The Great Fall Of China Started At Least 4 Years Ago

 

Home Forums The Automatic Earth Forum The Great Fall Of China Started At Least 4 Years Ago

Viewing 7 posts - 1 through 7 (of 7 total)
  • Author
    Posts
  • #25014

    Robert Capa Anti-fascist militia women at Barcelona street barricade 1936 Looking through a bunch of numbers and graphs dealing with China recently, i
    [See the full post at: The Great Fall Of China Started At Least 4 Years Ago]

    #25015
    Dr. Diablo
    Participant

    Cool stuff. One thing that you touched on a little, is that China’s slowdown is really a slowdown of their customers, the U.S. and E.U. Virtually everything China imports, they export again as the factory of the world. I heard this same thing on NPR yesterday, that the U.S. economy is only “responding” to the slowdown in China: i.e. “It’s their fault!! We were just fine before China broke our economy!!” –Your typical political blame-game. (PS, Let’s bomb them) In fact, the way China is built, it can only slow down or did only slow down because their factories stalled from a lack of orders, due to a lack of buyers, due to an overwhelming debt + falling wages + credit crisis in the West. No doubt China was itching for overcapacity and this would have happened soon anyway–you can’t double your concrete and steel capacity every 5 years forever–but the actual tipping point was the West’s credit crisis throwing the kill switch. In my opinion. These things are complicated, of course.

    Second item, yes China is in debt, and that’s always a problem, first that unrestrained debt leads to overcapacity and boom/bust, but also that it can’t be paid and must be liquidated. But the liquidation doesn’t destroy assets(mostly): it transfers ownership of them. The social stress comes when someone who owned an asset gets it taken away from them, and they cry, throw a tantrum, and plan revenge. The new owner now is pals with whoever transferred somebody else’s stuff to them–a potential example of political payoffs. But for the most part, the assets, factories, warehouses, mines, continue to exist, however less valuable for the moment, and however many unimportant people are out of work.

    My point about debt not being paid, and ownership being transferred in weakness and bankruptcy, however, is WHO does China owe their debt to? WHO is not going to get paid? If the debt is internal, all minted up by the Chinese central bank, then the problems and social stresses of taking assets and redistributing them are all internal. And this is something China has very, very familiar with. China isn’t run like the west, and never has been. The Government, the Party, the Emperor, the Confucian bureaucracy going back 1,000 years, they own everything inside the borders of China without dispute. They always have. If the Emperor wants to take your land, your province, your title, your manor house, your factory, and hand it to someone else, he can. You can be upset and get him back, but they’re very experienced in this problem of power and dissent. China, the Chinese people, will consider this normal.

    So if China wants to call a time-out on all internal debt, cancel the Yuan, go through the books, and clear the ledger, and reboot with Yuan2, they can. And all the extreme, overwhelming debt (internally) can vanish in a weekend. –Of course, so can we, and we probably will, but the American people especially will find this unjust, high-handed, and unacceptable. We believe WE own our property. Inside China, the Emperor, the Party, the Nation, the bureaucracy owns the property.

    Just a thought. They don’t run by our rules. If the debt is internal, it doesn’t mean there what it means here. If the debt is external, owed to the Western US/EU nations and banks, then look out all the more, because it’s that much easier not to get paid.

    #25017
    John Day
    Participant

    I sent a 0.25 Troy oz. Mexican gold bullion coin by registered international mail to Pireas Solidarity Clinic yesterday, after purchasing it at $1170/oz + 8% at a local dealer, here in Austin. The tracking number supplied doesn’t work on this perfectly legal form of asset transfer, but the software tells me it can’t track my package to Greece, so it recognizes it.
    Financial geurrilla charity? I worked a lot last month, and still have kids in college and that $15,000 of credit card debt. I can’t buy things for myself until that is paid off, but I have a little wiggle room to do this, with the same charity we helped together this summer.
    (I know it has been 5+ years since I contributed to Automatic Earth and Nicole’s trip to Austin, but I have excuses.)

    #25020

    I’ll go seen them again soon, John, should remember to ask them about the gold coin.

    #25025
    Nassim
    Participant

    For an alternative view (translated from French) on the background to recent events in Paris, I suggest this article:

    “The French Republic taken hostage
    by Thierry Meyssan

    The war which has now spread to Paris is incomprehensible for those French citizens who are ignorant of practically all the secret activities of their government in the Arab world, of its unnatural alliances with the Gulf dictators, and its active participation in international terrorism. These policies have never been discussed in Parliament, and the major media have rarely dared to take an interest in them.”

    https://www.voltairenet.org/article189300.html

    #25041
    seychelles
    Participant

    ” If the debt is external, owed to the Western US/EU nations and banks, then look out all the more, because it’s that much easier not to get paid.”
    Seems like selective sovereign (internal vs external) debt repayment is likely to be an important phase in the upcoming debt default game, followed by selective internal debt repayment, as the process grinds on.

    #25286
    alan2102
    Participant

    “China has given the green light to more than 150 coal power plants so far this year despite falling coal consumption, flatlining production and existing overcapacity.” — greenpeace blog, quoted above.

    Technically correct, but it ignores context. Yes, many new coal power plants are being built — and many are being SHUT DOWN. The ones being shut down are older, inefficient and highly polluting. The ones being built are much better, albeit not faultless. China is transitioning to renewables and nuclear as fast as it can, but coal is still (and will remain, for at least 50 years) an important part of the mix. That being the case, what is to be done right now, for the couple decades? Answer: build MUCH BETTER newer coal plants (higher efficiency, with air quality control systems) and shut down the awful old ones. This is a good and appropriate investment, for the time being. However, within as little as a decade, the economics of renewables will make it foolish to construct any more fossil fuel-dependent infrastructure. When that moment arrives, coal will finally begin its long descent into well-deserved oblivion. China will likely lead the way in the conversion.

    PS: China is not “falling”. It is entering its period of economic maturity, i.e. the wild young growth years are over. This will continue for a half-century or so. Likely growth: 6-7% per year, next decade or two.

    ……………………….

    https://www.bloomberg.com/news/articles/2015-04-19/here-s-what-china-closing-coal-power-plants-means-for-emissions
    Here’s What China Closing Coal-Power Plants Means for Emissions — April 19, 2015
    snip
    The [coal plant] closures are part of China’s plans to close as much as 20 gigawatts of capacity that doesn’t meet environmental standards in the five years ending in December. China has already shut 18 gigawatts, according to Greenpeace…. China is expected to close another 60 gigawatts with facilities that are more efficient between 2016 to 2020, though three times as many plants are scheduled to be built using newer technology, BNEF’s Lu said. New plants will produce about 90 percent fewer pollutants such as dust and sulfur dioxide per kilowatt-hour of electricity generated, she said.

Viewing 7 posts - 1 through 7 (of 7 total)
  • You must be logged in to reply to this topic.

Sorry, the comment form is closed at this time.