January 17, 2004
IN DENIAL ABOUT THE END OF HISTORY:
Is China the Next Bubble? (KEITH BRADSHER, 1/18/04, NY Times)
THE prospectus for China Green Holdings Ltd. looks a little like a seed catalog. Color photographs show the corn, cabbage, pickled plums and other vegetables that the company exports, mostly to Japan. There is even a helpful list of the growing times for broccoli, cauliflower and sweet peas; it is tucked between tables showing that the company earned $14.1 million on sales of $31.2 million in its last fiscal year.Though China Green's business literally involves small potatoes - cubed and shipped in plastic bags - its initial public offering in Hong Kong was anything but. Retail investors put in bids to buy more than 1,600 times as many shares as were available for sale, making it the most oversubscribed I.P.O. ever in Hong Kong. The stock jumped 58 percent last Tuesday, its first day of trading.
Japan had its bubble in the late 1980's, when the Imperial Palace grounds in Tokyo became worth more than all the land in California. Thailand and Indonesia had their bubbles in the mid-1990's, when speculators and multinationals poured money into what seemed like a Southeast Asian miracle. The United States had its Internet and telecommunications bubble in the late 1990's, when stock prices looked as if they could rise indefinitely and unemployment kept hitting new lows.
Each of those bubbles ended badly, with millions of families losing their savings and many losing their jobs.
As 2004 begins, China's economy looks as invincible as the Japanese, Southeast Asian and American economies of those earlier times. But recent excesses - from a frenzy of factory construction to speculative inflows of cash to soaring growth in bank loans - suggest that China may be in a bubble now, especially on the investment side of the economy.
The economy, though a problem, is small potatoes compared to the demographic and political crises that are coming. Posted by Orrin Judd at January 17, 2004 07:29 PM
I hope they can weather it all,a nationalist China full of out work peasants and on a rampage would be a global catastrophe.
Posted by: M. at January 17, 2004 08:51 PMIsn't it all one problem?
Posted by: David Cohen at January 17, 2004 09:33 PMIf China did somehow manage to make it work economically, then middle class bachelors could entice brides from Vietnam or other third-world cesspools to move to China.
Posted by: Michael Herdegen at January 17, 2004 10:28 PMDavid:
They can't save themselves by fixing the bad loan problem.
Posted by: oj at January 18, 2004 10:06 AMM:
They won't be nationalist when the collapse comes and they're surrounded by nuclear powers that hate them: US, India, Russia.
Posted by: oj at January 18, 2004 10:11 AM"They won't be nationalist when the collapse comes"
And before the collapse the CCP will ramp up the nationalism to try to keep power and a nice little military adventure is a dandy way to do that(Argentina,'81)
"they're surrounded by nuclear powers that hate them: US, India, Russia"
To desperate people,the unthinkable quickly becomes thinkable.Again,Argentina,the junta there managed to convince themselves of all kinds of things based on nothing more than a desire to believe.
And the catastrophe would not only be military,considering how much of the worlds manufacturing base is now located there.
Posted by: M. at January 18, 2004 10:27 AMMove the factories to Africa--there's no end of unskilled labor.
Posted by: oj at January 18, 2004 10:31 AM"Move the factories to Africa--there's no end of unskilled labor"
don't you mean build new ones there,after those in China are burned?
And who would pay to build all those new factories?Debt riddled western corporations will collapse when their China assets are destroyed.
Asians?
Japan,as you like to point out,doesn't have the resources.
S.Korea?They'll go bust dealing with N. Korea.
L. America?They go belly up when we do and we do when all those investments go up.
I admire your insouciance.It's almost breathtaking.
Posted by: M. at January 18, 2004 01:55 PMWhat will the Chinese government do when it has to put $300 billion into its banking system? They are at $200 billion and counting now.
Posted by: ratbert at January 18, 2004 09:05 PMoj:
Will racism be stronger than the desire to mate ?
It's one thing when women are a little scarce, but what about when every unmarried woman has three suitors, and the really fine ones five ?
Or are we back to polyandry ?
Posted by: THX 1138 at January 20, 2004 05:31 AM