Bombshell •China Faces `Unprecedented Difficulties' in Attracting Foreign Investment

Discussion in 'Economics' started by ByLoSellHi, Jul 2, 2009.

  1. If you don't think this public statement by THE man in charge of this area of China's expansion is a bombshell....

    Draw your own conclusions. These statements are made with a very specific purpose, and I believe it's to dramatically reduce expectations about Chinese growth based on a collapsing situation in China that has not been reported on as of yet - the factory 'zones' have been devastated, and now it looks as if we'll find out soon that the cancer is metastasizing to the whole of the Chinese Economy.

    This is huge. Bigger than huge.

    China FDI Faces ‘Unprecedented Difficulties,’ Government Says
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    By Bloomberg News

    July 2 (Bloomberg) --
    Foreign direct investment in China faces “unprecedented difficulties” as the global crisis cuts multinationals’ spending, Vice Commerce Minister Chen Jian said in Beijing today.

    To contact the reporter on this story: Paul Panckhurst in Beijing at
    Last Updated: July 1, 2009 22:17 EDT
  2. utter nonesense. Not a single manufacturing plant has been shut down in Shenzen or the special economic zones east of Shanghai. Obviously production had to be slowed down resulting from lower global demand. But its nowhere close to as bleak a picture as some "gurus" would love to paint it.

    But guess what, which large economies at the moment are currently in urgent need for foreign investmens? China would probably come to mind pretty much last after the US, after the UK, after central Europe, after Japan, after.....

    The point is investments still chase the best investment opportunities world wide and this will never change nor did it change last year. Investors are interested in relative performance, so, where would you yourself put your money right now? In the US knowing their currency will be devalued further down the road leaving your returns currency adjusted at meager levels? Or maybe in the UK/London, a barrel without any bottom whatsoever? Or you may possibly invest in Germany or France hoping unions and the welfare system will for once consider the advantages of what less regulated markets can bring about?

    Makes me wonder what your actual point is...any basis for your own assumptions or are you just copying one of the hundreds of analysts who have never risked a penny but can say whatever they feel like today?

  3. Someone told me that China went overboard with debt to finance production capacity, and now they have excess production capacity with a whole lot of debt. Perhaps the article is indirectly referring to this malinvestment. Thoughts?
  4. i politely disagree. Everyone finances with a portion of debt, its prudent and makes economic sense. Of course there are politicians and central bankers who do understand the dangers of overleverage and when debt ratios actually start to reverse the original advantage of financing partly in debt, and then there are those who really just act in order to be re-elected by the dumb guy on the street thus throwing good money after bad. I claim China is in no need to act irresponsibly in terms of debt financing, nor do any of the ratios support earlier claims.

    China more so than any other economy has control over wast surpluses and that some of it is utilized to stimulate productive capacity comes at no surprise nor is it in any way worrysome. Why would it? China's problem is what to do with its current account surplus not from whom to borrow. I claim this is likely to contine mainly due to a) high savings rate in China, b) undervalued yuan , c) comparitive advantage in manufactured goods.

  5. small technical point that is probably just a typo in your post but there are NO economic zones EAST of shanghai as its on the east coast.

    Another point would be that manufacturing plants open and close all the time from the information I get. to say 'not a single' would go against what I am hearing in both shenzen and shanghai. Perhaps you mean very large / MAJOR plants

    Many of the SOEs are still overweight with needless employees that they cant lay off for political reasons. That will keep downward pressure with the growth numbers for what I believe is the foreseeable future but that still means 5% growth rate as the market based economy grows beyond the coastal cities.

    Best to you

  6. Johno


    China faces major Banking and Financial issues that potentially could be far worse than that suffered in the US. As one of our most important trading partners I expect Australia to cop the major brunt of these problems and so have put my money where my mouth is and shifted most major investment assets to low risk profiles. I feel confident that the information I have received is reliable. I do hope that further destructive economic turmoil will be averted as many of the most vulnerable people will be the ones who suffer the most.


  7. AK100


    Seems like we've got a worker from the People's Propaganda Department of China posting on this thread.

    Man, things MUST be bad in China...........
  8. small technical point that was not a typo: I was talking about the Pudong special economic zone, lots of foreign industrials are located there, including Tyssen Krupp one of Germany's largest steel maker among many others.

    On the other point you were acccurate, I was not specific enough: I was talking about large industrials, whats the point to consider some mid-sized or family businesses.

  9. yes, among the 100s of thousands of small to mid sized businesses many of them reduced or shut down business. At least now I understand where you got your rethoric from. I recommend going there or living there yourself before you pick up some panic reports on the news. Go to Shanghai and when you get back tell me where you witnessed any panic, I am happy to stand corrected ;-)

    #10     Jul 2, 2009