China is Indias biggest enemy. They are doing everything possible to harm and undermine India

[randomGuy]

7 minutes ago, narenpande1 said:

 

 

Whereever you are getting your info from ..it is incorrect.

 

China's total debt has been reported to be over 33trillion USD or over 300 % of their 11 trillion GDP and expected to  touch 330 % of GDP by 2022 if they dont already have a asset bubble crash followed by yuan crashing. The problem is not the high % total debt standalone  - it is how quickly it is accelerating - if it were not to increase at such a pace, Chinese economy would grow at 3 % or less .

 

https://www.bloomberg.com/news/articles/2017-11-21/china-s-debt-surge-may-increase-risk-of-financial-crisis

 

https://www.cnbc.com/2017/06/28/chinas-debt-surpasses-300-percent-of-gdp-iif-says-raising-doubts-over-yellens-crisis-remarks.html

 

Overcapacity is severe and dangerous problem for China, because all the industries that supported the historically unprecedented pace of  infrastructure development - had built all this capacity to keep factories running 24*7. Now that they have built everything - what will happen to these factories and their workers ?

 

You mean to say tradingeconomics.com is wrong? Show me another source for Chinese government debt to gdp ratio. Don't show me total debt( for now) . Please show me a source for government debt to gdp ratio. 

[narenpande1]

7 hours ago, randomGuy said:

You mean to say tradingeconomics.com is wrong? Show me another source for Chinese government debt to gdp ratio. Don't show me total debt( for now) . Please show me a source for government debt to gdp ratio. 

 

 

My friend. Let me break it down for you this way:

 

1) Public Debt = Debt owed by Govt =  Govt Internal borrowings + External borrowing. Since the govt extracts the debt servicing elements including coupon and Principal payments from its nationals by way of some form of tax. It is inferred to as a burden on its citizens

 

2) Private Debt = Debt owed directly by private citizens ( home mortgages, credit card debt, student loans, car loans..etc ) + Corporate debt. 

 

Total Debt = Public Debt + Private Debt.

 

 

In China the public debt is lower relative to India but the private debt is very heavy high, and it is the debt that has caused China's total debt to ballon to over 300 % of GDP - that is cited by Bloomberg  and CNBC. Also alot of the private debt in China is outside the formal banking sector ( read shadow banking ). This has fueled an extraordinary asset bubble.

 

The website that you cite trading economics does not even have Private Debt of China citied. Tell me if you are able to find it.

 

https://tradingeconomics.com/country-list/private-debt-to-gdp

You can see most developed countries have very high private debt. Alarming as it sounds - those levels have been steady

 

It is easy to understand how this works - if every citizen is a home owner - who makes 25 % downpayment and takes a mortgage debt on 75 % of the value. Automatically that will translate to 300% debt to equity for individual. Multiply that nationally and you get ..what I am saying. A

 

 The problem is in China - private debt levels have been rising very fast..alarming-- unlike the west. And a lot of it is in the informal /unaccounted sector. 

 

 

 

 

[randomGuy]

Good that we are on the same page.  

 

Private Debt = Debt owed directly by private citizens ( home mortgages, credit card debt, student loans, car loans..etc ) + Corporate debt.

 

^the debt owed  by private citizens(not corporates)  is called the household debt. For China, household debt is 47% - https://tradingeconomics.com/china/households-debt-to-gdp

 

Corporate debt is 160%.

 

1.

Now see their debt categorization issues - 

"Zhou said some of China’s corporate debt includes borrowing from financing vehicles owned by local governments. When that debt is re-defined, corporate borrowing is estimated at 120 percent to 130 percent of gross domestic product, instead of the official figure of 160 percent of GDP. Government debt would be about 70 percent instead of 36 percent, he said."

https://www.bloomberg.com/news/articles/2017-10-15/china-s-zhou-warns-corporate-debt-too-high-urges-fiscal-reform

 

Corporate debt looks high which is why I asked you whether you were sure that debt of state owned enterprises is being categorized as Govt. Debt and not as corporate debt. 

 

2. Now when the debt goes bad, main priority of the government is to save the banks who have lent to these corporations. These banks would be too big to fail and the government WILL save the small depositors' money . And so more of this written off corporate debt will become government debt (because the banks would require capital and where will it come from?.. .. right, from the government) .

 

You should see at home (in India), how the government is infusing capital in the PSU banks. 

 

3. And it's not a big deal. As I said, china saw its self-reliance in producing everything. And then it saw the total debt levels through out the world -  usa, 250%, Japan 350%etc. And decided, let me also get my debt up there, because I can afford it. India for example can't do so (have so much public debt or private debt) because india isn't self reliant. 

Edited February 2, 2018 by randomGuy

[narenpande1]

15 hours ago, randomGuy said:

Good that we are on the same page.  

 

Private Debt = Debt owed directly by private citizens ( home mortgages, credit card debt, student loans, car loans..etc ) + Corporate debt.

 

^the debt owed  by private citizens(not corporates)  is called the household debt. For China, household debt is 47% - https://tradingeconomics.com/china/households-debt-to-gdp

 

Corporate debt is 160%.

 

1.

Now see their debt categorization issues - 

"Zhou said some of China’s corporate debt includes borrowing from financing vehicles owned by local governments. When that debt is re-defined, corporate borrowing is estimated at 120 percent to 130 percent of gross domestic product, instead of the official figure of 160 percent of GDP. Government debt would be about 70 percent instead of 36 percent, he said."

https://www.bloomberg.com/news/articles/2017-10-15/china-s-zhou-warns-corporate-debt-too-high-urges-fiscal-reform

 

Corporate debt looks high which is why I asked you whether you were sure that debt of state owned enterprises is being categorized as Govt. Debt and not as corporate debt. 

 

2. Now when the debt goes bad, main priority of the government is to save the banks who have lent to these corporations. These banks would be too big to fail and the government WILL save the small depositors' money . And so more of this written off corporate debt will become government debt (because the banks would require capital and where will it come from?.. .. right, from the government) .

 

You should see at home (in India), how the government is infusing capital in the PSU banks. 

 

3. And it's not a big deal. As I said, china saw its self-reliance in producing everything. And then it saw the total debt levels through out the world -  usa, 250%, Japan 350%etc. And decided, let me also get my debt up there, because I can afford it. India for example can't do so (have so much public debt or private debt) because india isn't self reliant. 

 

A high total debt level cannot be seen as standalone - I think the point you are missing is how alarmingly the private debt in China has been rising - it has almost become like a drug - this has been supported by sustained loose monetary policy. Loose Monetary Policy leads to  Easy Debt which leads to a vicious death cycle that inflates assets to an extent that asset bubbles are created. We saw that in Japan in the 80s and 90s , we saw that in US in 2007/08. 

 

And we are seeing it at a much bigger scale in China. 

 

You are also missing how HUGE shadow banking / unregulated borrowing is in China - so the real problem is far bigger.

 

When the debts go bad as they so often do in countries like China where shadow banking is so large, due to poor due diligence, assets prices crash and currency devalues. 

Last count - shadow banking  it was over 82 % of China's GDP.

 

https://www.ft.com/content/a6086a9a-5059-11e7-bfb8-997009366969

Shadow banking in an emerging market can be likened to be more ' notorious' version of subprime lending because atleast subprime lending goes through banks - with shadow banking you are vulnerable to loan sharks - even when shadow banking grows so viciously - you realize quite late in the day, that an asset bubble is building - because the reporting comes in much later and is often understated.

 

Also, China's self reliance is of limited use, they are savers not consumers like US and the West.

 

China has been riding a debt tiger to artificially meet GDP  targets for over 15 years. Even their senior most Govt members concede that they are on the cusp of a severe recessionary crisis - such a statement coming from a senior Chinese govt minister only highlights how bad their state is because they usually don't speak ill against the state of the economy

http://www.scmp.com/news/china/economy/article/2131202/financial-risk-facing-china-worse-us-global-crash-former-finance

 

 

 

 

 

 

 

[Muloghonto]

On 2/1/2018 at 1:50 AM, narenpande1 said:

Most of Chinese savings are in real estate and stocks and not idle cash sitting in banks - where the deposit rate is less than 2 %. What ever is sitting in banks is a very small % of net worth. It is not uncommon for every other Chinese in metropolitan China to own a second or third apartment as investment because credit was dirt cheap just like US before the 2008 crisis and because construction and building had to  go an at a frenzied rate to meet GDP figures, this cheap credit was allowed. 

 

ThIs has fueled an unprecedented asset bubble. It will meet the fate of all bubbles.

How do you know this ?

Infact, almost everything i've read is the exact opposite - that rich Chinese people prefer liquid cash in their bank accounts over investments, as they prefer to send a son/daughter/nephew etc. overseas to study and then transfer the funds so that they can buy a property overseas (part of the flight of capital from mainland China).

if anything, the rich Chinese have greater liquidity than all but the oil-rich Arabs due to this factor alone. 

[narenpande1]

4 hours ago, Muloghonto said:

How do you know this ?

Infact, almost everything i've read is the exact opposite - that rich Chinese people prefer liquid cash in their bank accounts over investments, as they prefer to send a son/daughter/nephew etc. overseas to study and then transfer the funds so that they can buy a property overseas (part of the flight of capital from mainland China).

if anything, the rich Chinese have greater liquidity than all but the oil-rich Arabs due to this factor alone. 

Do you read properly ? I said real estate and stocks. Stocks are a liquid form of investment. 

 

Also so if they are “ rich “ Chinese the cash in bank will all the more be a small % of their networth. 

 

Since you are the one of claims to have read everything “ opposite “ of this, the burden of proof lies with you. Why don’t you show where you have read this ignorant thing. 

 

 

[Muloghonto]

7 minutes ago, narenpande1 said:

Do you read properly ? I said real estate and stocks. Stocks are a liquid form of investment. 

 

Also so if they are “ rich “ Chinese the cash in bank will all the more be a small % of their networth. 

 

Since you are the one of claims to have read everything “ opposite “ of this, the burden of proof lies with you. Why don’t you show where you have read this ignorant thing. 

 

 

Google the topic in Vancouver Sun, The Province, The National Post. 
We've read it for YEARS how Chinese students come over with 2 million dollars, buys a house and then goes for an undergrad degree 

 

[narenpande1]

33 minutes ago, Muloghonto said:

Google the topic in Vancouver Sun, The Province, The National Post. 
We've read it for YEARS how Chinese students come over with 2 million dollars, buys a house and then goes for an undergrad degree 

 

Are you seriously this dumb ?

 

you can carry tens or even hundreds of millions of dollars, how do you the trail of that cash ? Stocks can be converted to cash in the bank in less than 18 hours. 

 

The richer you are the lesser is the cash idle bank a % of your net worth. 

 

 

 

 

 

[Mariyam]

On 1/30/2018 at 1:36 PM, Muloghonto said:

Yep. Rudest people on the planet even without cause.

I live in a city full of fresh-of-the-boat Chinese. And when I take the bus, I've given up asking old Chinese people waiting there (at bus stops that has multiple buses stop), if a certain bus has gone by just before I got there or not. Most people will respond normally. All immigrants who are bad at English smile and shake their heads....old Chinese people ? They will stare right ahead and ignore you..like you don't exist. A few times, I've asked and the Chinese person kept on staring ahead towards the street. So I asked again and they sighed, took 3 steps away from me and kept on staring at the street.

This level of rudeness, is pretty shocking actually.

This is anecdotal. You use these experiences to generalize across an entire lot of 130 cr people? For what its worth, typical Chinese behaviour in China could be a lot different from that of Chinese immigrants, even fresh of the boat. A change in social setting has a huge impact on how people react.

 

In my experiences in China (mainland), I found the people quite polite and always smiling. Sometimes, it was a little too creepy. :p And I found them eager to help, unfortunately most of them didn't know much English. Yet they would go out of their way to ask around. The more to the hinterland you head-> Xian, Wuhan etc , the more relaxed and friendly the people would be, and the lesser English they'd know.

Oh yeah, and when the Chinese say vegetarian, they include fish. My Gujju Jain friend learned this the hard way.

 

I haven't interacted with any Chinese immigrants in the west, so I can't comment on them. In fact, I'd have a difficult time differentiating the Chinese from the Vietnamese or the Filipinos imiigrants.

[Muloghonto]

56 minutes ago, Mariyam said:

This is anecdotal. You use these experiences to generalize across an entire lot of 130 cr people? For what its worth, typical Chinese behaviour in China could be a lot different from that of Chinese immigrants, even fresh of the boat. A change in social setting has a huge impact on how people react.

True, its a generalization and i tend not to hold these views strongly. However, its exactly the same in mainland China. Been there a few times. 

56 minutes ago, Mariyam said:

 

In my experiences in China (mainland), I found the people quite polite and always smiling. Sometimes, it was a little too creepy. :p And I found them eager to help, unfortunately most of them didn't know much English. Yet they would go out of their way to ask around. The more to the hinterland you head-> Xian, Wuhan etc , the more relaxed and friendly the people would be, and the lesser English they'd know.

This may explain my difference of experience with your's. I've been to China several times but only to their megalopolises. ie, Beijing, Shanghai, Shenzen and Kunming.

56 minutes ago, Mariyam said:

Oh yeah, and when the Chinese say vegetarian, they include fish. My Gujju Jain friend learned this the hard way.

Yep. and they also include all types of animal by-products, like gelatin as vegeterian as well. 

 

56 minutes ago, Mariyam said:

I haven't interacted with any Chinese immigrants in the west, so I can't comment on them. In fact, I'd have a difficult time differentiating the Chinese from the Vietnamese or the Filipinos imiigrants.

Oh they are easy to tell apart once you see them enough.

Filipinos have a distinct accent to their english and are usually hyper-chatty. 

[narenpande1]

@randomGuy

 

My friend, you should watch this video.

Michael Pettis teaches at Peking University.

China is an economic miracle that has flourished under state subsidized construction and manufacturing. This model builds wealth very fast - but has a disastrous end. I remember Raghuram Rajan mentioning on more than 1 instance how Chinas growth model would at one point lead to a painful crash that would last a decade or so. 

 

I love the way  Pettis explains GDP growth without econokic value added is not really economic growth. 

 

 

 

[randomGuy]

@narenpande1

China's GDP is 4-5 times India's. Acc. To you, Looking at both countries' current state, how much times should it be? So that we can get an idea how much China is inflated.

[narenpande1]

5 minutes ago, randomGuy said:

@narenpande1

China's GDP is 4-5 times India's. Acc. To you, Looking at both countries' current state, how much times should it be? So that we can get an idea how much China is inflated.

@randomGuy

 

China’s GDP and wealth is real. But it’s model has run its course. It will continue building more debt infused “ wealth “ , till the easy debt flow comes to a grinding halt.

 Then will come then asset bubble crash

 

I look at it as simplistically as below and then multiply it at a National economy level:

 

Asset = Debt + Equity 

 

When debt goes bad ( down )as it will when annual shadow banking is 80 % of the GDP level at 9 Trillion. 

 

Asset has to come down to balance the equation. But this is at a book value level, the market value always moves in greater extremes to the book value. 

 

Therefore when the debt write down becomes severe as will become evident, 

assets will crash furiously and disproportionately as there will be a panic sell off. This is cause yuan to severely devalue and cause savings to reduce comsiderably.

 

the result will be lower consumption, lower demand, greater unemployment - and classic case of economic stagnation as experienced by japan in the 90s for a decade 

 

 

 

 

 

 

 

 

[randomGuy]

@narenpande1 bro I agree that now that their cities' infra has been built, this section of the economy would see recession.

 

I am still asking you your opinion of 'x' for today, considering the infra part of China sees recession now - 

China's gdp = x times India's gdp

 

[randomGuy]

Use any way of measuring gdp https://en.m.wikipedia.org/wiki/Gross_domestic_product

[randomGuy]

Infra would be in recession in China soon.  Agreed. And that will affect other sectors as well (domino effect). 

 

But let's see other sectors of gdp. Exports, we know they are ahead of India. 

 

See consumption - 

 

Let's see passenger cars sold in 2017, iirc

China - 24.5 million 

India - 3.5  million 

We can assume avg. Chinese car would also be more expensive than indian... Or see smartphone sales. 

 

So please tell me the x in your opinion after recession in Chinese infra n it's domino effect - 

China's gdp = x times India's gdp

Edited February 5, 2018 by randomGuy

[kruiser]

On 1/28/2018 at 6:32 PM, narenpande1 said:

Because you know NOTHING. 

 

China requires 5 dollars of debt for every 1 dollar of INCREMENTAL gdp ( ie gdp growth) 

 

because they have to meet growth targets come what may - they keep getting sucked into  more and More debt.

 

When there is a difference between gdp growth and economic growth ( which is not the same thing )- it results in a disaster at some point.

 

Extraordinary debt fueled infrastructure projects over a decade that have not had takers means - that debt cannot be paid  fully or partially. So although that debt was used to build hard assets, those assets are not income producing - rather loss making and so although the work that went onto produce those assets resulted in gdp growth ( by the definition of gdp ) - it is not economic growth. It is an accumulation of bad debt that will blow up on chinas face.

 

because China wants to avoid a hardlanding, they are still taking insane amounts of debts each year to gradually come down at 10 bps less gdp growth a year. 

 

But this short sighted policy will result in a bigger disaster as China is taking debt in a manner unseen in human history 

 

https://www.google.com/amp/amp.timeinc.net/fortune/2017/12/07/china-gdp-growth-economy

 

 

the debt you talk about is internal - not from any external country or organization. China can easily write it off when it wants to. Do you have an idea of the real estate assets owned by Chinese government (in proxy thru individuals) in New York? I have heard rumors, but would like to get more factual information. 

[narenpande1]

18 hours ago, randomGuy said:

Infra would be in recession in China soon.  Agreed. And that will affect other sectors as well (domino effect). 

 

But let's see other sectors of gdp. Exports, we know they are ahead of India. 

 

See consumption - 

 

Let's see passenger cars sold in 2017, iirc

China - 24.5 million 

India - 3.5  million 

We can assume avg. Chinese car would also be more expensive than indian... Or see smartphone sales. 

 

So please tell me the x in your opinion after recession in Chinese infra n it's domino effect - 

China's gdp = x times India's gdp

@randomGuy

Quantum of Market reaction to debt write offs resulting in asset price free fall can only be guessed. The fact that China is such an interconnected part of the global economy, foreign investors will also flee and exit yuan based assets once the correction begins ... ..the moot point is how China’s economy would fare after a huge correction and asset bubble burst

 

the passenger car statistic is not very relevant in my opinion. Millions of middle class in urban and rural who have daughters save up money to give many Lakhs of jewelry and gold  to daughter upon marriage /bidai every year and spend lakhs on wedding too. They could easily buy a car or two. But consider it a luxury till daughter is wedded off. It is a cultural thing for us Indians. No such thing in China.  Is it any surprise that Indian household Gold hoard is more than many of the wealthiest countries combined ?

 

a staggering 800 billion USD 

 

https://www.google.com/amp/www.financialexpress.com/industry/indian-households-have-record-gold-hoard-of-rs-24000-tonnes-worth-800-bn/521155/lite/

 

 

 

Millions of such families still prefer relatively inexpensive  2 wheelers.

 

but once savings and equity crashes as debt write off and deleveraging of China’s economy happens - all these high flying consumer based statistics from China would come to a halt. 

Edited February 6, 2018 by narenpande1

[narenpande1]

15 hours ago, kruiser said:

the debt you talk about is internal - not from any external country or organization. China can easily write it off when it wants to. Do you have an idea of the real estate assets owned by Chinese government (in proxy thru individuals) in New York? I have heard rumors, but would like to get more factual information. 

 The debt may be internal but the trillions of dollars of FDI into china are external, and foreign investors will start liquidating yuan based assets nor will new FDI come while yuan is on a freefall

[randomGuy]

^^my guess is they (car sales) could stagnate... They will continue buying Cars, houses (for consumption, not as investment) etc. The sales may flatten in worst case but won't decrease much. Kyoki Chinese ko consumption ka chaska lag gaya.. Waise Bhi their consumption per capita is less than usa  Europe etc. 

 

Anyways u didn't give me ur guess for 'x' so let me try 

Since Gdp is broadly = investment +consumption + net exports

 

I would say 'investment'  part would struggle for china... Exports will remain constant i guess and consumption would increase somewhat ... 'X' taking into account all that (recession in infra investment etc.) could be maybe  4....meaning chinas stable state gdp 4 times India's with india having prospects of much better future growth... Agree? 

Edited February 6, 2018 by randomGuy