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Chinese Black Swan event imminent?

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Hmm, very interesting...however given that the central govt IS in control of the economy, then there seems little reason why they couldn't just keep building more Ordos' to keep GDP at "reportably" good looking levels? No reason why it couldn't keep rolling for a while longer?
 
that slides is an typical example of Western's bias, as a Chinese I as so used to read negative news from CNN and BBC.

And you are interested in the amount of car production, here is a list

http://en.wikipedia.org/wiki/List_of_countries_by_motor_vehicle_production

China has built 13.7 millions cars in 2009 while America only built 5.7 million. If you look at the figure from 2005, the figures are almost reversed for both countries. Most of the cars built in 2009 in China are sold in China which shows the amount of domestic demand. BTW, haven't you guys seen the Great Wall ads lately?
 
warakawa said:
that slides is an typical example of Western's bias, as a Chinese I as so used to read negative news from CNN and BBC.

And you are interested in the amount of car production, here is a list

http://en.wikipedia.org/wiki/List_of_countries_by_motor_vehicle_production

China has built 13.7 millions cars in 2009 while America only built 5.7 million. If you look at the figure from 2005, the figures are almost reversed for both countries. Most of the cars built in 2009 in China are sold in China which shows the amount of domestic demand. BTW, haven't you guys seen the Great Wall ads lately?
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Actually all the Western bias I have seen particularly main stream is the opposite that China is a bullish story for ever and how wonderful it is!

Australia has really just become a southern province as our economy is so depended on China's demand.

Many just think this commodity bull market in particular pricing is normal I don't know maybe this time is different.
 
IFocus said:
Australia has really just become a southern province as our economy is so depended on China's demand.

Many just think this commodity bull market in particular pricing is normal I don't know maybe this time is different.
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Focus...you have heard of the Commodity/resources Supercycle ? point im trying to make is that the current demand and prices are normal in the middle of a 20 year super cycle...as pointed out in the linked write up from 2006.

Ill link to a fullermoney.com PDF overview from 2006..and quote a little

fullermoney.com said:
Historically, commodities often have the longest cycles, lasting 20 years
or more. The current bull market is only 5 years old. The approximately
21-year bear market since 1980 considerably reduced production
capacity for industrial resources and expansion has lagged analysts'
expectations due to shortages of equipment and qualified manpower,
costs and environmental considerations.

If Fullermoney.com is right about the commodity supercycle, there are
implications for other markets, mainly regarding inflationary pressures.
Specifically, this would be positive for gold and other precious metals
but generally bearish for long-dated government bonds.
Click to expand...

http://www.fullermoney.com/content/...tySupercycleIsStillInItsEarlyYears23Oct06.pdf
 
warakawa said:
that slides is an typical example of Western's bias, as a Chinese I as so used to read negative news from CNN and BBC.
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I think it is irrelevant what your nationality is other than perhaps you have more inside info than the international commentators have.
There will always be comments from so called experts in countries that already have issues in an attempt to deflect the spotlight from their backyard.

I don't see any of these reports being western bias, especially on a forum such as this where the majority, myself included, would like to see where such an influential economy as China is headed.

Spain has gone down a path of lending to extremes and now they estimate that 45% of the loans there will not be repaid. There are over a million properties for sale in Spain for less than what they were originally financed for and yet there are no buyers (or no one willing to borrow/lend further) for them.

There are numerous predictions on the massive effect that a Spanish collapse can have on European and eventually world markets especially with Ireland and a few others waiting in the wings.

The Spanish/European situation is only a fraction of a similiar situation in China where whole towns are empty rather than just groups of apartment buildings.

The overall implications of a negative outcome in China would be massive with obvious severe implications for Australia and that I think is what most posters on here seem to be trying to get a handle on.

We want China to be a massive success but we are allowed to question and form an opinion which can only be based on the information available to us and that comes from Western sources.
 
warakawa said:
China has built 13.7 millions cars in 2009 while America only built 5.7 million. If you look at the figure from 2005, the figures are almost reversed for both countries. Most of the cars built in 2009 in China are sold in China which shows the amount of domestic demand.
Click to expand...

This seems to have got lost.
China is up the 'emerging market' end of the spectrum - huge domestic demand still to be unleashed (it is happening, but loads to come as incomes rise). Structural change, not just cyclical.
Spain, is a much more mature economy compared to China.
Its like comparing lychees with oranges.
 
IFocus said:
Actually all the Western bias I have seen particularly main stream is the opposite that China is a bullish story for ever and how wonderful it is!

Australia has really just become a southern province as our economy is so depended on China's demand.

Many just think this commodity bull market in particular pricing is normal I don't know maybe this time is different.
Click to expand...

Agree. The general sentiment among the "investment community", both industry and private, are biased toward a forever bullish story for China. Any "bearish" news are considered very contrarian at this point of time.

The information provided by the article are actually pretty well know among the "contrarian" community, and does a good job at summarising them too. We (at least I do) all know about the excessive capacity over there and certainly know the potential number of bad loans that the LOCAL regional governments may have in their books. Plenty more "inside" information are available at a number of blogs, including zero hedge, china financial markets, etc.

I do agree that I wouldn't call it exactly a black swan event as the coming up "slow down" (whether it is hard or soft) has already been pretty well documented.

Boggo said:
The overall implications of a negative outcome in China would be massive with obvious severe implications for Australia and that I think is what most posters on here seem to be trying to get a handle on.
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I agree. The fact remains that most mainstream financial commentators in Australia completely ignore the potential impact of a hard slow down in China, or rather, outright downplay them for the sake of their own career. Mums and dads investors stand to lose not only because they trust these commentators, but also because they do not have access to such information to make the right decision for themselves. The sames goes for those mainstream economists in political parties.

P.S: I'm a Chinese too. I PERFECTLY understand their culture and has no doubt in my mind their economy will suffer a slow down one way or the other. And I personally opt for a hard landing more than a soft one until new information suggests otherwise.
 
Timmy said:
This seems to have got lost.
China is up the 'emerging market' end of the spectrum - huge domestic demand still to be unleashed (it is happening, but loads to come as incomes rise). Structural change, not just cyclical.
Spain, is a much more mature economy compared to China.
Its like comparing lychees with oranges.
Click to expand...

For anyone who believed that China's domestic demand would save their economy (or the global economy for that matter), have a read on this article.

http://mpettis.com/2010/07/what-do-banking-crises-have-to-do-with-consumption/

It's not that they wouldn't eventually become the world next biggest consumers of goods, but it wouldn't come in a way that everybody hope would drag the world out of "depression" very soon.
 
Temjin said:
For anyone who believed that China's domestic demand would save their economy (or the global economy for that matter), have a read on this article.

http://mpettis.com/2010/07/what-do-banking-crises-have-to-do-with-consumption/

It's not that they wouldn't eventually become the world next biggest consumers of goods, but it wouldn't come in a way that everybody hope would drag the world out of "depression" very soon.
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No suggestion from me re China domestic demand and dragging the world out of "depression" (I don't even know what that means, it seems to be applied to the current slow global growth environment).

Just still don't agree any "black swan" (Katsenelson doesn't even seem to understand what Taleb means by "black swan") is "imminent" (and no suggestion what this means either - Katsenelson seems to my reading to be saying a China "black swan" will happen eventually, which is sort-of like saying pretty much nothing at all). These extremists (doom-and-gloomers and sunshine-and-lollypoppers (anyone remember Dow 36,000?)) seem more interested in self-promotion than defining terms & making meaningful contributions.
 
Temjin said:
Agree. The general sentiment among the "investment community", both industry and private, are biased toward a forever bullish story for China. Any "bearish" news are considered very contrarian at this point of time.
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I disagree. The bearish views are very widespread and well known indeed.
All over the MSM; eg. 'empty cities' article in Time magazine/website, here is the link: http://www.time.com/time/magazine/article/0,9171,1975336,00.html).
 
Well gee, of course it isn't an "imminent black swan" now after a 600 point drop in the SSEC :rolleyes:, but that article was posted Feb 12 2010 when everyone was eating the China story with dumplings and green tea.

The fact is, as usual, nobody really anticipated a 3000 pip drop in EURUSD would chew the SSEC up and spit it out as the PBoC maintained their hard USDCNY peg making CNY less and less competitive in Euroland as every day went past. That is a Black Swan.

Contrarians were warning people (just like this article) to be out of their BRIC investments and in cash at the beginning of 2010. Such people making said warnings were generally ignored or rationalised against using all the arguments posted in this thread. Apparently, nobody can ever see it coming, except you know, the guys who tend to see it coming.
 

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Timmy said:
I disagree. The bearish views are very widespread and well known indeed.
All over the MSM; eg. 'empty cities' article in Time magazine/website, here is the link: http://www.time.com/time/magazine/article/0,9171,1975336,00.html).
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Sorry, I will have to disagree with you. First of all, that is a US centric article, and I can find far more "bearish" view from US commentators than from Australian sources. (even if they cites oversea sources) Any discussion on possible Chinese economy crash, production over capacity, massive mal-investments, property bubble/crash and/or local government bad debt are simply non-existence in Australia. (with the rare exception of commentaries from Daily Reckoning Australia)

However, in recent weeks I do see more and more articles discussing the potential for slow down in Chinese growth due to their government "intervention" of cooling down their economy. But in most cases, the fear have been downplayed with little to no mention of a hard landing that could have severe implication for the Australian economy.

I tend to swam myself with bearish articles on the Chinese economy from various sources, but I just don't see the level of bearish discussion from mainstream Australian news sources. (again, even if they cite bearish oversea articles, they tend to have a bullish tone behind it)
 
sinner said:
Well gee, of course it isn't an "imminent black swan" now after a 600 point drop in the SSEC :rolleyes:, but that article was posted Feb 12 2010 when everyone was eating the China story with dumplings and green tea.
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This thread was started on July 24, not Feb 12.
So, it isn't 'imminent' if it has already happened, right?
Unless the imminent refers to another 25% fall in the next few months?
But that would involve a bit more than 20-20 hindsight, right?
Little bit harder, right?

sinner said:
The fact is, as usual, nobody really anticipated a 3000 pip drop in EURUSD would chew the SSEC up and spit it out as the PBoC maintained their hard USDCNY peg making CNY less and less competitive in Euroland as every day went past. That is a Black Swan.
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Why are moves like the EUR/USD move classified as black swans?
Markets move.
Thats what they do.
A 20-odd percent move in a currency pair in a few months is a fast move, not a black swan.
And, why is an existing hard currency peg a 'black swan'? Its already there, it can't be unexpected.
These are for you, sinner: :rolleyes::rolleyes:
:D

sinner said:
Contrarians were warning people (just like this article) to be out of their BRIC investments and in cash at the beginning of 2010.

Such people making said warnings were generally ignored or rationalised against using all the arguments posted in this thread. Apparently, nobody can ever see it coming, except you know, the guys who tend to see it coming.
Click to expand...
Yes, not six months later. Hindsight is easy. Please let us know if you expect another 600-or so point drop.

ps.
Saying this:
sinner said:
nobody really anticipated
Click to expand...
contradicts this:
sinner said:
nobody can ever see it coming, except you know, the guys who tend to see it coming.
Click to expand...
Can't have it both ways.
 
Timmy said:
This thread was started on July 24, not Feb 12.
So, it isn't 'imminent' if it has already happened, right?
Unless the imminent refers to another 25% fall in the next few months?
But that would involve a bit more than 20-20 hindsight, right?
Little bit harder, right?
Click to expand...

Err. Did you bother to check the actual article posted? Boggo, not the article writer, posted late.

Why are moves like the EUR/USD move classified as black swans?
Markets move.
Thats what they do.
A 20-odd percent move in a currency pair in a few months is a fast move, not a black swan.
And, why is an existing hard currency peg a 'black swan'? Its already there, it can't be unexpected.
Click to expand...

Err actually, what I said was: nobody anticipated a decline in the Euro would cause such havoc in the SSEC because everybody was gobbling up the China story at the time. In hindsight it is obvious that the hard currency peg would cause CNY to become less competitive in Euroland and thus have such a dramatic effect on the index, but "nobody" warned of it in advance.

To clarify, when I say nobody and everybody in the above context I mean the general investment community who always likes to shout down people who are warning that the current investment craze is treading a dangerous path.
Yes, not six months later. Hindsight is easy. Please let us know if you expect another 600-or so point drop.

ps.
Saying this:

contradicts this:

Can't have it both ways.
Click to expand...

:rolleyes: Once again Timmy: this article was posted on Feb 12. The Chinese black swan was imminent when this article was posted and played out over two financial quarters while everyone else was busy predicting AUDUSD parity. That Boggo only just found it and posted without providing any context or information to people here does not really change the fact it was a prescient warning back in Feb for those willing to listen.
 
Will happily leave the hindsight discussion to you sinner. Carry on.
 
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