Chinese Progress in their Move from a Government Financed Economy to a Private Economy

by fulltimestudent 28 Replies latest social current

• 

  fulltimestudent

  The Chinese government is said to be about half way in the progress from a centralised command economy to a market driven, private enterprise economy.

  Link: http://www.canberratimes.com.au/business/china/private-capital-gets-more-bang-in-china-as-economic-reforms-step-up-20141023-11ah6z.html

  CANBERRA TIMES

  Private capital gets more bang in China as economic reforms step up

  Date: October 23, 2014

  Elzio Barreto

  Private firms have overtaken state-owned companies this year for the first time as the biggest drivers of investment banking revenues in China - a sign of how Beijing's reforms are transforming private capital's role in the world's second-largest economy.

  Nimble and boasting efficient management, these private firms are taking advantage of the internet industry boom and business expansion ambitions to take a bigger share of the deal activity compared with state-owned enterprises (SOEs).

  So far this year, about 78 per cent of the total value of Chinese sharemarket listings, rights issues and other deals has come from the private sector, Dealogic data shows.

  This is up from last year, when the private sector accounted for less than half the total value of these deals. Between 2005 and 2010, when China's four largest banks and a slew of large SOEs were listed, private deals made up one third of the value.

  Private firms are also increasingly favouring foreign banks to advise on deals, undercutting the likes of China International Capital Corp (CICC) and China Galaxy Securities, which had built their fortunes on helping public entities to list and buy rivals.

  The shift comes as Beijing steps up broad financial and economic reforms to make the economy more responsive to market forces. China's Communist Party said last November the government would accelerate the restructuring of SOEs. Measures include allowing private investment in areas such as banking, transport, education and medical care.

  The $25 billion US sharemarket listing in September of Alibaba Group - the world's biggest ever - has largely contributed to this shift. Alone, it generated $300 million in fees to banks.

  Yet, the trend cannot be solely attributed to Alibaba. Companies such as pork producer WH Group, e-commerce giant JD.com and computer maker Lenovo Group were involved in nearly $10 billion in combined stock and takeover deals.

  The flurry of private-sector activity has turned China into a fee generator for investment banking.

  Thomson Reuters data shows that banking fees in China and Hong Kong were 55 per cent of the $8.74 billion made in Asia, excluding Japan, in the first nine months of 2014. This is up from 47.6 per cent a year earlier.

  Fees in mainland China surged 54 per cent this year, making it the world's third-biggest fee-paying market after the US and Britain.

  Its an interesting moment to contemplate the wisdom of Deng Xiaoping, in letting loose the drive of ordinary people, running their own business.
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  Ocean1111

  Meaningless distraction imo. Russia, China and India, as examples, all scrapped socialism in 1990 and joined the worldwide market capital globalization effort with the Anglo-Americans. Thus "state capital" vs. "private capital" is pure baloney, even Communist USSR and China were private corporations themselves disguised as "government". Its all a ruse that led to a full globalization cycle after 1990. They all just happened to now create more billionaires in Russia, China and India than since their inception as nations—in 10 years! China even has a billionaire "landscape architect". LOL
  
  American capital is made in China, recycled by the Fed (US Gov't bond loop), jammed globally by "enforced dependency", pumped as oil, and feeds ultimately the globalization of NATO military and the elements soon to be sucked into Global NATO (like Russia and China, they are already there, the rest is a ruse), so the stats show China has trillions in the global capital flow and that all began with the Berlin Wall going down as a symbol of the true globalization era amping up in earnest.
  
  Russia, China and India were not in the pre 1990 currency and gold markets like they are today, all the markets now mirror the master cycle of Wall Street and that is since 2007. So globalization of global capital, to achieve that feat, requires all the big capital players to be playing the same game: globalization-to-world-government, the true uni-polar global corporation.
  
  Everything else is just the distraction. WW1 and WW2 were multi-polar wars at a scale unknown prior. the Cold War was a true bi-polarity, and the final cycle of the future will achieve the uni-polarity (world government) the whole super-cycle has been forming since WW1. Those kinds of global power trends cannot be mere random coincidence. This is how we know the big elites of the big nations already know where the final cycle will end up in: world government, true uni-polarity.
  
  Government and corporation always have been the same thing, merely smoke-screened with meaningless ideologies like capitalist, democracy and communist, it is ALL the same thing. And that is why, in the end, the Global Corporation will also be the World Government self-same super entity. It already was that entity, all the philosophical rhetoric was just the ruse, it answered no questions, it had no real meaning to true global reality, and it ultimately instead aided the world government consolidation as divided nations must fall under global corporate control in time.
  
  In retrospect WW1 is the first cycle that started this whole momentum to world government. The global cycles and true global capital flows tell the real story of where it is headed. It is cyclic, WW1, WW2, Cold WW3, and the mega-event in store and coming up soon, the FOURTH globalization cycle that will complete the puzzle.

  IMO, world governemnt, sole global corporation top authority, by 2023, making global announcements of such intent by 2020. Six year global war cycle of some sort to begin soon, or develop from major global event or events soon. The recovery from that war "problem", will be the world governemnt "solution". Contrary to popular mythology, the next world war, even if semi nuclear, will NOT be the end. It will be better managed and engineered than all the three previous world wars, including the Cold War. (If we notice, the "Global War" "on Terror" is already phase 1 of that WW4, global war is the same as world war, it is just deployed and branded uniquely, like the Cold War).

  Once world government appears, THEN start to worry. I feel they have no plans to take care of 8-10 billion people, if you know what I mean. A global weapons network, in sole control, is a scary thing really. But it is what will define the UN "world peace" that corporation will indeed bring for a while—by THEIR own definition.
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  William Penwell

  It is all labels, China like Russia are still repressive regime.
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  DJS

  FTS, thanks for the Chinese economic update, and I'm sorry about the end-of-time conspiracy theorists amongst us who can't avoid the keyboard. This OP directly addresses a comment I made months ago in another Chinese economic OP:

  "The Invisible Hand will reach out and touch all nations, just as it did with the Japanese miracle 2 decades ago. The Chinese have a Field of Dreams goal, "If you build it they will come." It is admirable, but sooner or later the Chinese economy will have to compete directly with the world. Absent serious government support, can it thrive? Do they really have a free market capitalisitic economy? Or is the government propping up currencies, spending on infrastructure and enabling 'capatilistic' endeavors to such a degree that, once it is required to compete mano a mano, it will suffer?? Those are 64 dollar questions. There are others."

  The Chinese leaders are aware that, for their economy to thrive in the future they will need to compete with the global economic powers on equal footing. Having said that, Oceans is right about one thing (if you can find something rational in that end of time rant) in that economies are a public/private entity. And they should be. Darwinian survival of the fittest capitalism may be ruthlessly efficient, but it is ruthlessly indifferent to the have-nots, the strivers and those simply incapable of thriving otherwise.

  China is doing some amazing things; they have some enormous barriers in front of them. And they know it. Governments can prop up economies for only so long until the world demands equanimity. They can build protective walls around certain industries or capabilities for a while (all governments do it), but The Invisible Hand will have its say.

  I'm pulling for the Chinese. And the Russians. And the Liberians . . .
• 

  fulltimestudent

  William Penwell: It is all labels, China like Russia are still repressive regime.

  William, may I ask, what you see (or, think you see) in China, that leads you to call China a 'repressive' regime?
• 

  designs

  China is an interesting case study. Was Mao really a communist, has China really been a communist country for the past 70 years. Amazing how many Chinese political leaders were multi-millionaires and some billionaires in a supposed 'communist' regime....
• 

  Ocean1111

  @DJS

  I'm sorry about the end-of-time conspiracy theorists amongst us who can't avoid the keyboard

  Oceans is right about one thing (if you can find something rational in that end of time rant)

  Thats your first real lesson in globalization not a "rant".

  LOL, Don't lump me into "conspiracy theory" because you live in a 1960's level of academic and national sovereign awareness.
  
  I do not know where the "end of time" fit into my analysis. FYI, world government is needed and it is not "the end of time", it is an attempt at managing nations that need to be managed properly. True, national sovereignty will end with their overall national credit card, but that is not "the end of the world". No where did I predict an "end". If you cannot tell over population must eventually be addressed, you are probably also missing other basics of why world government is necessary and guaranteed to eventually develop in the longer run. World government must address the global national intensive care unit that the nations have become from top, to bottom.

  Recall this is a new millennium, and with it will come a new global paradigm.
  
  China needs no "equal footing" they are hands down the coming dominant system. Your post is what is called a national myth, a distraction. What they need, to aid the Anglo-American power system globalization is a normalizing, and deceleration that the US and EU will also have to endure in their national sovereign control realm, but in far different ways. It is the EU and US that are bottomed out, check the global debt map. The US and EU are the RED ZONES, and that is what will drive what is coming. None of them, as single nations, will "rule the world", it will be a collective of all the nations, and in the process they all must be normalized into a sovereign level subservient to the global wealth and capital flow control system. What is coming is not "the end", but national sovereign equalization. The top US, EU, Russian and Chinese super-corporations (and others) are already working for the health of the whole, at the super-super-rich level of power. The problem is not there, but down below in the national dated world of 1800, merely extended to today as if nothing has changed. But in reality EVERYTHING has indeed changed, and not for the preservation of national rogue sovereign systems, they too need a change, and it is coming.
  
  And yes it is a designed system, and it does have a dominant center of control that is of trans-national corporate structure, it is no longer nation-state dominated, that is a concept of the past. the trans-national progressive matrix of the " super-corporation" is what rules global finance and commerce and everything will be aligned in the nation-state to accommodate that wealth controlling power system transformation to full globalization of wealth and finance. (University of Zurich is not a "school of conspiracy theory", this is reality:

  http://www.dailymail.co.uk/sciencetech/article-2051008/Does-super-corporation-run-global-economy.html

  I did not say it will be an easy transition, but I certainly am not saying it is "the end" you allude to, I am saying it is a necessary transformation, it is a century long trended development from the past, and post Cold War globalization development is the microcosm of where it is heading. ALL GLOBAL POWER follows the wealth power, and that is why the wealth power is the main power and the first system to be mastered. The wealth power transcends and crosses former national boundaries at corporate and global legalistic levels, it is pointal in representation, not polygonal. The "polygon" its corporate super-dots and cross connections form is the WHOLE globe. A depopulation schedule is also not "the end of the world", it is an opportunity of a rebirth of many now stressed systems, unfortunately trial and error human management over time is the root of that core problem imo.
  
  I bet my life all that uni-polarity will develop according to that basic premise and concept, unless one can reverse back to WW1 and keep it all multi-polar forever, and one cannot do that, and consolidating polarity is the name of the uni-polar game, it was what world war actually empowers cyclically. Since WW1 it has been moving to uni-polar power to guide nations, and that trend cannot be reversed now. Wealth, and a reliable truly globalized super- credit / currency system to come is what drives the whole in experimental form even now, it just has to go truly globalized. Fiat currencies have a shelf life.
  
  Currency and debt are not "money" nor wealth, they facilitate the development of the latter for a small nucleus of actual world power players. Debt of others partly fuels their wealth consolidation at global scale. World government is coming, not "the end" as bumpy as that transition WILL be. A school like Thunderbird School of Global Management is an example of the kind of institutional tier where clearer global realities regarding globalization are being taught, of course there are schools probably beyond them in insight of globalization reality and what truly drives it. But Thunderbird, from what I know, entertains no fantasies of national sovereign restoration and magical global reform, which the former is the root cause of the problem in the first place, imo. In that way they are realistic and unique about globalization equating to world government. Its very logical actually.
  
  Public education is basically a paradigm behind the real times, and so are many of its professors. Many national politicians are from that school, but some are leaning to the sovereign individual and globalization reality. Schools vary in insight and expertise. And this is why some universities are still teaching a now dated paradigm, no one told them what globalization is truly all about: world government. Now you probably know more than your teacher in one sentence, lol.
  
  If anything I am an advocate of why the world does not end in its final world government cycle. The uninformed are the ones who feed the doomsayer knee jerk reactions based on limited insight, not globalization realities. That is not me, I am a globalization realist, just stating fundamental facts and concepts. If you consider the end of national autonomous sovereignty, which is now mortgaged, as impossible or "the end", then that is how you will perceive what is coming on the national sovereigns for a while. But it is actually a final transition to uni-polarity and it will require a fourth global war and stressing driving cycle in many dimensions, including financial war to complete the process of world government. I am including the Cold War in that four count.

  The national systems are parts of the whole, not the whole that must form upon their unification and it must be financial first, then military, then proxy-national governmental sub-tiers, the puppets national governments became around WW1, finalized. Many forecasters with no religious agenda whatsoever know the national sovereigns are in a precarious dilemma and it is driven by astronomical debt and for now unfunded massive liabilities even bigger than the debts. China and Russia will eventually align with the irresistible polarity, imo, they will aid the secondary system by more reliable capital control, without the same debt burden as the EU and US. In that way the EU and US can be normalized in controlled fashion, and still remain functional. It is not the US and EU debt system that actually guide that process, it is the globalized master credit system, and it runs on its own resources, it is not dependnt on the US or EU in reality. This is why it can recover them into a globalized sovereignty when the time arrives.
  
  Like a person in massive debt exceeding income, the system can carry on a while, but in time comes the foreclosure and recovery. National systems, led by limited national politicians empowering the main problem, and the like, are no different. They aided what is coming in their own strange way. Just a matter of compounding time and debt at global multi-national magnitude. Its not the end, it is a common cycle of the last 100 years, the fourth and it is a compounding global power and wealth consolidation process in all four cycles.

  I mean if any of that seems "crazy", then blame your teachers not me. That is what is going on at a very simplistic level of conceptualization. There is even now no such thing as an independent nation. The lines on the map aply to 1800, not today, it is one whole. Think globalization to the maximum, because it cannot be simply reversed, and you will see the need for world government, it is already there, save the presentation and global "problem" for which it actually will be the only "solution". There is not one thing in a nation that will not be globalized, especially their government, the last major entity to globalize in the process.
• 

  DJS

  Oceans,

  I have taught economics, including global, marco-economic theory and practical applicaion, at the collegiate level, and studied it at the undergrad and graduate levels. But thanks for the concern. Everything you say about the problems associated with Western economies is true, as we have attested to in the past. But the same things are true of the Chinese economy They have a lot of very serious barriers to cross before they establish a stable, iterative economy. With 1.6 billion people, they will without doubt pass up everyone else. Do the math.

  But there wiil be bumps in the road along the way. That's all that any of us who know wtf we are talking have ever said. Economics is not simple; anyone reading an article or two and then thinks they understand the topic is a dumbass.

  If you really want to discuss global, marco-economic theory and application with me, I suggest that you study the topic for a few years and then get back to me.
• 

  DJS

  Alright bicches, it’s time for the second class of Professor DJS’ economics class 101. We have so many OPs re: China’s economic miracle, and my ongoing frustration with dumbass responses to them (King of the North, overtaking the US, blah blah blah) demands a more proactive response. Full Time Student has eloquently posted data. Kudos to him/her. But some of you bicches haven’t a clue about economics. So listen up.

  The 2008-2009 global financial crisis resulted in the % of China's GDP tied to exports plunging from 38% in 2007 to 24% (current) almost overnight. In layman's terms that is roughly a 1.3 TRILLION dolllar hit on the GDP. The recession decimated China's low-end (low tech/low margin) export sector. The crisis halted the decades long low-cost export boom that the Chinese government had kept alive.

  Most economists believe the boom was kept alive well beyond its natural life span, through years of systematic wage repression (there is a wage/benefit level which will make Chinese low cost/low tech goods unattractive to spoiled western consumers (Walmart, Always the Low Price. Always. Oh, excuse me, new slogan "Save $. Live Better), which would have stopped the train in its tracks – I have referenced this in previous OPs) and wasteful subsidies (can you say Japan circa 1980 boys and girls), both direct and indirect, to manufacturers.

  The Chinese government was propping up the engine that had gotten them firmly on the world economic stage, even though it was past time to retire that engine. Remember a few months ago when I briefly discussed letting aging industries die (and let someone else make the low cost/low profit margin stuff) and moving quickly to a new paradigm??? As painful as it may seem in the moment, letting it die (think the textile industry in the US) is the best long-term strategy to maintain an effective economy (Adam Smith says you are welcome).

  If you are the Gang-of-Five (or whatever they are called the ruling body these days), what do you do, both to save face and to keep the engine churning and try to get as many of your 1.6 billion people engaged in the 21 st Century? Well, the leaders did what they could control to keep the economy going (some would say on life support). They enabled massive expansion of state-led investment into housing and infrastructure construction (all hail Full Time Student- now, as Paul Harvey would say -the REST of the story).

  The infrastructure was likely a very good thing, as it should position China to play in a very large way on the world economic scene. But infrastructure improvements are typically a long-term strategy with long term payback. Good for them, though. It is also a copy/paste from the very Keynsian approach adopted by the US to get out of the Great Depression in the 1930s. Google it.

  The housing boom is showing signs of having finally run its course. The boom was fueled by the 600,000 or so Chinese who had expendable income but with nothing to do with it (the Chinese stock market sucks the big one). Buying housing, and speculating that there would be buyers for it at a large profit, resulted in entire cities being built, many of which are not inhabited. Not houses or subdivisions. Entire freaking Cities. Got that? ENTIRE UNINHABITED CITIES. Got that????

  Since nearly 1 billion. Let’s stop right there and say it together, class. A fucking .... BILLION. . . people are under/un-educated agrarian peasants who couldn’t afford the cheap consumer goods China is making, much less houses and condos, the impact on the GDP of the housing 'boom" (not really fair to call it that now is it) kinda sorta stops right there, at least for the time being. I also alluded to the inherent concerns with the ‘if you build it they will come’ philosophy months ago.

  Part II soon to come.
• 

  enlarged postate

  There are as many China econ narratives as there are economists, it seems.