Hidden Chinese Economy http://www.profitableinvestingtips.com/profitable-investing-tips/hidden-chinese-economy China has been the wonder of the economic world over the last forty years. With growth rates often exceeding ten percent per year China has moved too first place in the world in value of exports. However, China ranks sixth in gross national income due to its heavy reliance on exports to the neglect of its domestic markets. Along the way Chinese banks have been very free in lending money, especially to high ranking members of the Communist Party and their friends and families. The suggestion of large pools of loans invisible to the outside world is reminiscent of the situation in Japan in the late 1980s. Just as Japan seemed set to conquer the world economically it went into economic stagnation and deflation that lasted over two decades and is just now emerging. This hidden Chinese economy of loans has the potential to kill the Chinese economic miracle, at least for the foreseeable future. Another hidden Chinese economy issue is the large number of empty buildings that Chinese investors believe are repositories of wealth. When the Chinese real estate bubble bursts many investors will find that the money that they borrowed to buy real estate is still due but that the value of the real estate they purchased is nowhere near what they owe. Trying to Fix the Hidden Chinese Economy The People’s Bank of China has been tightening up on its lending in an attempt to clean up loan portfolios without killing all economic growth. A major issue for foreign as well as domestic investors is the accuracy of Chinese economic data. The many hidden loans in Japan were not visible and were a rot at the core the Japanese economic miracle. Is this the case with a hidden Chinese economy of bad loans, inflated housing values and doctored economic figures? Fundamental analysis can be misleading even for investment in a China with lower growth targets if the basic data is not accurate. In a democracy the government derives its power and authority from the consent of the governed. Chairman Mao, the founder of Communist China, said that political power came from the barrel of a gun. Today the Communist elite in China are often the main beneficiaries of the economic miracle via preferred loans and ownership/management of businesses with preferential connections. China has prospered because it has let up on the strict controls of the early days. But it needs to maintain growth and a certain level of prosperity in order to avoid civil unrest without reverting to the gun barrel approach to power. Thus the People’s Bank of China needs to reduce the money supply without killing the economic miracle. In a sense only the folks on top of the ruling pyramid in China know the whole story and the hidden Chinese economy and just how dangerous things are at the moment.

1. Hidden
Chinese
Economy
BY
WWW.PROFITABLEINVESTINGTIPS.COM

2. China has been the wonder of the economic
world over the last forty years.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

3. With growth rates often exceeding ten
percent per year China has moved too first
place in the world in value of exports.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

4. However, China ranks sixth in gross national
income due to its heavy reliance on exports
to the neglect of its domestic markets.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

5. Along the way Chinese banks have been very
free in lending money, especially to high
ranking members of the Communist Party
and their friends and families.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

6. The suggestion of large pools of loans
invisible to the outside world is reminiscent of
the situation in Japan in the late 1980s.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

7. Just as Japan seemed set to conquer the
world economically it went into economic
stagnation and deflation that lasted over two
decades and is just now emerging.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

8. This hidden Chinese economy of loans has
the potential to kill the Chinese economic
miracle, at least for the foreseeable future.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

9. Another hidden Chinese economy issue is
the large number of empty buildings that
Chinese investors believe are repositories of
wealth.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

10. When the Chinese real estate bubble bursts
many investors will find that the money that
they borrowed to buy real estate is still due
but that the value of the real estate they
purchased is nowhere near what they owe.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

11. Trying to Fix the
Hidden Chinese
Economy
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

12. The People’s Bank of China has been
tightening up on its lending in an attempt to
clean up loan portfolios without killing all
economic growth.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

13. A major issue for foreign as well as domestic
investors is the accuracy of Chinese
economic data.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

14. The many hidden loans in Japan were not
visible and were a rot at the core the
Japanese economic miracle.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

15. Is this the case with a hidden Chinese
economy of bad loans, inflated housing
values and doctored economic figures?
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

16. Fundamental analysis can be misleading
even for investment in a China with lower
growth targets if the basic data is not
accurate.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

17. In a democracy the government derives its
power and authority from the consent of the
governed.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

18. Chairman Mao, the founder of Communist
China, said that political power came from the
barrel of a gun.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

19. Today the Communist elite in China are often
the main beneficiaries of the economic
miracle via preferred loans and
ownership/management of businesses with
preferential connections.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

20. China has prospered because it has let up on
the strict controls of the early days.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

21. But it needs to maintain growth and a certain
level of prosperity in order to avoid civil
unrest without reverting to the gun barrel
approach to power.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

22. Thus the People’s Bank of China needs to
reduce the money supply without killing the
economic miracle.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

23. In a sense only the folks on top of the ruling
pyramid in China know the whole story and
the hidden Chinese economy and just how
dangerous things are at the moment.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

24. Facts and Figures
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

25. Here are some facts and figures regarding
how China ranks in the world of exports and
the world of gross domestic income.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

26. Nation
Value of Exports (2012)
China
$ 2,057,000,000,000
United States
$ 1,564,000,000,000
Germany
$ 1,460,000,000,000
Japan
$ 773,900,000,000
France
$ 567,100,000,000
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

27. China leads everyone in the value of what
they export.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

28. Nation
Gross National Income
United States
$9,780,000,000,000.00
Japan
$4,520,000,000,000.00
Germany
$1,940,000,000,000.00
United Kingdom
$1,480,000,000,000.00
France
$1,380,000,000,000.00
China
$1,130,000,000,000.00
Italy
$1,120,000,000,000.00
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

29. These figures put China in sixth place for
total value of goods and services produced.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

30. This is because China’s economy is so
heavily tilted toward exports and not its
domestic markets.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

31. Many believe that to fix the hidden Chinese
economy more money needs to be allotted to
small businesses and normal households.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

32. This is a difficult task for the Communists task
masters who always feel more comfortable
with huge mega projects which they can
control and from which they can siphon
profits.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy

33. In the end the hidden Chinese economy is a
threat to foreign investors, nations that supply
raw materials to China and Asian neighbors
who will feel threatened by economic and
social instability if the hidden Chinese
economy implodes.
http://www.profitableinvestingtips.com/profitableinvesting-tips/hidden-chinese-economy