Tom Kirkman

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

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7 minutes ago, Marcin2 said:

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.

Interesting observation.  

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4 hours ago, Tom Kirkman said:

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. 

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.  ...

"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.   ...

It is true that private sector is slowing, the results of private sector (the major driving force of Chinese economy for 2 decades) are worse than state sector. Most analysts say that it is because of tightening of financing conditions for this sector, and lack of level playing field, state companies are prioritized, for political reasons.

But this article is not proving these facts, it is more or less irrelevant to them, I will explain why:

- when we build scenarios, especially relating to such a volatile measures like GDP growth in 5-6 years perspective in fast rebalancing economy (report prepared in 2019, relating to reality in 2024), the 3 or 4 scenarios are relatively diverse. So scenarios are probably: 4%, 5%, 6%, 7% or 4% , 5.5%, 7% of projected GDP growth. One of them is recommended as more probable, there is explanation why.

- Chinese GDP growth impact on electricity consumption is changing in the last 5-7 years. about 70% of Chinese power consumption is industry, with small growth rates, as industry's role in economy peaked about 2010-2012. The residential and commercial usage is rising fast, but it is still relatively small % of total usage.

 

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23 minutes ago, Marcin2 said:

But this article is not proving these facts, it is more or less irrelevant to them, I will explain why:

...

Good rebuttal.

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45 minutes ago, Tom Kirkman said:

Interesting observation.  

Thank you Tom, I just calculated this, data from article were sufficient. It is of course rough estimation: data could have +/- 3% error, could be even like 67% vs 33% or 73% vs 27%, but they show major idea.

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7 minutes ago, Marcin2 said:

Thank you Tom, I just calculated this, data from article were sufficient. It is of course rough estimation: data could have +/- 3% error, could be even like 67% vs 33% or 73% vs 27%, but they show major idea.

When I lived in Malaysia, some utilities would routinely lose money, as the utilities were basically government controlled, and were considered necessary for the country.  Utilities usually made money in urban areas and usually lost money in rural areas.

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1 hour ago, Tom Kirkman said:

When I lived in Malaysia, some utilities would routinely lose money, as the utilities were basically government controlled, and were considered necessary for the country.  Utilities usually made money in urban areas and usually lost money in rural areas.

That seems analogous to our USPS (Postal Service). We could have Amazon deliver all but first class mail and save lots of money, but we would still need them for some remote  areas. First class mail might work for Amazon also but would be more controversial. 

Right now we are greatly subsidizing a failing USPS that is legally supposed to show a profit. It is losing more billions every quarter because of high employee payrolls and benefits. That is not how it was intended to work out. 

See United States Postal Service Problems https://docs.google.com/document/d/14eYBbtNv2fDBCr-UPLyN1f_j1CqrxkJJMjcKQqBviRs/edit

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I would love to see the effects of China growth slowing from 6% to 4% in a chart. The trade imbalance difference between the China and the US would be good place to start. 
Statistics have nothing to do with patriotism of the outcome. These red right wing Republicans will always try to twist some kind of political message while ignoring reality. 
Trump good, China bad,I am ok with since I’m American. But numbers are numbers. So far all that damage is speculation and Chinese goods are everywhere in US stores. All this rhetoric is to glorify Trump success when few if any positive results have been seen. Tell you what, show me those numbers in a 3, 5 or 10 year chart and prove Trumps results. 

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Trump will tweet how hundreds of billions to trillions are pouring into US government coffers.  Yet the only trillion that the government can really claim is the deficit. GW touted Middle East wars and the economy. Then it crashed taking most of the world with it. How are those wars doing now. Trump is sending in the troops and it ain’t for the Kurds who did much of the fighting for us. Pathetic. Instead of giving those F-35’s to Israel. Teach the Kurds to fly. Iran, Iraq, Russia, Syria and the Saudi could learn a thing or two from my Kurdish friends. Lol

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11 hours ago, Boat said:

I would love to see the effects of China growth slowing from 6% to 4% in a chart. The trade imbalance difference between the China and the US would be good place to start. 
Statistics have nothing to do with patriotism of the outcome. These red right wing Republicans will always try to twist some kind of political message while ignoring reality. 
Trump good, China bad,I am ok with since I’m American. But numbers are numbers. So far all that damage is speculation and Chinese goods are everywhere in US stores. All this rhetoric is to glorify Trump success when few if any positive results have been seen. Tell you what, show me those numbers in a 3, 5 or 10 year chart and prove Trumps results. 

Nothing's stopping you from building such a chart. You can run a spreadsheet I hope? Good luck, have fun. The DNC would happily pay you if, as you intend, the chart puts Trump in a bad light. Goferit

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24 minutes ago, Ward Smith said:

Nothing's stopping you from building such a chart. You can run a spreadsheet I hope? Good luck, have fun. The DNC would happily pay you if, as you intend, the chart puts Trump in a bad light. Goferit

You just don’t google much eh? Here is a list of our trade deficit with China by year. As you can see, so far Trumps policies have had little effect. In Texas we call that Trump rhetoric on trade, all hat, no cattle.

https://www.census.gov/foreign-trade/balance/c5700.html

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1 minute ago, Boat said:

You just don’t google much eh? Here is a list of our trade deficit with China by year. As you can see, so far Trumps policies have had little effect. In Texas we call that Trump rhetoric on trade, all hat, no cattle.

https://www.census.gov/foreign-trade/balance/c5700.html

The intent of the tariffs was never to "fix" the trade imbalance. You're the one who wants to make this all about Trump for obvious reasons. You couldn't be more transparent if you tried. I get it, you hate Trump. You're probably Jeb Bush, lol. 

We've already won the trade war in ways you're either purposely blind to or more likely, partisan blind. Tom has posted multiple times about this, I'm not going to waste time repeating. Have a nice weekend, get some fresh air. 

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On 1/17/2020 at 5:36 PM, Marcin2 said:

It is true that private sector is slowing, the results of private sector (the major driving force of Chinese economy for 2 decades) are worse than state sector. Most analysts say that it is because of tightening of financing conditions for this sector, and lack of level playing field, state companies are prioritized, for political reasons.

 

But this article is not proving these facts, it is more or less irrelevant to them, I will explain why:

 

- when we build scenarios, especially relating to such a volatile measures like GDP growth in 5-6 years perspective in fast rebalancing economy (report prepared in 2019, relating to reality in 2024), the 3 or 4 scenarios are relatively diverse. So scenarios are probably: 4%, 5%, 6%, 7% or 4% , 5.5%, 7% of projected GDP growth. One of them is recommended as more probable, there is explanation why.

 

- Chinese GDP growth impact on electricity consumption is changing in the last 5-7 years. about 70% of Chinese power consumption is industry, with small growth rates, as industry's role in economy peaked about 2010-2012. The residential and commercial usage is rising fast, but it is still relatively small % of total usage.

 

 

 

The point is that there are only 2 profitable provincial electric utilities left. That is expected to fall to none in the next few years. Meaning that the entire system will lose money with no province subsidizing the others unless they cut supply and raise prices, or obtain a subsidy from the central government. Which is probably what they are signaling. 

It is consistent with numbers from Markit and Caixin, and other non-state (not NBS) reports. The private market economy in China is in distress. Perhaps now that they resumed "shadow banking" operations, it is possible there will be a pickup. There was a large spike up in activity in December. Perhaps it will hold past the filling of pent up demand from the trade war. The import spike was substantial. There was also a pop in Baltic Clean Tanker rates past the Sep. bombing of Saudi oil facilities. That may be Chinese demand. 

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On 1/17/2020 at 11:43 AM, Tom Kirkman said:

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.

 

  So what my take on this is that these tariffs HAVE had an effect on their economy. Even if it only to make buyers aware that a lot of stuff in our stores is made in China and we now pay more attention to that fact, and try to find alternatives to buying goods made in China.

  I went to get a new belt a couple of weeks ago and all of them are made in China, at least in Target and Walmart they seem to be. I decided screw it and found a mfg of quality leather goods in the US and bought one there. About twice as much as the Chinese junk, but the quality is unbelievably so much better, and a lifetime warranty to boot. So is this awareness catching on in the US now? I surely do hope so....

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I did exactly the same thing.  I bought a belt handcrafted in America at a NC Golf Course.

Making America Great one belt at a time!

You're a patriot Serwin!

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We are more aware and look at things we think we need but can only find made in China, so my wife either makes it herself or we do without. Oven mittens, pot holders, only from China. Bar towels, only from China. Stupid little things that you need are made in China. We have decided to forego purchasing them if they are made in China. I bought some towel sets a couple of years ago, made in China. They look horrible, threads pulling out and not wearing very well. We will not buy them again. Is there anything made over there that has any appreciable quality? Not from what I am seeing...

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On 1/18/2020 at 5:44 AM, 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.  

Actually Jan, the Chinese used to mainly buy Apple/Samsung phones, now they mainly buy Huawei/ZTE. Even have their own version of Nike shoes now, not to mention their own cars and aircraft. When it comes to electricity, real problem is that they have built too many coal-fired power generators. About 100 "ghost-cities" with power plant operating at 20% capacity, and they still building more!

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