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  • China Bankrupt?

    Chinese TV Host Says Regime Nearly Bankrupt | Business & Economy | China | 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.
    Its' not really unexpected btw most of those provinces have a white elephant project (or a dozen of them) an empty city or two at least that nobody can afford to live in, well almost nobody.
    And Now Presenting: Amazing Satellite Images Of The Ghost Cities Of China

    Press TV-Reporter's File-Chinese Ghost Cities-07-22-2010 - YouTube

    Fun thoughts
    Originally from Sochi, Russia.

  • #2
    So, you are saying they wont buy Taiwan for $1tril? Hmm...
    No such thing as a good tax - Churchill

    To make mistakes is human. To blame someone else for your mistake, is strategic.

    Comment


    • #3
      Sh!t !!!Merkozy are in trouble.They were asking China to prop EZ.
      Those who know don't speak
      He said to them, "But now if you have a purse, take it, and also a bag; and if you don't have a sword, sell your cloak and buy one. Luke 22:36

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      • #4
        I think that China will fracture into at least several states post-collapse. (I know I sound like a broken record about collapse this split that, secession here there everywhere.)

        North/South divide will most likely occur in my view the industrialized south has potential ethnic and language differences it could muster to create an active division. Money is the major issue though, whom benefits if real property is allowed to be owned, taxes are controlled regionally, and actual development is organic instead of split between corrupt officials and their benefactors.

        I don't buy these we are 99% homogeneous group things. This is rarely true and the more its pushed the less likely it is. I think 1990s mega crashes are over the horizon and China is one of them.
        Originally from Sochi, Russia.

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        • #5
          Originally posted by cyppok View Post
          I think that China will fracture into at least several states post-collapse. (I know I sound like a broken record about collapse this split that, secession here there everywhere.)
          Ya think ?

          Prescription:
          Check out Monty Python's 'Always look on the bright side of life'.

          Auto-repeat for the rest of the day.

          We'll check on you tomorrow.

          Originally posted by cyppok View Post
          North/South divide will most likely occur in my view the industrialized south has potential ethnic and language differences it could muster to create an active division. Money is the major issue though, whom benefits if real property is allowed to be owned, taxes are controlled regionally, and actual development is organic instead of split between corrupt officials and their benefactors.

          I don't buy these we are 99% homogeneous group things. This is rarely true and the more its pushed the less likely it is. I think 1990s mega crashes are over the horizon and China is one of them.
          How credible is Epoch times ;)
          Last edited by Double Edge; 16 Nov 11,, 21:03.

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          • #6
            What if China has a civil war or revolution but doesn't break apart? With such a humongous state machine in China it seems likely that if the current regime falls, the victor will just take over.

            Ah who knows, maybe the Uigurs and Tibetans will get some independence
            "Football is war."

            -Rinus Michels

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            • #7
              they have a you tube of the audio the professor is giving and its been reprinted in lots of other places...

              Originally posted by Nightowl View Post
              What if China has a civil war or revolution but doesn't break apart? With such a humongous state machine in China it seems likely that if the current regime falls, the victor will just take over.

              Ah who knows, maybe the Uigurs and Tibetans will get some independence
              Depends whom the regional military commanders and their soldiers are more loyal to during that tumult.

              P.S. I seen that Monty Python before its neat but hopefully I don't sound too bad.
              Last edited by cyppok; 16 Nov 11,, 21:42.
              Originally from Sochi, Russia.

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              • #8
                Originally posted by cyppok View Post
                they have a you tube of the audio the professor is giving and its been reprinted in lots of other places...
                is the audio in english or chinese?
                "Football is war."

                -Rinus Michels

                Comment


                • #9
                  Lang Xianping: China's Economic Depression Has Begun - YouTube
                  Chinese (but this has subtitles confirming the nature of discussion).

                  And no I can't understand Chinese.
                  Originally from Sochi, Russia.

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                  • #10
                    I've been told that about 40% of the loans Chinese banks lend will never be paid back.

                    So it would not be a complete suprise I guess.

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                    • #11
                      The "Epoch Times" is the official Fa Lun Gong mouthpiece. They've been prophesizing doom and gloom for ages now. If you don't believe that one could harness the energy of the universe to cure all ails using breathing and meditation exercises, you shouldn't place too much stock in these "expert opinions".

                      China's economy is surely not as well as officials would suggest. Recession and slower growth will come, but it's far from doomsday.

                      Comment


                      • #12
                        Although at least part of what this article says is true, the problem is that if we apply this standard aka debt including all the local and losses on public company or public held stocks , everyone else is pretty much screwed as well. You do realize that when we talk of US debt we are ALSO only talking about Federal and not adding all the States' debt on top of it as well. and also because China is more centralized meaning a lot more of it's Provincial budget is comming from the central government than the US states' this becomes even more frightening as the US's states debt purpotion is likily to be even higher.
                        Last edited by RollingWave; 17 Nov 11,, 03:55.

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                        • #13
                          cyppok,

                          As citanon pointed out, check your source.
                          ET is not known for being objective.
                          Trust me?
                          I'm an economist!

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                          • #14
                            Originally posted by RollingWave View Post
                            Although at least part of what this article says is true, the problem is that if we apply this standard aka debt including all the local and losses on public company or public held stocks , everyone else is pretty much screwed as well. You do realize that when we talk of US debt we are ALSO only talking about Federal and not adding all the States' debt on top of it as well. and also because China is more centralized meaning a lot more of it's Provincial budget is comming from the central government than the US states' this becomes even more frightening as the US's states debt purpotion is likily to be even higher.
                            Never said the U.S. is doing good. This thread is about China , remember my moto everyone is goin down :Dancing-Banana:.
                            State and Local Debt: $2.4 Trillion - By Veronique de Rugy - The Corner - National Review Online
                            I'm guessing its around 2.4+ trillion for state and local and 15 for federal.

                            older article lower amounts but still confirms theepochtimes story
                            New evidence indicates China may be Bankrupt - CSMonitor.com
                            The numbers are slightly smaller but around what the guy quoted in epoch times talks about also we have to figure a year went by and those debts jumped by the interest rates given by the central bank + margin at least.

                            Different guy here more or less same thing
                            http://www.globalpost.com/dispatch/n...ubble-bursting
                            http://www.bloomberg.com/apps/news?p...d=aN94MF7BDx_A
                            By Shih’s count, China’s debt may reach 39.838 trillion yuan ($5.8 trillion) next year.
                            Last edited by cyppok; 17 Nov 11,, 12:13.
                            Originally from Sochi, Russia.

                            Comment


                            • #15
                              Originally posted by Nightowl View Post
                              What if China has a civil war or revolution but doesn't break apart? With such a humongous state machine in China it seems likely that if the current regime falls, the victor will just take over.

                              Ah who knows, maybe the Uigurs and Tibetans will get some independence
                              Fat chance of either happening. The Romanovs have a better chance of becoming the tsars of Russia again.

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