China's economy - is it really what we think it is...?

[maplefemme]

With diamond prices increasing and China being touted as partly responsible, I see things like this and wonder what to make of it all, your thoughts??

http://www.youtube.com/watch?v=rPILhiTJv7E

 

[Arkteia]

Off-topic but I wonder what might happen in a country where man:woman ratio is 1.5:1? Sociology-wise? I was surprised to see kids on this vacant street.

 

[maplefemme]

I really couldn't say, I was just wondering who exactly is buying up large volumes of rough over there and who are the consumers, what are the demographics?
Do they have enough consumers of diamonds or is this a facade? Is it a bubble and will it affect diamond prices globally?

 

[TristanC]

China is a country with 1.3billion (oh look, i rounded the next decimal and lost 36million chinese nationals... 9 times the number of my country lost to rounding) people.

Even if half of one percent of them are filthy rich, that's 6.5million very very rich people. They can absorb a huge quantity of gems. I think the market is real, and it is in its infancy. India is no slouch either, and they will swiftly change the game.

So I expect China and India to take things to the next level very soon.

Don't expect to see any quieting of the demand for a while. The consumption pattern of Asians is typically more quality driven for luxury goods, and a bit more on the showy side. So gems that go there should be of decent to higher quality standards. I doubt large low quality stones will be in fashion there (stature of the average asian is smallish - but growing) and of the large ones that make it there, they will be of large size and high quality I feel.

There are some threads with indian diamond jewelry on PS that have shared some amazing bling. This is the future of the diamond industry I think.

 

[TristanC]

Off-topic but I wonder what might happen in a country where man:woman ratio is 1.5:1? Sociology-wise? I was surprised to see kids on this vacant street.

Wasn't America very much like that at one point in history too? All the wealth was pouring in, and it was a land of opportunity, with more men seeking their fortunes and a big gender disparity in major cities?

Chinese women are also being exported for the flesh trade, and as brides at an alarming rate. But there are so many of them that the sheer numbers are mind boggling.

As with everything, those that are of middle income and above would not feel the shortage of women I think. As with most things, the lowest echelons of society are the ones that have to find their way...

 

[maplefemme]

China is a country with 1.3billion (oh look, i rounded the next decimal and lost 36million chinese nationals... 9 times the number of my country lost to rounding) people.

Even if half of one percent of them are filthy rich, that's 6.5million very very rich people. They can absorb a huge quantity of gems. I think the market is real, and it is in its infancy. India is no slouch either, and they will swiftly change the game.

So I expect China and India to take things to the next level very soon.

Don't expect to see any quieting of the demand for a while. The consumption pattern of Asians is typically more quality driven for luxury goods, and a bit more on the showy side. So gems that go there should be of decent to higher quality standards. I doubt large low quality stones will be in fashion there (stature of the average asian is smallish - but growing) and of the large ones that make it there, they will be of large size and high quality I feel.

There are some threads with indian diamond jewelry on PS that have shared some amazing bling. This is the future of the diamond industry I think.

Very good points about China, this is what I was curious to know. India I have no questions, I was an International foreign aid and community development advisor in India, I know their economics. Mass poverty, mass wealth...

Tristan, what do you think of these entire cities being created yet remaining uninhabited?

 

[stone-cold11]

Tristan, what do you think of these entire cities being created yet remaining uninhabited?

Not tristan but my take on it is as follows.

Not sure if this bubble will burst in the near future. The state has the money, the people that do not have the money cannot buy it, the large down deposit and 3 years to full payment cited in the clip, so no chance of a confidence collapse similar to the west.

 

[maplefemme]

Tristan, what do you think of these entire cities being created yet remaining uninhabited?

Not tristan but my take on it is as follows.

Not sure if this bubble will burst in the near future. The state has the money, the people that do not have the money cannot buy it, the large down deposit and 3 years to full payment cited in the clip, so no chance of a confidence collapse similar to the west.

Good point...

 

[Dancing Fire]

there are no question in my mind that the property bubble will soon burst in China.the chinese people only want the west to see rich side of town they don't wanna show you the gettos.yes,there are many millionaires in China but 90% of the people still live in poverty.the avg citizen probably takes home about $250 per month. how in world can a avg citizen afford to buy a home.

 

[kenny]

That reminds me . . . about that Chinese economy . . . http://www.youtube.com/watch?feature=player_embedded&v=NOzR3UAyXao

 

[Dancing Fire]

Tristan, what do you think of these entire cities being created yet remaining uninhabited?

Not tristan but my take on it is as follows.

Not sure if this bubble will burst in the near future. The state has the money, the people that do not have the money cannot buy it, the large down deposit and 3 years to full payment cited in the clip, so no chance of a confidence collapse similar to the west.

yeah,but soon or later the government will go broke from big spendings.why do you think many of the rich families in China holds duo citizenships ? b/c when the S**T hits the fan they can then escape to another country.

 

[maplefemme]

That reminds me . . . about that Chinese economy . . . http://www.youtube.com/watch?feature=player_embedded&v=NOzR3UAyXao

Classic...The Good Will Hunting up next hits the mark too.

 

[maplefemme]

there are no question in my mind that the property bubble will soon burst in China.the chinese people only want the west to see rich side of town they don't wanna show you the gettos.yes,there are many millionaires in China but 90% of the people still live in poverty.the avg citizen probably takes home about $250 per month. how in world can a avg citizen afford to buy a home.

This is what I'm questioning, I do not understand how they can afford to build entire cities that remain uninhabited and for what reason would they build them?
Why invest in such massive infrastructure with no economic benefit to the region?
This makes no sense to me, it goes against everything I know in regards to community development and sustainability, to invest funds into such a project with no apparent social or economic benefit.
What am I missing here?

 

[stone-cold11]

Tristan, what do you think of these entire cities being created yet remaining uninhabited?

Not tristan but my take on it is as follows.

Not sure if this bubble will burst in the near future. The state has the money, the people that do not have the money cannot buy it, the large down deposit and 3 years to full payment cited in the clip, so no chance of a confidence collapse similar to the west.

yeah,but soon or later the government will go broke from big spendings.why do you think many of the rich families in China holds duo citizenships ? b/c when the S**T hits the fan they can then escape to another country.

Not that soon, as China is still has a vast internal market and their labor is still relatively cheap.
In the west, because of the cheap loans, many of those that are caught up in the bubbles are low/middle income family. This bubble looks like it will hit the middle to high income family who decide to speculate on properties, how hard it hit depends on how badly they over spent their income, and the property developers.

The low income family will be spared. Maybe better when the housing price starts being affordable to them.

 

[TristanC]

Disclaimer: I am not a social/economic expert. I merely speak as I think. And no, no-one is paying me to think either. Ok, disclaimer done.

I think the painted picture of 90% poverty is no longer accurate. It was true as little as a decade ago, but it simply isn't true now. Remember that wealth is relativistic. If you are in a rural state, where you are living on subsistence agriculture and your income is measured in US$, yes, you are quantitatively poor. But if you work your own land and have the means to support a family in a province where this is the Norm... then no, I do not think you are dirt poor. You are just average.

In the China of today (the rate of wealth growth is phenomenal), people simply aren't anywhere near as poor as you picture them. There is an incredible burgeouning middle wealth segment, and doubters will fall by the wayside as the economy develops.

India and China are parallels in terms of size of country, but I believe China has the greater potential for economic growth in the mid term. Too long a post to explain this point of view.

Anyway, the bubbles won't necessarily collapse. Much of the projects and special cities are state led with massive private investments as well. Some cities may fail. But the way that China does things is insane to a westerner.

For example, for the Beijing Olympics, experts said that air pollution was unbearably bad. The solution? 1. Move the city's iron/steel foundry that had been in operation for decades out of the city. And everyone with it. Just like that. They built a newer modern foundry, and just moved everyone out wholesale to a designated zone.

Also, cars were contributing to air pollution. Solution? On alternate days, cars with even numbered license plates can be driven, and on the other alternate days cars with odd numbered license plates can be driven.

These may be lunatic suggestions from a human rights, civil rights, whatever rights point of view. Sometimes it seems like a child is making these decisions. But if you ask me, I step back and ask - what is wrong with the solution? It works. Yes, it doesn't take everything into account, and it is overly simplistic, but it is workable right? yes it is. And they implement it immediately, and don't accept non compliance.

So will the government precipitate a collapse? Perhaps. All economies go through phases. But they have the will to make it work, and the growing wealth and clout to make it happen as well. Also, they don't sit on their hands. They get it to go the way they envision it, or shoot anyone that stands up to say no.

So far china has a very good record for setting up special economic zones and whole city projects. They actually have sufficient local demand and a large enough domestic market that if the government feels a city is developed enough to support a nascent economy/industry, they can provide stimulus to companies/individuals to set up there. I don't think many will remain ghost towns for long.

 

[Dancing Fire]

food inflation will bring China to its knees.

 

[stone-cold11]

food inflation will bring China to its knees.

You forgot this is a planned state economy, with some freedom. You think the government will allow food inflation? Either an export restriction on certain grains/food items or subsidized import. Hungry people means unrest.

 

[maplefemme]

food inflation will bring China to its knees.

Hungry people means unrest.

.....and unrest means a rift in the sedation and a challenge to the status quo, something China vehemently defends against.