Saturday, January 09, 2010

The China Hype....

Recently MM Lee made a comparison of the Chinese economy and Indian economy and he concluded that India is not in the same league as China[Link].

There is widespread belief that China's economy is an unstoppable juggernaut destined to rapidly overtake the rest of the world. In Singapore, the leaders are probably hopefully that the Chinese are successful with their system because it will vindicate the way Singapore is being run -economy first...democracy, justice & people's rights are secondary.
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The rapid growth in China has masked many of its long term problems. Large income gap, corruption and social instability. Hundreds if not thousands of riots occur in China annually[Link]. The system of justice is primitive. Recently, there are reports of dissidents thrown into mental hospitals[Link]and protestors were put in black jails and tortured[">Link].
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China's rapid economic growth is what masks all the problems with its unusual system. We all saw what happened to political systems that were not democratic when their economies falthered during the Asian Crisis.

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Is China's economy headed for a crash?

David Barboza, New York Times News Service, 9 January 2010, 01:54am

"Dubai times 1,000 — or worse"
SHANGHAI: James Chanos built one of the largest fortunes on Wall Street by foreseeing the collapse of Enron and other highflying companies whose stories were too good to be true.Now Chanos, a wealthy hedge fund investor, is working to bust the myth of the biggest conglomerate of all: China Inc.As most of the world bets on China to help lift the global economy out of recession, Chanos is warning that China's hyperstimulated economy is headed for a crash, rather than the sustained boom that most economists predict.

Its surging real estate sector, buoyed by a flood of speculative capital, looks like "Dubai times 1,000 — or worse", he frets. He even suspects that Beijing is cooking its books, faking, among other things, its eye-popping growth rates of more than 8%. "Bubbles are best identified by credit excesses, not valuation excesses," he said in a recent appearance on CNBC. "And there's no bigger creditexcess than in China." He is planning a speech later this month at the University of Oxford to drive home his point.As America's pre-eminent short-seller — he bets big money that companies' strategies will fail — Chanos's narrative runs counter to the prevailing wisdom on China. Economists and governments expect Chinese growth momentum to continue this year, buoyed by what remains of a $586 billion government stimulus program that began last year, meant to lift exports and consumption among Chinese consumers.Still, betting against China will not be easy. Because foreigners are restricted from investing in stocks listed inside China, Chanos has said he is searching for other ways to make his bets, including focusing on construction- and infrastructure-related companies that sell cement, coal and steel.Chanos, whose hedge fund, Kynikos Associates, has $6 billion under management, is hardly the only skeptic on China. But he is certainly the most prominent and vocal. He has been spreading the view that the China miracle is blinding investors to the risk that the country is producing far too much.

18 comments:

Anonymous said...

Makes Singaporeans look like sissys. We go around asking what can we do, what can we do, afraid of this, afraid of that.

The PRC's are people who are prepared to stand up for their rights, they deserve freedom and democracy, not the idiot Singaporeans who believe that freedom is free.

Singaporeans even seem to expect the PAP dictatorship to lay the path to freedom for them and voluntarily give up their powers. Can you imagine a more ridiculous set of people?

I am a born Singaporean by the way and yes, I know I am also criticizing myself.

Anonymous said...

Ya.. makes us look bad in the eyes of our neighbours too, e.g. malaysia, indonesia. we need not look too far to distant alien countries like China.

Anonymous said...

I am not surprised. I have long associated "China" with "corruption" and "dishonesty".

I talked to many mainland Chinese, and they seem extremely proud of the way they fleece naive foreign investors.

They talk as though cheating others successfully was a virtue and an accomplishment, rather than as of a shame.

You can look at the number of S-chips on our SGX that had been found guilty of cooking their books.

I was secretly glad about the melamine food poisoning in China. What goes around comes around. PRCs who take pride in fleecing people at work finally ended up feeding their own kids poison, thanks to fellow PRCs who were willing to harm kids in order to make money.

What goes around comes around.

Anonymous said...

which place is free of controversy?

six feet underground!

DanielXX said...

The mainland Chinese are extremely resourceful. I've talked to a few of those who moved here and I find they can look for loopholes in the system and exploit them.

Jim Chanos is an extremely uninformed short-seller with regard to this. He will lose his panties.

overhype said...

and the best thing to happen ?

yes, you guess it !
the China hype together with the PAP hype will be buried along with one old fart and 6 feet is not deep enough.

Anonymous said...

MM Lee is known to be racist. He thinks that Indic cultures are soft, and not resilient.

Lim Leng Hiong said...

"Even from my sick bed, even if you are going to lower me into the grave and I feel something is going wrong, I will get up." - MM Lee

Yikes!

Anonymous said...

Nowadays, seems like no such thing as revolution anymore.

If things are very bad or whatever, it will still look normal.

Those who can leave will leave to greener pastures, eg Canada, Australia, etc.

The poorer and oppressed ones from China maybe will come to Singapore to seek a better life. And we will welcome them with open arms - PR, citizenship etc.

Anonymous said...

"Nowadays, seems like no such thing as revolution anymore. "

must be the airconditioning that keeps everybody in cool comfort - cleaners included.

cy said...

I will bet my money that Jim Chanos is right. The housing bubble is going to burst one day.

but,there won't be chaos, china will reflect on its materialistic,unsubstainable way of living and evolve a new model of governance borrowing from the best of civilization.

but of course,CCP's autocratic way will have to go. they have to open up to democracy.

Anonymous said...

That's OK. If China CCP busts, Mr Lim Swee Say doesn't have to pay a pilgrimage to the CCP in China just like last year (wearing the red scarfs around his crooked neck).

It's time to hang not a red scarf around Lim's crooked neck, but a rope. This Dog Lim wags his tails to Lee Hsien Loong, and not to the workers constrained by the PAP horrible policies.

Anonymous said...

Singapore is too into hype. If something is big or hip or cool Singapore wants a part of it. The China Hype is the same. I think we'll get burnt at the end

Kojakbt said...

Hi all,

It's been confirmed. Our investment in NY's realty has gone kaput. GIC just lost another S$805 million of our money!

http://singaporeuncletrader.wordpress.com/2010/01/09/gic-at-forefront-of-impending-cre-disaster-in-america-singapore-boleh/

skeptic said...

Lucky,

I am curious to know about your opinions on Gold.

Is it a bubble or a good hedge against inflation?

Do you favour a long, short or ignore position?

Thanks.

Anonymous said...

This is a really interesting cliche which has been repeated again and again in the last two decades. But so far China has been performing well.

Sure, you can always predict that a person will die and eventually you'll be correct.

The most interesting part is where this article started by comparing China with India: a country full of Maoist Guerrillas.

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