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Will China go down with developing economies of South East Asia?

KIND

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Hi Chinese friends,

I am worried. Since devaluation of your currency USD/INR went up from 63.36 to 66.64 . EUR/INR 69.70 to 77.43.

I am scared . In spite of strong economic result , (IIP growth four month high @3.85% , strong FDI , huge forex reserve) why is ruppe taking the hit?

China please do something.Today our index SENSEX lost over 1600 point in a single day. Wall street is bloody. Is this another 2007/2008?

And how come EURO with a sham economy is strengthening against all currency and not taking a hit?
 
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The stock market today in China...just like bomb...I am ashamed to say..
plz search for it by urself...:hitwall::hitwall::wave:
u=1697377135,1126367744&fm=21&gp=0.jpg

It doesn't matter!:hitwall::hitwall:
China is busy enough with our own affairs...
 
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But I have no idea of Chinese economic data.I mean , I havnt seen any single expert stat with deep analysis why the devaluation started in first place? And there is only high level rambling from so called economists.

How bad is this? I have some huge investment lined up and I need rupee to strengthen . I was searching for research papers on Chinese economy but nothing...only high level rambling without any data
 
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http://blogs.ft.com/the-exchange/2015/08/19/12621/

I agree with some point in this article. The recent devaluation of Yuan and bailout money withdrew from stockmarket could be a sign of a paradigm shift that the decision makers in China stopped caring about being world economy propeller or fancy stock prices, instead they will only focus on economic restructuring,which is the top priority at the moment and already going on for a few years.

Even two years back,most economists in China knew that 2015 - 2016 is supposed to be the rock bottom of Chinese economy.So the only good news is nothing happened so far came out as surprise and we are doing things according to plan, the bad news is if the world economy is going down at the same time,China won’t play the savior like back in 2009,instead we will be busy saving ourselves.
 
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It will be a shame on Asia if China goes down. Only country which gave all it could to achieve the best spot by hook or crook.


ok now let's carry on with ind pak muzakaraat.
 
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Chinese economy will weaken further unless the reforms are actually implemented. This next 6-12 months is so crucial to China.

China has been spending too much attention to the wrong things instead of reforms such as interest rate liberalisation, allow private capital into industries previously denied, loosen automobile and property restrictions on buying, allow factor prices to be market-driven, allowing the bond market to play a key role in financing, allow private banks to be established to loan to SMEs, remove the burdening regulations.

China has 2 problems:
1) demand
2) financing for SMEs

China did plenty of TALKING about reforms and now the time has come to to actually implement the reforms that were talked about.

China is trying to prop up the stock market to rescue to weakening SOE. The Shanghai stock market is still mostly SOE. SOE dominate the major industries of China like steel but the major GDP contributing industries have been weakening due to the property downturn.

Property market is a direct and indirect contributor to the overall economy because many industries depend on the property market.

Investment in China has weakened which the consumption cannot make up for. Exports are weakening due to collapsing demand in Europe.
 
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Chinese economy will weaken further unless the reforms are actually implemented. This next 6-12 months is so crucial to China.

China has been spending too much attention to the wrong things instead of reforms such as interest rate liberalisation, allow private capital into industries previously denied, loosen automobile and property restrictions on buying, allow factor prices to be market-driven, allowing the bond market to play a key role in financing, allow private banks to be established to loan to SMEs, remove the burdening regulations.

China has 2 problems:
1) demand
2) financing for SMEs

China did plenty of TALKING about reforms and now the time has come to to actually implement the reforms that were talked about.

China is trying to prop up the stock market to rescue to weakening SOE. The Shanghai stock market is still mostly SOE. SOE dominate the major industries of China like steel but the major GDP contributing industries have been weakening due to the property downturn.

Property market is a direct and indirect contributor to the overall economy because many industries depend on the property market.

Investment in China has weakened which the consumption cannot make up for. Exports are weakening due to collapsing demand in Europe.

In other words, China should become like the fabulously working economy of the U.S. :enjoy:

You are a genius or nomen es omen. :D
 
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No worries, folks. Better times ahead. China is just re-adjusting. The present global crisis is not a China-thing. It is a continuation of the 2008 financial crisis. Thankfully, most of East Asia are more or less prepared for worse days, thanks to the lesson learned during 1997 Asian Financial Crisis.

Keep the faith!


11896114_993987340653083_3667683066172278723_n.jpg
 
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In other words, China should become like the fabulously working economy of the U.S. :enjoy:

You are a genius or nomen es omen. :D

US is the richest nation in the history of planet earth and the most technologically advanced. It did that by letting markets decide the prices of goods and services.

The fabulously working Soviet economy which didn't believe in market forces and thought a few men in the government knows what millions of producers and consumers should pay each other and how much output to produce. That's why Soviet brands dominated the world economy.

China abandoned the Soviet model in 1978 in favour of markets.

I'm not saying there is no role for the government but the biggest problem in the Chinese economy is there is not enough market forces determining the prices of goods and services. The state owned banks are not lending to SMEs. There is no competition in the financial industry in China. The financial sector is supposed to support the real economy but the Chinese financial system is dominated by state owned banks and the stock and bond market plays a small role in helping SMEs raise funds. Even private banks are a rarity. This means SMEs are starved of funding for their operations. They are at a disadvantage when competing with global companies.
 
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I'm not saying there is no role for the government but the biggest problem in the Chinese economy is there is not enough market forces determining the prices of goods and services. The state owned banks are not lending to SMEs. There is no competition in the financial industry in China. The financial sector is supposed to support the real economy but the Chinese financial system is dominated by state owned banks and the stock and bond market plays a small role in helping SMEs raise funds. Even private banks are a rarity. This means SMEs are starved of funding for their operations. They are at a disadvantage when competing with global companies.

There has been constant calls to encourage banks to increase lending to SMEs, but policies might not be having the desired quick response. Nonetheless, historically, China's SMEs are not that much left behind although, I agree, at this stage of development, more needs to be done.

@Shotgunner51 , @tranquilium , @AndrewJin


China Economic Watch | Does China have an SME Lending Problem?

Economies across the globe struggle with providing small and medium enterprises (SMEs) access to loans. Banks are often accused of favoring large customers at the expense of everyone else. China appears to be no exception as Premier Li Keqiang recently criticized Chinese banks for favoring large borrowers.

While it’s true that SME financing is a near-universal problem, some countries do a better job than others. The OECD produces a helpful report, Financing SMEs and Entrepreneurs: An OECD Scoreboard, which shows the share of total lending going to SMEs for a variety of countries. Adding China, which is not included in the report, shows that the country does quite well in terms of SME finance.




However, the picture is not that simple because countries use different definitions for what constitutes a small or medium sized enterprise with respect to lending. Many of the countries in the report use the size of the firm, typically firms with less than 250 employees, as the cutoff for SME loans. Others use the size of the loan or firm specific factors such as the amount of sales or size of assets.

Adding China to this comparison is particularly problematic because the standard for what constitutes an SME varies significantly by sector. While many sectors use 200-300 employees as a cut off, others are much higher. For example, for telecommunications the cutoff is 2,000 employees. For Industry, Transportation, Postal Services, and Property Management the number is 1,000 employees. For other sectors, those listed as N/A below, revenues or an asset size cutoff rather than an employee count is used.

It clear from the chart above, that many of the “medium-sized” Chinese enterprises are actually quite large. Perhaps this is why the government introduced a new classification system in 2011 that divided firms into medium, small and micro sizes. When discussing access to finance problems, China’s leaders mostly refer small and micro-sized enterprises, rather than medium-sized firms.

For purposes of an international comparison, however, the small and micro categories is also problematic. The cutoff for small enterprises in many sectors is 100 employees or less, significantly below the 250 employee count that is used is many countries.

Fortunately, there is a way to make some rough adjustments to the Chinese data. The People’s Bank of China provides a sectoral breakdown of borrowing by medium and small enterprises. Removing lending to medium-sized firms in categories with high employee cutoff standards brings the numbers closer to the international norm. For example, we can correct the numbers for industrial firms by removing loans to medium-sized industrial firms (1,000-300 employees) and only using loans to small firms (less than 300 employees).

The other categories don’t match up quite as well because many of them are aggregated together. Information Transmission, Computer Services and Software are all grouped into one single category. The same is true for Transport, Storage and Postal Services and Real Estate Development and Property Management. Because it is impossible to separate out these different components, we will take the most conservative approach and subtract loans to medium-sized firms for all of them. The adjusted result shows China’s SME lending to be around 44 percent, significantly less than the initial 64 percent.



What’s the takeaway from all of this? Despite its reputation, the Chinese banking system does an admirable job of providing SMEs with access to loans. After revising the numbers down to something closer to international standards, China exceeds Russia, Turkey, Thailand and Mexico and is above the average for the group of countries as a whole. Even if you accept the narrowest definition of small firms, the small and micro category, China is still on par with or ahead of many countries. The Chinese financial system has many faults, but under-performing on SME finance is not one of them.

There is, however, a separate question of whether SMEs are being charged unreasonably high interest rates. This seems to be the case within private lending markets. The Wenzhou Private Financing Interest Rate hovers around 20 percent, more than three times the benchmark lending rate. However, interest rates in the formal banking system appear to be more evenly distributed. Almost 90 percent of loans are made at 1.5x the benchmark lending rate or lower (currently 6 percent for a one-year loan). Therefore, it’s unlikely that on bank loans SMEs are paying anything close to the interest rates seen in private markets. On both access to finance and cost of borrowing, China’s small enterprises are doing better than the conventional wisdom would suggest.
 
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It's not just the money they get, it's also the terms in which they get such as interest rate of the loan, duration of the loan, collateral needed.

Because they struggle to get funds, they go outside the official financial system to get funds called the shadow banking system. But those interest rates are very high.
 
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It's not just the money they get, it's also the terms in which they get such as interest rate of the loan, duration of the loan, collateral needed.

Because they struggle to get funds, they go outside the official financial system to get funds called the shadow banking system. But those interest rates are very high.

Definitely the system needs to be further reformed and streamlined. SMEs are the heart of China's economy, especially in terms of providing employment. Stronger SME means stronger domestic demand/spending, which is exactly what China has been trying to promote.
 
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"Blame the Fed, not China."

The US economy is a building whose structural framework has been nibbled away by Fed termites from within.
As of 2015, almost nothing remains.

Foreign influences are random gusts of wind.

If the building eventually falls over, the termites are to blame, not the wind."

This piece from libertarian website LewRockwell.com dissects what is finally being exposed about America's economic "con game" with QE. it is a con.

America is hollow and running on fumes, and almost on an empty gas tank... and we are seeing it in the worthless purchasing power of the U.S. dollar today in the domestic U.S. market.

Today, I got a real shocker of an 800 square foot apartment up for rental.... in Dot.com town, San Francisco .... at a whopping rental price of U.S.$ 3,500 a month..... in a so-so apartment building in the intersection of a noisy busy vehicular traffic intersection......

$ 3,500 f***** U.S. dollars for a tiny little apartment, the size of a closet.

I know who to blame.... and it is not China.

Don’t Blame China – LewRockwell.com
 
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