Hi Earlie,
<<- a banking system that is effectively bust as a result of all the old loans that are "non-performing".>>
As banks were owned by the government, and the enterprises that borrowed were also owned by the government, the NPL are simply transfers from left to right pockets, using the banks as a convenient tool. The banks undergoing commercialization are and will not be saddled with the bad loans, written off or otherwise taken care off by the government (i.e. tax payers, as opposed to depositors or privatization investors). So this is a non-issue made a big deal by WSJ and NYTimes.
<<- inventories that are mountainous, and dated>>
There is definitely massive over capacity of almost everything, but much of it not of quality capacity, and thus will have to be written off, given away, or improved. Simply part of the economic development process. Given that they folks are starting to take ownership of residences (some folks I know bought their apartment (1000 sqft) for around US$ 20k, and will soak up some excesses. Not a real problem of the existing inventory. The capacity is a worry, for the world. The money is lost already in China, and thus not a problem any more.
<<- rising unemployment as the government tries to shut down non-productive plants (I would guess that this is the government's major nightmare, given China's history when their people have time on their hands).>>
The unemployment pool is and has been turning over. The private enterprises are proving remarkable in their ability to transform communism. The state is still supporting some pretty large outfits, but many if not majority of the little and medium state owned enterprises are gone, going or will soon go. The speed of change is inspiring.
<<- the fact that the last time around, the Chinese stock markets were smoked, when they chased red chip valuations into the sky.>>
Yes, isn't it great. For progress, some one always have to pick up the tab, and for those to the wise, the bill is always on the other table. So much opportunity to ramp, dump, progress, speculate, ramp, dump ...
These mini-bubbles are an inevitable part of progress, as is the waste. These mini-bubbles are not fatal.
<<- the imploded inter-Asian trade situation. (China exported a bunch to the rest of Asia until the Asian collapse).>>
China does not depend on export, but on its domestic continental scale economy, but China exports a lot, because China makes a lot more. Yup, SE Asia may slip below the waves unless they get on a different boat (stop depending on export of things that China also makes).
Even in Indian newspapers, mention of "China" has sharply increased as they discovered that family scale factories are not able to compete against China imports even in the Indian home market.
The quality is improving, variety increasing, category expanding, tech content rising. Some US submarine tender ships are also manufactured in China, along with 20% of all ocean-going ships.
<<Would much appreciate your views as I have to deal with this stuff third hand and you are closer to the action.>>
Know what you mean. WSJ and NYT are pretty removed from the truth, by design or choice or ignorance. Chugs, Jay |
