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Guest Post: The Reasons For China's Imminent Bust

Tyler Durden's picture


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The global dominant narrative about China is wrong, claims Gordon Chang. Don't expect it to be the 'pocketbook of last resort' that will rescue world markets from their current malaise.

And don't expect its remarkable economic growth to continue. In fact, expect a "hard landing" for China - and soon. columnist and international lawyer Gordon Chang has spent much of his time since the early 1980s working and living in China. His primary knowledge of the country and his relationships there give him a superior understanding to how its economy is actually faring than many analysts based in the West. And what he sees today doesn't inspire confidence.

We are seeing the first real signs of slowdown in China's economic growth looking at the year-over-year numbers for the past several months. Car sales have decreased nearly 5% since last year, and property values are beginning to plummet in key markets (30% in October alone in Shanghai).

Gordon sees these as the inevitable harbingers of a coming collapse in China due to excessive stimulus policies the government undertook starting in 2009. The bubbles and malinvestment created by this stimulus have not been addressed, and increasing weakness and transitions inside the political system are making it less likely they will be before market forces intervene.

On The Repercussions of Excessive Stimulus

Inefficiency eventually catches up with every economy. They have a semi-closed system so that they are not necessarily subject to the principles of economics in the same way that we are, but they can only delay the inevitable. They cannot prevent it entirely, and that is really going to be their problem. Because they have done a lot which just does not make economic sense. I mean it might make sense in terms of rapid buildup of an economy, but they have to pay a price. And they have not paid their price yet.


The one thing that people say is "These Chinese leaders are so great at economic management because they got through 2008-2009 and they had enormous double-digit growth while the rest of us were suffering." Well yes, they did that but they did that at great cost.


And so for instance in 2009, the first full year of their stimulus plan, they dumped something like $1.1 trillion into a then $4.3 trillion economy. And so did they create growth? Yes, they did, but they also created a stock market bubble, a property market bubble, and inflation. And they have yet to deal with the property market and the inflation problems. Those are dislocations that they do not have the answers to. I would rather have our economic problems than theirs any day of the week.    

 On Growing Political & Social Instability

Starting at the end of next year, the Communist party is going to change the officers of their Politburo Standing Committee, the apex of political power in China. We are going to have a new General Party Secretary. And then in the early part of 2013, the government officers change. And sometime after that, the all-important Central Military Commission has a revamp of membership. And so at this time of political transition, the important economic decisions are not being made. But it is even worse than that, because corruption indeed is engulfing the political system. It is causing so much friction in society. The Communist Party is not able to mediate conflict and its only answer is to increase coercion.


And that is why you have survey after survey of the rich and the super-rich, they talk about leaving China. It is not the poor who are going, which we have seen in many waves throughout the last couple hundred years, now the rich are thinking of getting out. They are getting passports, they are putting their families offshore, and this is of concern because this is a leading indicator.


If you go about 25 miles south of where I live, and go to Princeton, New Jersey, you will see a lot of beautiful homes. I mean, they are all paid for, they have got a wife there, they have kids, and they have one or two Mercedes in the driveway. It is the perfect American family, except one thing is missing, and that is Dad. Dad is a senior official in Beijing and he is stealing as much money as he can. And at maybe not the first sign of trouble, but perhaps the second sign of trouble, he is on the United flight to New York, because he is not going to stay to defend a regime that is shaking. And that is one of the reasons why I think we have to be concerned about the way the Chinese economy is going, because the Chinese rich are starting to see the signs and are beginning to bail out.


We are talking about the people who have benefited the most from this system. And they can see the problems at the top of society. We have now a weak General Party Secretary, Hu Jintao, and he is going to be followed by probably by someone who is just as weak, especially in his beginning years, Xi Jinping. This is a political system that will not be able to make the decisions and to implement them that everyone knows have to be made. And that is why, for instance, we have not seen much in the way of reform over the last five years. In fact, we have seen a reversal of reform. And most of the conditions that have given rise to China's extraordinary growth either no longer exist or are disappearing fast. And so this is an economy in trouble.


On The Popping of China's Real-Esate Bubble

There was just too much money in the economy and so people then poured money into apartments. And China has gone on a tear building ghost cities and all the rest of it. And now the progression that you talked about -- skyrocketing prices and then stable prices, selling volume, and then property price declines -- is what we are seeing in China.


In October, last month, prices in places like Shanghai declined 30%, as we saw developers start to offer these enormous discounts. And by the way, these discounts were so big that people who bought at earlier stages in these same developments, where these discounts were being offered have now taken to the streets complaining if you are giving 30% discounts to these other guys, then give it to me as well. And so we have not got a little bit of social unrest because of falling property prices.


In Wenzhou, which is in prosperous Zhejiang Province, which was perhaps the most prosperous province up to about a year ago, developers are, one developer is now offering BMWs to the first 150 buyers of apartments. And this is just a sign that property prices have not only softened, but they are starting to fall quickly.


You know, every market has to go to equilibrium. There are too many apartments in China and not enough buyers and occupiers. And it was going to go to equilibrium in some fashion. What is really surprising observers is that the rapidity at which we see this move to equilibrium. Last year there were, in about I guess it was April or May, the state grid in China reported there were 64.5 million apartments that showed no electricity usage for six consecutive months. That is enough housing for 200 million people, but yet Beijing was decreeing the building of 30 to 50 million more apartment units....


But at the end of the day, there has got to be a correction. And what goes up fast comes down fast. And what we are seeing is the down phase. The only issue is whether Beijing can stop the down phase by administrative measures. But so far the Chinese leaders, Premier Wen Jiabao, last Sunday said "nope, we are going to stay with these tightening measures." And that has really created great pessimism in the Chinese property market...


And so really what we have is a government now that is really trying to bring the property market down. And of course it wants to do so gradually, you know, orderly. But as you say, it is a bubble, there is a pin and the problem is that Chinese leaders cannot manage the process of bringing the property market down to equilibrium....


When China's elite analysts start talking about prices being 50% of where they are this year that means that they are probably privately thinking that no, prices will not halve: they might go down even further than that. And that is really a problem because that mentality, once it gets embedded in people's minds in China really means that, Chinese leaders then have very few tools in which to prop up the property market.    


Click the play button below to listen to Chris' interview with Gordon Chang (runtime 40m:55s): 

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Fri, 11/18/2011 - 18:04 | 1892690 LawsofPhysics
LawsofPhysics's picture

well, at least until they politely ask to settle the U.S. debt in gold - take gold to 15,000,000,000,000 an ounce and give them an ounce.

Fri, 11/18/2011 - 18:21 | 1892726 Max Fischer
Max Fischer's picture



The collapse of China.  The collapse of Europe. The collapse of the US.  The depletion of energy.  Gold and silver to $5k.

Doomsday economics certainly is the fad these days.

Max Fischer, Civis Mundi 



Fri, 11/18/2011 - 18:39 | 1892782 agent default
agent default's picture

Nah, it's just back to reality. With accrued interest.

Fri, 11/18/2011 - 19:06 | 1892859 MillionDollarBonus_
MillionDollarBonus_'s picture

This sure makes me glad to be in America, where despite our problems we have far more educated economic advisers and government officials. People from all over the world compete for the privelage of studying at our Ivy League schools and consequently America has some of the smartest and most competent government officials in the world, many of whom have prior experience in top financial institutions. This is why America is not subject to the gross neglect demonstrated by Chinese economic planners with inferior educations and backward mentalitlies.

Fri, 11/18/2011 - 19:19 | 1892883 The Deleuzian
The Deleuzian's picture

MDB...You're getting close to perfecting pure sarcasm...Or Newspeak...It's a wonder the PTB hasn't gobbled you up yet...

Fri, 11/18/2011 - 20:09 | 1892944 spiral_eyes
spiral_eyes's picture

Yawn, bitchez.

China will liquidate its dollar holdings to bail itself out again.

Welcome to the Great Treasury Crash of 2011/12/13.


Fri, 11/18/2011 - 20:58 | 1893078 TheJokingJollyRoger
TheJokingJollyRoger's picture

Such a trade war will inevitably lead to a actual military war.

Fri, 11/18/2011 - 21:25 | 1893150 Carlyle Groupie
Carlyle Groupie's picture

At such time China will win and take Taiwan for free.

Fri, 11/18/2011 - 23:06 | 1893360 Mr. Firstname M...
Mr. Firstname M. Lastname's picture

ehhh fuck china, how in the fuck are they gonna get half a billion soldiers across the Pacific when the batteries die halfway to Hawaii.  molon labe

When the host dies, the parasite follows.

Sat, 11/19/2011 - 00:06 | 1893480 trav7777
trav7777's picture

ROTFL...with what military?

They have no navy, a pathetic army, and no air force worth a shit.  they couldn't mount an amphibious invasion of Hong Kong, much less Taiwan

Sat, 11/19/2011 - 00:22 | 1893509 Vic Vinegar
Vic Vinegar's picture


C'mon are fast-becoming an internet celebrity.  How many people get songs - especially this catchy - dedicated to them?  Own it!

Trav's Theme:

Sat, 11/19/2011 - 02:12 | 1893623 Cliff Claven Cheers
Cliff Claven Cheers's picture

That is awsome, Trav has his very own song.  

Looks like Fuu put it together. 

Sat, 11/19/2011 - 16:12 | 1894448 hardcleareye
hardcleareye's picture

Well that was different....  but he has missed some of Trav's best junked lines.....

Sat, 11/19/2011 - 12:30 | 1894050 JamesBond
JamesBond's picture

"they have no navy..."



Fri, 11/18/2011 - 21:17 | 1893127 Eeyores Enigma
Eeyores Enigma's picture

The Deleuzian - You of course realize that MDB is an auto-response computer system don't you?


Even if sHe is in human form IT'S automated.

Fri, 11/18/2011 - 21:34 | 1893173 The Deleuzian
The Deleuzian's picture


Sat, 11/19/2011 - 10:42 | 1893900 FEDbuster
FEDbuster's picture

MDB either works for the Obama Administration or the NYT.  His delusions are the talking points of both entities.

Fri, 11/18/2011 - 19:44 | 1892914 eaglefalcon
eaglefalcon's picture

Be careful what you are glad for.


If real shit hits the fan in China, the people will overthrow the government and hang all the politicians.  This prospect scares the craps out of the Chinese elite and they are bailing.  They know they are hopelessly outnumbered.  They know that the people have absolutely no trust in them.  Plus, ordinary people don't have much to lose because there is no welfare.  The so called "retirement funds" are meager and have been already wiped out by inflation of the past 2 years


The same thing wouldn't happen in America.  The people here are too docile and brainwashed, too dependent on paycheck, government and welfare.  Economic collapse will result in a Fascist state.  And if you frequent zerohedge, you are the perfect candidate for concentration camps.


I'd choose anarchy over fascism on any given day.


Fri, 11/18/2011 - 19:48 | 1892920 The Deleuzian
The Deleuzian's picture

EagleFalcon...I think you're taking it all too hard...If anything...Zher's would be a think tank

Sat, 11/19/2011 - 15:21 | 1894374 Cathartes Aura
Cathartes Aura's picture

ZHer's a "think tank"??? *snort*

given the auto-bot angry responses to Million$'s obvious troll posts virtually every thread, it's more like monkeys flinging shit around the cage than thinking - some threads do differ, but in the main, ZHer's are here to entertain themselves in a small small circle. . .

most spend more time trawling the interwebs for the perfect titty-pic-avatar than pondering the state of the world.

Fri, 11/18/2011 - 20:00 | 1892934 Robot Traders Mom
Robot Traders Mom's picture

@eaglefalcon-Best post in quite a while...I'm glad you chose to incorporate FEMA at the end.

Fri, 11/18/2011 - 20:05 | 1892941 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

EF, when everything goes bankrupt and those welfare/retirement promises vanish into thin air. The people will quickly go into a rage since they then have nothing left but delusions and poverty. Revolution will then be in the streets.

Fri, 11/18/2011 - 20:16 | 1892961 The Deleuzian
The Deleuzian's picture

Vamp-----the peasantry will be killed off slowely and quietly....Or otherwise quickly and thoroughly

Sat, 11/19/2011 - 10:56 | 1893905 FEDbuster
FEDbuster's picture

Man made pandemic targeted at 50+ population, solves most of their "problems".  WW3 would be messy and take out many of the younger "slave" age worker bees.  TPTB in China will try to direct attention away from themselves and at a foreign bad guy (ours do the same thing all the time).  Obama is getting his foot in the door with Marine base in Australia, so who knows?   Maybe China will set up shop in Cuba?

Fri, 11/18/2011 - 22:53 | 1893341 Uchtdorf
Uchtdorf's picture

Who said: When people with nothing have nothing left to lose, they lose it?

Sat, 11/19/2011 - 00:07 | 1893485 bigmikeO
bigmikeO's picture

Gerald Celente says that. Then he lost his (paper) gold to Corzine / MF and now he's losing it. Ironic...

Sat, 11/19/2011 - 15:22 | 1894380 Cathartes Aura
Cathartes Aura's picture

who doesn't??  it's repeated that often.

Fri, 11/18/2011 - 19:45 | 1892916 Socratic Dog
Socratic Dog's picture

I have to take this as sarcasm.  It just can't be real.  No one could be so fucking stupid.

I seem to find myself thinking that about most all your comments.

Fri, 11/18/2011 - 19:51 | 1892924 The Deleuzian
The Deleuzian's picture

Socratic Dog...MDB is most obviously being uber-sarcastic...Even those Ivy-League shmucks don't believe what they say publically...They're saying exactly what MDB is saying just pleasantly!!!

Fri, 11/18/2011 - 20:40 | 1893025 VyseLegendaire
VyseLegendaire's picture


Fri, 11/18/2011 - 20:51 | 1893055 zen0
zen0's picture

obviously you have not studied at an Ivy League school, unless spelling is optional.

privelage = privilege.

Sat, 11/19/2011 - 09:02 | 1893833 CPL
CPL's picture

So far it doesn't seem so. Isuggest that you go all in for allof our sakes for the economy. It certainly would put our minds at ease.


You could shut your pie hole and listen with your ears and not your mouth.

Fri, 11/18/2011 - 22:03 | 1893236 Buck Johnson
Buck Johnson's picture

Bingo, dead on.  We have delayed and delayed and kicke the can down the road to where the end of the road is 100 feet in front of us.  And so we are trying to find some way of extending that road but it won't happen.  Everything comes to an end, everything.  As he said equilibrium in China is also the same in the rest  of the world.  Everything must be brought back into equilibrium regardless of how much pain and suffering and countries going under that happen.

Fri, 11/18/2011 - 22:37 | 1893310 sabra1
sabra1's picture

as long as it's the 1% suffering, painfully! then, we take back our gold!

Fri, 11/18/2011 - 18:42 | 1892793 AldousHuxley
AldousHuxley's picture

Gold 2000: $300

Gold 2011: $1800


China Shanghai composite index 2000: 2000

China Shanghai composite index 2011: 2500 off of peak of 6000 in 2006


S&P500 (SPY) 1999: 130

S&P500 (SPY) 2011: 120


Doomsday has been here for last decade. Faux economics is just revealing itself.


tell Japan what a fad their lost decade was....


and you know what US is in world war III right at 4 fronts?

Fri, 11/18/2011 - 19:52 | 1892927 Hobbleknee
Hobbleknee's picture






That's 5, and soon Iran will make 6.

Fri, 11/18/2011 - 20:02 | 1892938 Robot Traders Mom
Robot Traders Mom's picture

Fuck it. You might as well throw Syria in for good measure...

Fri, 11/18/2011 - 20:42 | 1893030 Think for yourself
Think for yourself's picture

Don't forget Venezuela!

Fri, 11/18/2011 - 22:58 | 1893350 Uchtdorf
Uchtdorf's picture

There are Mexicans and Muslims ready and waiting to pour across the borders of Texas, NM, AZ and Cali. Heck, let 'em have CA.

Fri, 11/18/2011 - 20:52 | 1893059 eaglefalcon
eaglefalcon's picture

Iraq: bad situation, troop commitment required, pulling out will give rise to a hostile regime

Afghanistan: not so bad, troop commitment required but only in small numbers, occupation is economically viable because of the profit from the poppy fields

Pakistan: no confrontation likely in near future because the chinese swore to defend it

Yemen: already toppled and no troop

Libya: the europeans need oil from there, so it's up to them to come up with the money and troops


It appears that if iraq can stablize, the US can afford quite a few more occupations


bottomlin: they don't send the elite to die on battlefields, they send the plebs.  In that regard, the brits have more guts because their elite do go to combat



Sat, 11/19/2011 - 00:30 | 1893517 i-dog
i-dog's picture


"the US can afford quite a few more occupations"

Yep ... they're now in the process of occupying Australia ... and the FEMA camps have already been built ... for "refugees", of course ... not for citizens ... never for citizens.....

Sat, 11/19/2011 - 09:29 | 1893845 spinone
spinone's picture

We need to occupy Afganistan to keep the Chinese out of the middle east.  We'll be there till the middle east is out of oil.

Sun, 11/20/2011 - 14:32 | 1895972 thefedisscam
thefedisscam's picture

LOL. This Lang Xian ping is FREE LANCE Chinese live in HK!! He has NEVER been a Mainland Chineses resident! How does he know ANYTHING about Mainland China?  Just by reading the stupid Western media about China?  LOL

He has a huge mouth about everything! A lot of Misinformation from him! Whoever believe his judgement will get SCREWED!

Fri, 11/18/2011 - 19:11 | 1892870 BurningFuld
BurningFuld's picture

Nice to live in Canada.  Well except it's totally frekin' dumping snow on me.

Fri, 11/18/2011 - 19:24 | 1892891 hivekiller
hivekiller's picture

I thought that was the new new China given how many Chinese live there.

Fri, 11/18/2011 - 20:22 | 1892973 BurningFuld
BurningFuld's picture

See we don't have to worry about being attacked by the Chinese because they will be attacking themselves.

Fri, 11/18/2011 - 22:57 | 1893348 chindit13
chindit13's picture

I hate to disturb your sleep, but if you took the time to read some Chinese history, you might not feel so safe.  China prefers intramural warfare, because if one is on both sides, one can always rack up a "win".

Sat, 11/19/2011 - 00:15 | 1893495 Let them eat iPads
Let them eat iPads's picture

BC = Beijing, China

UBC = University of Beijing China

Sat, 11/19/2011 - 13:43 | 1894203 Reformed Sheep
Reformed Sheep's picture

I spent a few years in Vancouver, Canada. Affectionately called Hong-couver by the locals.

Canada was a great place, but has deteriorated since getting the Harper govt...


Sat, 11/19/2011 - 13:46 | 1894210 prains
prains's picture


Fri, 11/18/2011 - 18:32 | 1892754 Majere
Majere's picture


"When asked about gold, Armstrong responded, “Basically what you are doing is you are building a sideways type of base.  Eventually gold is going to take off to the upside, but largely when people begin to see the Emperor has no clothes and we’re getting close to that.  I would only give it a few more months.”


Bob and Doug "Take off ehhh.."

Fri, 11/18/2011 - 19:26 | 1892894 PulauHantu29
PulauHantu29's picture


Gold is the only winner from the euro crisis

As the euro struggles from crisis to crisis, it isn't hard to identify the losers. In reality, the only big winner from the euro crisis will be gold.Here's why.As this saga unfolds, there are only two possible endgames. One is for the European Central Bank, under its new President Mario Draghi, to rip up the rule book and start buying euro-zone bonds on a massive scale. The other is for the currency to break up in a chaotic and disorderly way. >

>Read MarketWatch commentary on gold and the euro

Doesn't Market Watch understand...."they can't eat gold"....

Sat, 11/19/2011 - 13:32 | 1894179 laomei
laomei's picture

Read up to where it said "Gordon Chang" and then stopped... the guy hasn't been right about anything in china ever.  Get it through your thick skull man, China is actively working to drive property prices down and it's a GOOD THING.  The rich who over-invested in property are gonna get fucked and housing becomes more affordable to the rest of the population.  This isn't a hard concept to grasp.  Everyone who bought pre-2006... hell, pre-2008 is still stupidly ahead.  Rich people saw the stock market was no longer a sure fire thing and they dumped it all in property... no you idiot they didn't take out mortgages to do it.  Hell, even in the height of the bubble, there have always been cheap properties.  No one in china cares if rich people lose their shirt, in fact we laugh our asses of when it happens.

Sun, 11/20/2011 - 00:02 | 1895190 eaglefalcon
eaglefalcon's picture

i don't believe in the atruism from the communist party, they are the rich folks

Sun, 11/20/2011 - 01:16 | 1895275 laomei
laomei's picture

Yep, they rich... they also have power and would like to keep it that way... to keep power they gotta be a bit altruistic at times as well.  

Fri, 11/18/2011 - 18:05 | 1892695 DoChenRollingBearing
DoChenRollingBearing's picture

Alright, getting the weekend started off with a bang!  I should have mnetioned CHINA in my blog article yesterday, I did not think about the MASSIVE corruption there.  So, OK, it is the whole damn world.  

Anyone interested drop me a gmail at my name, promise to behave (as I write under my own name), and I will send you the link to my blog.  My piece yesterday is titiled "Everybody Knows".  They already do, or will soon.

Fri, 11/18/2011 - 18:06 | 1892699 Seasmoke
Seasmoke's picture

do not listen to, believe or trust the Chinese

Fri, 11/18/2011 - 18:10 | 1892707 DaveyJones
DaveyJones's picture

who's left?

Fri, 11/18/2011 - 18:25 | 1892735 Sabibaby
Sabibaby's picture

The other honest good looking leaders of the world and some of the ugly ones too... It's that thing they do with their eyes where the look from side to side, very shifty people if you know what I mean...Always watch their eyes, that's how you can tell...

Fri, 11/18/2011 - 18:44 | 1892800 AldousHuxley
AldousHuxley's picture

blind politicians can lie too.


don't listen to their empty rhetoric. follow the money. that's how you can tell....




Fri, 11/18/2011 - 23:44 | 1893431 DaveyJones
DaveyJones's picture

Marcel Marceau?  

Sun, 11/20/2011 - 14:35 | 1895980 thefedisscam
thefedisscam's picture

Yeah, right, listen to and trust an idiot American like you?? What a JOKE!!

Fri, 11/18/2011 - 18:09 | 1892705 Josh Randall
Josh Randall's picture

Ghost livin' for the Ghost City...

Fri, 11/18/2011 - 18:12 | 1892713 Little Red Rooter
Little Red Rooter's picture

Number 69 is chicken and bwoccoli, bitchez!

Fri, 11/18/2011 - 18:42 | 1892794 NotApplicable
NotApplicable's picture

That's not chicken!

Fri, 11/18/2011 - 21:12 | 1893118 TheMerryPrankster
TheMerryPrankster's picture


Fri, 11/18/2011 - 18:14 | 1892716 I think I need ...
I think I need to buy a gun's picture

if gold is revalued aren't the millions of accounts in china going to see a least the bigger guys everyone will be lifted and people in the US we will be paying 5-6 dollar gas and maybe everyone won't laugh at me anymore

Fri, 11/18/2011 - 18:38 | 1892778 Majere
Majere's picture

1) Those that can and have been buying PM's will be in the top 1% and the .01% have an even higher gap between the 99.x% because they knew about this long before the mass of sheeple getting in late.


2) The CB's/Gov's will become the horde hoarding PM's then again confiscate it....from everyone but the 1%

Fri, 11/18/2011 - 18:17 | 1892721 JustObserving
JustObserving's picture

How can China have a property bubble?  - land values are so reasonable:

"According to the China Economic Weekly magazine, property prices are currently so high that the total value of land in Beijing, estimated at 130 trillion Chinese yuan (US$19.74 trillion), surpassed the United States' gross domestic product of US$14.5 trillion for 2010."

Jan 26 3011

Fri, 11/18/2011 - 18:24 | 1892732 TheAkashicRecord
TheAkashicRecord's picture

Wow, that land must be über productive.


Fri, 11/18/2011 - 18:40 | 1892787 Fish Gone Bad
Fish Gone Bad's picture

Property bubbles grow into poverty bubbles.

Fri, 11/18/2011 - 18:30 | 1892751 JustObserving
Sat, 11/19/2011 - 06:33 | 1893748 koperniuk666
koperniuk666's picture

wasnt a VERY similar  stat quoted in early 1980's when the total value of land in Tokyo was said to be worth more than the whole of the US? 

It was still going up at that point. But we now know where it went.

Fri, 11/18/2011 - 18:18 | 1892722 Great Depressio...
Great Depression Trader's picture

A China bust would be good as prices for commodities would PLUNGE. Especially crude as their oil consumption has been on a tear. With a 3million bpd reduction in use that will free up supply for our fat american asses LOL

Fri, 11/18/2011 - 18:19 | 1892723 TheAkashicRecord
TheAkashicRecord's picture

We should start seeding labor revolutions in countries where we previously exported all of our manufacturing to, then we could bring those jobs back here after the labor costs rise!

Fri, 11/18/2011 - 18:38 | 1892772 solgundy
solgundy's picture

send the weenies to OCCUPY BEJIING

Fri, 11/18/2011 - 19:35 | 1892903 sitenine
sitenine's picture

That's an interesting idea, but when an iPad costs you $2,000, what are you going to eat?

Fri, 11/18/2011 - 20:31 | 1892989 BurningFuld
BurningFuld's picture

What do you mean? My line of credit is good for it.  Do I actually have to pay that back??

Fri, 11/18/2011 - 20:47 | 1893042 TheAkashicRecord
TheAkashicRecord's picture

An iPad Nano?

Fri, 11/18/2011 - 21:47 | 1893200 StychoKiller
StychoKiller's picture

Mmm, just like "Lay's® Potato chips, no one can eat just one!"

Sat, 11/19/2011 - 00:38 | 1893526 i-dog
i-dog's picture

Just like tits.

Fri, 11/18/2011 - 22:43 | 1893319 sabra1
sabra1's picture

i guess it wouldn't take long to reprogram chinese robots to understand english!

Fri, 11/18/2011 - 18:19 | 1892724 The Deleuzian
The Deleuzian's picture

Wait til' the PRC invade Taiwan using 2 million soldiers... Each in their own little single self contained speed boats so as not to disrupt the submarine nets in the South China Sea

Sat, 11/19/2011 - 00:44 | 1893530 i-dog
i-dog's picture

China doesn't need to invade Taiwan ... they already own it.

Taiwan is just a side show for American TV audiences. (The MIC needs to have lots of places to "save", or "protect", so that they can continue developing new weapons).

Fri, 11/18/2011 - 18:22 | 1892731 magpie
magpie's picture

Awww, not Gordon Chang. And i was about to go very short on the giant panda.

Fri, 11/18/2011 - 18:27 | 1892738 Eally Ucked
Eally Ucked's picture

One thing I don't understand, he's talking about economic laws catching up with China, which laws and where he was when the western world got fucked up. I'm not economist and I know untill they're supplying world with everything they will be fine. When jobs will start flowing back to US or Europe then I will start counting years or months to their demise, for now I don't see it.

Fri, 11/18/2011 - 18:38 | 1892773 blindman
blindman's picture

play the ponzi pay your piper, blah bo be bah pay pay....

Fri, 11/18/2011 - 18:38 | 1892775 Desert Irish
Desert Irish's picture

It's not just Princetown...the entire Canadian real estate condomindium market is currently being upheld by mainland chinese consumption. The face of this is Vancouver but it's actually now Toronto, the current leader (by far) of North American high tower construction. We have entire Chinese suburbs ie; Markam where 95% of the population is Chinese and my contacts in the real estate division (I'm a construction manager) tell me they are having busloads 4-6 at a time of mainland Chinese at private condomindium viewing parties. Why? hard assets - that's why. $250,000 will automatically allow you to emigrate. You own hard assets here and your first through the door - if they were that confident on China they would be buying condo's in Shangai.   

Fri, 11/18/2011 - 18:46 | 1892812 NotApplicable
NotApplicable's picture

I wonder if they'll purchase Phoenix outright? Or Detroit?

Meanwhile, back in Bizarro World, the latest headline:

Deep spending cuts pose a new threat to US economy



Sat, 11/19/2011 - 00:12 | 1893493 trav7777
trav7777's picture

why would anyone buy detroit when the cost of carrying that city's residents is so high?  detroit is just a case in point of what happens when you get "too diverse"

Sat, 11/19/2011 - 06:38 | 1893754 koperniuk666
koperniuk666's picture

we must not be simplistic trav. even if the reason is bleedin obvious. detroits not all bad. Water melon's cheap for a start.

Sat, 11/19/2011 - 19:29 | 1894764 ozziindaus
ozziindaus's picture

Ever heard the term "as goes GM, so goes the nation"? Well, you're seeing it in action. 

Sat, 11/19/2011 - 19:55 | 1894822 sitenine
sitenine's picture

I've been over that term for a long time.  The US replaced it with Silicone Valley in the 90s, and then replaced that with housing in the 00s.  I think I get your point though; that the US used to have a manufacturing base, and nothing really creates jobs like a manufacturing base.

Fri, 11/18/2011 - 18:40 | 1892785 Missiondweller
Missiondweller's picture

Well that might be good for our Canadian friends living in BC as the Chinese bail on China and bring their money with them.

Fri, 11/18/2011 - 18:41 | 1892790 bugs_
bugs_'s picture

excellent article.  agree - Dr Copper tells us something big happened a couple of months ago.

on the lighter side i thought this might be a robotrader article with pics.  awwww!

Fri, 11/18/2011 - 18:43 | 1892796 vipmoneymachine
vipmoneymachine's picture

There goes the neighborhood and last man standing please turn off the lights.

Fri, 11/18/2011 - 18:46 | 1892809 heech
heech's picture

Are you kidding me?!  He wrote the book "The Coming Collapse of China" TEN YEARS ago.  And this guy is credible in your eyes?

Fri, 11/18/2011 - 18:48 | 1892817 NotApplicable
NotApplicable's picture

What's that irrational vs. solvency quote again?

Fri, 11/18/2011 - 18:55 | 1892836 fnordfnordfnord
fnordfnordfnord's picture

If he keeps saying it, he's bound to be correct someday.

I tend to agree with the sentiment, but not time scale. In ten or twenty years their productive class will be old/infirm Their birthrate will have fallen off because their emancipated and rare wimmen folk don't want to have kids.

PS breeding females are rare in Chiner as a result of the 1 child policy for Han Chinese (everyone wanted a boy).

Fri, 11/18/2011 - 19:25 | 1892893 topcallingtroll
topcallingtroll's picture

I hope you are right about the birth rate.

That is the strongest and clearest sign of China's benign intent as they rise in power.

If they were becoming more militaristic and repealed the one child policy then we need to starr worrying.

Sat, 11/19/2011 - 06:40 | 1893758 koperniuk666
koperniuk666's picture

Those armageddon fools are gonna get the end of the world right some day too. meantime millions of gullible twits continue to believe.

Sat, 11/19/2011 - 15:37 | 1894403 Cathartes Aura
Cathartes Aura's picture

plays right into the globalist POV.

more asian males to mate with females from other nations = mixed race babies.

and the "hawt asian babes" the white males take up with guarantees the same - no more whining about integration dudes, it's already happening in your minds. . .

Fri, 11/18/2011 - 19:21 | 1892886 topcallingtroll
topcallingtroll's picture

Orlov wrote about a Russian writer who was five years early in his call of the collapse of the USSR. Orlov that that should be considered amazing luck or amazing prescience.

China's collapse could take 30 more years. Waiting ten is nothing.

Fri, 11/18/2011 - 18:50 | 1892822 topcallingtroll
topcallingtroll's picture

I remember a year ago I was one of only two trolls arguing that chinq would fall before the usa, and that they were worse off than us.

They are so fragile that any complaints, even innocuous ones, result in threats and possible detention. The only thing left is to riot if people have no way to petition for a redress of grievances.

And China far outpaces the entire world in riots, a veritable hegemon, even with intentional data suppression and undercounted numbers.

Fri, 11/18/2011 - 18:53 | 1892829 Dick Darlington
Dick Darlington's picture

OT: On the ongoing collapse of Greece. VERY interesting story i found on Yves Smith's Naked Capitalism blog.

Fri, 11/18/2011 - 21:27 | 1893156 Bob
Bob's picture

Fuckin A.  Thanks. 

Sat, 11/19/2011 - 00:07 | 1893486 roygbiv
roygbiv's picture

what Bob said - thanks - that is a very thought provoking and informative article.

Full of stuff which we will never of course read in our mainstream media.


dang, this is why I spend too much time on Zerohedge.  Its like the Slashdot of politics and economics.

Fri, 11/18/2011 - 18:53 | 1892833 Piranhanoia
Piranhanoia's picture

A question if I may;  Regarding China's purchase of precious metals,  and their creating an easier pathway for the people to purchase them lately, on the tradition that it is the preservation of wealth.

Is this something that the government might be doing to get on the good foot of the people lower down the ladder?  Is it a slush attempt to buy time?  Will they use this against the higher ups that have fled?  Will the blame be going with the expats?   It seems like a contradiction to the government when they are both buying and selling without there being that great a profit in allowing their people to own it.  Are they more concerned with having this store of wealth in their land at any cost?

The contradictions in China are fascinating. 

Fri, 11/18/2011 - 20:15 | 1892957 jimmyjames
jimmyjames's picture

Are they more concerned with having this store of wealth in their land at any cost?


If China crashes and unemployment spikes up and continues rising-likely all of the newly purchased Gold will come back to the government owned banks as people with no jobs will be forced to liquidate-so your point about China's government encouraging ownership which has had the effect of increasing the countries total accumulated gold supply-could be correct-

Fri, 11/18/2011 - 20:25 | 1892979 eaglefalcon
eaglefalcon's picture

If I remember correctly, the Chinese government went into a frenzy of encouraging gold and silver investment in 2009, exactly the same time they dumped 5 trillion rmb stimulus package on the market.  There was no grand strategy in this except that the government knew inflation was coming and wanted to cover their own rear end to certain degree. Their calculation was that if the populace invest in gold and silver, most of it would come from import so they don't have anything to lose anyways (the 400 ton annual gold production in China goes straight into the central bank vault and never see the day light on market)


Unfortunately, the people took the poison (inflation), but not the antidote (gold),  most of them chose to buy real estate instead of gold to preseve wealth.  Talking about law of unintended consequence.  How could people waste all their life saving on apartments when the government was constantly telling them "buy gold, buy gold, buy gold"?  The answer was simple, the Chinese people don't believe a single word that the government says.    Now that the real estate bubble is burst the government has no intention of bailing, you need to pay 60% percent down for an apartment in China and no matter how low it goes your are not likely to strategically default.  

Fri, 11/18/2011 - 18:56 | 1892837 jcaz
jcaz's picture

Always get a chuckle when the pundits note that China is "engineering a soft landing";

Yes, cause their engineering is soooo top-notch.....

The more China tweeks with their economy, the harder it will fall.....

Fri, 11/18/2011 - 18:58 | 1892840 fourchan
fourchan's picture

as our bubbles created their bubbles, our popped bubbles will pop their bubbles. bye bye red china.

Fri, 11/18/2011 - 19:00 | 1892842 stopthecasino
stopthecasino's picture

this isn't analysis, it's a rant, what a joke!

Sat, 11/19/2011 - 01:54 | 1893605 kito
kito's picture

buy yuan as a hedge. you wont regret it.

Fri, 11/18/2011 - 19:02 | 1892845 sitenine
sitenine's picture

" The bubbles and malinvestment created by this stimulus have not been addressed, and increasing weakness and transitions inside the political system are making it less likely they will be before market forces intervene."
Yeah, it's just China with this problem...

Fri, 11/18/2011 - 19:13 | 1892873 hambone
hambone's picture

OT but important -

Anybody seen any guess as to the euro's the ECB spent on driving Spanish, Italian, etc. bond yields down in the past couple weeks...given there is no ESFS as of yet, would seem they will burn through their mandated $300 or $400 billion euro's quickly at current burn rates???

How long can they continue to suppress rates before all the pretend money approved in July is gone and they need to resort to lending themselves faker money (approved under ESFS) to allow them to provide more pretend money for holding bond rates down???

Fri, 11/18/2011 - 20:15 | 1892955 slewie the pi-rat
slewie the pi-rat's picture

(see below) here is a link to the reuters piece ECB has secret 20 billion euro bond-buying limit: report

and here is a GATA link to data from the World Gold Council report claiming central banksters took advantage of people selling their gold for fiatscoes: Central bank gold purchases soar | Gold Anti-Trust Action Committee

(paste): Total central-bank gold purchases in the third quarter more than doubled from the second quarter and were almost seven times higher than a year earlier as countries continued to diversify reserves, according to a World Gold Council report.

how much did the bansksters buy??? (paste): 148.4 metric tons (end paste/emphasis mine)

so, one would hope the world gold council isn't being fed a buncha bullshit by the banksters; tyler has put up some of their reports here, also


Fri, 11/18/2011 - 23:07 | 1893362 Zero Debt
Zero Debt's picture

Oh no! 20 billion money printing limit! Unleash the deflation doom p*rn propaganda machine!

Fri, 11/18/2011 - 19:27 | 1892879 slewie the pi-rat
slewie the pi-rat's picture

we doomed long time, BiCheZ!

@ hambone:  tyler put up a piece very early today about the ECB having a board which meets once or twice per month and sets guidance for the amount of bond buying (and printing)

Fri, 11/18/2011 - 19:18 | 1892882 americanspirit
americanspirit's picture

The Chinese aren't just buying expensive houses. A friend of mine who brokers high quality farmland (with water) tells me that for the past year his client base has been becoming more and more Chinese. And no, they aren't moving their families to Iowa - they are moving their assets into one of the few things that will hold value long term - good ag land with water rights. Better start learning Mandarin. America is on sale - blue light special.

Fri, 11/18/2011 - 19:22 | 1892889 Magnum
Magnum's picture

Chinese people are everywhere in my local area, and they carry themselves with an arrogant swagger and largeness of character & voice like the old stereotype of the Ugly American.  My how things change.

Fri, 11/18/2011 - 19:47 | 1892919 RobertC
RobertC's picture


Fri, 11/18/2011 - 19:58 | 1892929 Piranhanoia
Piranhanoia's picture

The Chinese have been in the US for a long time. They are the first large immigrant group after the founding of the nation aren't they?   They helped build the Russian part of California and north early on,  BC too. 

It really does show you how screwed up things are if they copy our worst behavior because it helps them assimilate.  

Fri, 11/18/2011 - 19:44 | 1892913 SeanJKerrigan
SeanJKerrigan's picture

I've said before that China is not the super powerhouse of the future that so many theorists see. Its funny that most futurists are complete fools when it comes to seeing changes.  They assume trends will always continue in the same direction, never changing significantly, never pulling back or reversing.  A classic example:,9171,835128,00.html

In this, Time predicts a bunch of insane nonsense about how politics will fade away since there will be no scarcity of wealth -- that the growing middle class would continue forever and that work itself would eventually disapear into automation.  It explicitly says that people who see the future as a world like 1984 or Brave New World are "plainly in the minority," or something like that.  It's quite amusing. The cyclicalist would have a field day with this one.

Back to China.  Yes, they are weakening and will continue to do so.  The US will do everything in its power to keep them from spliting apart (if we wanted that to happen, we could cause it to happen now with little effort).  That is why there is no pressure on China to reform.  Geopolitics.  We need them in once piece to act as a counterbalance to the Russians  as they expand back into Eastern Europe.  This is also the reason the US gets so upset when the two countries meet.

See, when you understand Geopolitical positioning, everything makes sense.

Fri, 11/18/2011 - 19:56 | 1892928 moskov
moskov's picture

Can't believe Zerohedge spreading bullshit from Gordon Chang Who's as creditable as Paul Krugman. 30 years of lies and he's spreading exploring China's collapse. What a amazing record it has. In the mean time, OWS has been busying shooting the Whitehouse

Fri, 11/18/2011 - 20:01 | 1892936 Smokey1
Smokey1's picture

Unauthenticated specious garbage.

Within the next three years, China will publicly abandon the USD and announce their support for a new world reserve currency. That will spell the end of US world economic dominance. The China announcement will crash the USD, and hyperinflation will follow here soon after. Exchange controls will be implemented in the US during the economic collapse.

Fri, 11/18/2011 - 20:35 | 1893002 piaoyou
piaoyou's picture



Gordon Chang?

Can you find someone who would be more credible? He has been bashing China collapse for 20 years! Even a broken clock will be more accurate than him.

Sat, 11/19/2011 - 13:48 | 1894211 buyingsterling
buyingsterling's picture

And now all of the weaknesses he's written about are becoming evident to everyone. Who craps on the hard money guys who have been talking about the end of the dollar for 20 years? Find a quote where Chang says China dissolves by a specific date, and his credibility is somewhat damaged. But to me it just looks like he was ahead of the curve. Power can prop itself up for a long time.

Fri, 11/18/2011 - 20:47 | 1893045 VyseLegendaire
VyseLegendaire's picture

I don't see all that much wrong with Chang's actual appraisal, its just that today's world is so phantasmagorical that its anybody's guess how and when the SHTF happens. 

Fri, 11/18/2011 - 20:53 | 1893062 loop360
loop360's picture

Yawn..... Property prices dropped 30 per cent, a bubble, therefore negative. Politburo reshuffling, no decision is made, therefore negative. Wen continues to tighten, so at least some one still in charge, but the policy will be negative to China. So you do this, negative. You do that, also negative. This gentleman has been selling his negative views on china for like ten years.

Fri, 11/18/2011 - 21:27 | 1893147 williambanzai7
williambanzai7's picture

Listen to factual context he is presenting then draw your own conclusions.

Yes he is a professional China doomsday pundit. However, the anecdotal evidence he cites does ring a bell.

Fri, 11/18/2011 - 22:47 | 1893327 cosmictrainwreck
cosmictrainwreck's picture

and your take from HK, WB7 ?

Fri, 11/18/2011 - 21:28 | 1893159 Carlyle Groupie
Carlyle Groupie's picture

Blah, blah, China this and that, and some such, blah, blah!


Fri, 11/18/2011 - 21:53 | 1893209 meizu
meizu's picture

How are those officials a leading indicator if they are taking money out of a country that may go bust and put them into a country that is going bust?  They are simply stupid.

Sun, 11/20/2011 - 14:48 | 1896009 thefedisscam
thefedisscam's picture

LOL. finally, among the STUPID post of sea, see a smart comment from you.


Fri, 11/18/2011 - 21:55 | 1893214 gnomon
gnomon's picture

The China Trolls are late to the game today.  And their protestations are lame as well.  You will have to come at us with force, and don't bet on winning no matter what little dirty asymmetrical warfare tricks you have up your sleeve.  

Fri, 11/18/2011 - 22:05 | 1893221 earleflorida
earleflorida's picture

fwiw dept:

china interest rates -

CHY to USD currency rate chart [20yrs.] -

ps.  if what the author says is a harbinger of things to come, the u.s. will suffer greatly with consumers [70%] of u.s. economy already on the ropes.

ps2. mao didn't care if half the population died building his new china *[@ the time 50ml /100ml starved, slave labor camps, or just plain genetic-genocide engineering as hitler ]    


Fri, 11/18/2011 - 23:01 | 1893352 Stuck on Zero
Stuck on Zero's picture

Lets compare investment strategies:  In China they are building cities, public works, water works, power generating stations, factories, housing, highways, airports, universities, and hospitals.  We are pouring trillions into welfare, Wall Street execs, billion dollar fighter planes, hundreds of overseas military bases, prisons, failing schools, liver transplants for 90 year olds, food stamps, and social research.

Tell me who is making the malinvestments?

Fri, 11/18/2011 - 23:26 | 1893403 alexwest
alexwest's picture

#And so we have not got a little bit of social unrest because of falling property prices.

Eacb time I read another western writing about collapse in CHIna/etc..
I laugh..

hey idiot , how many times have you ever been in communist country? did you ever live there ? what do you know about people living here ?

hey stupid, google 'china culture revolution' .. Mao killed dozens of millions chinese people, nothing happened.. Stalin killed millions Russians.. nothing happened... dont worry about them...


FALLING PRICES ARE GOOD FOR PEOPLE WHO WANT TO BUY.. and believe many each time there'are more people who want to buy.. its the same as if there could be social unrest in case of FALLING FOOD PRICES.. HOW STUPID IS THAT..



Fri, 11/18/2011 - 23:53 | 1893451 sabra1
sabra1's picture

please use google translate next time! inhglish to english!

Sat, 11/19/2011 - 07:01 | 1893770 onebir
onebir's picture

No unicode here. Suan le!

Sat, 11/19/2011 - 22:35 | 1895077 jm
jm's picture

Sorry alexwest.  Idiots won't shut up no matter how much sense you make.  It's a part of what makes them idiots.

Sun, 11/20/2011 - 14:50 | 1896017 thefedisscam
thefedisscam's picture

You know Shxt about China, Google knows Shxt about china! Otherwise, Google would not be kicked OUT of China!

Fri, 11/18/2011 - 23:52 | 1893450 papaswamp
papaswamp's picture

Little story...just got back from the south pacific...Bora Bora Moorea (thank ZH!). Did the pearl dealer thing. One can take 10 loose pearls..or be like the Chinese and come off a ship literally with bags full of USDs and buy loose black pearls. Apparently the Chinese are trying to convert as fast as possible ANYTHING paper to hard asset as fast as possible. Since ship crews don't have to go through customs like vacationers, they are cleaning out dealers of the high end pearls and also other end of spectrum. Interesting event...

Sun, 11/20/2011 - 14:55 | 1896033 thefedisscam
thefedisscam's picture

Do you know what is the retirement age now in China???

I bet you do NOT!

Women have to retire at 55, men at 60. some high-ranking professionals can stay a little longer. And yes, they can retire with 90%+ of their pay! And vast majority of them live a very HAPPY lives. Unlike their American counterparts, everytime when the stock market collapse, many of retired have to go back to the labor market to find a job!

Those Americans who worried about China had better worry about yourself FIRST!

Most of Chinese live HAPPIER than Americans! and That is just a FACT!

Sat, 11/19/2011 - 01:21 | 1893576 yogibear
yogibear's picture

After the Chinese take care of their leaders maybe it will catch on over here. We need to clean house here.

Sat, 11/19/2011 - 03:09 | 1893661 Totentänzerlied
Totentänzerlied's picture

A bubble popping in America will inflate another in China.

Put the chaos back in chaos theory.


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