Chriss W. Street continues:
…China is about to show its third straight quarter of negative real (after inflation) GDP growth. The nation had been relying on a stock market boom to play a “decisive role” in funding the nation’s “Silk Road” reforms to transition to a consumer economy.
But as Breitbart News warned in “China’s Lehman Brothers Weekend Begins,” the “Red Dragon” has suffered a financial collapse equivalent in degree to the U.S. stock crash in 2008-9. Unlike the U.S., which used a formal government bailout to stabilize markets, the Communist Party instructed the nation’s banks to use their own balance sheets to guarantee the current $8 trillion stated value of all of China’s 2800 listed stocks.
As Stratfor’s John Minnich points out, “market capitalization of Chinese stock markets hovered around $1 trillion to $2 trillion” before the recent stock boom. At its peak on June 12, “China’s stock market capitalization, all the markets across the country, was something in the area of $10 trillion to $11 trillion.”
Minnich comments that people before the boom might gamble some of their personal savings into the stock market, but “it wasn’t critical to financing, corporate financing in the Chinese economy. Almost all corporate finances came through the state-owned banks.” Read the rest of this entry »
Frances Martel reports: 2013 was a banner year for uncalled for expansion of China’s borders, from the Senkaku Islands Air Identification Defense Zone to a state TV show claiming the entirety of the Philippines for China. But on the economic front, China plans an expansion of a completely different kind: the use of robots to make manufacturing even cheaper.
Canada’s Globe and Mail has a feature out this week on China’s increased push to replace human labor with automated work. While China boasts some of the cheapest labor in the world–hence their domination of the manufacture of many simple to make items–salaries are, by necessity, increasing. This, argues author Scott Barlow, is pressuring the Chinese government to stay competitive economically with other nations by suppressing the growing wages. And to do that, he continues, businesses need to hire fewer people.
Adam Segal writes: One of the common arguments in the wake of the Snowden revelations about NSA surveillance is that other countries are going to double down on developing their own technology industries to reduce their dependence on U.S. companies. The Chinese press has made this argument numerous times–highlighting how IBM, Cisco, Intel and others have penetrated Chinese society–and this was one of the themes in Brazilian President Dilma Rousseff’s address to the United Nations General Assembly: “Brazil will redouble its efforts to adopt legislation, technologies and mechanisms to protect us from the illegal interception of communications and data.” Read the rest of this entry »