China finance chief sees world recession

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Offline Letsbereal

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China finance chief sees world recession
« on: November 20, 2011, 06:50:31 PM »
China finance chief sees world recession
20 November 2011
, by Jamil Anderlini in Beijing (The Financial Times)
http://www.ft.com/intl/cms/s/0/e0b044a2-1382-11e1-81dd-00144feabdc0.html

Excerpt:

Wang Qishan, the Chinese leader in charge of finance, has predicted the global economy will slump into long-term recession and warned that China will need to deepen financial reforms to cope with the fallout.

“Right now the global economic situation is extremely serious and in a time of uncertainty the only thing we can be certain of is that the world economic recession caused by the international crisis will last a long time,” state media reported Mr Wang as saying over the weekend.

His unusually bearish comments could set the stage for domestic monetary loosening as Beijing frets about a deflating property bubble at home and chronic economic woes in China’s two largest export markets – Europe and the US.

They also reflect growing concern among policymakers that the country’s underdeveloped financial sector is facing heightened risks from a gathering economic slowdown.

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Most analysts predict it will slow further in the coming months and many believe Beijing has already begun to soften its relatively tight monetary policy stance.

Growth in exports to key western markets is slowing and China’s overheated property market has recently seen a sharp fall in transactions, raising fears that housing construction, a key engine of growth, is running out of steam.

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China’s commercial banks extended Rmb587bn ($92bn) in loans in October, up from Rmb470bn in September in what many analysts believe was the start of monetary easing.

“Above-expectations loan supply reflected the change in policy stance in late October,” said Yu Song, Goldman Sachs economist. “We believe monetary conditions are likely to see more visible loosening in the rest of the year.”

However, few analysts believe China will unveil a stimulus-like the Rmb4,000bn package it launched in late 2008 to deal with the fallout from the global financial crisis.

That emergency response pumped huge amounts of credit into the economy and sparked a wave of infrastructure building and investment, much of which is expected to end up as bad loans on the books of the state-owned banks.

Another reason for Beijing to be cautious about stimulating growth is the fact that inflation remains high, at an annual rate of 5.5% in October, although it fell from a high of 6.5% in July as growth slowed.
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Jordan

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Re: China finance chief sees world recession
« Reply #1 on: November 20, 2011, 07:54:19 PM »


Larry Lang, chair professor of Finance at the Chinese University of Hong Kong. (Wu Lianyou/The Epoch Times)

China’s economy has a reputation for being strong and prosperous, but according to a well-known Chinese television personality the country’s Gross Domestic Product is going in reverse.

Larry Lang, chair professor of Finance at the Chinese University of Hong Kong, said in a lecture that he didn’t think was being recorded that the Chinese regime is in a serious economic crisis—on the brink of bankruptcy. In his memorable formulation: every province in China is Greece.

The restrictions Lang placed on the Oct. 22 speech in Shenyang City, in northern China’s Liaoning Province, included no audio or video recording, and no media. He can be heard saying that people should not post his speech online, or “everyone will look bad,” in the audio that is now on Youtube.


In the unusual, closed-door lecture, Lang gave a frank analysis of the Chinese economy and the censorship that is placed on intellectuals and public figures. “What I’m about to say is all true. But under this system, we are not allowed to speak the truth,” he said.

Despite Lang’s polished appearance on his high-profile TV shows, he said: “Don’t think that we are living in a peaceful time now. Actually the media cannot report anything at all. Those of us who do TV shows are so miserable and frustrated, because we cannot do any programs. As long as something is related to the government, we cannot report about it.”

He said that the regime doesn’t listen to experts, and that Party officials are insufferably arrogant. “If you don’t agree with him, he thinks you are against him,” he said.

Lang’s assessment that the regime is bankrupt was based on five conjectures.

Firstly, that the regime’s debt sits at about 36 trillion yuan (US$5.68 trillion). This calculation is arrived at by adding up Chinese local government debt (between 16 trillion and 19.5 trillion yuan, or US$2.5 trillion and US$3 trillion), and the debt owed by state-owned enterprises (another 16 trillion, he said). But with interest of two trillion per year, he thinks things will unravel quickly.

Secondly, that the regime’s officially published inflation rate of 6.2 percent is fabricated. The real inflation rate is 16 percent, according to Lang.

Thirdly, that there is serious excess capacity in the economy, and that private consumption is only 30 percent of economic activity. Lang said that beginning this July, the Purchasing Managers Index, a measure of the manufacturing industry, plunged to a new low of 50.7. This is an indication, in his view, that China’s economy is in recession.

Fourthly, that the regime’s officially published GDP of 9 percent is also fabricated. According to Lang’s data, China’s GDP has decreased 10 percent. He said that the bloated figures come from the dramatic increase in infrastructure construction, including real estate development, railways, and highways each year (accounting for up to 70 percent of GDP in 2010).

Fifthly, that taxes are too high. Last year, the taxes on Chinese businesses (including direct and indirect taxes) were at 70 percent of earnings. The individual tax rate sits at 81.6 percent, Lang said.

Once the “economic tsunami” starts, the regime will lose credibility and China will become the poorest country in the world, Lang said.

Several commentators have expressed broad agreement with Lang’s analysis.

Professor Frank Xie at the University of South Carolina, Aiken, said that the idea of China going bankrupt isn’t far fetched. Major construction projects have helped inflate the GDP, he says. “On the surface, it is a big number, but inflation is even higher. So in reality, China’s economy is in recession.”

Further, Xie said that official figures shouldn’t be relied on. The regime’s vice premier, Li Keqiang for example, admitted to a U.S. diplomat that he doesn’t believe the statistics produced by lower-level officials, and when he was the governor of Liaoning Province “had to personally see the hard data.”

Cheng Xiaonong, an economist and former aide to ousted Party leader Zhao Ziyang, said that high praise of the “China model” is often made on the basis of the high-visibility construction projects, a big GDP, and much money in foreign reserves. “They pay little attention to things such as whether people’s basic rights are guaranteed, or their living standard has improved or not,” he said.

Behind the fiat control of the economy, which can have the appearance of being efficient, there is enormous waste and corruption, Cheng said. It means that little spending is done on education, welfare, the health system, etc.

Cheng says that for the last decade the Chinese regime has accumulated its wealth primarily by promoting real estate development, buying urban and suburban residential properties at low prices (or simply taking them), and selling them to developers at high prices.

According to Cheng, the goals of regime officials (to enrich themselves and increase their power) are in direct conflict with those of the people–so social injustice expands, and economic propaganda meant to portray the situation as otherwise prevails.

Few scholars inside the country dare to speak as Lang has, Cheng said. And that’s probably because he has a professorship in Hong Kong.

http://www.theepochtimes.com/n2/china-news/chinese-tv-host-says-regime-nearly-bankrupt-141214.html

Offline Letsbereal

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China vice premier sees extended global recession
« Reply #2 on: November 21, 2011, 09:26:54 AM »
China vice premier sees extended global recession
20 November 2011
, by Jean Yung - Shanghai (MarketWatch)
http://www.marketwatch.com/story/china-vice-premier-sees-extended-global-recession-2011-11-20-2354120

-- Chinese Vice Premier Wang Qishan says world is likely to experience prolonged economic recession

-- Comments follow Premier Wen Jiabao's remarks Friday that uncertainties and instability in global economy would persist for long time
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Offline Overcast

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Re: China finance chief sees world recession
« Reply #3 on: November 21, 2011, 11:33:04 AM »
The whole world's economy is going to follow the US's.

If the US's crashes - so will the rest. I know that might have an arrogant tone to it, but it's not meant to be arrogant at all.. just true.
And dying in your beds, many years from now, would you be willin' to trade ALL the days, from this day to that, for one chance, just one chance, to come back here and tell our enemies that they may take our lives, but they'll never take... OUR FREEDOM!

Offline Letsbereal

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Re: China finance chief sees world recession
« Reply #4 on: November 21, 2011, 12:50:21 PM »
The whole world's economy is going to follow the US's.

If the US's crashes - so will the rest. I know that might have an arrogant tone to it, but it's not meant to be arrogant at all.. just true.

Not only that but also vice versa meaning if Europe falls the U.S. will follow later.

But at the end it all doesn't matter cause the outcome is the same.
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Offline Overcast

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Re: China finance chief sees world recession
« Reply #5 on: November 22, 2011, 11:06:17 AM »
Not only that but also vice versa meaning if Europe falls the U.S. will follow later.

But at the end it all doesn't matter cause the outcome is the same.

Oh yes, I could agree with that too. Europe's is just a big now.
And dying in your beds, many years from now, would you be willin' to trade ALL the days, from this day to that, for one chance, just one chance, to come back here and tell our enemies that they may take our lives, but they'll never take... OUR FREEDOM!