Do you belive China Bankupt ?

[Jasonjst]

http://www.theepochtimes.com/n2/china-news...upt-141214.html

 

Saw this article on Epochtimes , they give this free paper at MRT Station.

 

Anyone belive what is written here ? KNN if it is real , the whole world will goes into a depression for a long long time ?

 

 

Here is the article :

 

China

[Jasonjst]

http://articles.moneycentral.msn.com/Inves...y-bankrupt.aspx

 

Another acticle say or less the same thing :

 

Is China broke?

 

It seems like a silly question, right? China's foreign-exchange reserves stood at $2.4 trillion at the end of 2009. Yes, China announced that its proposed annual budget for 2010 would produce a record deficit, but the deficit is just $154 billion, or 2.8% of China's gross domestic product. In contrast, the Congressional Budget Office projects the U.S. budget deficit for fiscal 2010 at $1.3 trillion. That's equal to 9.2% of GDP.

 

 

How to invest in China

But remember the theme of my column earlier this week: All governments lie about their finances. At worst, as in Greece and the United States, the lies are bold and transparent. Everybody knows the emperor has no clothes, but no one want to say so. At best, as in Canada and China, the lies are more subtle -- more like a magician's misdirection than a viking raider's ax. Look at these great numbers, the lie goes, but don't look at those up my sleeve.

 

There's a good argument to be made that if you look at all the numbers, instead of just the ones the budget magicians want you to see, China is indeed broke.

 

More debt than meets the eye

Want to see how that could be?

 

If you look only at the current position of China's national government, the country is in great shape. Not only is the current budget deficit at that tiny 2.8% of GDP, but the International Monetary Fund projects the country's accumulated gross debt at just 22% of 2010 GDP. U.S gross debt, by comparison, is projected at 94% of GDP in 2010. The lowest gross-debt-to-GDP figure for any of the Group of Seven developed economies is Canada's 79%.

 

Breakdown in the BRICs

 

Go to MoneyShow.com

 

 

But China has a history of taking debt off its books and burying it, which should prompt us to poke and prod its numbers. If we go back to the last time China cooked the national books big time, during the Asian currency crisis of 1997, we can get an idea of where its debt might be hidden now.

 

The currency crisis started in 1997 with the collapse of the Thai baht -- and then, like dominoes, the currencies of Indonesia, South Korea, Malaysia and the Philippines collapsed.

 

In each case, the country had built up an export-led economy financed by foreign debt. When the hot money that had been flowing in instead flowed out, that sent currencies, stock markets and economies into a nose dive.

 

China escaped the first stage of the crisis because the country's tightly controlled currency and stock markets, and its economy, had kept out hot money from overseas. China had built its export-led economy on domestic bank loans instead. The majority of bank loans, then as now, went to state-owned companies -- about 70% of the total, the Congressional Research Service estimated in a 1999 examination of the period.

 

Check today's currency exchange rates

 

Those loans were all that kept the doors open at many of China's biggest state-owned companies. In its review, the Congressional Research Service estimated that about 75% of China's 100,000 largest state-owned companies lost money and needed bank loans to continue operating.

 

That became a problem when, in the aftermath of the currency crisis, China's exports fell. That sent revenue plunging at state-owned companies that were already losing money. Suddenly, China's banks were sitting on billions and billions of debts that anybody who'd taken Bookkeeping 1 in high school could tell were never going to be paid. This was especially a problem for China's biggest banks, all of which had ambitions to raise more capital -- and their international profile -- by going public in Hong Kong and New York. But no bank could go public with this much bad debt on its books.

 

What to do? Why not bury the bad debt?

 

The Beijing government created special-purpose asset management companies for the four largest state-owned banks, the Industrial and Commercial Bank of China (IDCBY, news, msgs), the Agricultural Bank of China, the Bank of China (BACHY, news, msgs) and China Construction Bank (CICHY, news, msgs). These asset management companies -- China Cinda, China Huarong, China Orient and China Great Wall -- would ultimately wind up buying $287 billion in bad loans from state-owned banks. The majority of those purchases were at book value.

 

So how did the asset management companies pay for the purchase of that $287 billion in bad loans? They certainly didn't pay cash. Instead, they issued bonds to the banks in exchange for the bad loans. The bonds, of course, were backed by the promise that the asset management companies would gradually sell off or collect on the bad loans in time to redeem the bonds. And in the meantime, they'd pay the banks interest on those bonds.

 

Neat, huh? In one swell foop, the state-owned banks got $287 billion in bad loans off their books and turned deadbeat loans that would never pay off into streams of income from these bonds. To read more on this neat bit of financial engineering, check out this research paper (.pdf file).

 

Of course, that still left the little issue of where the asset management companies were going to get the approximately $30 billion in annual interest they had promised to pay the state-owned banks. There was also the small matter of how they were going to pay off these bonds when they came due in 10 years, especially since the cash recovery rate on these bad loans would run at just 20.3% in the first five years.

 

 

[Happily1986]

Cheng says that for the last decade the Chinese regime has accumulated its wealth primarily by promoting real estate development, buying urban and suburban residential properties at low prices (or simply taking them), and selling them to developers at high prices

 

this seems so familiar...

[Rockaphonics]

at the rate they are construction infrastructures to artificially boost their domestic consumption and production figures, im not surprised they go bust.

This round of financial crisis maybe a good thing for S.E.A as money has to flow somewhere.

[Kiadaw]

You never know man. You can never guess what the chinese have inside their closets.

 

No matter, they can claim the money from USA, maybe. They have so many construction, some of them bigger than they need to, like government buildings that looks like palaces. But then again, their labor are cheap, but then there is corruption.

 

Anyway, I may be going to buy a piece of land with huge plot. Grow some plants as food, so we can survive with minimal outside influence, like the good old medival period, & not worry about the state of the world economy.

[Happily1986]

You never know man. You can never guess what the chinese have inside their closets.

 

No matter, they can claim the money from USA, maybe. They have so many construction, some of them bigger than they need to, like government buildings that looks like palaces. But then again, their labor are cheap, but then there is corruption.

 

Anyway, I may be going to buy a piece of land with huge plot. Grow some plants as food, so we can survive with minimal outside influence, like the good old medival period, & not worry about the state of the world economy.

 

So are you going to be an Amish?

[Kiadaw]

So are you going to be an Amish?

This is a new word for me, but just for you, I did a serach.

 

Anyway, not this extreme. But its always interesting to plant some of your own food. Can be simple things like apple trees, or tomatos. Or have a garden of roses. Then can sell in the market on Sunday, or use them to decorate the house..

[Lethalstrike]

It might sounds a bit far-fetched as it is just based on the opinion of 1 Chinese scholar. However, knowing the Chinese and their fixation on "face" value, it is also not hard to fathom that the Chinese government has quite a lot of skeletons in its closet.

[Meanmachine]

It is hard to believe that China will be like tat, going forward, when the whole of China's population stand together and jump @ the same time,

 

Guess what will happen?

 

 

 

 

 

The whole world will , , , " F#@K SHAKE ", Good enough to scare everybody ya!!

[Ithunk]

nope dun believe china is a rich country

 

its jus that doing business with them will take something special

[2BDriver]

Jason, this is a piece of scary information. If it do happen, the impact will be doom for sure.

[GoodCar]

The real wealth is not paper money.

 

 

[2BDriver]

The real wealth is not paper money.

Is it call Legal Tender Note ?

[Mecontle]

inflation is really high in cheena , 1 fast food meal of kungfu's is 68yuan & , 1 meat floss bun at breadtalk is 7yuan , 1 blue collar avg pay is 2k pm , iphone4 is 5k , basically u can pretend u r paying in sgd when u live in cheena

[Windwaver]

Anyway, I may be going to buy a piece of land with huge plot. Grow some plants as food, so we can survive with minimal outside influence, like the good old medival period, & not worry about the state of the world economy.

 

Ah, I like this

[Hwt]

Scientists and engineers used to pay lots of attention to Linpack performance figures of supercomputers. The leaders were usually computers in US and Japan. Suddenly, China dominated the world with its Tianhe-1A that emphasized the use of GPUs. Then the scientists and engineers tried hard to convince the world that Linkpack is no longer a good gauge of supercomputer performances. They started to talk about energy efficient supercomputers and the kind of computations that can be done using the hardware. When Japan won the race again with its K-computer, we seem to be back to Linpack, with US following the GPU-centric approach.

 

Is something similar happening in economics? Seems to be, just that economics probably has a much bigger historical baggage that prevents it from changing focus so quickly.

[Donut]

I'm not surprised by the report. China is always corrupted and famed for hiding info. Their companies are like that and garment is also like that.

 

I never believe their data, no matter what.

 

Their economy is over heated. One day it will just burst!!

[GoodCar]

I don't know leh, I no study finance and economy one

 

But when money become no value, the farmer will be the most wealthy people in earth..

 

Don't think too much, time to sleep