China GDP Numbers miss

[william the wie]

Came in low for the qtr and the year. The looting of abandoned factories and buildings for barely and never used high value items should continue.

Far too little Net National Investment is shown in gdp numbers to support observed employment growth here in the US. This oddity has only one suspect: a huge increase in really low mileage but officially used capital equipment. China is the only place that that has enough ghost cities and abandoned factories to supply the quantity and quality of equipment needed to a) not show up in US gdp numbers and b) provide the amount of investment required to create the of jobs added since the 2009 bottom.

This stealth investment is a way of getting the money needed to achieve residency and self-employment in the US, Australia, Canada or New Zealand out of China so Main Street should see an increase in economic growth while growth in China should get ever slower as it loses physical, human and monetary capital.

 

[frigidweirdo]

The biggest problem China has is companies that aren't run very well which make money. They need a recession so they can sort this out, get rid of those companies that are run badly, and the more efficient companies move ahead and other better companies can also rise up.

 

[william the wie]

The biggest problem China has is companies that aren't run very well which make money. They need a recession so they can sort this out, get rid of those companies that are run badly, and the more efficient companies move ahead and other better companies can also rise up.

True but that ain't gonna happen. Real estate debt can safely run @ 80 GDPs, in China calculating real estate debt is an absurdity 2-3 people being sole occupants of a 300 unit development is common even when the development is effectively sold out. 10 to 1 leverage something unavailable in the US since the 1930s was available in China to novice retail investors as recently as August. No one can figure out Chinese bookkeeping including billionaire market analysts so corporate debt could easily be 75% or more of capital and bankruptcy is usually taking the money and running. This is going to get much uglier..

 

[AdvancingTime]

The importance of the housing market in China's economy should not be underestimated, this is where almost 75% of the country's household wealth is stored and it is deeply interwoven with shadow banking. In China most apartments are sold with internal walls and electrical outlets in place but everything else, including doors, flooring, and bathroom fixtures need to be built-out by the owner after purchase.

Cheap housing is something you won't find in China. Its housing market is among the most expensive in the world when compared to per capita income. For example, the average price of housing in New York City is around $200 per square foot with an average family income of $72,000 per year. By comparison, the average cost of housing in Shanghai for the year 2007 was nearly $108 a sq. ft. against an average family income of $7,316. The article below titled, "China Housing Market A Tad Bizarre" delves deeper into the customs.

http://brucewilds.blogspot.com/2014/12/china-housing-market-customs-tad-bizarre.html

 

[william the wie]

an affordability problem not quite 50 times worse than in the US or 25 times less stable than the US housing market in 2006? That does not sound good.