Panama Canal Expansion

[LongBlade]

Forecasting economic futures is next to impossible. 
That being said, I have one critical observation for Chinese economic growth.

In the history of man, there has never been an economy with sustained rapid growth with a falling population.
China's population is starting to decline due to the one child policy and the intentional killing of female infants.

I could be wrong, but given what I know about long term economic growth the Chinese will start slowing pretty soon.

You're absolutely correct, Airboy. There are a large number of fundamentals going wrong for the Chinese right now.

[Windigo]

Forecasting economic futures is next to impossible. 
That being said, I have one critical observation for Chinese economic growth.

In the history of man, there has never been an economy with sustained rapid growth with a falling population.
China's population is starting to decline due to the one child policy and the intentional killing of female infants.

I could be wrong, but given what I know about long term economic growth the Chinese will start slowing pretty soon.

I will agree with that, provided you give me a time frame for what you consider sustained rapid growth. 10 years? 20? 30?
my rationale for thinking China is a safe bet for at least 7% is based on the development of their internal economy (rise of middle class), its a long way from maturation.

[GDS_Starfury]

we could call it the Advanced Genghis Warning thread.

for consistency...   :P

[airboy]

Forecasting economic futures is next to impossible. 
That being said, I have one critical observation for Chinese economic growth.

In the history of man, there has never been an economy with sustained rapid growth with a falling population.
China's population is starting to decline due to the one child policy and the intentional killing of female infants.

I could be wrong, but given what I know about long term economic growth the Chinese will start slowing pretty soon.

I will agree with that, provided you give me a time frame for what you consider sustained rapid growth. 10 years? 20? 30?
my rationale for thinking China is a safe bet for at least 7% is based on the development of their internal economy (rise of middle class), its a long way from maturation.

Economic growth rates slow, then turn negative with a declining population.  Japan is a classic example.  China is more complex because they have (had) a large, rural population that was engaged in marginal farming.  But what I have been reading in the Wall St. Journal over the last 3 years is that the marginal, rural farmers are drying up as an economic source and that China has had consistent high wage inflation.

Also, it is incredibly hard to keep up a high growth rate once your economy grows to medium size or above.  The base is so big a huge growth rate becomes almost impossible.

So, I think that China continuing 7%+ growth rates for another 10 years is pretty improbable.  Not saying it can't happen because I have not done a comprehensive study of their population and employment demographics.  But I doubt it.  Japan was going to take over the world economically in the 70s and 80s - and that plan collapsed when their population began to age & numbers declined.

In sum, I strongly doubt 7% growth rates over the next 10 years.

[Mr. Bigglesworth]

Forecasting economic futures is next to impossible. 
That being said, I have one critical observation for Chinese economic growth.

In the history of man, there has never been an economy with sustained rapid growth with a falling population.
China's population is starting to decline due to the one child policy and the intentional killing of female infants.

I could be wrong, but given what I know about long term economic growth the Chinese will start slowing pretty soon.

I will agree with that, provided you give me a time frame for what you consider sustained rapid growth. 10 years? 20? 30?
my rationale for thinking China is a safe bet for at least 7% is based on the development of their internal economy (rise of middle class), its a long way from maturation.

Economic growth rates slow, then turn negative with a declining population.  Japan is a classic example.  China is more complex because they have (had) a large, rural population that was engaged in marginal farming.  But what I have been reading in the Wall St. Journal over the last 3 years is that the marginal, rural farmers are drying up as an economic source and that China has had consistent high wage inflation.

Also, it is incredibly hard to keep up a high growth rate once your economy grows to medium size or above.  The base is so big a huge growth rate becomes almost impossible.

So, I think that China continuing 7%  growth rates for another 10 years is pretty improbable.  Not saying it can't happen because I have not done a comprehensive study of their population and employment demographics.  But I doubt it.  Japan was going to take over the world economically in the 70s and 80s - and that plan collapsed when their population began to age & numbers declined.

In sum, I strongly doubt 7% growth rates over the next 10 years.

Well said, the shift from peasant farmer to educated worker is the critical input for normally measured economic growth. Even the small village kids are now getting good levels of education comparable in quality to the rest of the world. More advanced in math and science. IMO that is the source of potential growth. What do those people decide to do with their lives? Many will not stay farming. Many in the cities sick of the shitty slave live will return to rural communities with money. The potential is there for a new type of lifestyle in those areas.

[Windigo]

Forecasting economic futures is next to impossible. 
That being said, I have one critical observation for Chinese economic growth.

In the history of man, there has never been an economy with sustained rapid growth with a falling population.
China's population is starting to decline due to the one child policy and the intentional killing of female infants.

I could be wrong, but given what I know about long term economic growth the Chinese will start slowing pretty soon.

I will agree with that, provided you give me a time frame for what you consider sustained rapid growth. 10 years? 20? 30?
my rationale for thinking China is a safe bet for at least 7% is based on the development of their internal economy (rise of middle class), its a long way from maturation.

Economic growth rates slow, then turn negative with a declining population.  Japan is a classic example.  China is more complex because they have (had) a large, rural population that was engaged in marginal farming.  But what I have been reading in the Wall St. Journal over the last 3 years is that the marginal, rural farmers are drying up as an economic source and that China has had consistent high wage inflation.

Also, it is incredibly hard to keep up a high growth rate once your economy grows to medium size or above.  The base is so big a huge growth rate becomes almost impossible.

So, I think that China continuing 7%+ growth rates for another 10 years is pretty improbable.  Not saying it can't happen because I have not done a comprehensive study of their population and employment demographics.  But I doubt it.  Japan was going to take over the world economically in the 70s and 80s - and that plan collapsed when their population began to age & numbers declined.

In sum, I strongly doubt 7% growth rates over the next 10 years.

you raise a good comparison with Japan... though I would argue that when Japan's economy took off they already had all the internal infrastructure and complexities of an internal economy going for them.... I think China will be 7% over the next 10 years

[GDS_Starfury]

Japan had the advantage of restarting their industry and infrastructure with modern technology as we had razed the previous ones.  China does not have that advantage.

[Windigo]

Japan had the advantage of restarting their industry and infrastructure with modern technology as we had razed the previous ones.  China does not have that advantage.

they have no fucking indigenous tech though... other than civil engineers.... most came with the Russians IIRC

[OJsDad]

From CNBC

China Showing Symptoms of Financial Crisis: Report
SOUTH AND SOUTHEAST ASIA, ASIA: NEWS, BUSINESS NEWS
CNBC.com | Monday, 18 Mar 2013 | 4:08 AM ET
Just as concerns over a hard landing in the world's second largest economy look to have faded,
economists at Nomura sounded a warning that the Chinese economy is exhibiting the same worrying
symptoms that triggered the 2008 financial crisis.
The country's rapid buildup of leverage, decline in potential growth and elevated property prices, are
three red flags that should not be downplayed, according to economists at the bank, Zhiwei Zhang and
Wendy Chen.
"China faces rising risks of a systemic financial crisis and the government needs to take action quickly
to contain such risks. We believe the true extent of financial risks in China is not fully appreciated by
investors," Zhang and Chen wrote in a report released over the weekend.
According to the analysts, if China maintains a loose policy stance this year it would heighten the risk
of a financial crisis in 2014. Easy monetary policy risks pushing up inflation and leverage in the
economy, making the eventual de-leveraging process more disruptive.
"This is clearly a dangerous choice, but we cannot rule it out given political pressures to maintain
strong growth," Nomura said in the report.
Leverage, a leading indicator of financial strain and measured as a ratio of domestic credit to gross
domestic product (GDP), has reached its highest level since records began in 1978. This ratio was 121
percent before the financial crisis of 2008 and has risen to 155 percent in 2012, as a result of the
government's fiscal and monetary policies to support growth.
(Read More: Time to Remove the Punch Bowl in China?)
"China's leverage rose by 34 percent of GDP in five years — a worrying sign given its history," they
said, noting leverage in the U.S. rose by around 30 percent of GDP in the five years before entering a
crisis.
The Chinese government has in the recent months sent a number of "unusually strong" signals that it
is concerned about financial risks in the economy, they said.
During the People's Bank of China's (PBOC) fourth-quarter monetary policy committee meeting, the
central bank said "controlling risks" was a top policy objective.
Last week, PBOC governor Zhou Xiaochuan said the risk banks face on loans to local governments
should not be underestimated. He noted that around 20 percent of loans to the financing arms of local
governments were risky, several media reported.
In addition to worrying levels of leverage, China is facing a decline in potential growth, according to the
economists, driven by a decline in the labor force and productivity growth. The country's working age
population began to decline in 2012, according to Nomura.
(Read More: China's Aging Population Threatens Its Manufacturing Might)
Last year, China's economy expanded 7.8 percent, its slowest pace in 13 years. In 2013, the
government has set an annual growth target of 7.5 percent.
Property Bubble? 11/9/13 China Showing Symptoms ofFinancial Crisis: Report
www.cnbc.com/id/100562024/print 2/2
Rapid property price inflation is the final warning sign in the economy, they said, noting that unusually
strong increases in asset prices have typically preceded banking crises.
According to official data, housing prices have risen 113 percent from 2004 to 2012 in major Chinese
cities. However, they deem the data highly "questionable" and "contradictory" to observations on the
ground.
(Read More: China February New Home Prices Rise for Second Month)
Citing a report by three professors in Tsinghua University and National University of Singapore,
Nomura said property prices rose by 250 percent from 2004 to 2009, far outstripping the level of
growth in the official index. This compares to a rise of 84 percent for the Case-Shiller U.S. housing
price index from 2001 to its peak in 2006.
(Read More: Why China's Property Market Is Getting Scary)
The government has acknowledged risks in the property sector through imposing a slew of measures
to stabilize prices earlier this month including the stricter enforcement of a 20 percent capital gains tax
on home sale profits.
However, Zhang and Chen, expect they will be ineffective in keeping a lid on prices in the long run.
"The pattern has been for house prices to initially dip after tightening policies are introduced, then to
rebound, which suggests that the risks have not been mitigated," they said.
© 2013 CNBC.com
URL: http://www.cnbc.com/100562024

[OJsDad]

An article from CNBC last year talking about China's declining population and manufacturing;

China's Aging Population Threatens Its Manufacturing Might
BUSINESS NEWS
By: Deirdre Wang Morris, Producer and Reporter, CNBC Asia Pacific
CNBC.com | Wednesday, 24 Oct 2012 | 4:20 PM ET
China, the manufacturing hub of the world, is in danger of losing that title.
Its population is aging fast as its one-child policy, begun in the 1970s, begins to bite. This, in turn,
could lead to a huge labor shortfall by 2050, according to experts.
China's workforce, those between the ages of 15 and 64, is expected to start contracting beginning in
2015. The number of new entrants into the workforce is already falling and will decline by 30 percent in
2020 compared to 2010, according to Beijing-based research firm GK Dragonomics.
"In the case of China, you have a shrinking number of people in the young adult workforce, shrinking
numbers of children feeding into this force, and a growing number of the aging workforce," Judith
Banister, senior demographer at Javelin Investments in Beijing, said.
In 2010, there were 110 million people 65 and above in China; by 2030, the number will increase by
more than 100 million, according to the United Nations. By 2050, more than a quarter of the population
will be over 65.
In an article published in the China Economic Quarterly earlier this year, Wang Feng, director of
Brookings-Tsinghua Center for Public Policy in Beijing, likens China's demographic structure to a bullet
train racing into the unknown.
"Profound demographic changes in China are redrawing the parameters of the country's future," Wang
wrote.
Over the past two decades, China has experienced what experts call "a demographic window of
opportunity." UN data show the country's working age population grew from 66 percent of China's total
population in 1990 to more than 72 percent in 2010 — fueling the nation's economic rise, when it grew
at an average rate of nearly 10 percent annually.
China's working age population is expected to decline to 61 percent of the total population by 2050,
according to the UN.
A one-child policy introduced in 1977 and rolled out nationwide two years later has contributed to
falling birth rates, while life expectancy has gone up.
(Read More: Asia Caught Off Guard by Its Aging Population)
Thomas Gatley of GK Dragonomics said those between 15 and 24 are "the cheapest, most mobile and
flexible in the Chinese workforce," but their numbers have been declining since 2005, a situation that
has led to significant wage growth and demand outstripping supply.
UN data show there were 225 million people in this age group in 2010. By 2025, the number will fall by
nearly 30 percent to 164 million. And in 2050, it will shrink to 124 million.
A cheap and young labor force that gave China its reputation as the manufacturing capital of the world
is fast eroding. Plus, China's youth are now reluctant to take up low-paying factory jobs that come with
long working hours under tough conditions.
Geoffrey Crothall, research director at Hong Kong-based China Labor Bulletin that tracks labor strikes11/9/13 China's Aging Population Threatens Its Manufacturing Might
www.cnbc.com/id/49498720/print 2/3
and protests in the mainland, said that "the number of young people going into the workforce is
declining. They're not willing to work 12 hours a day for minimum wages anymore. They're looking for
alternative employment or pushing for higher wages through strike action and protests."
According to the Bulletin, in the first eight months of the year there were on average 29 incidents of
labor unrest per month compared to 11 per month in the same period last year. Meanwhile, the
average minimum wage in China has been increasing — 12.5 percent per year over 2006-2010,
according to official data.
Over the past few years Apple supplier and contract electronics manufacturer Foxconn Technology
Group has come to symbolize the changes and challenges plaguing China's labor market.
Recent worker-related unrest at the company, which employs 1.2 million people at its factories, has
highlighted the fact that China's labor force is in the midst of a churn.
In mid-October, more than 200 workers at its plant in Zhengzhou refused to work in protest over their
working conditions. Less than two weeks earlier, the company's Taiyuan factory in central China, which
employs about 79,000 workers, had to shut down for a day after a riot left several workers hospitalized
and detained by the police.
Also in mid-October, Foxconn admitted to using underage interns at a site in Shandong province.
According to the Bulletin's Crothall, "the younger workers are leading a lot of the protests, as they
have higher expectations."
The rise in labor unrest is owing to greater awareness among workers about their rights and an
unwillingness among the new breed of workers to make sacrifices in return for low pay, said China
observers.
Migrant workers, one of the important components of China's labor force, are also declining as
improving employment conditions in rural areas keep them from moving to cities in search of work.
Foxconn told CNBC via email, "China has changed dramatically in recent years, and many migrant
workers who have been so important to the success of the manufacturing industry no longer want to be
migrants, preferring, instead, to have good employment opportunities in their home province."
(Read More: Can Japan's Elderly Become Its Growth Engine?)
As a result of this shift, factories have started to move away from the cities in China's industrial coastal
belt. Foxconn, for example, has been gradually shifting its manufacturing operations to China's inland
provinces to combat rising labor costs and shortages.
"Our goal in doing this is to give workers an opportunity to find employment and a competitive wage
near their families and friends," the company said.
As China ages, the mobility of its workforce will reduce further, said experts, forcing more factories to
rethink their location.
Moving Out
Many manufacturers, long used to a cheap and mobile workforce, are leaving the country for alternate
destinations like Thailand, Vietnam and Bangladesh.
According to U.S.-based financial consultancy firm Capital Business Credit's quarterly "Global Retail
Manufacturers and Importers Survey," released in September, 40 percent of U.S. importers and
manufacturers are thinking of moving their manufacturing bases away from China.
The survey cited concerns over the quality of goods made in China, rising operating costs and
competition from other manufacturing centers as the main reasons for moving out.
Over the past few years, several global manufacturers have closed factories in China. For example,
German sports goods manufacturer Adidas losed its last factory in China's eastern Jiangsu province
earlier this year. China's official news agency Xinhua quoted workers at the Adidas factory, saying they11/9/13 China's Aging Population Threatens Its Manufacturing Might
www.cnbc.com/id/49498720/print 3/3
suspected the closure was caused by rising salaries.
In mid-October, China Daily reported that British oil and gas major BP had transferred the last of its
solar business in China to the Chinese company it had joint ventures with, effectively exiting the
market.
While some are moving out of China, others are increasing their level of automation to make up for the
shortfall in labor supply.
For example, Chinese carmaker Great Wall Motors has Swiss robots and other machinery to weld
together car frames, while Apple supplier Foxconn plans to put a million robots in its factories in China
by 2014, according to a Reuters report.
China's changing demographic structure is like a rocky terrain the country's economy will have to
navigate over coming decades, according to Patrick Chovanec, associate professor at Tsinghua
University.
"If you have an uphill situation in terms of demographics, it's not like you can't climb the hill, but your
engine has to be in good condition," he said, implying that China has to build a strong economy to
overcome its demographic challenges.
© 2013 CNBC.com
URL: http://www.cnbc.com/49498720

[GDS_Starfury]

thanks for those two articles.

[GDS_Starfury]

heres another twist on the whole China issue.

http://money.msn.com/investing/news.aspx?feed=AP&date=20131113&id=17104538

so as our energy exports increase as Chinas need of foreign oil increases I see a rebalance of the debt/trade issue.
nothing stays static Windy.   ;D

[Windigo]

heres another twist on the whole China issue.

http://money.msn.com/investing/news.aspx?feed=AP&date=20131113&id=17104538

so as our energy exports increase as Chinas need of foreign oil increases I see a rebalance of the debt/trade issue.
nothing stays static Windy.   ;D

don't bank on oil to turn the economy around...

[GDS_Starfury]

your being myopic again.

[LongBlade]

your being myopic again.