China's Economy and Subsequent Energy Demand To Decelerate Sharply Through 2024

[Tom Kirkman + 8,860]

Double hitter from ZeroHedge.

The economy and subsequent energy demand in China is forcast to seriously decline.

Not going to post long excerpts, just short snippets from 2 ZH articles:

China's Largest Utility Company Warns "Growth To Decelerate Sharply Through 2024"

Ahead of tonight's key China data dump, State Grid, China's largest utility company, has warned the rate of economic growth in the country could plunge to 4% within the next four years, according to internal forecasts, first seen by the Financial Times. 

The state-owned utility has turned bearish on the Chinese economy. It forecasts a rapid slowdown that has already dented energy demand across all 23 provinces and could last until 2024. 

Already, ten of the company's 25 regional operations reported a loss in 2019, according to company insiders, resulting in decreased capital expenditures. 

One official from the utility company, who asked not to be identified, said the economy was booming, and generally, that meant internal estimates about the economy were overly bullish. But now, it appears the exact opposite, and internal estimates show China's economy is decelerating while official GDP estimates are up.  ...

 

=================================

China Growth Slows To 29 Year Low In 2019 Despite Q4 Rebound

With phase-one talks completed in October (and signed this week), tonight's Q4 GDP and December smorgasbord of data is being keenly watched by the market for any signs that China's massive credit stimulus has actually done any good at all.

Ahead of tonight's key China data dump, State Grid, China's largest utility company, has warned the rate of economic growth in the country could plunge to 4% within the next four years, according to internal forecasts.

"We were upbeat about China's power demand five years ago because the economy was still robust and 7 or 8 percent GDP growth was the bottom line," the official said. "No one expected growth to decelerate so sharply." He warned that 4% growth by 2024 was the utility's worst-case scenario.   ...

 

==============================

House of Cards meet the Trump Sanctions Breeze ...

By all means, go ahead and disagree with my views.  Just please counter with some facts, and not just state that I am "biased".   Prove me wrong.

 

[BlackGold + 3]

ZeroHedge does nothing but praise Donald Trump and attack China, so if you read their articles and think they are facts that says quite a lot in itself about what you consider facts. 

One thing I did notice was Xi not being there for this huge event. Seems like it's no big deal to China to me. 

[Tom Kirkman + 8,860]

45 minutes ago, BlackGold said:

ZeroHedge does nothing but praise Donald Trump and attack China, so if you read their articles and think they are facts that says quite a lot in itself about what you consider facts. 

One thing I did notice was Xi not being there for this huge event. Seems like it's no big deal to China to me. 

- @BlackGold, your IP Address shows that you are using / have used multiple user accounts on this forum, one of which posted just a few hours ago in a different thread, using a different user name. 

- Sock Puppets are not allowed, as sock puppets artificially distort forum discussions, by the same person pretending to be different members. 

- One of your other user accounts was already suspended earlier today. 

- Since your other account(s) were suspended earlier today, and you are using this account to post anyway to skirt the suspension, this account is banned, and this IP Address is now blocked from using this forum.

- You may contest this suspension and your other suspension(s) with the site administrator, @CMOP

 

For info @Douglas Buckland @Ward Smith @Jan van Eck

[Jan van Eck + 7,558]

8 minutes ago, Tom Kirkman said:

- Since your other account(s) were suspended earlier today, and you are using this account to post anyway to skirt the suspension, this account is banned, and this IP Address is now blocked from using this forum.

My, My.  Rather naughty.   On a personal level, I have never understood this idea of fantasy names, using a label instead of one's given name.  Why the big veil of secrecy about one's identity?  You are who you are.  What's wrong with that?

[Jan van Eck + 7,558]

Getting back to the original topic, the forecast of dampened use of electricity in China, this is hardly surprising.  Let us remember that the USA comprises some 25% of world GNP.    All of Africa combined only is 2%.  So the idea that the Chinese manufacturing machine, which today is a real powerhouse, is going to find a substitute market for its goods in say Africa instead of shipping to the USA is ludicrous.  Nor do I see trade between India and China rising to anything but a fraction of the (former) US-China trade. 

So, if you are a Chinese manufacturer, and your big customer, the USA, is cut off  (by the Trump tariffs, let's be clear), then where do you go to find yet another market, a new market, where you can sell that production output?    And the answer is:  you cannot..  Those other markets just do not have the buying power to do anything for you. 

The result is entirely predictable: either the internal Chinese market expands so dazzlingly fast that it can and does consume all those manufactured products, or the factory has to shutdown at lest some of its product lines.   And the reality is that shut-down is exactly what is happening.   

When those lines stop running, two things happen:  less electricity is purchased, and the workers are sent home, now unemployed.  It is that last prospect that is such a bad omen for the Chinese Communist rulers:  unhappy, unemployed, and dispossessed citizens are the source of big trouble.  And that is what is pushing the Party principals into continuing "talks" with American trade negotiators. 

My prediction?  I suspect that China does not have the internal dynamics to survive a prolonged trade-barrier situation with the USA.  China is a poor country, still largely dependent on rice agriculture.  The manufacturing spectacle will break up, and possibly China itself will break up.  It is an artificial country, with lots of ethnic and linguistic components, held together by force of arms.  You cannot run a country indefinitely at gunpoint, not if you are not making money.  

[Enthalpic + 1,496]

50 minutes ago, Jan van Eck said:

Getting back to the original topic, the forecast of dampened use of electricity in China, this is hardly surprising.  Let us remember that the USA comprises some 25% of world GNP.    All of Africa combined only is 2%.  So the idea that the Chinese manufacturing machine, which today is a real powerhouse, is going to find a substitute market for its goods in say Africa instead of shipping to the USA is ludicrous.  Nor do I see trade between India and China rising to anything but a fraction of the (former) US-China trade. 

So, if you are a Chinese manufacturer, and your big customer, the USA, is cut off  (by the Trump tariffs, let's be clear), then where do you go to find yet another market, a new market, where you can sell that production output?    And the answer is:  you cannot..  Those other markets just do not have the buying power to do anything for you. 

The result is entirely predictable: either the internal Chinese market expands so dazzlingly fast that it can and does consume all those manufactured products, or the factory has to shutdown at lest some of its product lines.   And the reality is that shut-down is exactly what is happening.   

When those lines stop running, two things happen:  less electricity is purchased, and the workers are sent home, now unemployed.  It is that last prospect that is such a bad omen for the Chinese Communist rulers:  unhappy, unemployed, and dispossessed citizens are the source of big trouble.  And that is what is pushing the Party principals into continuing "talks" with American trade negotiators. 

My prediction?  I suspect that China does not have the internal dynamics to survive a prolonged trade-barrier situation with the USA.  China is a poor country, still largely dependent on rice agriculture.  The manufacturing spectacle will break up, and possibly China itself will break up.  It is an artificial country, with lots of ethnic and linguistic components, held together by force of arms.  You cannot run a country indefinitely at gunpoint, not if you are not making money.  

In reality, the US is still importing, the US consumer paid for it (look at the CPI numbers), and now  and trump is backing off on his tariffs.

He signed a deal that just increased raw agriculture and energy exports - not manufactured goods.  Wasn't the whole point to increase domestic manufacturing? 

Nope, just have to appease the pissed off farmers a bit. Although they were getting tons of transfer payments a.k.a vote buying (like QC Haha).

 

[Enthalpic + 1,496]

2 hours ago, Tom Kirkman said:

Ahead of tonight's key China data dump, State Grid, China's largest utility company, has warned the rate of economic growth in the country could plunge to 4% within the next four years, according to internal forecasts, first seen by the Financial Times.

Fall to 4% growth... so sad. 

Still better than the USA's ~2.1%

https://tradingeconomics.com/united-states/gdp-growth

 

[Ward Smith + 6,615]

10 minutes ago, Enthalpic said:

In reality, the US is still importing, the US consumer paid for it (look at the CPI numbers), and now  and trump is backing off on his tariffs.

He signed a deal that just increased raw agriculture and energy exports - not manufactured goods.  Wasn't the whole point to increase domestic manufacturing? 

Nope, just have to appease the pissed off farmers a bit. Although they were getting tons of transfer payments a.k.a vote buying (like QC Haha).

Phase one of the trade deal was signed yesterday. No one said it was all inclusive. 

4 minutes ago, Enthalpic said:

Fall to 4% growth... so sad. 

Still better than the USA's ~2.1%

Do you understand the law of large numbers? Your net worth is a penny and you find a nickel. How much has your net worth increased? Same question, but now you're a millionaire. Hardly worth picking up that nickel eh? 

[Enthalpic + 1,496]

7 minutes ago, Ward Smith said:

 

Do you understand the law of large numbers? Your net worth is a penny and you find a nickel. How much has your net worth increased? Same question, but now you're a millionaire. Hardly worth picking up that nickel eh? 

Yes, I understand percentages, thank you.  However, nothing about China is particularly small.  There wouldn't be a trade war if they were tiny.

USA GDP: 19.4 trillion, China GDP: 12.2 trillion... and you compare a penny to a million bucks. Joke.

Do you understand compounding?

Edited January 17, 2020 by Enthalpic

[0R0 + 6,251]

This is essentially what Prof. Xiang was trying to hammer into the commie's paranoid militarist heads. China has no remaining consumer demand to provide profitable business. At the same time, policy has shifted to attack the private sector's financing by a crackdown on "shadow banking". Diverting them to the SOE banks that don't care about them and don't know how to lend to a real business without government guarantees and purchase quotas. Oh, and what is that profit thing you are so concerned about?. Whys shouldn't you sell 51% to our SOE partners and then we will give you a loan. 

As Prof Xiang said, this unhealthy new relationship to the private sector is deadly to growth. And has caused wholesale migration of entrepreneurs out of China along with their capital. (disguised as exports, which proceeds thereof remain abroad, and which domestic costs of production are unpaid. This combines with real estate loans on investment properties in HK, which are then taken to the Caymans to hide and the bank gets to own the empty apartments).

http://www.asianews.it/news-en/Xiang-Songzuo:-China's-economic-data-are-far-from-reality-48359.html

Xiang:

Reportedly, up to 70 percent of private entrepreneurs in a certain province have emigrated, which may be a bit of an exaggeration, but the indisputable truth is that private entrepreneurs generally lack a sense of security and have no long-term investment plans. How to make private entrepreneurs feel secure, willing to make long-term investments, and keep them from wanting to emigrate and moving their assets away? It must be through giving them freedom, and truly protect the rights of private property and entrepreneurs with the rule of law. 

And on the (fake) GDP numbers of 2018:

The growth rate of corporate profits has fallen sharply and experienced negative growth. Residents’ income has not increased rapidly. The income from individual tax revenue has dropped by nearly 30 percent in the first three quarters. These three figures added together make up the GDP, and all three are either increasing very slowly, or decreasing. How can combining them yield GDP growth of 6 percent?..

Elsewhere he is quoted with a 1.67% high case for real GDP in '18 and expects real numbers to be negative in '19

2018 sees continued paranoid action by the Politburo to maintain control of the party leadership and provinces 

In his words

Beyond this, there are too many aspects of the government and state that are in need of change. At present, vacuous inspections and studies are probably taking up half the time for many officials. The grassroots cadres are even more miserable. Security inspections and useless work is everywhere. All of this requires financial expenses. In the third quarter of this year, fiscal revenue growth was only 3.3 percent, but the rise in expenditure was 9.6 percent. Can this go on? There is a serious dearth of economic vitality combined with the rapid growth of non-productive fiscal expenditure. How can this continue?

 

[Enthalpic + 1,496]

*cough*

12.2 x 0.040 = 0.488

19.4 x 0.021 = 0.407

It's not just percentages... absolute growth is faster too.

 

Edited January 17, 2020 by Enthalpic

[Ward Smith + 6,615]

2 minutes ago, Enthalpic said:

*cough*

12.2 x 0.040 = 0.488

19.4 x 0.021 = 0.407

It's not just percentages... absolute growth is faster too.

 

Next we can quibble About what overstated means

[0R0 + 6,251]

18 minutes ago, Enthalpic said:

Yes, I understand percentages, thank you.  However, nothing about China is particularly small.  There wouldn't be a trade war if they were tiny.

USA GDP: 19.4 trillion, China GDP: 12.2 trillion... and you compare a penny to a million bucks. Joke.

Do you understand compounding?

South China Morning Post reports Univ. of Chicago China economist estimates systemic error of an annual 2% in post 2008 GDP estimates. That China GDP is likely under $11 Trillion. 

With tax revenue down 30% in Q2 and Q3 2018 and up 3.3% in Q4 - if I got the timing right for Prof. Xiang's data, then China did not grow in 2018 at all, and the 2019 figures should be rounded down to 0, at least through Q3 2019. Which would still be a generous estimate.

Edited January 17, 2020 by 0R0

[ronwagn + 6,290]

2 hours ago, BlackGold said:

ZeroHedge does nothing but praise Donald Trump and attack China, so if you read their articles and think they are facts that says quite a lot in itself about what you consider facts. 

One thing I did notice was Xi not being there for this huge event. Seems like it's no big deal to China to me. 

We seem to be inundated by many China apologists, it sounds like you are another.

[Enthalpic + 1,496]

2 minutes ago, Ward Smith said:

Next we can quibble About what overstated means

"Pettis is also fond of saying that China's GDP is overstated because of malinvestment. I concur 100%. But the same applies to the US, EU, Japan, everywhere.

The struggle to hit meaningless growth targets is accompanied with struggles to hit equally useless, and even damaging inflation targets."

[Enthalpic + 1,496]

Just now, ronwagn said:

We seem to be inundated by many China apologists, it sounds like you are another.

Has to be some balance to China bad, USA great; the truth is in the middle somewhere.

[ronwagn + 6,290]

6 minutes ago, Enthalpic said:

Has to be some balance to China bad, USA great; the truth is in the middle somewhere.

No, the truth is not in the middle. China is at best, 40 vs. 60. We are getting better yet with President Trump. Most Chinese would choose to move here if they had the money to visit. Many are escaping anyway they can. Few Americans would even consider moving to China. 

Edited January 17, 2020 by ronwagn
addition

[Enthalpic + 1,496]

1 minute ago, ronwagn said:

No, the truth is not in the middle. China is at best, 40 vs. 60. We are getting better yet with President Trump. Most Chinese would choose to move here if they had the money to visit. Many are escaping anyway they can. 

That's within the margin of error haha.

They certainly like to come to Canada "Hongcouver."

[Ward Smith + 6,615]

6 minutes ago, Enthalpic said:

"Pettis is also fond of saying that China's GDP is overstated because of malinvestment. I concur 100%. But the same applies to the US, EU, Japan, everywhere.

The struggle to hit meaningless growth targets is accompanied with struggles to hit equally useless, and even damaging inflation targets."

Whataboutism

I agree the formula used for computing GDP is flawed. The crucial difference is there's no big deal if the US announced a lower GDP growth rate. Markets react but no big deal. China on the other hand is obligated to cook the books, which is what many are now acknowledging. 

Same sources different year

[ronwagn + 6,290]

I love British Columbia. I have heard Canadians are being priced out of Vancouver by immigrants. I am now priced out of the entire Pacific Coast. We are planning on doing the Canadian Prairie States and the Canadian Rockies this summer. Then down into Montana and Idaho. We are hoping to eventually see all the provinces in our lifetime. We have already seen  B.C. the Yukon, Ontario, and Quebec. Just bits though.

[Enthalpic + 1,496]

8 minutes ago, Ward Smith said:

Whataboutism

I agree the formula used for computing GDP is flawed. The crucial difference is there's no big deal if the US announced a lower GDP growth rate. Markets react but no big deal. China on the other hand is obligated to cook the books, which is what many are now acknowledging. 

Same sources different year

It was in the same article you posted, try to not selectively read the "China bad" parts and not the rest.

I agree the numbers are cooked, but by everyone.

Edited January 17, 2020 by Enthalpic

[Enthalpic + 1,496]

7 minutes ago, ronwagn said:

I love British Columbia. I have heard Canadians are being priced out of Vancouver by immigrants. I am now priced out of the entire Pacific Coast. We are planning on doing the Canadian Prairie States and the Canadian Rockies this summer. Then down into Montana and Idaho. We are hoping to eventually see all the provinces in our lifetime. We have already seen  B.C. the Yukon, Ontario, and Quebec. Just bits though.

The island is heaven.  3 trips last year and already planning a trip for April (going to eat so many free, fresh, prawns).  Plus I get to pick up the giant Coho salmon I caught last trip which has now been smoked and vacuum packed, yum!

If you come through Edmonton PM me and I buy you a beer or something.  Just don't call us states.

Edited January 17, 2020 by Enthalpic

[ronwagn + 6,290]

6 minutes ago, Ward Smith said:

Whataboutism

I agree the formula used for computing GDP is flawed. The crucial difference is there's no big deal if the US announced a lower GDP growth rate. Markets react but no big deal. China on the other hand is obligated to cook the books, which is what many are now acknowledging. 

Same sources different year

Yes, the difference is crucial the Chinese live in a very strict dictatorship. The ruling class and Emperor for life XI are already freaking out about Hong Kong and Taiwan. Taiwan just reelected a conservative by a wide margin. 

Tsai Ing-wen says that China must face the fact that Taiwan is an independent country.

https://www.scmp.com/news/china/politics/article/3046175/tsai-ing-wen-says-beijing-must-face-reality-taiwan-independent

[ronwagn + 6,290]

4 minutes ago, Enthalpic said:

The island is heaven.  3 trips last year and already planning a trip for April (going to eat so many free, fresh, prawns).  Plus I get to pick up the giant Coho salmon I caught last trip which has now been smoked and vacuum packed, yum!

If you come through Edmonton PM me and I buy you a beer or something.  Just don't call us states.

I know better than that!  

I have always planned to do the Island, It is near the top of my list. We have been to all fifty states but have a lot to see there and in Canada.

[Marcin2 + 725]

4 hours ago, Tom Kirkman said:

Already, ten of the company's 25 regional operations reported a loss in 2019, according to company insiders, resulting in decreased capital expenditures.

OK, so first how State Grid of China operates, to explain these results.

Revenue 400 billion USD, realtively small operating/net income about 10 billion USD.

State Grid is roughly divided on geographical areas per province boundaries, each of them has own Profit and Loss Account like they are different companies.

This is needed for calculation of transmission rates.

But access to cheap and omniscent electricity is public good in many countries, also in China.

This is natural monopoly so it needs to be this way.

So because China is so diverse, transmission rates in less developed provinces are subsidized by revenues from prvinces that are more developed, with higher population density, and higher electricity consumption per capita and per geographical area.

Otherwise it would never be economical to conduct any economic activity in SIchuan, Xinjiang or TIbet because of very high transmission rates.

So 10 out of 25 operating areas have losses on the level of individual Profit and Loss Account covered from high net profits of more developed provinces.

This is beneficial for all, as geographical distribution of generation and consumption is uneven.

So profits from 70% of electricity transmitted in 15 more developed provinces is subisidizing to some extent losses relating to 30% of transmitted electricity  in 10 less developed provinces.