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Old 04-30-2014, 07:36 AM
 
Location: In the heights
22,183 posts, read 23,711,901 times
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Quote:
Originally Posted by Obi wan spaghetti View Post
What difference does chinas population make. Europe and North America both have big populations but they are still rich, china is poor because it is poor, you are just trying up make excuses, do you even believe what you say.

Its not just Hong Kong that Britain built and made rich, British Singapore is another rich successful country that Britain built while china was poor and poverty ridden.
Being a former British colony is definitely not a guarantee of not being poor and poverty ridden. If you're looking at it as a batting average, former British colonies both by number of countries or total population are far more likely to be poor and poverty ridden than rich. Outside of the three to five British settler colonies that became countries (depending on how you want to count them), Hong Kong and Singapore are two of maybe a half dozen exceptions in a pool of dozens of countries.
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Old 04-30-2014, 08:04 AM
 
1,011 posts, read 630,715 times
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Interesting. The points you mentioned about Spain, its greater social security, shorter working hours, and longer vacations are exactly the reasons for Spain's incompetitiveness in the world.

I cannot imagine you can call a country rich if they have more than half the young population unemployed, and its very livelihood depend on the rescue fund from foreign countries.

Quote:
Originally Posted by OyCrumbler View Post
Yes, the coastal provinces are doing quite well aside from the massive environmental pollution whose costs generally grind on for much longer than most governments account for, but it's a bit disingenuous to have to discount such a huge portion of the country's population in a comparison as there is a tremendous population both in absolute numbers and in percentages that are not in those wealthier coastal provinces.

Also, I'm not sure about Greece, but definitely few Chinese cities overall rival the living standard in most ways in even post-recession Spain. In fact, there is no single mainland Chinese administrative unit that ranks with a higher per capita GDP (nominal or purchasing power parity) or human development index with an average higher than the average of Spain as a whole. I'd actually have a hard time thinking of a single place in China that would have a higher living standard--even if all other things were equal in terms of consumer purchasing power, Spain still would be better just from the knowledge and trust of food safety, the civil liberties afforded, the far greater social safety net, the much shorter work hours and longer vacation days, and far less grave environmental issues. Hell, the AQI might alone be a good enough of an argument.
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Old 04-30-2014, 08:28 AM
 
Location: In the heights
22,183 posts, read 23,711,901 times
Reputation: 11635
Quote:
Originally Posted by gen2010 View Post
Interesting. The points you mentioned about Spain, its greater social security, shorter working hours, and longer vacations are exactly the reasons for Spain's incompetitiveness in the world.

I cannot imagine you can call a country rich if they have more than half the young population unemployed, and its very livelihood depend on the rescue fund from foreign countries.
Definitely wrong on all accounts except to some degree the greater social security. The larger issue was financial mismanagement by the banks and a large degree of market volatility and debt hidden by the banks as well as overzealous lending for construction. Spain basically constructed a crapton of highrises that were mostly used as investment.

There's some edginess right now that certain companies and municipalities are doing the same within China. I did live in a complex that had been open for a good few years in Pudong, conveniently located about five minutes from a subway station and that complex seemed maybe a quarter full. I rented it from someone who had fully appointed it with furniture and bought it as an investment (more like real estate speculation) before the complex was even finished. Apparently the value has skyrocketed, but she is still holding on with the idea it can go much higher. That would be closer to what actually happened in Spain, though it's possible that maybe its not speculation at all and real estate is actually that valuable. I would be pretty surprised though as this seems to be a worldwide pattern that happens repeatedly.

How do you feel about my assessment of the role Hong Kong and Taiwan play in regards to the Chinese economy and how they were able to become so wealthy?
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Old 04-30-2014, 09:01 AM
 
1,011 posts, read 630,715 times
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HK and TW of course play a big role in the rapid development of the Mainland, both serving as a capital provider and a windows through which the mainland economy is connected to the world.

But their role has been waning as Mainland itself is opening its market and becoming more economically mature.

I think TW is not that wealthy compared to SH or BJ. HK is a different story. HK actually benefited a lot from its unique role as a special administrative region. Consider this, it has much lower tax, it does not need to pay the bill for military, and it is enjoying its status of a shopping mecca for the mainlanders.



Quote:
Originally Posted by OyCrumbler View Post
Definitely wrong on all accounts except to some degree the greater social security. The larger issue was financial mismanagement by the banks and a large degree of market volatility and debt hidden by the banks as well as overzealous lending for construction. Spain basically constructed a crapton of highrises that were mostly used as investment.

There's some edginess right now that certain companies and municipalities are doing the same within China. I did live in a complex that had been open for a good few years in Pudong, conveniently located about five minutes from a subway station and that complex seemed maybe a quarter full. I rented it from someone who had fully appointed it with furniture and bought it as an investment (more like real estate speculation) before the complex was even finished. Apparently the value has skyrocketed, but she is still holding on with the idea it can go much higher. That would be closer to what actually happened in Spain, though it's possible that maybe its not speculation at all and real estate is actually that valuable. I would be pretty surprised though as this seems to be a worldwide pattern that happens repeatedly.

How do you feel about my assessment of the role Hong Kong and Taiwan play in regards to the Chinese economy and how they were able to become so wealthy?
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Old 04-30-2014, 09:30 AM
 
Location: In the heights
22,183 posts, read 23,711,901 times
Reputation: 11635
Quote:
Originally Posted by gen2010 View Post
HK and TW of course play a big role in the rapid development of the Mainland, both serving as a capital provider and a windows through which the mainland economy is connected to the world.

But their role has been waning as Mainland itself is opening its market and becoming more economically mature.

I think TW is not that wealthy compared to SH or BJ. HK is a different story. HK actually benefited a lot from its unique role as a special administrative region. Consider this, it has much lower tax, it does not need to pay the bill for military, and it is enjoying its status of a shopping mecca for the mainlanders.
Right, exactly. They played essential roles in first having the capital and the knowledge transfer which allowed China to quickly develop enough of a domestic market as well as the ability to establish a strong export market. It's not going to last forever, of course.

Taiwan is/was wealthier than Shanghai and Beijing depending on how you're doing the accounting--of course, it's difficult to compare as economically Taiwan acts as a nation unit.

Right, HK benefits a lot from its unique role which does stem from being a former British colony and not under the rule of the CCP and not having to suffer the kind of nosedive China went to. Things in China have changed greatly, but HK still has certain advantages stemming from its special status which is why full integration into China would be a mixed bag.

I'm curious, do you feel like China is currently racking up a lot of hidden municipal and corporate debt right now as well as undergoing intense real estate speculation? Do you feel like it would be headed towards a bust cycle in the near future and if so, to what magnitude and under what timescale?
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Old 04-30-2014, 09:44 AM
 
1,011 posts, read 630,715 times
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Of course, China has some internal problems as you have pointed out. The debt level of the local government is on the rise. And there are some real estate speculation. No question about it. But in my view, it is manageable.

The debt level of China's government, including the local level government is still low compared to the international standard, much lower than its GDP.

About the real estate speculation, it is a hot topic. Any hot real estate market will have certain level of speculation. China's real estate is hot, because of the mass immigration into the cities and Chinese traditional penchant for real estate. You just need to look at the real estate price in HK. However, I don't think it is a bubble or anything that will bust one day, like the meltdown of the real estate in US or Spain.
The government has taken many measures already to reduce the speculation. The credit is very tight, and there are many restrictions to purchase a home in China. In Shanghai, you need to provide 30% down payment, plus you need to be a resident in the city for at least 5 years before you can buy an apartment. Each family is limited to buy at most one secondary home in the city.

If the restrictions are gone and the credit is as loose as in US, the price in Shanghai or Beijing will at least double the current level.



Quote:
Originally Posted by OyCrumbler View Post
Right, exactly. They played essential roles in first having the capital and the knowledge transfer which allowed China to quickly develop enough of a domestic market as well as the ability to establish a strong export market. It's not going to last forever, of course.

Taiwan is/was wealthier than Shanghai and Beijing depending on how you're doing the accounting--of course, it's difficult to compare as economically Taiwan acts as a nation unit.

Right, HK benefits a lot from its unique role which does stem from being a former British colony and not under the rule of the CCP and not having to suffer the kind of nosedive China went to. Things in China have changed greatly, but HK still has certain advantages stemming from its special status which is why full integration into China would be a mixed bag.

I'm curious, do you feel like China is currently racking up a lot of hidden municipal and corporate debt right now as well as undergoing intense real estate speculation? Do you feel like it would be headed towards a bust cycle in the near future and if so, to what magnitude and under what timescale?
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Old 04-30-2014, 09:54 AM
 
10,847 posts, read 11,281,099 times
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I think there is huge real estate bubble in major Chinese cities. The government's measures are just delaying the eventual collapse, but won't prevent it from happening.

The current price is simply not sustainable. New York and San Francisco are expensive, but people can still manage to buy. In Shanghai and Beijing, it is completely beyond 90% of the wage earners. You can't say because the rest 10% are rich, the price is justified.

Hangzhou's price is already dropping, but the government (funnily) dictates that any significant price drop would need approval. I wonder how that will play out.
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Old 04-30-2014, 10:05 AM
 
1,011 posts, read 630,715 times
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In SH or BJ, the average guy can buy a 2 bedroom apartment for less than half a million USD within 1 hour commute to the city center. Why this is not sustainable?

A lot of young couples can put more than half of their income into their property. Chinese are just willing to pay a larger portion of their income into property.

In places like Vancouver, Sydney, Melbourn, real estate prices are all driven up by the Chinese. Why no one talk about bubble there?

Quote:
Originally Posted by botticelli View Post
I think there is huge real estate bubble in major Chinese cities. The government's measures are just delaying the eventual collapse, but won't prevent it from happening.

The current price is simply not sustainable. New York and San Francisco are expensive, but people can still manage to buy. In Shanghai and Beijing, it is completely beyond 90% of the wage earners. You can't say because the rest 10% are rich, the price is justified.

Hangzhou's price is already dropping, but the government (funnily) dictates that any significant price drop would need approval. I wonder how that will play out.
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Old 04-30-2014, 10:14 AM
 
10,847 posts, read 11,281,099 times
Reputation: 7586
Quote:
Originally Posted by gen2010 View Post
In SH or BJ, the average guy can buy a 2 bedroom apartment for less than half a million USD within 1 hour commute to the city center. Why this is not sustainable?

A lot of young couples can put more than half of their income into their property. Chinese are just willing to pay a larger portion of their income into property.

In places like Vancouver, Sydney, Melbourn, real estate prices are all driven up by the Chinese. Why no one talk about bubble there?
What does an average guy in SH or BJ make? Don't tell me a typical 30 year old makes $3000+ a month. Something like $1000-1500 is more realistic. Not everyone has a high paying job at PetroChina or CitiBank. Most of the jobs don't pay much.

Not too familiar with Australia, Vancouver's property bubble is huge.
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Old 04-30-2014, 10:35 AM
 
Location: In the heights
22,183 posts, read 23,711,901 times
Reputation: 11635
Quote:
Originally Posted by gen2010 View Post
In SH or BJ, the average guy can buy a 2 bedroom apartment for less than half a million USD within 1 hour commute to the city center. Why this is not sustainable?

A lot of young couples can put more than half of their income into their property. Chinese are just willing to pay a larger portion of their income into property.

In places like Vancouver, Sydney, Melbourn, real estate prices are all driven up by the Chinese. Why no one talk about bubble there?
Your listed definitely doesn't sound like it's within easy reach of a population given how low the per capita GDP is. Is that really sustainable?

Vancouver, Sydney, Melbourne, etc. are getting real estate prices driven up and it is a bubble which is developing also because of wealthy Chinese wanting to put their finances elsewhere for generally one of two reasons: 1) fast track immigration status 2) diversifying their assets in case something happens at home.

I think the big difference there is that for overseas investors, you generally have to pony up all the money rather than financing it on credit which while still a risk, makes it so the bank that would have to eat those bad loans isn't in the same country as where the speculation is occurring which means the effects of such collapse would have to run a slightly more circuitous route--still doesn't seem sustainable though.

Last edited by OyCrumbler; 04-30-2014 at 10:44 AM..
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