Manufacturing orders to China down 40% in unrelenting demand collapse

[stompix]

Might also remember while hard cash is needed, China is also sitting on a huge and growing pile of foreign reserves (1/3 of the world's foreign reserves, which it of course needs to continue sitting on in the short term to continue their export policy).

Reserves that start to look thinner and tinier when it comes to the amount of debt both the central and regional governments are piling up, just the other day they did another trick to refinance expiring bonds and not count it up
https://www.globaltimes.cn/page/202212/1281553.shtml

Dong noted that unlike regular government debt, special treasury bonds are "special budget" that are not included in deficit calculations but earmarked for specific major projects at "special times," which are often closely related to solving major financial or reform issues.
~
Local governments in China issued 439.9 billion yuan in new special-purpose bonds in October, up from 24.1 billion yuan in September and 51.6 billion yuan in August, latest MOF data showed.
In the first 10 months of 2022, these issues totaled 3.98 trillion yuan, which means the annual quota has been completed ahead of time.

And here we have half a trillion only by local governments in 10 months, when somebody will manage to get the real numbers, if that is possible at all, half of the world is going to have a shock at what's really happening there, if a country that's not in a war (like Russia does) suddenly decides to stop releasing indicators and postponing even the key figures it's clear things are not going well.

The planet's resources are limited.  If each of the countries begins to independently produce microchips, this will result in a slowdown in scientific and technological progress throughout the world.

Wow, I've never realized monopolies were good for innovation.

Yes, Europe will achieve success in microelectronics, but the initial products are likely to be of poorer quality than under the conditions of the global division of labor.  

Yes, because we all know Europe makes low-quality products, including sarcasm, you should start reading about ASML, and then probably you will realize who is ahead of who.

[buwaytress]

Might also remember while hard cash is needed, China is also sitting on a huge and growing pile of foreign reserves (1/3 of the world's foreign reserves, which it of course needs to continue sitting on in the short term to continue their export policy).

Reserves that start to look thinner and tinier when it comes to the amount of debt both the central and regional governments are piling up, just the other day they did another trick to refinance expiring bonds and not count it up
https://www.globaltimes.cn/page/202212/1281553.shtml

Nice find on those special treasury bonds, especially not healthy when you're considering you don't know how much debt you're actually standing on. CN economists must be feeling like they're treading water in the dark. They really don't want to go down that path.

Though to my eye, even if their real debt turns out to be 400% higher than reported (let's be pessimist), they're still end up with total debt well below GDP (which is how I see sustainable debt management). The US is about to break even (and the minute they stop their wars they're back deep in the red, which is why they won't), while almost the entire EU members already have debt multiple times their GDP. That was the eventual Greek route to bankruptcy (though they do seem to like taking that road a lot!).

[DrBeer]

And who would not say anything about the huge economy of China - it is DEPENDENT on the West. It depends on how much the West will buy (paying with hard currency, which is critically needed by China). And the Chinese economy is dependent - TECHNOLOGICALLY. And technology is the west, not the east ....

Might also remember while hard cash is needed, China is also sitting on a huge and growing pile of foreign reserves (1/3 of the world's foreign reserves, which it of course needs to continue sitting on in the short term to continue their export policy).

I wouldn't say it's critical. They may be forced to finally show their hand and that would actually be a bone-cruncher on the rest of the world.

Tech not in the east? Not sure that's going to be the truth for much longer, if at all now. Japan, SK, Spore, even China itself, at least on a more distributed level.

But in Russia they say that China is refusing the dollar, and in general many countries are refusing, because no one needs the dollar, it is not backed by anything, and in general everyone will make payments in their currencies and not in this "ugly green"

Of course, CURRENCY is critically important to China, but not just a currency, but one that you can buy what China needs. And he needs a lot! He needs to address issues of the domestic economy, which has a huge hole in the budget. Western technologies and INVESTMENTS are leaving the economy! And this means - now you have to BUY EVERYTHING in the west! And this means the DOLLAR is critically needed!

Last year, China sold a huge amount of yuan to Russia, under the Russian hysteria "give up the dollar." The Russians replaced about 12% of dollar foreign exchange reserves with yuan And then the yuan "fell". Russia's total direct losses from such a "good deal" are more than $10 billion. Oh yes, "cherry on the cake" - China sold its yuan to Russia for ... DOLLARS

[Hispo]

USA should stop being the money printer of the world to begin with. They keep printing money and then buy something with it from other nations and then they print more when they have none left and we act as if that's okay.

I am sorry but USD doesn't really have the value it used to have, we put value into it, normally I would prefer to go towards Euro a long time ago, even if that doesn't look as strong right now, it has a clearer future right now and looks to be backed by people with actual economic goal, not people who just do whatever they want and show you a guy afterwards to make you accept. China is doing worse because they dependent on others money, that is the main issue.

I believe the plan of the economic authorities behind the USA economy is the same as usual: to defend the adoption and the state of the USD as global currency, regardless of the amount they have printed or plan to print in the future. They want to keep the demand of their money high around the world, basically.

For this objective, inflationary countries like Argentina, Venezuela and Zimbabwe are ideal, since they demand currency to their economies and even there are proponents of a full de jure dollarization in those places. It would also be important oil producing countries to continue to accept American currency for their energy, for obvious reasons.

[stompix]

Though to my eye, even if their real debt turns out to be 400% higher than reported (let's be pessimist), they're still end up with total debt well below GDP (which is how I see sustainable debt management).

China's total reported debt, national and local government is already at 45% of GDP (assuming real GDP) so just doubling will put it above the EU average.

The US is about to break even (and the minute they stop their wars they're back deep in the red, which is why they won't), while almost the entire EU members already have debt multiple times their GDP.

Nope, assuming multiple means at least twice there is NO country in the EU that has that much debt, Greece is just at 183%, and only 6 countries have more than 100%. You're overestimating China's economy and really downplaying the European one, the most important thing is that one of the two has worked without the other one for decades and it doesn't really need the other one as much, and that ain't China's. 

[DrBeer]

USA should stop being the money printer of the world to begin with. They keep printing money and then buy something with it from other nations and then they print more when they have none left and we act as if that's okay.

I am sorry but USD doesn't really have the value it used to have, we put value into it, normally I would prefer to go towards Euro a long time ago, even if that doesn't look as strong right now, it has a clearer future right now and looks to be backed by people with actual economic goal, not people who just do whatever they want and show you a guy afterwards to make you accept. China is doing worse because they dependent on others money, that is the main issue.

Re-read these words of yours again ... And more .. Don't you feel like you are deceiving yourself?
If the United States prints unsecured dollars, and then buys everything they need with them. So those who sell for these unsecured dollars are just primitive stupid suckers? Or is that something wrong? After all, everyone wants to sell their goods and services for dollars, right? Look, China even sold its yuan to Russia for dollars! Yes, yes, it's not a joke, it's a fact!
So your assumption is wrong? Does this mean that the dollar is not only worth its face value, but is also in demand? Well, or are we coming to the conclusion that 90% of the world's population had their brains amputated?!
We come to a logical contradiction ... So you are still mistaken, and the United States simply turned out to be more cunning, smarter, more pragmatic than others, and their product in the form of a dollar is in demand all over the world! Even if nothing is obchespechen!

[redsun114]

I have to say its also a bit of a problem about peoples purchasing power as well. I worked in a company that ordered some stuff from China, and it was like every 2-3 months as well so its not like a small amount, we are talking about nothing major like billions, but like 1.5 million dollars worth every 75 days.

That company now stopped ordering from there because they are not making any profit, so they are just reusing the items after clearing it very carefully, and that is looking like an easy solution most, but this is a towel that they distribute to hotels, when you learn that, it becomes clear why its a big deal, if you are the only one who used that towel that's an elite hotel, if they just wash it and give it back to you, that's not so elite.

[DrBeer]

I have to say its also a bit of a problem about peoples purchasing power as well. I worked in a company that ordered some stuff from China, and it was like every 2-3 months as well so its not like a small amount, we are talking about nothing major like billions, but like 1.5 million dollars worth every 75 days.

That company now stopped ordering from there because they are not making any profit, so they are just reusing the items after clearing it very carefully, and that is looking like an easy solution most, but this is a towel that they distribute to hotels, when you learn that, it becomes clear why its a big deal, if you are the only one who used that towel that's an elite hotel, if they just wash it and give it back to you, that's not so elite.

Many will come to this. wasteful, unbridled consumption, and uneconomical use will become a thing of the past for many. People will learn to save, use what they have more efficiently, and not waste money on buying unnecessary or non-critical goods. This is fine. But this will also lead to a decrease in the turnover of economies like China, when a huge number of "disposable" things are produced. People will give preference to slightly more expensive but better and more reliable things.

[Smartprofit]

I have to say its also a bit of a problem about peoples purchasing power as well. I worked in a company that ordered some stuff from China, and it was like every 2-3 months as well so its not like a small amount, we are talking about nothing major like billions, but like 1.5 million dollars worth every 75 days.

That company now stopped ordering from there because they are not making any profit, so they are just reusing the items after clearing it very carefully, and that is looking like an easy solution most, but this is a towel that they distribute to hotels, when you learn that, it becomes clear why its a big deal, if you are the only one who used that towel that's an elite hotel, if they just wash it and give it back to you, that's not so elite.

Many will come to this. wasteful, unbridled consumption, and uneconomical use will become a thing of the past for many. People will learn to save, use what they have more efficiently, and not waste money on buying unnecessary or non-critical goods. This is fine. But this will also lead to a decrease in the turnover of economies like China, when a huge number of "disposable" things are produced. People will give preference to slightly more expensive but better and more reliable things.

Here the question arises - do modern manufacturers know how to make durable things (products)?  And another question - are modern people ready to consume such products? 

I will give you an example.  English handmade leather shoes can be worn for life (changing soles periodically).  However, will you wear such shoes or would you prefer to buy sneakers? 

At one time, I found that the less durable Puma summer sneakers, the more comfortable they are.  I then started buying four pairs of these comfortable sneakers during the discount season.  They were 50% off.  I wore each pair of sneakers for no more than 3 months, and when the mesh was torn on them, I threw them away. 

Now Puma has closed all its stores in Russia. 

Perhaps soon in Russia they will begin to mass-produce very durable felt boots, but this will not make me very happy.

[pooya87]

It would also be important oil producing countries to continue to accept American currency for their energy, for obvious reasons.

This is the only thing that has left for US and it is called Petrodollar. The funny thing is that all oil producing countries are slowly dumping US dollar too! The latest is Russia that started when sanctioned and now anyone in Europe that buys anything from Russia is paying in Ruble. Even the US colony called Saudi Arabia is slowly dumping USD, the recent Chinese visit there started a wave of political pressure from US to dissuade them from dumping it (we have to wait and see how successful that can be though). Are we going to say hello to Petroyuan? lol
With China securing more cheap oil and resuming their economy/production, next year would be very interesting regarding the global energy prices and the industries in the West that don't have access to said cheap oil anymore.

[DrBeer]

It would also be important oil producing countries to continue to accept American currency for their energy, for obvious reasons.

This is the only thing that has left for US and it is called Petrodollar. The funny thing is that all oil producing countries are slowly dumping US dollar too! The latest is Russia that started when sanctioned and now anyone in Europe that buys anything from Russia is paying in Ruble. Even the US colony called Saudi Arabia is slowly dumping USD, the recent Chinese visit there started a wave of political pressure from US to dissuade them from dumping it (we have to wait and see how successful that can be though). Are we going to say hello to Petroyuan? lol
With China securing more cheap oil and resuming their economy/production, next year would be very interesting regarding the global energy prices and the industries in the West that don't have access to said cheap oil anymore.

Are you back with your propaganda tales / fantasies?
Once again I tell the dreamers: all contracts are signed with oil and gas prices - in DOLLARS and EURO!
The terms of the contracts were not changed. The Kremlin terrorist, of course, decided to show everyone his fake greatness, and announced that everyone would now buy oil and gas for some incomprehensible rubles, but he was immediately sent. And in order to "save face", they implemented such a scheme (maybe even check the official information) - Correspondent accounts are opened in one of the Russian banks in dollars-euro. Buyers there transfer DOLLARS-EURO. Russia transfers the currency from these accounts to the Moscow currency exchange, where it sells dollars and euros for its own rubles (i.e., they sell and buy to themselves), and the rubles received are counted as payment for oil and gas.
And now explain to everyone - where in this scheme "oil and gas are bought for rubles"?

[Hispo]

-snip-

-snip-

There are other reasons why the American dollar is valuable in foreign markets though, still the oil/USD liquidity helps a lot.
I am not sure yet better the petro-dollar will find an end in the short or mid term, because there are still oil producing countries which are willing to accept American fiat in exchange of their natural resources.

Venezuela, having the biggest oil reserves on the planet is specially thirsty for dollars, even though the Venezuelan government have close ties to China, Rusia and Iran.

[pooya87]

I am not sure yet better the petro-dollar will find an end in the short or mid term, because there are still oil producing countries which are willing to accept American fiat in exchange of their natural resources.

Unless something very drastic happens like a direct war between US and another power (as opposed to all their proxy wars) I don't see Petrodollar going away in short or midterm. The process is definitely very slow and it is not like US regime is sitting idle watching it happen. They are fighting it hard. For example ever since the Chinese visit to Riyadh there are talks of a coup an a lot of chaos in Saudi Arabia and the unrest is growing fast. Historically speaking whenever a weak country like Saudi did something similar they were bombed out of existence.

The process may be slow and facing a lot of resistance but it is inevitable.

P.S. What we should be worried about is if some day we see USD be replaced by something just as bad like Yuan!

[DrBeer]

Here the question arises - do modern manufacturers know how to make durable things (products)? And another question - are modern people ready to consume such products?

I will give you an example. English handmade leather shoes can be worn for life (changing soles periodically). However, will you wear such shoes or would you prefer to buy sneakers?

At one time, I found that the less durable Puma summer sneakers, the more comfortable they are. I then started buying four pairs of these comfortable sneakers during the discount season. They were 50% off. I wore each pair of sneakers for no more than 3 months, and when the mesh was torn on them, I threw them away.

Now Puma has closed all its stores in Russia.

Perhaps soon in Russia they will begin to mass-produce very durable felt boots, but this will not make me very happy.

I will say this - not all manufacturers and not all products.
For example, take cars - from personal experience - European A-brands (Mercedes, BMW, ...) quality - DECREASED. No, from the point of view of the quality of materials and reliability, everything is fine, but the life span has really decreased. It is certainly more than warranty figures, but a 10-year-old post-2010 Mercedes feels "worse" than its older brother, for example, a 2000 model. Toyota is still happy, I was their adherent, and I will continue - they adhere to high quality.

Household appliances - at home almost all Bosch and Miele brand appliances. Yes, it's more expensive, but it works like a Swiss watch! Watches - I like old European brands - for mechanical ones, and for example from smart watches - quite high-quality Samsung. LG TV has already had several models, I changed them, all are working, I give out old ones to my relatives LG OLED65CX is an excellent model!

In audio / video - Korean companies are very good in terms of price / quality!

I can say about these brands - yes, they know how to make comfortable, high-quality products.