calm before the storm, page-39

Of more concern to China is the structural problems.
GDP growth is and has always been fanciful at best.
We even had past finance chiefs admit it. Think of a figure and report it.
China is the only country in the world that predicts growth and then gets within a decimal point each time. That is because figures are fanciful at best. The same goes for inflation, debt figures and just about every other economic indicator. I spent 6 years living in China and if you live there you know how the culture works. The government suggests a figure and that's what gets reported. Those that know prefer to look at power usage, rail movements etc

Major Chinese cities are almost as expensive as Australia. In fact just about anything you buy there is comparable is similar to Australia. The biggest concern is wages growth. Long gone are the days of unlimited labour at RMB 800 a month. Wages growth has been astronomical and yet work practices and factories in general are still low tech on average. The facts are that in the most comprehensive survey ever conducted goods could be made in America for only around 5% more than China when all costs were considered. Quite simply, China is not competitive anymore and countries like Vietnam, Cambodia and others can easily beat China at their own game.

On top of that China are the biggest printers of new currency. New RMB notes abound. The reason for so many foreign takeovers is that all those new dollars can be freshly printed, converted to foreign currency and SEO's can pick up assets for nothing but paper cost. They prefer foreign takeovers because they do not feed into local inflation figures as much which are of course much higher than anyone in the CCP will admit. America just stays silent. They want an over valued RMB precisely because it makes China noncompetitive.

One of their biggest assets is access to cheap raw materials. The second is their vast network of export smuggling. They can get products into most countries that business in the west cannot and many smuggled nice and duty free. High duty and high raw materials is what has caused western countries to lose manufacturing.

Now add the debt problem. No-one knows the real figure. Not even the CCP. SEO loans, local government and shadow banking make it impossible to get accurate figures. What we do know is that you could visit a supermarket and be offered 20 % interest to help finance them. That the government washes money into SEO's and then instructs them to lend. They lend at higher rates and they do not wipe those bad debts off the books. We will probably never know what the debt is but we do know it has been growing at an alarming rate.. The CCP tries to control it, then something happens like the recent market problems and they are forced to again feed the beast.