Last week, I went to a conference on China at J.P.Morgan by the renowned Managing Director, Chairman of China Equities and Commodities, Harvard and Stanford educated Jing Ulrich. The mood at the conference was excessively bullish and Jing wasn’t open to more than a total of 5 question which I didn’t like! What I hate about such conferences is that discussions are very generalized and never stock-specific. The same mantras are repeated: China will continue to ferociously grow and this time it will decouple from the US. My main concern is in regards to the slump in exports which currently yields a negative net trade. Exports comprise around 25% of Chinese GDP vs less than 3% domestic consumption. I don’t see any decoupling from the US soon as China heavily depend on the US consumer buying its exports. Moreover, it can’t sustain the intensive levels of capital formation (i.e. government spending) forever.
I was only going to share with you a few trivia info about China which I thought were interesting, but unfortunately (as always) I drifted.
So here it goes:
- China overtook the US as the country with the most car sales in the world.
- China overtook Germany as the third largest world economy. It is expected to overtake Japan (2nd largest world economy) in the next 2-3 months.
- China’s 1 day GDP today is equivalent to its GDP in all of 1949!
(1 votes, average: 4.00 out of 5)
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Huge growth brings huge oppertunities
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A mantra, exactly.
Maybe, more accurately, a sales pitch.
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Keynesian Reply:
November 4th, 2009 at 11:52 pm
dxb where have u been and what’s wrong with ur blog? For some reason I can’t access it. Exactly: a sales pitch.
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Folks,
For some strange reason I can’t trust those economic figures coming out of China!
For one, I have a feeling that there is a major discrepency between rural and urban economic data and, I feel the Party in China fix those economic releases as they please. In other words, how accurate are they?
Thanks Keynesian for sharing your findings.
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Ra’ad you have good instincts. The economic statistics from there are unreliable and in most cases doctored. There is no question there is a whole lot of economic activity in China, but things can always change dramatically overnight once assets deflate in value rapidly (stocks and property in China).
As for Blogoronomy, it unfortunately has been hacked into again and taken “private” so someone is controlling the username. This time we can’t be bothered to “repo” the Wordpress account.
LOL there were always people p—–ed off at the blog.
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china’s a very interesting place that many people dedicate their lives to as sinologists much like you have egyptologists. there’s a huge amount of data to consider and so one must keep in mind the scale they are dealing with. my reflections on some of the points you put forth in the post:
* china conferences are a dime a dozen so do try to filter the good ones
* i agree with the comment stating the gap between urban/rural china and how this has to be considered in a serious analysis
* its about time china took its place as part of the grown up world. lets hope they can make it stick this time since they’ve had their heyday a thousand and more years ago
* 1949 china GDP was probably one of its worst in a 1000 years given a number of factors including the impact of WWII, forced seclusion from the rest of the world and communism’s radical economic effect that had just started to take hold. i would look at China’s GDP at around 1800 and before that and compare it to what you have in 1949 for a more realistic perspective.
finally, china is a fascinating place for anyone to visit that hasn’t been there but make sure you plan your trip well – its not london and there are many things to see/do.
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Keynesian Reply:
November 6th, 2009 at 6:31 pm
Hey peteyb,
Sorry but for some reason your comments always go to spam ( I think because you have this comments@incogenator.oib.com as your email. Try changing you email.
China is indeed a very interesting place. This conference is supposed to be one of the best seeing that Jing is MD and Head of China at JP Morgan. My point is that these conferences tend to focus more on the top and not go down to equities and what the economic factors mean for them. For example, Jing was very bullish on commodity producers so at the end of the conference a guy approaches her asking for 3 names (stocks) she would recommend. SHE COULDN’T GIVE HIM ANY NAME. He said BHP, she said yeah that’s good. Then he told her give me 2 more and she couldn’t.
Also, we know China is selling cars, but should I buy aluminum or steel producers or even both? or car manufacturers? Which companies? Economics/strategists never answer these questions. They talk general and general talk is never wrong. “In ten years such and such.” Who will check on what she said in 10 years. However, with stocks you get an instant answer and that is why they tend not to recommend any.
I guess I also wasn’t lucky because there was China fever and you get the sort of people who will ask stupid questions and prevent you from asking important ones.
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peteyb Reply:
November 8th, 2009 at 4:05 pm
to avoid the congestion at conference question time, you should ask for the expert’s card (all the ones worth their salt will give it to you) and then call or email them later. if they’re genuinely focused on their field and your questions seem interesting then my guess is you will get answers more often than not.
there is a more important reason to do this than simply avoiding the crowds that is some speakers will be quite reserved in front of a large and sometimes unknown audience. now usually i believe people should speak their minds in a rational environment but i also recognizing that certain realities are important to take into account such as the omnipotent chinese govt. would you want to put down a SOE by touting a privately held company that you thought was better? if you do business in china, you may want to think twice about what you say in public.
and its still worth visiting.
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