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China Slows As Tightening Start To Bite

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http://www.telegraph.co.uk/finance/china-business/8232336/China-slows-as-tightening-start-to-bite.html

HSBC's manufacturing index fell from 55.3 to 54.4 in December, the first drop in five months. The slowdown suggests that the authorities are at last gaining traction in their ever-more zealous efforts to stop over-heating, though many analysts say the credit bubble has already gone too far to avoid trouble next year.

The spectre of Chinese monetary tightening has now become the most neuralgic issue in the world economy. There are fears that Beijing may knock away the central prop of global recovery if it misjudges the delicate task.

Capital Economics said Chinese growth has been even stronger than suggested by official data, reaching 10pc in the fourth quarter based on freight levels, electricity use, and building footage. This blistering pace is no longer viewed as benign since it implies that China will have to brake harder.

The central bank has nudged up reserve requirements for banks five times and raised a range of interest rates, including a surprise move over Christmas to lift the one-year lending rate to 5.81pc. Beijing bared its fangs again on Thursday, pushing the money market rate to a three-year high of 6.25pc. Tightening fears has triggered a 12pc fall in the Shanghai stock market since early November.

Professor Michael Pettis from Beijing University said the Communist Party will struggle to engineer a soft-landing after letting rip with credit over the last two years.

"Debt levels are worryingly high and starting to act as a serious constraint on rebalancing. It is becoming increasingly difficult for the People's Bank of China to raise interest rates without causing a great deal of financial distress in government related entities," he said.

More at the link.

Genius, pure genius. In the west we lent money to the debt slaves, in China it went to local authorities and the "selected" pet projects who appear to have gone on a huge borrowing rampage to make lots of money and keep GDP figures up.

Still I'm sure it's all contained.

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It's obvious why Chinas manufacturing is slowing.Their wage advantage is shrinking by the day.

Still i don't see why it can't increase next month , it usually takes years for these trends to gain serious momentum.

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China has a few tricks to pull yet, the Guanzhao, and coastal areas are starting to get expensive yeah?

You know the traditional places like Shanghai Guanzhao, Zuhuai, Dailan, Qingdao, Tianjin etc.

Oops China invested billions in its rail and road networks so that rural central and northern China is being developed. Which means the cheap labout (which is a small component of each item anyway) can be moved to cheaper labour places and still get to the gigantic port complexes. There is unhappiness in moving migrant workers around, if they can move closer to their homes you can trim the cost of dorms out completely and they live at home meaning even lower costs.

Besides...

The discouragement of factories in the USA/UK are high land taxes, pollution laws and populations who have entitlements.

Thus even if it is cheaper to have a factory in the UK or a worker in the UK, I've seen plenty of instances where the UK company hires the foreigner overseas instead.

The +2% on NIC coming April more than wipes out the Chinese increases in wages.

Finally as a kicker who says Western factories will have any employees in them anyway? Japanese have lived with robots for a very long time because of fairly strong labour laws, does the UK even have any employee rights anymore especially for its temps? (i.e. everybody)

Edited by ken_ichikawa

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Rural and northern China have serious desertfication issues.

With food price inflation the way it is i don't see how ferrying hundreds of tons of food to workers in these desert regions will help the food inflation issue in any way.

Wages will keep on rising and fast.

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Rural and northern China have serious desertfication issues.

With food price inflation the way it is i don't see how ferrying hundreds of tons of food to workers in these desert regions will help the food inflation issue in any way.

Wages will keep on rising and fast.

China already has serious water issues in some areas. Are they building a huge network of pipes to move water around the country? Some industries are extremely water intensive.

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China already has serious water issues in some areas. Are they building a huge network of pipes to move water around the country? Some industries are extremely water intensive.

I predict a huge eco disaster in China in the next decade. God knows what environmental horrors are being covered up. Becoming the worlds workshop will have consequences.

Edited by Sir John Steed

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I predict a huge eco disaster in China in the next decade. God knows what environmental horrors are being covered up. Becoming the worlds workshop will have consequences.

http://www.reuters.com/article/idUSTRE60O0UC20100125

Beijing's mayor Guo Jinlong said on Monday that the Chinese capital faces an "extremely serious" pollution problem, unveiling a target for "blue sky days" below the number achieved for all of 2009.

Beijing is frequently enveloped in foul-smelling smog, the result of a private car boom on the back of breakneck economic growth, the rapid development of industry around the city, and a reliance on coal power stations for electricity.

Some of it's problems can't be covered up.

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China already has serious water issues in some areas. Are they building a huge network of pipes to move water around the country? Some industries are extremely water intensive.

They've been dreaming about the North South water project since 1952. Mao promised the people it would happen. They started a long time ago about 2300km of pipes have been built so far. At a cost of $67bn It is now only 2 years behind (was 6 years behind) but the CCP pumped more money into it to spend those US$!

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They've been dreaming about the North South water project since 1952. Mao promised the people it would happen. They started a long time ago about 2300km of pipes have been built so far. At a cost of $67bn It is now only 2 years behind (was 6 years behind) but the CCP pumped more money into it to spend those US$!

Any idea of how much water these pipes will be able to shift and how much energy the pumping stations will require? I would also assume they need quite a bit of built in redundancy if the pipes develop leaks.

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Any idea of how much water these pipes will be able to shift and how much energy the pumping stations will require? I would also assume they need quite a bit of built in redundancy if the pipes develop leaks.

The pipes are 8 metres across.

Also what do you mean pumping? It's a gravity system.

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The pipes are 8 metres across.

Also what do you mean pumping? It's a gravity system.

I would have thought terrain wise moving from North to South they would have had some up hill bits, plus wouldn't a pressurised system move the water faster?

Can any of the maths people reading this calculate how much water could be moved in a pipe 8m across.

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Problem being well over 50% of Chinas GDP is based on construction.

They can build all the roads and railways they want but it's what they give back is the main question mark. Frankly I doubt the long term strategy if their best plan is to smash the productivity of their most accessible cities and move it to more and more inaccessible areas in order to control inflation.

Then the argument is if all this can pick up the slack from an over heating construction sector. I don't think it can. China cannot do this on their own, they need an expanding world economy to pick up their slack which just isn't there.

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I don't know what everyone is worrying about.

Do we not have the World's self-proclaimed expert on the 1929 Crash and the 1930s Depression, the Bernanke, who even as I type is busy saving the planet?

The worlds biggest dumb ass.

Busy trying to save his own ass, not the planet.

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I don't know what everyone is worrying about.

Do we not have the World's self-proclaimed expert on the 1929 Crash and the 1930s Depression, the Bernanke, who even as I type is busy saving the planet?

He doesn't need to save the world - Brown did that already.

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I don't know what everyone is worrying about.

Do we not have the World's self-proclaimed expert on the 1929 Crash and the 1930s Depression, the Bernanke, who even as I type is busy saving the planet?

Doubt he gives a f*ck about China.

He's busy (hyper)inflating them.

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  • 311 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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