Skip to comments.China: Why The Recovery Has Begun
Posted on 07/31/2012 5:16:44 AM PDT by blam
China: Why The Recovery Has Begun
07/31/2012 1:52 AM
According to Citi Research, Chinas economy bottomed in Q2 and is likely to rebound moving forward.
The key drivers of growth recovery are that de-stocking is near its end, the hard landing risk of the property sector is contained, and investment, consumption and exports had shown signs of improvement in June. In our view, given more policy supports in the near term, 3Q GDP growth will likely be flattish.
In addition, credit and fiscal policy support is likely to help boost the economy.
First, the planned Rmb360bn infrastructure investment will be fully implemented. Second, the government may draw down Rmb150bn from its macro stabilization fund to elevate the spending capacity, including interest subsidies to designated strategic new industries. Third, in the medium term, experts agree that its more fundamental to cut valuate added tax rate. And if it happens, it will be much more significant on the VAT conversion in the service sector.
The article also stated that proper rebalancing by China in the near term future could have a very strong impact on its growth.
Instead of 10-15 years, Chinas rebalancing is expected to be largely completed by the end of the 12th five-year plan or early 13th five-year plan. If so, Chinas potential growth rate may return to 9% p.a. Urbanization is likely the major driver of growth. From 1978 to 2010, the net increase of permanent urban residents (those with urban hukou) was only 280mn, In the future, another 900mn people will move into cities assuming 70% urbanization rate. This will lead to fundamental changes in household savings and consumption behavior, and require huge increase in public goods and services. Financial reforms could be another area of key policy focus in the new government.
The Real Problem With China "For the United States, the No. 1 problem with Chinas economy is probably intellectual property theft. Technology companies, for example, continue to notice Chinese government agencies downloading software updates for programs they have never bought, at least not legally . . . Chinas leaders have reason to be nervous about all the barriers they have built. Chinas elite, in government and business, are deeply concerned that their companies remain unable to create truly innovative products."
Yes, Red china is getting back to normal . . . "But hey! We don't care what they do to others.. we just love that cheap labor," say U.S. corporations.
< sarc > The "greedy" American factory worker will pay for our sins of taxation and regulation. < /sarc >
Great article IMO. The China Price comes with an ever increasing cost.
These are my comments, not in the article:
Labor unrest in Red China.. revolution to follow? Or, simply the Commies way leading to the seizing of the Useful Idiots' (Lenin's name for them) assets and sending them, penniless, on a slow boat back to America?
When the Commies have stolen all the technology and intellectual property they need to compete worldwide they will kick the foreigners out. There are way too many Chinese who need the jobs than to let a bunch of foreigners share the wealth -- otherwise there will be revolution for sure.
But they will need to make it look like the foreigners were being mean to the heroic workers. "The people" own everything, ya know.. this would not be stealing -- it would be social justice and economic justice.. oh! and it will stop global warming. Washington will cheer but they damn well better not approve another TARP to make taxpayers pay the corporations for the property the Commies stole from them! We'll have revolution here if they do.
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