China Growth Has Stopped

Buying, Selling, Building, Tax issues, anything regarding real estate or properties in Chile.
Forum rules
NO DISCUSSION OF SPECIFIC REAL ESTATE AGENTS BY NAME, LINK, OR RECOMMENDATION ANYWHERE ON THE CHILE FORUM.
Britkid
Rank: Chile Forum Citizen
Posts: 1760
Joined: Wed Dec 05, 2012 6:59 pm
Location: Talagante area, Chile
Contact:

China Growth Has Stopped

Post by Britkid » Mon Jan 07, 2019 3:16 pm

I talk to Chinese companies and track their fiscals in the industry I work in. 2018 was clearly a year of less growth than previous years in one particularly industry I work in.

Apple's 4th quarter surprise interim announcement confirms a similar trend, as did various other news in the last few days.

What we can now say for sure is that Q4'18 (Oct-Dec) was weak in general in the China economy as is the whole 2018. Now does that mean 5.5% growth in 2018 instead of 6.5% or is it something more serious, we'll have to wait and see but it's clear than expectations have been downgraded.

Reasons: perhaps Trump trade war being the most obvious...there are other arguments about the China growth being exaggerated anyway - that it was built on low wages and credit and land sales and corruption and therefore fundamentally unsustainable....maybe....maybe not....

There's a pretty simple argument here....weak China growth = less copper needed = weaker peso and weaker Chilean economy. Not much doubt there, but the big question is will the China situation cause further weakening to Chile, or has the current weakening of copper price etc already been as a result of that and therefore no further adjustment needed. I'll guess half and half. I'll take a punt that peso will get a bit weaker from here, while the copper price will drop a little more in 2019.

Of course, the US stock market has also been going down, and the US is just as likely to be effected by the China situation, so I'm not saying the peso will weaken against the dollar specifically, but maybe against, say, a basket of other major currencies like the Euro and the Yen.

Also a weak China could ultimately also hit growth in other places around the world that see investment, like Africa.

The growing China economy is what causes people there to accept the government's evil freedom destroying dictatorship. That's ultimately the power Trump has in the trade war. If the Chinese economy is no good then people will be like "we're giving up freedom for this???". Then the game changes. Are we there yet? No. Could it happen? Well the chances have gone up from very unlikely in the short term to fairly unlikely.

Is that the end of the China growth period? Or is it a pause, and then start again? Or just a readjustment to a more modest growth - 4%-5% rather than the 7% of a few years ago and the 10% of years before that?

One to keep an eye on.

User avatar
admin
Site Admin
Posts: 18042
Joined: Sat Aug 26, 2006 11:02 pm
Location: Frutillar, Chile
Contact:

Re: China Growth Has Stopped

Post by admin » Mon Jan 07, 2019 5:50 pm

well not there yet

https://www.latercera.com/pulso/noticia ... ar/473850/

chile's overall exports for 2018 are up, even if copper price is soft. looks like 2018 growth of 4% is back on after some suprise november numbers came in, and looks like a trade surplus of about a 1.6 billion i think.

there also seems to be a bit of perfect storm developing on the supply side. years of under investment. lower quality production in existing mines. all with an expected boom in demand for copper related to eletric cars that use a lot more copper (like around 200 pounds) than a regular car.

chile has also gone a long way in diversifying its exports away from copper. it now like 50% of export, but only 10-20% of income. lithium is still a relatively small slice of the exports, think it is number 5, is moving up fast with a 40% or so increase over 2017. it could very well catch up to copper someday, or at least 2 or 3.

still, yea a weaker china is concerning, but i think it is too early to call it. due to Donald Duck's trade war, global supply chains are still adjudting to the random stupidity. i bet a lot if chinas companies start moving to proxy countries to get around yhe terrifs. I would keep an eye say places like vietnam or where ever that is easy to finish products, and ship them off to the u.s.

i think the real concern is the united states not china directly. i am watching the las vegas tech show CES, and how chinese companies are MIA this year. china is dumping investments in the u.s., and a lot of u.s. companies have made the mistake of going all in in the chinese market. they are dumping real estate in new york, and evaporating from silicone valley. Bejing has probably issued marching orders, or at least the guys in the know are not taking any chances. arresting the cfo of Huawei probably spooked a lot of them from traveling to the u.s. also.

meanwhile, from what i have heard is that chinaa factory orders for sales to other trading partners are doing fine, just the u.s. was such a large chunk it shows in the stats. it is that backdoor trading that needs to keep an eye on. reflagging products has the potential distort a lot of stats globaly.

still, all of this is way too early. chile has a massive portfolio of trade agreements, it can adjust. panic if this keeps up through late 2019, and it shows up on chile's export demand numbers across everything, not just copper.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

User avatar
admin
Site Admin
Posts: 18042
Joined: Sat Aug 26, 2006 11:02 pm
Location: Frutillar, Chile
Contact:

Re: China Growth Has Stopped

Post by admin » Mon Jan 07, 2019 7:58 pm

as i have said before, i expect this "trade war" to force supply chain distrubtions to diversify away from heavy concentration in china. ultimatly that will be good for china, chile, everyone.

FYI, i never bought the chinese growth numbers. always sort of devided them by 2. they make more sense that way. china was growing, just probably since the end of say the 90's, 7+% never made any sense, without all the bad economic things catching up to them.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

Britkid
Rank: Chile Forum Citizen
Posts: 1760
Joined: Wed Dec 05, 2012 6:59 pm
Location: Talagante area, Chile
Contact:

Re: China Growth Has Stopped

Post by Britkid » Mon Jan 07, 2019 10:12 pm

I was thinking though.

Chile is raw materials (phase 1 of commerce)

China is production (phase 2)

US is buying all the junk (phase 3)

If that's how it works (obviously oversimplification but may be some truth in it), then by the time China is slowing down, you would think Chile would already be slowing down. If the production today in China is less, then they would have to buy less stuff some weeks ago in raw materials?

But perhaps not that simple of course.

The alternative is that the Chinese reduce production and in the meantime they get an inventory build of raw materials, and suddenly cut.

User avatar
admin
Site Admin
Posts: 18042
Joined: Sat Aug 26, 2006 11:02 pm
Location: Frutillar, Chile
Contact:

Re: China Growth Has Stopped

Post by admin » Tue Jan 08, 2019 6:48 am

there was a massive rush before the tarrifs went in to effect to stock up in the united states. started showing the storage capacity in the states.

so now it makes sense if everyone in the states is sitting on a massive stock of pre-tarrif goods and parts the orders in china would fall off a cliff for a while.

we need to wait for them to burn through that stock to get any sort of accurate read. again, way too many distortions, in too short a time frame, to draw any long-term conclusions.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

User avatar
admin
Site Admin
Posts: 18042
Joined: Sat Aug 26, 2006 11:02 pm
Location: Frutillar, Chile
Contact:

Re: China Growth Has Stopped

Post by admin » Tue Jan 08, 2019 6:59 am

FYI, i think apple buggered itself by jacking up the price on the new phone, but not realy providing anything special or new.

my wife got the new iphone. it sat in a box for two weeks, because she did not have time to do the data transfers, and she realy was sort of attached to her old one. there was simply nothing compelling about the new iphone to get her in a rush to switch.

since she got it, i have not seen very many around chile. even among those that can afford it, it is not a 'must have' device vs the older model at that price point.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

HybridAmbassador
Rank: Chile Forum Citizen
Posts: 3804
Joined: Wed Mar 28, 2012 4:19 pm

Re: China Growth Has Stopped

Post by HybridAmbassador » Tue Jan 08, 2019 5:13 pm

admin wrote:
Tue Jan 08, 2019 6:59 am
FYI, i think apple buggered itself by jacking up the price on the new phone, but not realy providing anything special or new.

my wife got the new iphone. it sat in a box for two weeks, because she did not have time to do the data transfers, and she realy was sort of attached to her old one. there was simply nothing compelling about the new iphone to get her in a rush to switch.

since she got it, i have not seen very many around chile. even among those that can afford it, it is not a 'must have' device vs the older model at that price point.
Yeah, the dreaded new iPhone with its notch on the upper portion of screen. That put me off buying the newer phones. Beside, it seems that I'm not gettin' iphones anytime soon even Apple fixes its ugly and inefficient notch on screen.. Apple not even introducing the upcoming 5G ready phones in its lineup when every majour smart phone makers are implementing the 5G. Go figure ?
HybridAmbassador. Toyota Hybrid system for helping climate change.

Britkid
Rank: Chile Forum Citizen
Posts: 1760
Joined: Wed Dec 05, 2012 6:59 pm
Location: Talagante area, Chile
Contact:

Re: China Growth Has Stopped

Post by Britkid » Tue Jan 08, 2019 6:51 pm

Reported today: Franziska Ohnsorge, a World Bank economist said in a BBC interview: "In China it's policy engineered, a very deliberate slowdown towards more stable long term growth."

User avatar
admin
Site Admin
Posts: 18042
Joined: Sat Aug 26, 2006 11:02 pm
Location: Frutillar, Chile
Contact:

Re: China Growth Has Stopped

Post by admin » Tue Jan 08, 2019 10:38 pm

here is a report on chinese deals in silicone valley drying up:

https://www.reuters.com/article/us-vent ... SKCN1P10CB
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

Britkid
Rank: Chile Forum Citizen
Posts: 1760
Joined: Wed Dec 05, 2012 6:59 pm
Location: Talagante area, Chile
Contact:

Re: China Growth Has Stopped

Post by Britkid » Wed Jan 09, 2019 9:58 am

OK, here we go

China car sales fall for the first time in 20 years. (BBC - today)

Car sales in China, the world's biggest vehicle market, have seen their first annual fall in twenty years.

Sales fell 6% to 22.7 million units in 2018, according to the China Passenger Car Association (CPCA)

Down for the entire year! That's a shocker. China vehicles sales have been going up and up and up and are expected to keep flying up.

This isn't about trade deals. This is an indication of weak economy within China. This is sales figures inside China.

User avatar
admin
Site Admin
Posts: 18042
Joined: Sat Aug 26, 2006 11:02 pm
Location: Frutillar, Chile
Contact:

Re: China Growth Has Stopped

Post by admin » Wed Jan 09, 2019 11:01 am

Well, considering the crazy ecological disaster that China is, that might not be a bad thing. Add in all the first time drivers. A decrease of 1 million cars, is probably = to saving 1 million people lives, between accidents and smog.

My wife and I got in a taxi in Nanjing one time. It became immediately apparent the taxi driver had never driven before, and definitely never a stick. He literally could not get out of second gear. I was going to show him how, then realized for our own safety and everyone else's, probably better to leave him in second gear. So, we enjoyed a nice, slow, slow ride across Nanjing.

The next day, in class at the University, I joked to my students that is amazing more people do not die of car accidents in China. One of my students piped up, "that is because anyone that causes a car accident get's put to death".
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

Britkid
Rank: Chile Forum Citizen
Posts: 1760
Joined: Wed Dec 05, 2012 6:59 pm
Location: Talagante area, Chile
Contact:

Re: China Growth Has Stopped

Post by Britkid » Wed Jan 09, 2019 11:31 am

I heard a story once from a colleague at work that someone at another company complained about a taxi driver ripping him off and get a letter back from the Chinese saying they caught the taxi driver and executed him. I think that might have a been a windup or an exaggeration, surely even in China that wouldn't happen?

Post Reply