China und Rußland

Geschrieben von BossCube am 27. Februar 2004 17:38:09:

All About China
by John Lee
www.GoldInsider.com

For those that follow the NBA (National Basketball Association), you know that Houston's Yao Ming knocked LA's Shaquille O'Neal out of the All-Star Game's starting line-up for the second season in a row. But O'Neal expected this, and hardly flinched when the final balloting was announced Thursday, January 29.

"That's cool," said O'Neal, who counts himself a fan of the Chinese-born Rocket's center. "Where he's from, there's two trillion people. I was just happy to be there."

But China gets blamed a lot for . . .

Jobs: China steals jobs from the US.

Deflation: China exports cheap goods and depresses manufacturing pricing power.

Inflation: China imports many basic commodities such as copper, iron, soybeans and oil, which just caused the CRB Index of commodity prices to reach more than a decade-high mark.

The all-star balloting does demonstrate the power of the Internet. The Chinese today are now louder both in voice and in money. Accenture, a business consulting company based in Bermuda, once estimated in 2001 that by 2010, Chinese websites will outnumber English ones. And now we offer our view on China.

Geography and population

Now with more than 1.2 billion people, China has the largest population in the world, one-fifth of the total. And every year the country adds another 12 million.

However, China only has 7% of the world's arable land and fresh water, 3% of its forests and only 2% of its oil. And although China's land mass is roughly the same size as the United States, it has 4.5 times the population. In addition, China's enormous population is unevenly distributed, with 94% living in the southeastern part of the country. In the United States, this distribution would translate to nearly one billion people living east of the Mississippi River

Most of the affluent people live in urban cities. There are over thirty cities with over five million in population. Shanghai, the biggest of them all, topped twenty million in 2003. We visited Shanghai and Hong Kong last year. There were just so many people, day and night, that only New York City compares in terms of population density. And in terms of marketing, one really only needs to capture these top cities.

What about the rest of China? In rural areas, clean water and food are a tough go for many. Public sanitation is lacking with many catching deadly parasitic worms. The AIDS epidemic is serious with illegal blood trading. Farming is still one of the top occupied professions in China.

Through the transformation to capitalism, the poor are ignored and public services are cut.

Trade

"China is now the single largest contributor of export recovery in the Asian region," says Jonathan Anderson, a China economist at UBS, "and provides a third of the region's bank loans." China now assumes that economic role, buying 31 percent of the region's exports as it currently prepares to become a source of regional funding.

To be sure, China's economic fuel in Asia is a recent phenomenon. In 1990, for instance, China only imported 6.8 percent of the region's exports. And in 1999, China accounted for only 11 percent of total Asian trade. But it is about fifty percent today!

In the past year, China has taken in 40-50 percent of Asia's exports, accounting for all of Taiwan's and the Philippine's, export growth last year and over 50 percent of each of Japan's, Malaysia's, South Korea's and Australia's. Such intake has driven more than 7 percent of the GDP (gross domestic product) growth in Taiwan, Malaysia and Singapore, 5.8 percent in South Korea and 4 percent in Thailand, according to UBS figures.

But despite having a trade surplus of $56 billion with the US, China is running a large deficit with Asia. Contrary to the belief that China is enjoying a large net trade surplus, it just reported its first trade deficit in 10 months as imports to Asia's second largest economy exceeded exports by 20 million dollars in January.

Currency

The Yuan (also known as the renminbi) is pegged at 8.28 to the Dollar.

Recently talks surfaced along the lines of China considering raising the exchange rate by 2.5% to the dollar as soon as summer of 2004. We are not particularly bullish on the Yuan due to China's trade deficit and low interest rate.

Banking and Wealth

China's banking system is developing rapidly with growing deposits denominated in both local and foreign currencies in all its financial institutions (including foreign-funded ones). They reached RMB22 trillion at the end of last December. This is an increase of 20.2 percent year-over-year, or RMB3.7 trillion compared with a year earlier. However, 80% of these total bank deposits today belong to just 12% of the investing public. China only recently started offering car loans. Credit cards are still not available to most Chinese (China has no nationalized social security number to check credits against). And there is little consumer debt to speak of.

There has been much talk about a Chinese banking crisis. China's non-performing loans (NPLs) by State owned enterprises (SOEs) deserves a closer look than we have time for right now. However, it seems to us that NPL is a term under capitalism and surfaced as China has been attempting to adhere to western standards and to join the WTO.

NPLs are really subsidies to SOEs which are not for profit. These are indirect loans by the state-owned banks to the state itself and thus should properly be included as part of the public debt. By the end of June 2003, outstanding NPLs of these institutions stood at 2.54 trillion yuan (US$306 billion), which was 19.6 per cent of the total outstanding loans during the period; 3.51 percentage points down from the beginning of the year.

With 2003 GDP clocked at $1.4 trillion, NPLs were 20% of that figure, considerably lower than the public debt to GDP ratio of many other countries. The US national debt ($7 trillion) is about 60 percent of GDP ($11 trillion). US private-sector debt is about 250 percent of GDP. Moreover, it is also clear that the Chinese banks will never be allowed to fail in a way that hurts depositors. There is, in fact, universal implicit insurance for bank deposits. Thus it is purely technical that Chinese state banks have a capital/loan ratio problem.

In the end, NPLs are just another inflation scheme to fund government works. The USA has two powerful tools to avoid NPLs. One is the US tax code, which gathers income to fund public works, and the other is the so-called 10-yr treasury note in which the US has $trillions outstanding. Since Chinese treasury notes have lesser appeal than American ones, and the Chinese don't believe in paying taxes, China has to resort to state bank loans to the state itself to fund its public works. So in the end it's really the same pie. The US can never earn enough to pay its treasury debt, just like SOE's can never earn enough to pay their loans off. Think of the US's $10 billion+ per year farm subsidies programs, or the $billion plus Amtrak bailout. These would have to be included in the NPLs in China but not under the US system.

So why is China going through the hoopla to create an NPL problem and pretending to be solving it?

The Chinese are quickly learning the American Way understanding in today's world that it's far quicker and easier to absorb others' wealth than to generate it. The grand China plan is as follows:

Join the WTO and adhere to the international banking code.
Take NPLs off the banks' balance sheets through AMCs (asset management companies; a stolen chapter from Enron).
Dispose NPLs to foreign banks, such as Morgan Stanley, for 10 cents on the dollar.
Increase the performing loans amount so that a lower percentage of NPLs will show in total loans outstanding.
Prime state banks for IPOs to receive $tens of billions in foreign capital.
The result is everyone's eyeing for Fidelity's Magellan, Pimco's bond funds and the purse of CALPERS. China already has over dozens of ADR's at the NYSE and NASDAQ, with a combined $200 billion in market capitalization (LFC, SHI, HNP, SNP, PTR, CHINA, NTES). Industries span from life insurance, utilities, chemical, oil, and dot-coms. Soon you will hear ICBC (Industrial and Commercial Bank of China) alongside JP Morgan and Citibank.

Watching some hamburger-flipping Americans who own 3000 sq. ft homes, the Chinese are quickly realizing that money will come easily once they step into the American financial gates. Take a few dozen state officials claiming the ownership of a steel factory, working with a Hong Kong banker to structure capitalization manufacturing some earnings reports, drafting a prospectus and then you have $1 billion in market cap on the NYSE. We encourage you to visit Vancouver, Canada to get a glimpse of these wealthy Chinese and their money at work.

There are two things to consider when buying Chinese ADRs:

Officially no money can be taken out of China. You can invest money in China but you can't take it out.
To think the NYSE will protect you when your ownership of the company is in question, think again. We had Enron, SBC, WorldCom and Qwest easily dodging auditors and Fannie Mae and Freddie Mac still can't produce reliable and certifiable quarterly and annual reports.
Today, with dividends next to nothing, investors will never earn back the capital they initially invested, Chinese ADR's or not. GE, at last count, had $290 billion of debt and less than 10 billion in cash.

Consumption

Consumer consumption stands at around 45% of GDP (vs. 66% for the US). This shows the potential of China as a source of demand for goods and services. However, in the near term, China has too much excess raw resources and manufacturing capacity. The State Council this year has ordered a halt in investment in three key industries: steel, cement and electrolytic aluminum. At this juncture we would caution investments in commodity stocks. We think the end of the first leg of the bull run of Phelps Dodge, Noranda and Inco are near.

But over the long term we are bullish on China. If global consumption of Chinese goods tails off, there are ways to spur domestic demand. Easy money and credit is always welcomed by the public. Easy credit boosts consumption, creates inflation and results in higher prices and concludes with a tougher recession. We will wait and see how the Chinese government tackles the cooling economy and loss of jobs that's to follow with the current red-hot Chinese economy.

Conclusion

We think the new Chinese leader Hu-Jin Tao is an ambitious one. He has befriended the Thais, Vietnamese, Russians, Europeans, Cambodians, Koreans, and Japanese. He lent several hundreds of millions of dollars to Asian partners. He has played the leading role in taking in Asian exports. With no storage problems, he wisely bought up all the natural resources from abroad. And he is making huge efforts to clean up China's capital markets to attract foreign investment. We will research more of Mr. Hu and share those insights with our subscribers in future issues.

Data were taken from the following sites:
http://www.pbs.org/sixbillion/china/china.html
http://abcnews.go.com/wire/World/ap20040219_2158.html
http://www.time.com/time/asia/magazine/article/0,13673,501031208-552154,00.html
http://www.atimes.com/atimes/China/FB10Ad05.html
http://www1.chinadaily.com.cn/en/doc/2003-08/09/content_253508.htm
http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/70534/1/.html
http://www.publicdebt.treas.gov/opd/opds012004.htm
http://www.icbc.com.cn/e_index.jsp
http://www.tdctrade.com/econforum/sc/sc010402.htm
http://www.atimes.com/atimes/China/FB14Ad03.html
http://www.atimes.com/china/DF01Ad05.html
http://www.pbc.gov.cn/english/xinwen/detail.asp?col=xinwen&ID=354
http://finance.yahoo.com/q/bs?s=GE&annual

Es ist prophezeit, daß China sich große Teile von Sibirien aneignen wird. Anhand der o.g. Zahlen ist das mehr als nachvollziehbar. China wird keine Wahl bleiben!

Gruß

B.

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