\n\t \n<\/p>\n
\n\tI personally admire the way that China imposes its dominance in the world. Whether we like it or not, they have succeeded in becoming the third pole in world, after Europe and the United States. Many people believe that they can also become the no.1 economic power in the world.\n<\/p>\n
\n\tWhat is sure is that China’s economic situation influences the entire world. It’s not a local issue anymore. This is why I would like to share with you some information that we read in the news, trying to figure out if there is a risk of seeing the Chinese economy slowing down.\n<\/p>\n
\n\tStock market<\/strong>\n<\/p>\n \n\t· The Chinese stock market keeps on falling for the last 30 months, having reached its lowest level for this period.\n<\/p>\n \n\t· The Chinese government announced that it will buy shares in the biggest banks of the country, in order to increase investors’ confidence.\n<\/p>\n \n\t· Taking into consideration that the government is already a majority shareholder in all these banks, the results are not expected to be tremendous.\n<\/p>\n \n\t· Credit Suisse, in its latest analysis (12.10.2011) puts the Chinese banks’ NPL at 8 – 12%, at best. In the same analysis it estimates that there is a possibility that the required write-offs will decrease the Owners Capital of the banks by approximately 65-100% in the future. This is probably why the shares keep on falling…\n<\/p>\n \n\tBanking sector<\/strong>\n<\/p>\n \n\t· The credits used to increase by 30% per year. This is double than the increase that USA registered at the peak of the credit bubble and the increase of the Japanese credits in the 80’s.\n<\/p>\n \n\t· IMF says that the price of an apartment in Beijing is 20 times the average annual income of an employee, 14 times in Shanghai. This is triple compared to the peak of the bubble in USA in 2008.\n<\/p>\n \n\t· This credit expansion cannot continue forever. But it is also, probably, linked to the country’s gross domestic product increase, by 10% per year.\n<\/p>\n \n\t· According to UBS, the Chinese “underground” banking sector stands at some 630 billions of dollars, more or less 10% of the Chinese gross domestic product.\n<\/p>\n \n\t· Chinese banks are reported to finance only the big national companies.\n<\/p>\n \n\tEconomy<\/strong>\n<\/p>\n \n\t· IMF estimates the total Chinese debt reaching 200% of the gross domestic product, if we add several “hidden debts” which do not exist in the official calculations.\n<\/p>\n \n\t· The national railway company has already a 300 billion dollars debt, while it owes some 25 billion dollars to its two biggest providers.\n<\/p>\n \n\t· Many local governments borrowed money in order to develop the infrastructure in their area. Now it’s difficult for them to pay these loans back.\n<\/p>\n \n\t· There are also many stories about Chinese companies that don’t have money to pay their employees, Chinese entrepreneurs who disappeared etc.\n<\/p>\n \n\tAll the above does not mean that China will collapse tomorrow. But they give us a clear sign that it might slow down during the following period and this is one more risk that we have to take into account in our calculations.\n<\/p>\n \n\tWhy should we assume it? Because if China coughs, the entire world has a cold. If China has a cold, the world has pneumonia…\n<\/p>\n \n\tWhat is your opinion?<\/p>\n","protected":false},"excerpt":{"rendered":" I personally admire the way that China imposes its dominance in the world. Whether we like it or not, they have succeeded in becoming the third pole in world, after Europe and the United States. Many people believe that they can also become the no.1 economic power in the world. What is sure is […]<\/p>\n","protected":false},"author":3,"featured_media":59454,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[216,17,236],"tags":[],"_links":{"self":[{"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/posts\/9874"}],"collection":[{"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/comments?post=9874"}],"version-history":[{"count":0,"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/posts\/9874\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/media\/59454"}],"wp:attachment":[{"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/media?parent=9874"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/categories?post=9874"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.iliaspapageorgiadis.ro\/english\/wp-json\/wp\/v2\/tags?post=9874"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}