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CHINA'S GREAT WALL OF DEBT China is poised to overtake the United States, and the rest of the developed world, economically by the year 2030. Or is it? To gauge by this account, Western capitalists can breathe a little easier. Business journalist McMahon, a longtime China reporter for the Wall Street Journal and current fellow at the Paulson Institute, contends that for all the anti-corruption rhetoric of the Xi Jinping government, corruption is still rampant, adding burdens to an economy already bound by strains of command-economy socialism, free-market capitalism, crony capitalism, and state capitalism, all designations that fail “to sufficiently describe the nature of the Chinese economy.” Suffice it to say that nothing is as it seems: the data are fudged, the numbers untrustworthy and incomplete, and while the government presence is inescapable, there is evidently little coordination among the sectors. One thing that all seem to agree on is that growth is of paramount importance, even if demand does not always approach considerations of supply. For that reason, China has too many industrial facilities, for instance, and too many “shadow cities” and empty housing developments. Even so, McMahon writes, the Chinese government is planning to grow its way out of current problems, including massive, underreported debt, whether through supply-side reforms and expansion into new areas of economic activity or falling by old standbys. The old ones certainly seem not to be working. By the author’s account, consumer dissatisfaction is high, and all the more so the dissatisfaction of investors in failed sectors. If China fails to build its economy and become truly wealthy, he notes, then demographic pressures caused by an aging population will mean that the “nation’s ambitions of national rejuvenation will be postponed for at least another generation.” The specter of Chinese dominance, McMahon writes, is less daunting than the likelihood of the Chinese economy’s failure. Of considerable interest, especially to investors in the Chinese market. Honesty is the best policy. |
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You may not know it, but I have a lot of respect for and of you. You speak!! you address more issues than any of the other posters on this blog. It why I write commentary to your posting. I find it odd that not many others discuss the details of things as you do in the blogs you create. I appreciate the exposure you've given yourself to understand not just politics, but financial and cultural issue, not just in American, but Asian as well. I speak only English, I'm at a point where the main thing for me is "HEALTH", I care about my health.... as long as I'm healthy I can make it. As to basic things, If I had to retire today, I'd not have a stash of cash, but I could sustain my home and life. That to me is important. I don't market myself as I should, as I'm highly underpaid for what I do and can do. I have friends who urge me to market myself. As to China, I agree with much you say, I read info that said some of the new construction was bought by some who had money, but they 'sit on it" hoping the price will go up, but it sits there with no new buyers and thus it sits empty. I've not been to Mainland China, only to HKG. there I worked with people who came from Mainland China as labor for the industry I worked in. I noticed the difference in how the HKG people's disposition was about people from Mainland China. What I did notice in HKG and in Thailand, is that people, "follow instruction" more than they make decisions independently. They don't deal with talking about politics, and even in general conversations, something it was like "a challenge", because they'd let conversation fall flat. (except, I did meet some women who were pretty good an engaging ongoing conversation, but it was not political, they mostly would tell me how things worked in their society, and some of the do's and don't do, as to public decorum and law. I certainly have not had the expanse of exposure as you've had on a personal level to Asian culture and society and community. Thanks for your compliments. I was in Taiwan for my first 24 going on 25 years and almost 38 years in USA. Taiwan had been threatened by China to bomb to flat after USA established diplomatic relationship with China and many countries followed. I wanted "peace", so quit my job and emigrated to California. I love both countries. However, the 2nd Amendment that allow people to own guns, weapons, rifles has been tormenting me. Taiwan is a "sovereign country" 主權國家 as decreed by the people. We have democracy, presidential election, our own flag, our own national anthem, our own constitution, bipartisan, .... etc. It is just Taiwan is a small island. USA wanted to sell products to China after they recovered from "Cultural Revolution" economy recession. It is all about "trade", "money". I am a Taiwanese. My ancestors had been in Taiwan for 400 years. KMT (Kuomintong, a political party in Taiwan) retreated to Taiwan in 1949. It has been 69 years since the separation from China to Taiwan. No Taiwanese want to be communist, so it is very difficult to unit as one country. My divorce/ separation situation is almost like the same. It has been almost 14 years since the separation date. I married him and gave him "Green Card", S.S. #, credit card, cars, .... He is a "gold digger", "free loader", a loser, lazy, .... but the law says he can get 50 % of my properties. It is so unfair. I don't want to lose my million dollar house to give him half. So, I just delay and hope he dies before me. I am not a paid member now. Basically I just come on Asia Friendfinder for blogs. My blogs mostly "current events" (true stories), sometimes jokes, pictures, my favorite songs, my travel journeys, ... many topics. It is almost like a memoir or memorandum. I used to talk and email with my banker friend for 11 years. We talked about politics, religion, current events, stock market, real estate market, .... He is a very kind man and very knowledgeable on finance and economy. However, he likes Trump "tax reform" from 35 % reduced to 21 % for rich people. Trump save him lots of tax. I was mad and blocked his emails. When he found out I blocked him, he also "spam" my emails. I regret blocked him, but too late. He doesn't want to talk to me any more since June 2017. I miss him. He is my best friend who has known to me for 11 years (since June 2006). Honesty is the best policy.
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beyond fatasy3, Have you been to China?? I have traveled to China in May 2008. I can speak fluently, write good calligraphy, read newspaper and understand Mandarin Chinese very well. I was graduated from an university in Taiwan and passed pharmacist license exam and worked as pharmacist for 3 years before I came to USA in 1980. So, I understood their language while I was in China. I saw they were building in every city and province. However, the majority people were living in very small and shabby old houses in 2008. I asked them why they didn't move (buy) those new and tall buildings. They answered "too expensive", or "banks are not landing" or "traffic is not convenient". You have to know they have different banking system than USA. In China, banks don't trust people. So, most properties change hands by CASH. I have been told in 2008 that they had to pay 50 % down-payment and the remaining had to pay-off loan in 3 years. In USA, we have S.S. # and the mortgage loan is 30 years term, so people make money, paid 20 % down and finance 80 %. I bought houses with 20 % down and my pharmacist income is qualified of 35 % in mortgage monthly payments. China doesn't have S.S. # system. CASH is KING. Banks don't trust people. So, they have to save money for years to buy houses or inherited from their parents. As you know, they had "Cultural Revolution" for a decade. China was in chaos and economy was in recession. Their government encouraged young teenagers to kill or humiliate their teachers, principals, and professors. Poor people killed rich people and took away or burned down the houses. China government closed the "iron curtain" so its people didn't know the outside world news. People didn't have time or energy to care the outside world when their lives were hang by a thread. People reported other people to get some rewards, but other people died for the fake reports. It was a calamity. People worshiped Mao Jer-Dong as a God. Nobody said anything to against him, even to this date. It is not Americans could understand. We can at least criticize Trump as what we can't tolerate his behavior or attitude, ... etc. So, Chinese people don't talk about politics because they don't have "bipartisan". They only obey whatever their government and their leaders. This is why I repeatedly said in my blogs. They can't criticize their government or leader. Five decades after the beginning of "Cultural Revolution", China recovered their economy in a speedy pace. Yes, I know they have improved a lot. They are catching up fast. Because they have large population, so the labor is cheap. They have worked very hard to accomplish their financial goal - GDP growth as high as 7.8 %. American labor law made the cost higher, so the manufacturers and factories moved to China, such as Apple, Inc. to reduce the cost. However, for the recent years, China is not the lowest labor anymore. Vietnam, Indonesia and India have even cheaper labor now. China overly built too many condos, apartments, shopping malls, .... and the prices are too high for people to afford them. So, those buildings became vacant, empty, .... and gradually became "Ghost Town". So, government loose the loan requirement a bit to allow more people to borrow loans. However, their credit are not so great. They don't have the habits to pay back as we Americans have. Because we know the consequence, if we don't pay back. When the China's vast loans crash, it will be a disaster that called "Housing Bubble burst". As for me, I won't buy any property in China. Why? Because government own land, people can only rent the land for 99 years. I heard 99 years is almost reach, I don't know the law will change or not. Besides, China has air pollution, water pollution and dirty environment, why invest money in China??? I appreciate the exposure you've given yourself to understand not just politics, but financial and cultural issue, not just in American, but Asian as well. I speak only English, I'm at a point where the main thing for me is "HEALTH", I care about my health.... as long as I'm healthy I can make it. As to basic things, If I had to retire today, I'd not have a stash of cash, but I could sustain my home and life. That to me is important. I don't market myself as I should, as I'm highly underpaid for what I do and can do. I have friends who urge me to market myself. As to China, I agree with much you say, I read info that said some of the new construction was bought by some who had money, but they 'sit on it" hoping the price will go up, but it sits there with no new buyers and thus it sits empty. I've not been to Mainland China, only to HKG. there I worked with people who came from Mainland China as labor for the industry I worked in. I noticed the difference in how the HKG people's disposition was about people from Mainland China. What I did notice in HKG and in Thailand, is that people, "follow instruction" more than they make decisions independently. They don't deal with talking about politics, and even in general conversations, something it was like "a challenge", because they'd let conversation fall flat. (except, I did meet some women who were pretty good an engaging ongoing conversation, but it was not political, they mostly would tell me how things worked in their society, and some of the do's and don't do, as to public decorum and law. I certainly have not had the expanse of exposure as you've had on a personal level to Asian culture and society and community.
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Correction: "Banks are not lending" - typo. Honesty is the best policy.
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beyond fatasy3, Have you been to China?? I have traveled to China in May 2008. I can speak fluently, write good calligraphy, read newspaper and understand Mandarin Chinese very well. I was graduated from an university in Taiwan and passed pharmacist license exam and worked as pharmacist for 3 years before I came to USA in 1980. So, I understood their language while I was in China. I saw they were building in every city and province. However, the majority people were living in very small and shabby old houses in 2008. I asked them why they didn't move (buy) those new and tall buildings. They answered "too expensive", or "banks are not landing" or "traffic is not convenient". You have to know they have different banking system than USA. In China, banks don't trust people. So, most properties change hands by CASH. I have been told in 2008 that they had to pay 50 % down-payment and the remaining had to pay-off loan in 3 years. In USA, we have S.S. # and the mortgage loan is 30 years term, so people make money, paid 20 % down and finance 80 %. I bought houses with 20 % down and my pharmacist income is qualified of 35 % in mortgage monthly payments. China doesn't have S.S. # system. CASH is KING. Banks don't trust people. So, they have to save money for years to buy houses or inherited from their parents. As you know, they had "Cultural Revolution" for a decade. China was in chaos and economy was in recession. Their government encouraged young teenagers to kill or humiliate their teachers, principals, and professors. Poor people killed rich people and took away or burned down the houses. China government closed the "iron curtain" so its people didn't know the outside world news. People didn't have time or energy to care the outside world when their lives were hang by a thread. People reported other people to get some rewards, but other people died for the fake reports. It was a calamity. People worshiped Mao Jer-Dong as a God. Nobody said anything to against him, even to this date. It is not Americans could understand. We can at least criticize Trump as what we can't tolerate his behavior or attitude, ... etc. So, Chinese people don't talk about politics because they don't have "bipartisan". They only obey whatever their government and their leaders. This is why I repeatedly said in my blogs. They can't criticize their government or leader. Five decades after the beginning of "Cultural Revolution", China recovered their economy in a speedy pace. Yes, I know they have improved a lot. They are catching up fast. Because they have large population, so the labor is cheap. They have worked very hard to accomplish their financial goal - GDP growth as high as 7.8 %. American labor law made the cost higher, so the manufacturers and factories moved to China, such as Apple, Inc. to reduce the cost. However, for the recent years, China is not the lowest labor anymore. Vietnam, Indonesia and India have even cheaper labor now. China overly built too many condos, apartments, shopping malls, .... and the prices are too high for people to afford them. So, those buildings became vacant, empty, .... and gradually became "Ghost Town". So, government loose the loan requirement a bit to allow more people to borrow loans. However, their credit are not so great. They don't have the habits to pay back as we Americans have. Because we know the consequence, if we don't pay back. When the China's vast loans crash, it will be a disaster that called "Housing Bubble burst". As for me, I won't buy any property in China. Why? Because government own land, people can only rent the land for 99 years. I heard 99 years is almost reach, I don't know the law will change or not. Besides, China has air pollution, water pollution and dirty environment, why invest money in China??? Honesty is the best policy.
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Nation building is certainly tough.... If comparison mean anything, then there are scenario's. China may well under-report its debt, (i'd previously wrote they did not have a debt crisis, which I may well be wrong) . I do however say, that to sustain and maintain the growth, is and will be an ongoing challenge. As will be the sustaining of massive projects they have on foreign soils. then there is the 500+ million people that are still below poverty levels. The massive building of whole living communities that remain empty may become a big challenge. As we know, anything built that has no occupants, will "deteriorate" its just a matter of realism of how "the living life" inside of structures seem to have an affect on it not deteriorating in the same ways as unoccupied structures deteriorate. "That says a lot about the value of the "human spirit". Their bigger issue may be "over industrialization in the sense of how much natural resources, such massive production depletes", as well as... "what do they do with all the toxic residue from such massive production"?????? There is a lot of "over production taking place"... I noticed here in this city, the former GM plan, has a very massive parking lot space, it is not filled with cars as far as one can see, "new cars", yet, every major car dealer's lot is full of cars that are not selling like 'candy". I have a friend who drives trucks, who said he has seen similar locations with outrageously large volumes of cars. this lot I'm speaking of has a Kia sign, but also has other type of cars on it. When we consider the highway congestion as a friend tells me about California, "where can all those cars be utilized even if they are sold". We have more and more "overstock stores of all sorts popping up" trying to discount a great volume of this "over production stuff". I wonder if that same scenario plays out in China as well. I do not think the trend of "Over Production" can continue. Even still, considering the many countries that are "under stocked on so many things"... there will have to be some dramatic changes to "International Trade" to move this stuff to countries that are "under stocked". Greed has created some major messes, that can't be fixed quickly enough. We may we headed for some major World Calamity, that forces change in how the world deals with the "massive production excesses".. Much of this is driven by OVER PRICED STOCKS, and the FAKE DATA that companies are using to keep the stock prices high, by "over production", with FALSE claims of sales that don't meet with the "smell test". It's likely not just in China, but many of the other nations that are in "overdrive" on "overproduction". The loosers seem to be continually the countries where all the natural resources come from, who suffer from "under distribution" of the things that are produced in other countries. Even in America, with the continual expansion of cities being made into "ghetto's by the lack of work, the lack of economic function and the drain from the impact of of major cities, with over priced "everything". Cities like San Francisco, LA, New York, Boston and other cities, and the same is true in other countries where the "over pricing" element has devastated many of the common people. It's true in Chinese Mega Cities, Japan Mega Cities and all across the globe. Sadly, most of these are saturated not with people actually producing anything, but people who "shuffle paper". and promote fiction. At some point we have to come to terms with that reality. There was a time when people went to University, because they had a "heart drive passion" for a particular field, and they were the people who invested themselves into innovation and the desire to make a contribution through their gained knowledge and passions for "a particular field". TODAY, we have people going to University, because it serves more as a "get a job certificate" more than it does for people pursuing a passion and sticking with it. Many people in the "paper shuffling world of business today", are not working anywhere or dealing with anything even remotely close to what they claimed their University major to be, they simply used the degree as a "get a good paying job". the bigger problem with that is, the "brain drain" in thing that matte, and people selling out their passion for a pathway to "money" and "title elation". I don't see that changing anytime soon. Even Lawyers they no longer practice law with ethics'.. "they practice "LET'S FIND A LOOP HOLE AND EXPLOIT IT", rather than be of ethics to know if they find a loophole, "patch and repair it". Until Justice is now like a dike with a million holes in it, because "no one is willing to patch up the loop holes. It's not just in American, its in many places. We might find out that the Nordic Region, are functioning more "within their country" in ways to make better their society. The issue is, the vile they support outside of their country which is centuries old due to the ways they were historical plunderer's and financiers of those who do plunder. I do consider it a good thing that the Nordic Region do believe it best that their people earn a good wage for work, that meets with the cost of living, and sustains a means for their people to meet the standards of living, and they have good longevity in their peoples lives. If people could travel across this nation, as well as China, and Europe and Spain and Other places and see the reality of "poverty that truly exist"... the people would be appalled at the many of "Trillions of Dollars that Spin In and Among the Circle of the Wealthy" while making life more and more difficult for the people in general.
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當全球將中國視為崛起的強大經濟體，前華爾街日報駐北京特派記者麥克馬宏（Dinny McMahon）對於「中國經濟力很快將會超越美國」說法，不以為然，他在新書中說，中國經濟成長不過是虛假神話，隱藏在背後的是堆積如山的債務，一旦這個債務崩盤，全世界都將陷入災難。 他今天在華府智庫演說也提到，習近平最偉大的經濟改革成就不是經濟，而是更突出中央威權領導，讓黨更牢牢控制經濟，這會是中國因應每一個經濟挑戰的模式。 麥克馬宏新書「中國巨債長城 : 影子銀行、無人城市、鉅額貸款和中國奇蹟的終結」( Chinas Great Wall of Debt: Shadow Banks, Ghost Cities, Massive Loans, and the End of the Chinese Miracle，暫譯)本月13日上市，書名為他20年來對中國的觀察做出結論。 麥克馬宏在威爾遜中心基辛格美中關係研究所介紹寫這本書的動機，基辛格研究所主任戴博（Robert Daly)力推此書，稱「這是我讀過有關認識現代中國，最好的一本書!」。 中國走出由內需推動的經濟模式後，過剩的資金流向股市、房市，失控後再由政府出手管控，上海股市崩盤、非一線城市的房市泡沫，麥克馬宏說，中國式經濟不像美國是以信任為基礎，而是由政府擔任操盤手，這對中國市場投資者而言，這個幽靈恐怕比經濟失敗本身，更令人生畏。 成長於澳洲，9歲開始習中文，1997年之後四度出入中國，麥克馬宏說，這本書除了有他對中國經濟長年的近距離觀察，還包括與中國經濟政策主導者及走訪各大城小鎮的鄉民訪談。「從中國近20年的發展可看到，如今有過多的廠房空置，過剩的住房和地方建設無人居住或使用， 這些讓地方政府債臺高築，加上低成本人力不再，中國領導人理解，經濟想再成長，必須找出新模式。」 這本書上提到，習近平政府重打貪腐，腐敗依然猖獗，加上人口老齡化、群帶資本主義、數據不完整或不可信，大規模被低報的債務，都是中國政府想擺脫的經濟問題。麥克馬宏也提到，中國經濟不斷下修、工資上漲、增長動力不足，中國恐難跳出「中等收入陷阱」（middle income trap），他預測，這會繼續讓中國領導人睡不了好覺。 麥克馬宏用中文「上有政策下有對策」向與會的學者、聽眾闡釋中國經濟特色，他說，因為這種特色，他無法推論中國經濟會如何發展，也難預測下一個泡沫會是哪一個。 2005年至2015年定居中國，先後擔任道瓊通訊社駐上海記者、華爾街日報（Wall Street Journal）駐北京特派記者。目前是芝加哥智庫博森研究院(Paulson Institute )研究員。 Honesty is the best policy.
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