This is Only the Beginning in China

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In case anyone else is wondering who is correct here, dshibb is correct, and since kamalktk said so the discussion is over

dshibb said:   
1) If you're going to talk about wealth(or better yet income) you wouldn't be talking about a countries combined GDP, but instead GDP per capita. This is because in 50 years GDP for a country is really just a study of that countries population and that doesn't have much use. In this sense, the country to be impressed with isn't even a China twice as large as today. It's a country like Qatar where the average person makes $100k a year and a substantial portion of the country drives a sports car.
...
C) What do I see in the long term: I see a country that has institutionalized problems where(absent massive reform) the population's per capita income will always come at a discount relative to a country like the United States, and the size of that discount long term will depend in a large part to US vs. Chinese government policy over the ensuing decades. By the way this is the context of the way I see practically every country in the world today. ...
Cognitive dissonance anyone?

If you comparing China to Qatar - I don't know which one is more of "free" country and which one "has institutionalized problems", and either one should have "a discount relative to a country like the United States"

If you comparing China to US (more appropriate comparison IMO) - last time we achieved growth of GDP per capita comparable to China of the last 30 years was in 19th century when we went though industrialization and urbanization, and that's exactly what China is undergoing now.

dshibb said:   
2) 100 years ago if you wanted to start a business being in a 'bigger pond' actually had value to it. Your potential was higher opening a business in a larger city than a small town. In a globalized world where you can sell anywhere borders no longer mean anything. So trying to give any inherit value to businesses in one country vs. another based on anything other than government policy is really a bit of a fools errand. A company could open up in Kenya today and end up selling a ton into China.

B) Obviously picking a language that is spoken by a significant portion of the world has more economic value than picking a language spoken by a small portion of the world regardless of how those populations are doing economically.

This is a good point. But there's more to it than just language. Cultural aspects are a big deal in many cases. Yes, you can operate anywhere, but to be successful, you often have to understand your customers culturally, and this may be nearly impossible to do from afar. This is one major advantage Chinese companies have over their US counterparts when operating in China (though, like you said, government policy is another big one).

neophyte said:   In case anyone else is wondering who is correct here, dshibb is correct, and since kamalktk said so the discussion is over

No kamalktk is correct because it's an objectifiable fact that the Shanghai index has trended down over the last several years(one of the few places in the entire world where that is true).

neophyte said:   
If you comparing China to US (more appropriate comparison IMO) - last time we achieved growth of GDP per capita comparable to China of the last 30 years was in 19th century when we went though industrialization and urbanization, and that's exactly what China is undergoing now.


That is an interesting theory and everything, but unfortunately I don't live in 1990. See in this thing called the present, China is already the most(and over) industrialized nation in the world. They are littered in factories, plants, warehouses, etc. all of which is in surplus over capacity. So I would love to invest in this dream world you haven't woken up from since Kurt Cobain died, but see I actually like to make money on the future and not get stuck in some platitude from the past.

Also, if you believe the Chinese GDP numbers today I have a bridge you might be interested in. Actually just yesterday I believe a gentlemen had released the results of an exhaustive study where he estimated that the Chinese GDP numbers likely are overstated by $1 trillion US. Now you could say that he isn't particularly credible, but it's pretty safe to say that the Chinese government is no more credible.


Next, if China is this great success story growing at this amazing rate why is it that Chinese equities have been so unbelievably terrible these last couple of years? I mean how is it possible that an economy growing at 8%+ a year for the last few years has corporate profitability being crushed(an objectifiable fact) and equities prices are precipitously falling? Side note: In China corporate profitability has been falling even as most Chinese companies engage in Enron style tactics of fabricating income(and profits) through subsidiary deals while not consolidating their financial statements(like we do in the US).

In the US in the 19th century we never had fixed asset investment in excess of 50% of GDP. Actually the US has never had that nor has practically any country in world history that I know of. Nor has the US ever expanded it's total market debt(and money supply) at 50% of GDP every single year. Hell, if the US went and expanded credit at 50% of our GDP this year I would bet the over on 8% GDP growth for everything I had.

Lastly, as much as I would love to join this world you live in where we can all delight in infinite money and all hold hands and sing kumbaya, in this other place called the real world, when you have a business activity/asset that doesn't kick off enough revenue to cover your expenses it's really only a matter of time until that activity financially blows up in your face(and your creditors).




I mean this one is so obvious folks that I really wonder whether in my lifetime I will ever see one as obvious as this. I mean you have to be willfully blind, 100% focused on bull$hit platitudes and axioms about China 'coming to the fore' for you to be dumb enough to invest money there today.

It's spoken by a billion native speakers, probably another 500,000,000 as a second or third language throughout Asia, and whatever people are studying it throughout the world. So not quite 2 billion, sorry, but still probably the most widely spoken language in the world besides English.

psychtobe said:   It's spoken by a billion native speakers, probably another 500,000,000 as a second or third language throughout Asia, and whatever people are studying it throughout the world. So not quite 2 billion, sorry, but still probably the most widely spoken language in the world besides English.
Right, thanks for the clarification.

Someone above had speculated that most Chinese don't even speak Mandarin based on what he/she know about India: sorry, but that's a wrong vintage point - China and India are culturally and historically opposite; with China being a monoculture with the deepest imperial heritage in the world, and India being a bewildering snapshot of humanity.

By the way I have a friend that is fluent in Mandarin. It should be pointed out that Mandarin speaking countries do have many dialects that aren't completely understandable when you're taught a different one.

It's actually worse than trying to speak to a Chilean using Spanish you learned in Mexico.

For example you'll be reasonably confused if you're in Taiwan speaking Mandarin the way someone in Beijing speaks it.

Here is a list just for Mandarin: http://en.wikipedia.org/wiki/List_of_Chinese_dialects#Guan_.28Mandarin.29

Bump here, don't want a good thread to get archived.

Just a tidbit here: a lot of doomsayers claim their Debt to GDP ratio is 200% and therefore is higher than ours.

However, Chinese debt is not on federal level, but on provincial and municipal; in order to compare apples to apples one has to summarize US federal debt, state's and municipal obligations.

In addition to that - ironically communist China serves their debt at rates much closer to market rates than US, we're serving debt on ultra-low manipulated rates

Neophyte, thanks for the bump, now where is dshibb?

The high debt to GDP ratio in china is never a real issue given the vast resources the government has. Ironically the high debt in the local governments is curbing corruption. The real issue is still internal consumption demand and the non real estate economy. Even with that the things have stabilized and starting to turn in the healthy direction.

dshibb said:   By the way I have a friend that is fluent in Mandarin. It should be pointed out that Mandarin speaking countries do have many dialects that aren't completely understandable when you're taught a different one.

It's actually worse than trying to speak to a Chilean using Spanish you learned in Mexico.

For example you'll be reasonably confused if you're in Taiwan speaking Mandarin the way someone in Beijing speaks it.

Here is a list just for Mandarin: http://en.wikipedia.org/wiki/List_of_Chinese_dialects#Guan_.28Mandarin.29 

  
Second this.  I have watched my wife (China-born) switch dialects so an eavesdropper couldn't understand the conversation.

neophyte said:   
psychtobe said:   It's spoken by a billion native speakers, probably another 500,000,000 as a second or third language throughout Asia, and whatever people are studying it throughout the world. So not quite 2 billion, sorry, but still probably the most widely spoken language in the world besides English.
Right, thanks for the clarification.

Someone above had speculated that most Chinese don't even speak Mandarin based on what he/she know about India: sorry, but that's a wrong vintage point - China and India are culturally and historically opposite; with China being a monoculture with the deepest imperial heritage in the world, and India being a bewildering snapshot of humanity.

  
Actually, I said (note that I stated it as fact, didn't speculate it ) that most Chinese don't speak Mandarin. It's also simply not spoken by a billion native speakers.  There may be 1BB+ people in China but seriously go to some poor peasant farmer earning less than 1USD/day and I'd bet dollars to doughnuts they don't actually speak Mandarin, they just speak whatever local dialect their village speaks.  

dshibb said:   By the way I have a friend that is fluent in Mandarin. It should be pointed out that Mandarin speaking countries do have many dialects that aren't completely understandable when you're taught a different one.

It's actually worse than trying to speak to a Chilean using Spanish you learned in Mexico.

For example you'll be reasonably confused if you're in Taiwan speaking Mandarin the way someone in Beijing speaks it.

Here is a list just for Mandarin: http://en.wikipedia.org/wiki/List_of_Chinese_dialects#Guan_.28Mandarin.29 

  
Mandarin-speaking countries?  Do you mean China... and Taiwan?  Because those are the only two in the world  Second, you will not be reasonably confused if you're in Taiwan speaking Mandarin the way someone in Beijing speaks it.  That's just not correct.  There may be regional variations (different word for "spoon" or something) but functionally it is still the same language, and someone from Taiwan would have no problem communicating with someone from Beijing.

TheDragonn said:   
neophyte said:   
psychtobe said:   It's spoken by a billion native speakers, probably another 500,000,000 as a second or third language throughout Asia, and whatever people are studying it throughout the world. So not quite 2 billion, sorry, but still probably the most widely spoken language in the world besides English.
Right, thanks for the clarification.

Someone above had speculated that most Chinese don't even speak Mandarin based on what he/she know about India: sorry, but that's a wrong vintage point - China and India are culturally and historically opposite; with China being a monoculture with the deepest imperial heritage in the world, and India being a bewildering snapshot of humanity.
 

  
Actually, I said (note that I stated it as fact, didn't speculate it ) that most Chinese don't speak Mandarin. It's also simply not spoken by a billion native speakers.  There may be 1BB+ people in China but seriously go to some poor peasant farmer earning less than 1USD/day and I'd bet dollars to doughnuts they don't actually speak Mandarin, they just speak whatever local dialect their village speaks.  
 

Dragonn, talking about facts  - do you know what are literacy rates in China including "poor peasant farmer" ? Well, it's 95%, the education is mandatory and is not conducted in "whatever local dialect their village speaks"

You might be victim of 90 years of anti-communist propaganda, but there are (were) things the socialist countries did well - education is one thing; it might had include a lot of  indoctrination - but it's completely obligatory, free and of reasonable quality.

So these poor Chinese peasants had at least 7 years of schooling in Mandarin...

About literacy I have another view. I had two relatives and they both were not literate in today's sense but they both were good listerners and good judge of character. They could write their name and read to some extent. Literacy is linked to what you are going to do in life. For a farmer basic ability is fine because he cannot be lazy while reading a book when it is best time to sow or some natural conditions are favorable. The modern way of literacy is based on urbanization/industrialization of countires and is not applicable to any agricultural economy/country. How would a farmer produce a noble prize winner (symbolically) if he was not literate or this feat is more than Michael Phelps 18 golds? Both of my relatives produced best doctors in their field who received equivalent of Knighthood in their countries. Now literate Dad's of Lady Gaga, Madonna and Miley produced what, I am not sure? My comment is on understanding of literacy and how it channels into a countries growth or preception of country in a TV driven culture. I am not supporting China but I don't want someone to denigrade a nation for lack of information about it. Socialist countries dwelt on concept of normal literacy just to prove to the world that they are as knowledgeable to be democratic as some literate morons in most democratic countires are? If Literacy teaches you how to cheat and steal from someone else then I am confused as to the goals of this humanity? I am from Houston and this city is less of America and more of 3rd World very advanced City, just to put my comment in perspective.

For property bubble you don't need fancy models, all old economies exhibit this cancer because this is a strong remnant of feudal system, pick any old economy and you will see they are sickeningly poor in managing property values. I know more about China but I will keep that logic little away because I want to read entire thread. Take India, Japan, Hongkong, Taiwan, Vietnam so on and so forth, if they can just control their peroperty valuation, they can add some percentage to their GDP. Oh one funny guys I missed Pakistan (since I mentioned that, let us pick Bangladesh also), why all these morons have same valuation? Are we not looking at systemic issue? Personally I have valuation in one House in one of these countires than I have made in my entire life in several houses in US but that money is not sitting as cash with me or nor it will be. The moment that money can be converted to liquid form the valution will drop. This house was around 30,000 dollars, 23 years back and is now 300,000 dollars. I bought it for 150,000 dollars when I was counting my days in the hospital fading away from life three years back. In country where annnual per capita income is 4000 dollars in PPP or if you want to wear a Cowboy hat, read it as annual per capita income is 1600 dollars. Average price of house people can have is 150000 dollars (1250 Sq. Ft of total space with constructed space around 900 Sq. Ft. but this is a lot not a condo.).

neophyte said:   Dragonn, talking about facts  - do you know what are literacy rates in China including "poor peasant farmer" ? Well, it's 95%, the education is mandatory and is not conducted in "whatever local dialect their village speaks"

You might be victim of 90 years of anti-communist propaganda, but there are (were) things the socialist countries did well - education is one thing; it might had include a lot of  indoctrination - but it's completely obligatory, free and of reasonable quality.

So these poor Chinese peasants had at least 7 years of schooling in Mandarin...
 

Second this.  No matter what we have gone in China my wife has been able to use Mandarin to communicate, although there have been times she has had trouble with people of rural origin not having a good vocabulary in Mandarin.  (The incident that stands out in this regard was on the phone--she finally ended up describing how to draw the symbol for "persimmon" as she doesn't speak the other person's local dialect and they didn't know the word in Mandarin.)

dshibb said:   By the way I have a friend that is fluent in Mandarin. It should be pointed out that Mandarin speaking countries do have many dialects that aren't completely understandable when you're taught a different one.

It's actually worse than trying to speak to a Chilean using Spanish you learned in Mexico.

For example you'll be reasonably confused if you're in Taiwan speaking Mandarin the way someone in Beijing speaks it.

Here is a list just for Mandarin: http://en.wikipedia.org/wiki/List_of_Chinese_dialects#Guan_.28Mandarin.29 

  I agree with pretty much everything you say, but this part is not true. You are confusing Mandarin dialects with Chinese dialects. A Taiwan Mandarin speaker will understand a Beijing Mandarin Speaker. A solely Taiwanese speaker (Min Chinese) will not understand any Mandarin dialect, regardless of what region it is from. 

The mandarin dialects discussion aside, this weekend the all important planning committee is going to set the economic course of the supposedly next 5 years but in reality much longer timeframe given this is the first one for the new leadership and there are several pressing issues of economic liberalization related to property ownership, property tax, freeing interest rate and exchange control, privatizing SOEs etc. This meeting has all the potential of being a watershed event for china and the world.

Seems like it is very positive. FXI up for two days.



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