=15m20s
Thu, 03/05/2015 - 19:49 | 5859371 divingengineer
divingengineer's picture

They don't have the bond market that it takes to be a reserve currency.  And who says they want that? Did they? I doubt they do, they just want us to quit dicking with the world financial system.  

Thu, 03/05/2015 - 14:51 | 5858302 Miffed Microbio...
Miffed Microbiologist's picture

Activity " probably slowed"? Sounds a little nebulous and unsure. Maybe hard numbers and reality are just too uncomfortable today. Back to the Land of Dreams.

Miffed

Thu, 03/05/2015 - 14:55 | 5858319 Winston Churchill
Winston Churchill's picture

Just pass the opium pipe, and dream on.

Thu, 03/05/2015 - 16:38 | 5858708 mkkby
mkkby's picture

Good catch, Micro.  "Probably maybe" from the super expensive, but oh so worth it, newsletter.

Thu, 03/05/2015 - 14:58 | 5858334 kaiserhoff
kaiserhoff's picture

It's like with kittens.  Life is hard, then you nap;)

Thu, 03/05/2015 - 14:56 | 5858321 alangreedspank
alangreedspank's picture

So probably 0% if they always add a fictitious 3% on top of any GDP number they produce.

Thu, 03/05/2015 - 16:17 | 5858640 NoPension
NoPension's picture

I keep staring at it, like it's going to break off.

Thu, 03/05/2015 - 14:56 | 5858325 nakki
nakki's picture

Just build some more ghost cities, and remember that they're "new" and maintain themselves.

Thu, 03/05/2015 - 15:22 | 5858426 NoPension
NoPension's picture

I can't find the answer to this question;
Do those " ghost" cities have electric, water and wastewater infrastructure that would support them if they were occupied? And if they do, they are no good not working at optimum capacity.
I find it absolutely impossible to believe the infrastructure to support this build out exists. Impossible. The infrastructure would be a bigger waste than the vacant buildings. By orders of magnitude.
That alone makes me call bullshit on China.
On one hand, fallow water, wastewater and electric generation and distribution.
On the other hand, no infrastructure to support the buildout, which makes them more useless than a movie set.

Thu, 03/05/2015 - 15:34 | 5858474 kaiserhoff
kaiserhoff's picture

Good point.  Vacant buildings AND INFRASTRUCTURE  rot out pretty quickly if not used.  Humidity goes up, bugs, critters and mold move in.  If you haven't seen it, it's hard to believe how fast man made improvements go back to Hell's half acre.

Thu, 03/05/2015 - 14:56 | 5858327 yogibear
yogibear's picture

Don't watch CNBC it just pollutes your brain.

Thu, 03/05/2015 - 15:04 | 5858337 Vinividivinci
Vinividivinci's picture

To this layman, what I think I understand about this post is that:

1. The world is broke
2. The world is buying less crap from China
3. The world will continue to buy less crap from China
4. China has played the same financial shell games as the rest of the world
5. China has been able to hide its shell game behind strong exports
6. China is just as fucked as the rest of us
7. There's a good reason why Chinese hate the year of the Goat

Awesome, now I can stop being jealous of China's growth.
How do you say "unambiguously good" in Mandarin ?

Thu, 03/05/2015 - 16:29 | 5858676 Ban KKiller
Ban KKiller's picture

It translates as "crooked accounting works wonders". 

Thu, 03/05/2015 - 16:47 | 5858746 Apostate2
Apostate2's picture

Bu hanhude is a start.

Thu, 03/05/2015 - 15:04 | 5858348 Madcow
Madcow's picture

here is keanu reeves to show us that its all going to be okay - 

http://klipd.com/watch/speed/bus-freeway-jump-scene

 

Thu, 03/05/2015 - 15:22 | 5858429 q99x2
q99x2's picture

This is just the beginning of what happens when there are no sunspots. When there no sunspots as in 1650 everyone around the globe including China enter into turbulance, stable governments fail, rescources grow scarce and a global crisis ensues. Check out today's sunspot activity. 42 seconds into the video. https://www.youtube.com/watch?v=Bz7X-Evu_4s

Sunspot activity has been very low this winter.

Thu, 03/05/2015 - 15:47 | 5858531 NoPension
NoPension's picture

We should send a probe to the sun's surface.
Have it land at night, when it's dark.

Thu, 03/05/2015 - 16:10 | 5858614 cornfritter
cornfritter's picture

We have precious little time, but if there's ever been an administration capable of achieving this, it is the current one.

Thu, 03/05/2015 - 16:45 | 5858736 mkkby
mkkby's picture

Sun spot activity is normal, if you look at space weather dot com.  But you go right ahead and believe the religious doomsters.  Since forever they've said the world will end in 2-3 years.  In a few billion they will be right.

Thu, 03/05/2015 - 18:42 | 5859148 Mad Cow
Mad Cow's picture

"In a few billion they will be right."
Sounds like you have a belief system too. What'll they think of next?

Thu, 03/05/2015 - 19:02 | 5859224 MEAN BUSINESS
MEAN BUSINESS's picture

(the solar wind) reaches L1 about an hour before reaching Earth."

Deep Space Climate Observatory now half way to L1, launched by SPACEX 11FEB2015

http://www.nesdis.noaa.gov/DSCOVR/

Thu, 03/05/2015 - 15:31 | 5858465 StupidEarthlings
StupidEarthlings's picture

I guess we slowed down on buyin chinese crap..

But hey...3% is still better than the US.

 

 

 

Thu, 03/05/2015 - 15:34 | 5858472 Itchy and Scratchy
Itchy and Scratchy's picture

Ho Lee Fuk Sum Ting Wong

Thu, 03/05/2015 - 16:45 | 5858739 mkkby
mkkby's picture

-1 for the over use of this joke.

Thu, 03/05/2015 - 17:43 | 5858955 Itchy and Scratchy
Itchy and Scratchy's picture

Yoo Noe Phun

Thu, 03/05/2015 - 16:10 | 5858613 NoPension
NoPension's picture

Here is another angle. I used to have an auto repair shop. Cars NEEDED regular under the hood work to run.
Today, it's my opinion, you can damn near ignore a car, and just gas it up, and 100,000 is a break in.
I don't mean to imply maintenance is not good. Just that 10-15-20 years ago, it wasn't an option.
My daily driver is a 2001 Subaru, with 165000 miles. Bought it for $250, it had been crashed in the front end. $1500, and my skill set, valve job and all underhood maintenance, body and paint, new tires. 23 miles per gallon, $100 every six months insurance, and she's fully loaded for 2001. It asks for nothing, but a sip of oil now and again.
Why buy new?

Thu, 03/05/2015 - 16:27 | 5858669 Ban KKiller
Ban KKiller's picture

Sir, "why buy new"? is a subversive statement. Prepare for audit. 

Thu, 03/05/2015 - 16:49 | 5858754 mkkby
mkkby's picture

I found out the place that changes my oil was lying about topping off radiator coolant.  My 20 year old accord was probably running on a bone dry radiator for at least a year.  No issues at all.  Temperature gauge never went above normal in in the summer with the a/c running.  Damn car is idiot proof.

Thu, 03/05/2015 - 16:51 | 5858764 83_vf_1100_c
83_vf_1100_c's picture

  New is for people who do not have any wrenching skills. Or, those fortunates who make more money working than they can save repairing their own.

  My kid is stuck out in West By God TX with his low miles '03 Silverado with a fucked transfer case/tranny. Apparently this is a common problem with GM trucks. He is an experienced wrench and found a shop who is putting him up at the owners, feeding him and adjusting the repair bill by his wrenching on a 06 DTS Caddie. A GM product you really want to avoid.

Thu, 03/05/2015 - 18:42 | 5859150 Big Brother
Big Brother's picture

I too own a Subaru for a daily driver (2008 Legacy GT M/T w/123000 mi.).  I concur with your statement.  I've my hands under the hood a bit.  I cannot for the life of me find anything that states "Made in China" under the hood.  Most everything reads "Made in Japan" (Denso, Fuji Heavy Ind, Koyo, Sakamoto, NGK).  But I'm sure the radio came from China or SE Asia.

I realize buying a new Subaru costs a bit more, but the owner will make up for it on repairs and resale.

In my experience I found the car with the most parts made in China is the circa 2000 Ford Taurus.  The radiator, the washer resevoir, the intake manifold (plastic) were all made in China.  The sales ledger read "parts-source nationality" was "70% foreign-sourced".   

Thu, 03/05/2015 - 16:28 | 5858672 starman
starman's picture

3% of 1.3 billion! Shit! 

Thu, 03/05/2015 - 16:58 | 5858785 TalkToLind
TalkToLind's picture

Good lord, has Krugman seen that thumbnail?  When he sees that toppled building and all of those broken windows, he'll need a towel.  He'll be like:  BULLISH!

Thu, 03/05/2015 - 17:03 | 5858816 venturen
venturen's picture

well...duh...just need more central bank intervention...SOLVED

Thu, 03/05/2015 - 17:32 | 5858911 FieldingMellish
FieldingMellish's picture

The fastest "growing" market for the world's largest company. What could possibly go wrong?

Thu, 03/05/2015 - 19:30 | 5859305 TrustbutVerify
TrustbutVerify's picture

Buying US goods builds the US manufacturing sector.

Thu, 03/05/2015 - 23:19 | 5859990 hedgiex
hedgiex's picture

Go and kick the tires in China. Non state owned enterprises are hanging on as most cannot produce without subsidies. (No world beating tech to improve productivity here just cheap labor).

Subsidies as part of targeted stimulus is to keep employment as the unemployment shall explode into social unrest at a time when the legitimacy of Party is at a low point. (Hence the corresponding anti corruption drive to appease the millions who have been marginalized by rent seeking cronies aka princelings).

They know that the future is to turn the economy around to be a consumption one. This involves raising wages that they cannot bear. Unlocking household savings is also off as household debt/GDP is high with whatever savings tricked into real estate. This is exacerbated by a gneration lack of trust in the Govt protecting their domestic investments (sound familiar ?)

The RMB/$ rate is under pressure from the current global currency war. The smart money in China know and is moving out not to chase yields but to protect value (remember a high trust deficit).

There is only the smoke of the emergence of a great consumer base that is packaged into snake oils by financial predators for CONSUMPTION from their muppets.

Want to move in where angels fear to tread ? Long term investments also mean that you only move after the debacle. NOT NOW.

 

 

Do NOT follow this link or you will be banned from the site!