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Archive for the ‘China’ Category

Moody's Review China's Credit Rating, Overseas Investment …

www.proactiveinvestors.co.uk11/8/11

HIGHLIGHTS FROM CHINA About ARC China ARC China is a Shanghai-based investment manager focused on investments in consumption-driven, entrepreneur-owned small and medium sized enterprises in China's Tier II and Tier III …

China cuts bank reserve ratio by 50 bps | Bramesh's Technical …

www.brameshtechanalysis.com11/30/11

In a major rating action review of as many as 37 banks globally, S&P has incidentally upgraded two Chinese banks – Bank of China and China Construction Bank. A credit rating is generally considered as a tool to measure an …

A PDF of The Ratings Of Various Countries By The Credit Agencies Is Available For Download

Government officials in China are berating the U.S. because of the Standard & Poor’s downgrade to AA+ and Guan Jianzhong, chairman of Dagong Global Credit Rating, says the U.S. dollar is,

"Gradually being discarded by the world", adding that the “process will be irreversible".

China’s Credit Rating

Fitch gives China an A+ which is their fourth highest rating.

Moody’s gives China an Aa3 which is there third highest ranking.

S&P lists China’s debt rating as AA-, which is the fourth highest level, due to its “sizable” contingent liabilities in its banking system.

Debt to GDP

China’s debt-to-GDP ratio is not only worse than the United State’s ratio, it’s probably worse than Portugal’s, and Portugal is close to bankruptcy.

Despite Moody’s Investors Service saying last month that China’s local debt was understated by hundreds of billions of dollars, the People’s Daily said S&P’s downgrade of the U.S.’s credit rating,

"Sounded the alarm bell for the dollar-denominated global monetary system".

Some Points To Ponder

China has come to own an estimated $1.16 trillion in U.S. debt, by printing excessive Yuans which holds down the currency’s value, making its exports dirt cheap, and it then it uses that extra printed currency to buy U.S. debt.

China likes to say its debt-to-GDP ratio is 17% but the respected Beijing-based research firm Dragonomics says it’s in fact 89% of GDP, which if true would make it worse than Portugal’s which is 83% of GDP.

Stephen Green, who is China economist at Standard Chartered Bank, reckons China’s total debt, including contingent liabilities, is 77% of GDP.

Moody’s said last month that China’s local government debt is understated and might be 3.5 trillion yuan ($540 billion), bigger than its state auditor has estimated,

China’s central bank alone holds an estimated $1.16 trillion in debt, and the government has already increased credit in the system to a reported 200% of GDP.

The eurozone’s problems have kept the euro on a very questionable footing, with the European Central Bank keeping it strong by raising interest rates.

Japan’s massive debts, which are the largest in the world, have kept the yen on an unsound footing.

Strong U.S. defense of Japan, South Korea, Saudi Arabia, Kuwait, Qatar and the United Arab Emirates make it in their interests to protect the dollar.

The US Russia-China Geo-political Strategy | Sikh Archives

www.sikharchives.com12/16/11

After going from defeat to defeat on the periphery of world power and not satisfied with running treasury-busting deficits in pursuit of empire building against economically weak countries, Obama has embraced a policy of encirclement … We will then analyze the rationale for military escalation against Russia and China as part of a new offensive moving beyond the Arab world ( Syria , Libya ) and in the face of the declining economic position of the EU and the US in the …

U.S. experts said the People's Liberation Army and courage by …

www.9abc.net12/16/11

China's economic growth rate of 9%, the United States is suffering from paralysis of the economic recession and political problems. U.S. opinion polls continue to show most Americans believe that China is the world's dominant economic power. Pew Research Center found that in 22 countries among the 15 … on an outdated view of national power the formation of delusions. If anyone think that China will overtake the United States, that at least three errors were committed – the one. …

China? India? Or will the West Just Scrape though?

Two Very Different Views

Citigroup and HSBC recently issued two very different analyses about who will rule the world in 2050 with one concluding that the West can just hang onto its lead, whilst the other suggests that it might become just another not-so-relevant voice in global affairs.

Citigroup

Citigroup’s Willem Buiter offers the following projections:

The Muslim powerhouse of Indonesia will match the combined GDP’s of Germany, France, Italy and Britain by mid-century.

The combined economies of China and India (Chindia) will be four times as large as the United States’s, which would restore the historic order of Asian dominance, before Europe’s navies entered the scene in the 16th Century.

Africa will at last emerge from its long string of disappointments to take the baton as the fastest growing region, clocking up a 7.5% increase a year over the next two decades.

Does The Above Seem Feasible?

Yes, because it would not require miracles of any kind for it to occur.

Catch-up countries merely need, law and governance, open markets, and to then let the "convergence theory" do the work for them, in order to keep their reforms on track;

*Convergence theory claims that people in crowds express existing beliefs and values i.e. a mob’s reaction is the rational product of widespread popular feeling.

Take a look at the uprisings in many Arab countries right now!

Sustained growth prospects in per capita incomes across the world have not been as favourable as they are today for a long long time, possibly in human history.

Global growth is expected to quicken.

And GDP should quadruple again from $73 trillion to $378 trillion by 2050 (measured in constant US dollars).

Will Any Western Economy Defy The Odds?

Britain is expected to scrape through, and will just hold on as the world’s 10th biggest economy in 2050 and it will even overtake the US in per capita terms.

How Could That Be?

Britain has now slipped to 25th in reading, 28th in maths, and 16th in science in the Pisa (Programme for International Student Assessment) rankings.

Whereas Shanghai’s school district takes top prize across all three, ahead of Korea and Finland.

So Where’s The UK’s Hidden Strength?

The UK faces a less disastrous aging crisis than much of Europe because of its unrivaled leadership in unwed teenage pregnancies.

HSBC

Th HSBC’s report also sketches an era of unparalleled prosperity:

China overtakes the US, but only just, but then loses momentum.

China and America (Chimerica) and not Chindia, form the G2, and it towers over all others in the global condominium.

Americans prosper with a fertility rate of 2.1, which is high enough to shield them from the sort of demographic collapse that’s closing in on Asia and Europe.

Beijing and Shanghai are 1.0, Korea is 1.1, Singapore 1.2, Germany 1.3, Poland 1.3, Italy 1.4 and Russia 1.4.

Americans remain three times richer than the Chinese in 2050.

The US economy still outstrips India by two-and-a-half times.

So Which Report Is Right?

Both studies rely on the theories of Harvard economist Robert Barro, but they differ on how easy it is to handle population collapse, and the great unknown is the effect of rapid ageing on creativity.

China’s workforce will peak in absolute terms in just four years, and while the population keeps growing until the tipping point in the mid 2020s, it is ageing very fast.

Zhuoyan Mao from Beijing’s Institute for Family Planning said China’s fertility rate had been below replacement level for almost twenty years, “Population momentum turned negative over a decade ago in Beijing, Tianjin, Shanghai and Liaoning, but the countryside is catching up and the decline speed in rural areas is faster".

*Hence warnings by Chinese demographers that there may soon be an epidemic of suicides, as the elderly step out on the ice to relieve society’s burden.

China’s one-child policy is obviously no longer needed, (but for some reason which is unknown to us is still in force), since its fertility rate is collapsing anyway for the same reasons that it collapsed in Japan and Korea:

Affluence.

Women’s education.

Later pregnancies that stretch generations.

In-law duties.

Costly housing.

*Shanghai’s local authorities have been encouraging couples to have a second child since 2009.

China is depleting the non-renewable aquifers of its northern plains at an alarming place, and faces a separate water crisis from receding Himalayan glaciers, and eco-damage of 13.5% of GDP each year outstrips China’s growth rate of 10%.

What neither report deals with however is that the US is deemed for bankruptcy in 2020 and might even be bankrupt already!