China's economy slowing? Not much.

[daddy-ji]

India's base is very low,how come it develops so slow?China's growth used to be around 15% when at that low level.

BBC News - India's GDP growth falls to 6.1%

For reference, both Turkey and Argentina are currently growing at more than 8%+.

GDP India Growth Rate

In the final quarter of 2011, India has seen a growth rate of 6.1 percent in its GDP on a year-on-year basis. When seen in the years between 2000 till 2011 the South Asian economy has had an average growth rate of 7.45%. The highest rate in this period was 7.80 percent which was achieved in December 2003 and the lowest rate was 1.60% during December 2002.

India has a diverse economy that has conventional village farming, handicraft, and updated agriculture, apart from several industries and the services sector. The services sector has been the biggest contributor to India's economic growth over the years – it generates in excess of 50 percent of the country's aggregate production and employs more than 33.33% of the labor force.

From 1997 onwards India has seen an average economic growth of at least 7 percent and has been able to reduce poverty by approximately 10 percentage points.

Reduction in India's GDP Growth Rate


In the quarter that lasted from July to September in 2011, Indian economy has seen a growth rate of 6.9 percent, which is the slowest in the past couple of years. The economic growth has been impeded by factors like the Eurozone crisis that is assuming threatening proportions by the day, and the high costs of borrowing in India itself. In the quarter encompassing January, February, and March in 2011, the national economy had grown by 7.8 percent.

In the last year and 8 months, the Reserve Bank of India has increased its rates of interest in a forceful manner in order to contain inflation. However, this has stifled the rate of India's industrial growth. The condition of global economy has been far from desirable and this has led to reduction in exports as demand for Indian goods have gone down.

Economic reforms have been implemented at a slower rate and the government has also faced a raft of corruption charges of late. All these factors have severely diminished India's potential as investors, especially from outside the country, are now less confident about putting their money over here.

GDP India Growth Rate

 

[northeast]

GDP India Growth Rate

GDP India Growth Rate

ah，that's slow.even slower than what ASEAN countries had achieved.
east asian countries are much faster，china，japan，korea have reached around 15%.

 

[beijingwalker]

ah，that's slow.even slower than what ASEAN countries had achieved.
east asian countries are much faster，china，japan，korea have reached around 15%.

it's like a handicapped person laughing about the world top sprinter can not run as fast as before.

 

[Korean]

A Chinese Mega City Is On The Verge Of Bankruptcy | ZeroHedge

Boom city Dongguan faces bankruptcy

Dongguan's derelict factories and huge deficits send chilling warning to a China in slowdown

After three decades of spectacular growth, Guangdong's boom town of Dongguan is on the brink of bankruptcy.

Up to 60 per cent of its villages are running up deficits and will soon need a bailout from the township, researchers at Sun Yat-sen University have discovered.

It is a dramatic turn of fortune for Dongguan - one of the richest cities in China - and could foreshadow a wider fiscal crisis as the country's economy cools.

Local government debt hit 10.7 trillion yuan (HK$13.16 trillion) nationwide at the end of 2010, equivalent to about 27 per cent of gross domestic product. Credit rating service Moody's estimates the actual figure could be about 14.2 trillion yuan.

Bai Jingming, a senior researcher at the Ministry of Finance, estimated in 2009 the total debt of village authorities could total 10 per cent of the country's GDP, but there is no official data.

Bai said many village chiefs he interviewed had no idea how much debt they had. Yet their failings could bring serious political and financial instability at higher level government right down to the grass roots.

Experts have found Dongguan's village debt woes stem from two factors: a tightly-bound landlord economy, plunged into crisis by failing factories in the global downturn, and political pressure on local village chiefs to pay generous "dividends" to voters under the immature rural election system.

"The financial problems of the villages are much more serious than expected," said Shao Gongjun, the owner of a printing company who blogs on Dongguan's economy. Shao attributed much of the crisis to the local authorities' dependence on rental incomes.

A backwater farm town until the late 1980s, as China boomed Dongguan was transformed into one of the most important hi-tech manufacturing centres in the world.

An IBM vice-president famously said a mere 15-minute jam on the expressway there would be enough to cause worldwide fluctuations in computer prices.

As industry thrived, the population swelled from 1.8 million in the '80s to more than eight million. Most of the peasants cashed in and built matchbox homes on their land, letting the flats to migrant workers. Village authorities leased community land to factories and collected rent as their main source of income.

This worked perfectly until the recent downturn. Shao said many factories had either closed or moved out over the past five years to inland provinces with lower costs.

The number of Hong Kong-backed factories has dropped by 15 per cent since 2007. As factories and migrant workers left Dongguan, rents nosedived.

"I'm so worried that before long I will lose my tenants and the flats would be left deserted," said a 61-year-old woman surnamed Luo. She put together two million yuan from her life savings 10 years ago and with bank loans built a six-storey apartment building in Luowucun in Zhangmutou county. Her family occupied the first floor and let the rest out to migrant workers.

Luo used to collect about 15,000 yuan a month in rent - nearly 10 times what an average worker earned. But rents have dropped by a third since 2007.

The fall in rental values forced 60 per cent of the 584 villages in Dongguan into budget deficits, the study by Professor Lin Jiang of the finance and taxation department of Lingnan College at Sun Yat-Sen University found.

Lin's estimate is based on a study of 30 villages in relatively well-off counties, such as Tangxia, Houjie and Humen, in May.

The figure may not reflect the whole picture, but it gives a good snapshot of the problems authorities face.

"They are in deficit because their incomes are shrinking while their expenses are going up," Lin said.

This is an unexpected sideeffect of China's fledgling grass-roots democracy.

While competitive elections are still absent at almost all levels of government, Beijing has started to let villages choose their leader through universal suffrage. These elections have been getting increasingly competitive, and candidates often promise to pay generous "dividends" to villagers to attract votes.

"In some rare cases, the leader-elect promised to give each household 10,000 yuan per month," Lin said. The money would come from the village community "investment" - effectively, the rent they collected from factories.

Lately, village chiefs have found it difficult to fulfil such election pledges. But instead of reneging on their promises and sparking the anger of villagers, they turn to the rural credit co-operatives - the de facto local banks - for short-term loans at interest rates as high as 30 percentage points.

Banks are willing to lend, because they know that the township government would have to bail villages out if things go wrong.

"Some village leaders are now really worried that the bank may come to call in the loans," Lin said. "If the villages default, the burden would be transferred to the county or the township government."

The Dongguan government is in poor shape to handle a crisis. Its GDP growth slowed to 2.5 per cent in the first half of the year. The average growth in the past eight years was about 11 per cent.

Xu Jianghua, Dongguan's party secretary, urged villages last month to stop raising money to pay dividends. Few took heed.

Village chiefs may argue paying dividends are not the sole cause of their debt. They also have to pay for local fire and police services - even though these are supposed to be the local government's responsibility.

For years, the township government underinvested in such services, knowing they would be taken care of by the cashed-up village authorities.

Eddy Li, president of the Hong Kong Economic and Trade Association, said in some counties police would refuse to investigate a crime unless it involved more than 20,000 yuan.

Shao estimated Zhangmutou county authorities alone have accumulated a total of 1.6 billion yuan in debt. Annual revenue is only 600 million yuan.

Shao said the Dongguan government needs structural reform to end its reliance on rental income. He proposed the township give residency to migrant workers so they can contribute more to the local economy.

"Without a radical change in the social structure, the economic transformation will never succeed," he said.

Hanging up on Dongguan: Factories struggle for survival|HongKong Focus|chinadaily.com.cn

Hanging up on Dongguan: Factories struggle for survival
Updated: 2012-09-22 05:56

"We get busier when Samsung sells better and orders more shells. Even though it's busier for us, we feel lucky that our client is doing well in the industry. We know some are doing really badly," said Shan.

"It's much worse for my friend's situation. She works at a factory (producing components) for a less popular brand. They get fewer orders from the phone company. She has nothing to do but to waste time in the factory," said Shan.

Now, he has no need to travel there. After Google bought Motorola Mobility on August 15, Motorola took drastic measures to restructure its product line. It was cut back from over 20 to three or four. Over 85 per cent of the company's products were discontinued.
"Motorola stopped all its orders in Dongguan. All of them. Some factories which counted on Motorola could be in big trouble," said Ma.

The major mold suppliers for Motorola were hit hard. One was BYD Company Limited, a listed company on the Hong Kong Stock Exchange. BYD had done well, undertaking innovation and manufacturing work for Motorola.

Making things even worse, Motorola undertook a massive employee layoff in China, especially staff in Research and Development department (R&D). Motorola shut down its office in Nanjing; laid off 40 percent of the staff in its Beijing headquarters, (70 percent from R&D). "Among the top mobile companies, Motorola underwent the biggest changes and also had the most significant impact on its manufacturers," said Ma.

"Foxconn, the long-time major supplier for Apple, started to take orders from Samsung, and many Dongguan factories started to switch their strategy to national brands. This will help to develop China's own mobile brands and benefit long term development of the manufacturing industry," said the insider.

 

[AntoniSerbia]

When will China's economy collapse?

 

[Korean]

China could be the next Greece instead of being the next US. If Dongguan of all places in China is facing a public bankruptcy, then imagine what the public finances would be like at China's other regional governments.

 

[AntoniSerbia]

China could be the next Greece instead of being the next US. If Dongguan of all places in China is facing a public bankruptcy, then imagine what the public finances would be like at China's other regional governments.

u think Guangdong gov is the richest in China? What a joke. Guangdong is a failed province.

 

[Korean]

u think Guangdong gov is the richest in China? What a joke. Guangdong is a failed province.

Actually it is.

List of Chinese administrative divisions by GDP - Wikipedia, the free encyclopedia

2011 figures
Guangdong 1 5,267,359 815,532 1,262,217 11.17 10.0

The richest province in China and also bankrupt.

 

[Viet]

China still has $US 3 trillion and something as reserves, right?
The central government can support them easily with cash.

 

[Korean]

China still has $US 3 trillion and something as reserves, right?
The central government can support them easily with cash.

China owes more than $2 trillion to foreign investors.

Most of China's foreign reserve is built with FDIs, not trade surpluses.

This is another area where China and Japan/Korea differs, because Japan/Korea economies were built with local capitals and most of industry is controlled by local capitals, whereas Chinese economy was built on the strength for FDI.

 

[JayAtl]

China still has $US 3 trillion and something as reserves, right?
The central government can support them easily with cash.

nobody has verified it. trillion of china's money came to the US where most of their officials ran off to with vast amounts of money.

Btw where is Beijing walker and his great post about no slowdown...

 

[Korean]

trillion of china's money came to the US where most of their officials ran off to with vast amounts of money.

Chinese officials ran off with only $500 billion.

Btw where is Beijing walker and his great post about no slowdown...

Maybe BeijingWalker the CCP Internet Propaganda Officer was laid off due to budget shortfalls.

 

[ahfatzia]

Goldman sees China's growth slowing to 7 percent for next decade


(Reuters) - China's economy is expected to grow at a much slower pace of about seven percent over the next decade, but its stock market still has the most attractive upside among "BRIC" countries, according to Jim O'Neill, Chairman of Goldman Sachs Asset Management.

"China is in the early stages of going from a long period where it was all about the quantity of growth, into an era where the focus is on the quality of growth," O'Neill told a news conference in Singapore.

O'Neill, who coined the term "BRICs" to describe the emerging countries of Brazil, Russia, India and China, said markets have not fully factored in the next decade of slower growth for the world's second-largest economy.

That, he said, explains the underperformance of China's stock market.

After three decades of breakneck development that saw annual growth average of 10 percent, China's government is trying to steer growth lower to complete structural economic reforms.

"We're all used to the drug of 10 percent growth and those days are behind us," said O'Neill.

As China makes its transition, O'Neill expects consumer-related and healthcare companies to benefit, while those that depend on heavy industry production and heavy industry commodities were likely to lose out.

Investors are concerned over the timing of China's planned slowdown, as it could be derailed by the global economic downturn that has sapped overseas orders for exports from China's vast factory sector.

China's CSI300 Index .CSI300 has fallen 2.2 percent so far this year, While the MSCI Asia Pacific ex-Japan's .MIAPJ0000PUS 12.5 percent rise in the same period.

O'Neill said he expected China's A-shares to rise again over the next year, and disagreed with the what he described as a growing consensus that Chinese equities would never rally again.

However, he saw China's economy continuing to struggle in the near term, and said the slowdown in growth may have spread into the July-September period, which would mark a seventh consecutive quarter of slowing growth.

"It's too soon to say a clear recovery is on the way. The Chinese economy still seems to be softening and it's possible that the economy may be weaker in Q3 than it was in Q2," O'Neill said.

"There are not many signs yet of a big easing in financial conditions, which usually is a good leading indicator of momentum."

China is not alone in facing slower growth. Goldman Sachs Asset Management expects all "BRIC" countries, except Brazil, to see lower growth than they did in the last 10 years.

However, their collective share of the world economy will still rise, and O'Neill noted that recent policy reforms that some countries like India and Brazil have introduced are a good sign.

India introduced sweeping reforms two weeks ago, such as raising the price of heavily-subsidized diesel, aimed at shoring up government finances and attracting foreign investment to revive economic growth.

Goldman sees China's growth slowing to 7 percent for next decade | Reuters


7% growth for a large country is perfect, any higher that would be hard to manage at this point.

For those trolls who think China is in deep trouble should worry about their country and their respective city first. New York City has an unemployment rate way over 10% and two age groups, 18 to 25 and over 40, can not get decent full time jobs and Atlanta is not doing any better. If Wall street continues to dip these two cities will go the way of Stockton, California before the people know what hit them.

 

[Viet]

China owes more than $2 trillion to foreign investors.

Most of China's foreign reserve is built with FDIs, not trade surpluses.

This is another area where China and Japan/Korea differs, because Japan/Korea economies were built with local capitals and most of industry is controlled by local capitals, whereas Chinese economy was built on the strength for FDI.

Can you pls elaborate on this a little?

 

[Skull and Bones]

^^^

Even if it's 7%, the compound growth can be well over 12-15% taking 7% of GDP growth, 5% inflation and 2-3% appreciation of Yuan. Over a 5-10 year term perspective, Chinese growth looks more sustainable than aggressive.