{"id":12900,"date":"2016-03-02T19:53:34","date_gmt":"2016-03-03T00:53:34","guid":{"rendered":"http:\/\/goldstocksforex.com\/?p=12900"},"modified":"2016-03-02T19:53:34","modified_gmt":"2016-03-03T00:53:34","slug":"chinas-problems","status":"publish","type":"post","link":"https:\/\/thepatientinvestor.com\/index.php\/2016\/03\/02\/chinas-problems\/","title":{"rendered":"China\u2019s problems"},"content":{"rendered":"<p>China&#8217;s problems in a nutshell, From Niels C. Jensen&#8217;s <a href=\"http:\/\/arpinvestments.profundcom.net\/dms\/fd.php?campaign=136&amp;email_id=306&amp;id=89\" target=\"_blank\">Absolute Return newsletter<\/a>:<\/p>\n<blockquote><p>China\u2019s problems&#8230;.. It is faced with a decapitated banking industry, which has been far too willing to lend to all kinds of investment projects \u2013 good and bad. At the same time, the Chinese growth model has been driven by investments and exports, whereas the growth in consumer spending has been relatively modest. A few numbers to support that statement: As recently as 10 years ago, exports and investments constituted 34% and 42% respectively of Chinese GDP, i.e. less than a \u00bc of Chinese GDP came from the combination of consumer spending and government spending. By comparison, consumer spending accounts for over 70% of U.S. GDP.<\/p>\n<p>By 2014, investments had grown to 46% of GDP, whilst exports had fallen to 23%. The further growth in investments has been funded by rapid credit expansion in China\u2019s banking industry, which has grown from $3 trillion in 2006 to $34 trillion in 2015. That is a shocking amount of credit in a $10 trillion economy. Now, the Chinese leadership face a big challenge. They must restructure the banking industry whilst at the same time seek to change the growth model. I can think of quite a few things that can go wrong in that process&#8230;..<\/p><\/blockquote>\n<p>The outcome is likely to be similar to Japan in the 1990s: zombie banks.<br \/>\nFrom <a href=\"http:\/\/lexicon.ft.com\/Term?term=zombie-bank\" target=\"_blank\">FT lexicon<\/a>:<\/p>\n<blockquote><p>Beginning in 1990, Japan suffered a collapse in real estate and stock market prices that pushed major banks into insolvency. Rather than follow America&#8217;s tough recommendation &#8211; and close or recapitalise these banks &#8211; Japan kept banks marginally functional through explicit or implicit guarantees and piecemeal government bail-outs. The resulting &#8220;zombie banks&#8221; &#8211; neither alive nor dead &#8211; could not support economic growth.<\/p>\n<p>A period of weak economic performance called Japan&#8217;s &#8220;lost decade&#8221; resulted. Scores of companies were cast into an \u201cundead\u201d state \u2013 in the sense of being too weak to flourish, but too complex and costly for their lenders to shut down. Hence they remained half-alive, poisoning the corporate world by silently spreading a sense of stagnation and fear.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>China&#8217;s problems in a nutshell, From Niels C. Jensen&#8217;s Absolute Return newsletter: China\u2019s problems&#8230;.. It is faced with a decapitated banking industry, which has been far too willing to lend to all kinds of investment projects \u2013 good and bad. At the same time, the Chinese growth model has been driven by investments and exports, &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/thepatientinvestor.com\/index.php\/2016\/03\/02\/chinas-problems\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;China\u2019s problems&#8221;<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[31,41,17],"tags":[355,663,3744],"class_list":["post-12900","post","type-post","status-publish","format-standard","hentry","category-the-fed-banks-interest-rates","category-china-hk","category-japan-korea","tag-bank-lending","tag-china","tag-zombie-banks"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>China\u2019s problems - the patient investor<\/title>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"China\u2019s problems - the patient investor\" \/>\n<meta property=\"og:description\" content=\"China&#8217;s problems in a nutshell, From Niels C. Jensen&#8217;s Absolute Return newsletter: China\u2019s problems&#8230;.. It is faced with a decapitated banking industry, which has been far too willing to lend to all kinds of investment projects \u2013 good and bad. 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Exports to the US have declined on a year ago basis every month\u2026","rel":"","context":"In &quot;Banks &amp; Interest Rates&quot;","block_context":{"text":"Banks &amp; Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"China Fixed Asset Investment","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-06-15-china-fai_595x571.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-06-15-china-fai_595x571.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-06-15-china-fai_595x571.png?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":40639,"url":"https:\/\/thepatientinvestor.com\/index.php\/2023\/01\/30\/michael-pettis-the-china-shock-is-coming\/","url_meta":{"origin":12900,"position":1},"title":"Michael Pettis: The China Shock is Coming","author":"Colin Twiggs","date":"January 30, 2023","format":false,"excerpt":"https:\/\/youtu.be\/QcdPMOMS7N8 Michael Pettis is a professor of finance at Peking University in Beijing and one of the foremost Western experts on China, having lived there for almost two decades. He explains the Chinese growth model, why it no longer works, and the hard choices ahead. China's Growth Model China's growth\u2026","rel":"","context":"In &quot;China &amp; HK&quot;","block_context":{"text":"China &amp; HK","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/china-hk\/"},"img":{"alt_text":"China Non-Financial Credit\/GDP","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-01-30-china-credit.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-01-30-china-credit.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-01-30-china-credit.png?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":39471,"url":"https:\/\/thepatientinvestor.com\/index.php\/2022\/12\/10\/australia-hard-times\/","url_meta":{"origin":12900,"position":2},"title":"Australia: Hard times","author":"Colin Twiggs","date":"December 10, 2022","format":false,"excerpt":"You don't have to be an Einstein to figure out that 2023 is going to be a tough year. Australian consumers have already worked this out, with sentiment plunging to record lows. The bellwether of the Australian economy is housing. Prices are tumbling, with annual growth now close to zero.\u2026","rel":"","context":"In &quot;Australia &amp; NZ&quot;","block_context":{"text":"Australia &amp; NZ","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/australia-nz-countries-regions\/"},"img":{"alt_text":"Australia: Consumer Sentiment","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2022\/2022-12-09-aus-sentiment.png?resize=350%2C200&ssl=1","width":350,"height":200},"classes":[]},{"id":4853,"url":"https:\/\/thepatientinvestor.com\/index.php\/2012\/07\/14\/australia-and-the-endgame\/","url_meta":{"origin":12900,"position":3},"title":"Australia and the Endgame","author":"Colin Twiggs","date":"July 14, 2012","format":false,"excerpt":"John Mauldin: We wrote about Australia in a full chapter of Endgame. Their economy never really suffered in the recent debt crisis, in large part due to their growing housing market and their trade with China. If you talk to the average Aussie, they think that all is right with\u2026","rel":"","context":"In &quot;Australia &amp; NZ&quot;","block_context":{"text":"Australia &amp; NZ","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/australia-nz-countries-regions\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":9898,"url":"https:\/\/thepatientinvestor.com\/index.php\/2014\/05\/26\/chinas-export-dilemna\/","url_meta":{"origin":12900,"position":4},"title":"China&#8217;s export dilemna","author":"ColinTwiggs","date":"May 26, 2014","format":false,"excerpt":"Growth in value of exports from China has slowed to single figures since 2012. It will be difficult sustain current GDP growth if this trend continues. The Harper Petersen index of shipping rates for container vessels, the Harpex, remains near its 2010 low, reflecting continued weakness in Asian manufactured goods\u2026","rel":"","context":"In &quot;China &amp; HK&quot;","block_context":{"text":"China &amp; HK","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/countries-regions\/china-hk\/"},"img":{"alt_text":"China Exports","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-05-26-china-exports.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-05-26-china-exports.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-05-26-china-exports.png?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":13722,"url":"https:\/\/thepatientinvestor.com\/index.php\/2014\/05\/26\/chinas-export-dilemna-2\/","url_meta":{"origin":12900,"position":5},"title":"China&#8217;s export dilemna","author":"ColinTwiggs","date":"May 26, 2014","format":false,"excerpt":"Growth in value of exports from China has slowed to single figures since 2012. It will be difficult sustain current GDP growth if this trend continues. The Harper Petersen index of shipping rates for container vessels, the Harpex, remains near its 2010 low, reflecting continued weakness in Asian manufactured goods\u2026","rel":"","context":"In &quot;Market Insights&quot;","block_context":{"text":"Market Insights","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/market-insights\/"},"img":{"alt_text":"China Exports","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-05-26-china-exports.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-05-26-china-exports.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2014\/2014-05-26-china-exports.png?resize=525%2C300&ssl=1 1.5x"},"classes":[]}],"_links":{"self":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/12900","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/comments?post=12900"}],"version-history":[{"count":0,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/12900\/revisions"}],"wp:attachment":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/media?parent=12900"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/categories?post=12900"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/tags?post=12900"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}