China's "Dirtiest Secret" Gets Revealed

[hilly7]

From an email:

Toxic Timebomb #2: China's
"Dirtiest Secret" Gets Revealed
Vital to the idea of a global recovery... is the idea that China, at least, is still growing. And that, just maybe, they can help pull the rest of us out of this crisis by our bootstraps.
Is that a real possibility? Not by a long shot. And if you're placing any faith in a whole new Asian miracle, I urge you right now to reconsider. Especially if your wealth depends on it, as it might — in more ways than you imagine.

Consider Detroit. It once looked like a global mecca for capitalism and monument to progress, too. Have you seen it lately? It's practically a ghost town.
Now imagine the world's next industrial ghost towns — and you might be shocked to discover that they're already turning up. But not in America. Rather, in the Chinese provinces of Shenzhen, Guangzhou, or Dongguan.
See, while China's head honchos tout a rosier future for the "Red Dragon" economy than seems possible... over 15,000 factories in those areas I just named alone have already shut down... with many more slated to close over the months ahead.

It's an epidemic that's happening all across Asia, though you might not be hearing about the full scale of their meltdown on the evening news.
Half of China's toy factories have shut down. In fact, at least 67,000 factories overall closed in the last six months of 2008. With another 60,000 factories in the Wen Zhou Province alone about to shut down.
As many as 27 million Chinese are already out of work — with 20 million of them streaming out of the cities and back to the abandoned farms of the Chinese countryside.
It's not hard to figure out why...

China's Secret "Stealth" Depression
See, the "party line" coming out of Beijing says that even with the downturn... and with Americans not buying China's output... Chinese GDP could still grow another 8% this year.

But the facts on the ground tell a different story...
• According to Merrill Lynch, China's economy didn't grow at all in the last quarter of 2008. And it's still contracting fast, ever since the start of this year
• Of course, official Chinese growth last year topped 9%. But if you did the math the way we do in the U.S. and they do in Europe, the real growth rate — for the last three months of 2008 — was zero
• Keep in mind that China needs at least 9% growth to soak up the 24 million new Chinese workers who come of age each year — something even the Chinese Premier doesn't like to mention.
Why the lies? It's a huge con game. Says expat Prof. Tian Xie of Drexel University, China's elaborate campaign to falsify GDP numbers "is all part of a sophisticated strategy to cheat the world." But China can't keep up the deception much longer...
• In one huge textile factory — as big as 31 football fields and with 4,000 workers — the owner racked up $200 million in debts. Afraid to tell Beijing, he burned his records and fled the country
• Officially, nobody's protesting about losing their jobs or going broke. Unofficially, dozens of riots have broken out in front of closed Chinese factories
• 1,000 schoolteachers clashed with police over wages in early January. Hundreds of workers swarmed a city government building in Foshan, demanding back pay
• In Northern China, a TV journalist covered a story about a hostile labor takeover in a textile mill. Local authorities immediately punished him and pulled the story
• Creditors showed up to seize equipment from deadbeat borrowers at a factory in southern China. Police broke up a dozen riots in the aftermath, all of which they hid from the newspapers.

This isn't a modern-day coincidence. In the days of emperors, Chinese generals lied about battle kills... to keep from losing their own heads. In the days of Mao, farmers lied about crop results... even as 20 million Chinese starve to death.
Today, local bureaucrats fudge the books to get ahead in the Party... and the top dogs in Beijing lie to hang onto foreign investors. Padded revenue reports... fake production numbers... overstated employment... it's all part of standard practice.

To say so might not sound politically correct. But ask anyone who's done business there. Keeping a double set of books in China isn't just common, it's considered "good strategy."
Meanwhile, northeast China — home to 110 million people — looks more and more like rusted-out Detroit... only at ten times the scale.
You've also got under-regulated Chinese banks hiding as much as $500 billion in bad debts — China's own "subprime" loans to small businesses and Asian property speculators...
Plus, you've got a $40 billion tab left over from the Beijing Olympics... and a $140 billion tab for rebuilding Sichuan after their 2008 earthquake…
How Long Can China Hide the Truth?
Here's the bottom line:
China — with 80 different car makers to bail out... tens of thousands of huge socialist-era factories... and 100s of millions of workers to support — has a big problem.
Much bigger than they're letting on.
And it's not just China about to take an even bigger hit.
Korea, Singapore, Taiwan, Vietnam. Thailand. Malaysia. And Indonesia... just to name a few, all soared thanks to the China boom. Now they're going bust in kind.
Korean production alone is already down 14%. Japan is off 20%. Taiwan's exports have dropped 28.5%. Singapore is already deep into recession. Thailand's decayed into political crisis.
Until U.S. and European consumers come out of their shells, the new Asian meltdown doesn't end any time soon.
You remember how hard the Asian currency crisis hit U.S. markets in 1997. A total "miracle" reversal in the Far East could have much greater impact, especially in today's already battered environment.
And you'll want to take steps immediately to protect yourself, before that new wall of worry reverberates back here in the U.S.

[Easy Skanking]

Having always been interested in China and it's history, reasons like those listed above are why I haven't bought into the "China as a new world Super Power" ideas. ALL countries are being economically crashed while the money flows into a few already sickeningly wealthy hands that call themselves the "global elite". Despite having a huge population, most are still living at or below the poverty level. All that means is that the same filtering of wealth upwards that has been part of the history of China, is the methodology of the New Economic World Order and is still gong on in China, is the biggest factor to consider. Despite their people and natural resources, I think they will still be swallowed up into the NWO just like every other nation. We've all seen that money is the strongest factor in world events and where the direction that control has taken us. To a tighter control from fewer and fewer to the detriment of more and more. China is just as much of a victim as any other country is. All are dominated by control of mostly worthless currencies.

[hilly7]

This is a bit older, but pertains;

China nears deflation trap as rail freight collapses. Railway freight in China’s Shanghai region plunged 31pc in January and industrial production fell 12pc, dashing hopes that Beijing’s stimulus policies will soon begin to fuel recovery. By Ambrose Evans-Pritchard
Last Updated: 6:16AM GMT 25 Feb 2009


The country’s central bank said the economic outlook was going to bad to worse was still gathering pace, rains the risk that China could tip into a Japan-style deflation trap.

“External demand is shrinking, some sectors have overcapacity, and urban unemployment is rising. Downward pressure on economic growth is increasing. There exists a big risk of deflation,” said the bank. Factory gate inflation has dropped to minus 3.3pc.

“We will use various tools, including interest rates and banks’ reserve requirement ratios, to ensure reasonable monetary and credit growth,” it said. The bank has cut interest rates and relaxed credit rules fives times since September.

China’s economy continued to eke out headline growth of 6.8pc in the fourth quarter of 2008 but all the rise was in the early part of the year. On a month-to-month basis the economy has been flat for several months, and may even have started to contract. Electricity use has fallen sharply

The Shanghai industrial data is being watched closely as a proxy for the country since there is no nationwide data for January owing to the Lunar New Year. The output fall is adjusted for the holidays. The fall in absolute terms was 21pc, year-on-year.

The figures tally with the catastrophic drop in exports from Japan, Korea, Taiwan, and Singapore over the last three months. These countries are an integral part of the supply chain for Chinese industry.

Taiwan said yesterday that export orders to China fell 55pc in January, suggesting that Asian trade will remain trapped in depression deep into Spring. The fall in total orders was 41pc, while industrial output fell 43pc.

Separately, Japan’s finance minister Kaoru Yosano said Tokyo is examining plans to a special body to buy shares in banks to help shore up the stock market after the Nikkei index fell to a 26-year low.

“Excessive stock falls are undesirable. The government will consider what it can do if stock prices fall too much,” he said.
http://www.telegraph.co.uk/finance/economi...-collapses.html

[hilly7]

Another older article:

Official Chinese Economic Statistics Hide Potential for Unrest

Businessmen and economists inside and outside China are now talking about the gap between the official economic statistics put forward by the Chinese regime and China's real economic performance. Behind this new attention to the regime's questionable statistics lies concerns about the possibility of an economic and political collapse in China.

A Chinese businessman from the mainland met with clients at a location in South America to discuss future orders. In the telephone interview, he voiced his concerns regarding China’s economy saying, "200 million Chinese, including both migrant and other workers, are unemployed." He then disclosed that "Gross Domestic Product (GDP) growth was 'just below 4 percent.'” All present were shocked.

There are reasons to believe this Chinese businessman's numbers are not off the mark, even though they differ significantly from the regime's official unemployment and growth rates.

Smoke and Mirrors
"When the central government mandates a certain growth rate, the locals [governments] jump," said David Li, director ofTsinghua University's Center for China in the World Economy, as quoted by Business Week. "That's the easiest way to create growth." The reports come back from the provincial cadre with the required production numbers.

In recent official announcements, migrant worker unemployment was 20 million. The CCP also reported a 4.2% unemployment rate on registered (urban) workers for the end of 2008, as reported by Xinhua News Agency on Jan. 21, 2009.

On Feb. 16, Xinhua News Agency reported that the January GDP growth rate was 6.8%.

Economists Are Saying
Economists are providing a different picture of China's economic health than that given by the official statistics.
Professor Zeng Xiangyuan, Director of the Academy of Labor and Social Relations at the Renmin University of China, is quoted in the blog Seeking Alpha as saying that China’s unemployment rate for both urban and rural areas should be between 24 to 27 percent if converted to international standards.

This agrees with the Chinese businessman's estimate of 200 million unemployed, which would amount to an unemployment rate of 25 percent (excluding Hong Kong and Macau).

In a dramatic statement, Albert Edwards of Societe Generale is quoted by the blog Seeking Alpha as saying, "We cannot highlight strongly enough how truly mind-boggling Japan’s collapse in exports to China is. Last July they were expanding at a 16 percent year over year pace. Now they are contracting at a 35 percent year over year rate! This is a phenomenon throughout the region.

"Hence, despite the notoriously manipulated Chinese GDP data showing a shocking slowdown in GDP growth to 6.8 percent year over year, I would eat my hat if the Chinese economy was doing anything other than contracting right now.”

According to Nouriel Roubini, an economics professor at New York University who has grown famous for accurately predicting the global financial crisis, China’s GDP growth this year will not exceed 5 percent (See: China's Tough Employment Times)

China economist, Mark Williams, from London based Capital Economics, said in an interview with Voice of America that he also anticipated a growth of 5 percent this year in China’s GDP.

The Chinese businessman’s estimate of the growth rate at "just under 4 percent," then, seems very plausible.

What Next?
The regime reported in 2008 that a GDP growth rate of 6 percent was considered a critical threshold required to absorb incoming young workers and maintain sufficient jobs for the workforce in general. A lower rate could bring about major social disruptions.

Zhang Ping, president of China's National Commission for Development and Reform, said at a press conference on Nov. 27, 2008, "excessive bankruptcies and production cuts will lead to massive unemployment and stir social unrest” in 2009, as reported in China Daily on the same day.

With a true unemployment rate of 25 percent and a growth figure at or below 5 percent, the conditions for social instability have arrived in China.

In China, the regime's media are blaming the United States' failure to regulate its financial institutions as the cause of the Global Financial Crisis. Hu Jintao, head of the Chinese Communist Party (CCP), is meeting with leaders around the world who are disaffected from the United States, telling them the United States has failed them and China can help them.

Ms. He Qinglian, perhaps the best known commentator on China's economy, reports “Newspapers in China have been publishing numerous series of articles that examine the problems in China’s real estate, stock market, and banks. These reports state that the root cause has been the U.S. financial crisis.”

Ms. He continues, "What’s most surprising is the CCP has been patting itself on the back. It boasts that the Chinese and Russian models supposedly prospered, while stating that the financial crisis in the United States is due to its impoverished free market system and that its well-established freedom and democracy have collapsed." (See: Financial Crisis in the U.S. and China—Comparing Apples and Oranges)

Ms. He says that China's economic woes are homegrown. Among other factors,she points out that "The continuing bankruptcies in China were also not affected by the U.S. financial crisis. Last year [2007], toys from China were strongly boycotted, because they contained high levels of lead. Many millions of toys had to be recalled. ... On March 13, 2008, the Shanghai stock exchange fell by 3,971 points. That day, 700 billion yuan were lost...this had little to do with the U.S. financial crisis. It is China's problem," (See:China: Not a Financial but an Economic Crisis)

With its economy in a nosedive and social unrest growing, the CCP may feel threatened. It is capable of acting brutally under such circumstances. This is apparent from the 1989 Tiananmen Student Massacre, as well as the almost ten-year-long persecution of Falun Gong adherents.
Last Updated
Feb 21, 2009

http://www.theepochtimes.com/n2/content/view/12400/

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thanks

[hilly7]

Your welcome.

It seems funny how some of the "financial gurus" are suddenly pushing investment in China lately. The older articles show different than the ones these days, save 1, Buffet's crew. They seem to be a step ahead and a bit more honest. China also does annual reports rather than quarterly. Beware any quarter reports.