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Special report - China1

CHINA: POWERING THE GLOBAL ECONOMY OR THE NEXT BUBBLE TO BURST!

Copyright © 2010 eec-newsletter.com. Every effort has been made to ensure that this report is free from errors or problems. We Have made it available to you with the understanding that though we worked hard and long to provide accurate information, we can’t take any responsibility for loss or action to any individual or corporation acting, or not acting, as a result of the material presented here. All Right
Special report - China1

CHINA: POWERING THE GLOBAL ECONOMY OR THE NEXT BUBBLE TO BURST!

Copyright © 2010 eec-newsletter.com. Every effort has been made to ensure that this report is free from errors or problems. We Have made it available to you with the understanding that though we worked hard and long to provide accurate information, we can’t take any responsibility for loss or action to any individual or corporation acting, or not acting, as a result of the material presented here. All Right

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Special report - China1

CHINA: POWERING THE GLOBAL ECONOMY OR THE NEXT BUBBLE TO BURST!

Copyright © 2010 eec-newsletter.com. Every effort has been made to ensure that this report is free from errors or problems. We Have made it available to you with the understanding that though we worked hard and long to provide accurate information, we can’t take any responsibility for loss or action to any individual or corporation acting, or not acting, as a result of the material presented here. All Rights Reserved. Reproduction or translation of any part of this work by any means, electronic or mechanical, including photocopying, beyond that permitted by the Copyright Law, without the permission of the publisher, is unlawful. Further reports can be read on

www.eec-newsletter.com

Copyright ©eec-newsletter.com 2010All Rights Reserved

Page 1

Special report - China1 EEC Newsletter Special Report

CHINA: POWERING THE GLOBAL ECONOMY OR THE NEXT BUBBLE TO BURST!

THE ALLEGED GLOBAL ECONOMIC RECOVERY IS BASED ON THE CHINESE MIRACLE… THAT MIRACLE IS IN FACT A BUBBLE: CHINA IS DEEPLY MIRED IN DEBT IT CAN NEVER PAY BACK. CHINA’S UNEMPLOYMENT RATE IS THE HIGHEST IN THE WORLD. AT LEAST HALF OF THEIR FACTORIES HAVE CLOSED DOWN. DEMAND FOR THEIR PRODUCTS HAS COLLAPSED. THEIR EXPORTS ARE FALLING, NOT RISING. CHINESE CONSUMERS ARE SPENDING LESS, NOT MORE.

Copyright ©eec-newsletter.com 2010All Rights Reserved

Page 2

Special report - China1 Why the china “miracle” is a myth
The Chinese national government claims virtually no national debt. But the provinces owe over $20 trillion in debt and guarantees. Their “no-debt” claim is absolute hogwash. They owe 10 times their wildly exaggerated GDP. That's a world record. It is 8 times more than the U.S. government owes. We're told China's economy will drive the world forward even though its economy is only about one-fourth the size of the U.S. economy and just 5% of global GDP. We're told China has massive trade surpluses. Despite the fact that Chinese factory output is plummeting, prices are collapsing, exports are falling and the world is experiencing its worst recession since 1930. China has 100,000 “prosperous” people and 1.3 billion people on the brink of starvation.

Exports plunging at breakneck speeds
China's economy is export based. Their leaders admit exports fell by 30% in 2009 (although most would agree the real figure is double that). 2008 was another disaster. And, for 2010, there has been no real improvement at all. How could there be any improvement when China's main export consumers, the Euro zone and the U.S., are in the depths of a depression? Despite this, China “miraculously” claims an 8% GDP growth over the previous two years. How is that possible? No exports. No domestic consumers. Where does their alleged GDP growth come from? Beijing is cooking its books.

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Page 3

Special report - China1
Why haven't you been told about this? Because it runs directly against Wall Street's interest. They want to hawk their Chinese investments to the public. In order to do that, they have conspired with the Communist Central Party to create the illusion of great Chinese prosperity. The truth is their entire GDP growth over the last few years has been entirely based on a mindless building spree - a thousand times worse than Dubai. But the game has to keep going because if they stop construction, you'll see GDP growth go negative quickly. That's not going to happen because in China, people are rewarded at almost every level of government for making their economic growth numbers. The easiest way to do this: put up another building. In 2008 China launched a $4.5 trillion stimulus plan - more than its entire GDP. Investment rose 30.1%. On top of the government/stock-market stimulus, banks loaned a record 9.59 trillion Yuan (about $1.4 trillion). This is why China has reported 8% GDP growth the past two years. Unfortunately, this so-called growth came from short-term stimulus. The stimulus has run its course. China's economy is crashing. They have built entire cities nobody lives in. Miles of empty apartments litter the landscape in cities the Chinese people cannot afford to live in. It's unprecedented in world history. Supply far exceeds demand, and has done so for a long time. Funding was easily available, though. So developers disregarded demand and went on a mindless building spree erecting vast, unwanted and unused structures. They built the worlds biggest, most futuristic, high-capacity steel mill a year ago. It too, sits empty. They have never fired the furnaces. The new mill has no customers.

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Page 4

Special report - China1
China’s steel mills, refineries and factories hold far more capacity than anyone needs or can use. They sit there, under-used or abandoned. There is too much over-capacity in steel production, both in China and the world over. This puts China in a deadly dilemma. Steel sales are plunging, yet the factories keep producing more. Huge stockpiles of completed steel products are sitting idle in factories all over China. Every month, China buys $30 to $40 billion of (mostly) U.S. government bonds. This keeps its currency artificially low. It makes Chinese products artificially cheap. This has led to the vast over-investment in factories and industrial capacity. China has over-built by 100% to 200%, perhaps more. To keep this Ponzi scheme going, China floods the market with cheap, poorly made products. With the ongoing depression, the world cannot continue to buy these products. That is why Chinese exports keep plunging. Yet they keep building and more and more empty factories. This is a politically driven bubble — and it’s already massive. The U.S. is in a crisis, because its capacity utilization is a little over 70%. China's official rate is under 70%. Yet Wall Street says that is not a crisis. The true figure is under 50%: China's government is infamous for cooking its books, for not being truthful about its economic and production figures. Think about it. They admit that in their export-driven economy, exports slumped 30%. But somehow their utilization rates stay the same?

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Page 5

Special report - China1 Forget about the consumer revolution
They claim Chinese consumer spending is taking up the slack? Their retail sales numbers show consumer spending is falling, not rising. It has dropped for ten consecutive years. Wall Street tells you a great mass of emerging Chinese underclass are becoming shop-till-they drop consumers. Yet, at precisely the same time, they are losing their factory jobs and unemployment has soared to the highest level of any major nation in the world. The reality is China has 100,000 “prosperous” people and 1.3 billion people on the brink of starvation. It’s impossible to see how Chinese consumers will become the engine of growth for the world economy. By government design Chinese workers are among the lowest paid in the world tight-fisted and relatively poor Chinese consumers do not have the purchasing power to rescue China's economy, let alone the rest of the world. The Chinese masses have no money. No credit. If they got credit, they couldn't pay it back. Just like the rest of the country. The idea that they will become great consumers, who will lead the world economy forward, is the most absurd proposition in the world. Still Wall Street insists the Chinese are the world's emerging consumers. But how does a nation, whose GDP is a tiny fraction (one-twentieth) of world GDP, drive the world forward? Especially when it, too, is in a depression?

Profit margins thinner than rice paper
China's Central Committee completely controls its stock and currency markets. They keep wages and the yuan artificially low. This is essential to give them an export edge. Their undervalued currency distorts world markets. It makes their products artificially cheap.

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Page 6

Special report - China1
The bubble is now supported in the main only by cheap money where strong export-demand growth had sustained it in the past. China is not a democracy; they don't run their economy on the free enterprise system. They have a Communist economy. So they don't compete on quality or innovation. They compete on price. Any slight change in any economic factor can tip them into the red. And that is starting to happen now. Their currency has been rising. This alone makes their products more expensive to the rest of the world. Furthermore, China's factories have the worst logistics - some of the highest costs - of any country in the world. They don’t locate their factories next to the raw materials, or at the end of easy-to-use transport links. They build their factories in centrally planned industrial centres. Not on economic grounds, but for political reasons. Often, where the Communist Party chief has the most influence, where the biggest payoffs have been made, or where restless populations need to be pacified. So they have a transport nightmare. On top of that they are very bad material buyers. They pay vastly more for their production inputs. Over the last two years, over half the materials China has imported have not gone into the production cycle. They sit in warehouses. This is true of chemicals, refined products, iron ore, copper, lead, nickel, zinc and oil, to name just a few. Key commodities prices have collapsed. Oil was $150 a barrel. Now it's in the $80s. It will soon head considerably lower. Aluminium was $1.50 a pound: now it's $.80 cents. Lead fell from $1.75 a pound to a $1.00. Nickel from $24 a pound to $10. Tin dropped from $12 a pound to $8.00.

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Page 7

Special report - China1
So they stockpile more and more of the stuff. They think they are scooping up great bargains. They don't see that in the rest of world - where they must sell their products - the free market is forcing prices down. They are paying too much, for commodities that will drop even further in price. Chinese companies only have one advantage. Their sweatshop labour costs are less. Everything else costs more. Furthermore, their transportation, labour, material and input costs are rising. And, because of domestic inflation - again due to their communist system - they are now under incredible labour cost pressure.

Irrational exuberance about the Chinese economy has prompted American investors to try to get in on the supposed China boom, with little understanding of how these companies actually operate.

Any company that does business in China must give the government 30% ownership. Government agents sit on the Board of Directors.

If you want to manufacture in China, you must transfer all your technology information to the Chinese government including patents and proprietary manufacturing techniques.

They also demand you do your research and development in China. The Chinese systematically rip-off the technology of all companies located there. They are the biggest technology pirates on the planet.

Often the Chinese government comes back later and reneges on deals. It demands and receives information on technology not involved in the Chinese operation. This is the greatest transfer of technology ever seen.

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Page 8

Special report - China1
As soon as the Chinese know they can make the product themselves, they throw out their foreign partners. Foreign executives who do not play the game often end up languishing in Chinese prisons because they fail to understand this basic concept: the biggest risk of all is really the Chinese government itself. If the Government wants you dead tonight, you won’t live to see the sunrise the next morning. This is an authoritarian country where organs are harvested from prisoners who are still alive. Given how brutal they are to their own citizens in the name of preserving state authority and perceived national interests, the only reason for them to play nice with foreign companies is if they think the arrangement benefits them.

The dark side of the Chinese economy
China is a bureaucratic, centrally-planned, totalitarian nightmare run by 25 men - The Politburo. They are not capitalists or entrepreneurs but die-hard communists. Their attempts to centrally manage their economy works no better than Stalin's or Khrushchev’s did in the Soviet Union. How can twenty five people plan every building, every factory, every port, every job, every resource and every detail of the economy? It's impossible. Nobody is smart enough to do it. Just like the Soviets, China works with 5-year economic plans. Just like the Soviets, these plans are a complete and utter failure. One of the hallmarks of the failed communist system is its failed economy. Communists do things in a way that guarantees inflation. They create massive unemployment, waste and improper allocation of resources. Never mind the theft of funds and endless corruption. Central planning means they make mistakes in every aspect of their businesses. Unlike in a free market economy, there is no way for them to offset their mistakes. By the time they have spiralled out of control, it's too late.

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Page 9

Special report - China1
So what are they really up to? Nobody knows for sure. Government controls information there with an iron fist. There are no reliable statistics from China's government and not many people are willing to die to tell you the truth. That is the penalty you can pay in China, if you expose what is really going on there. But we do know this - all their policies are about to collapse in abject failure. And, when China's bubble finally bursts, which it will do any day now, the consequences will be severe. It will mean further devastating news for the world economy and recovery. Political risk will be a major problem in China, as rising unemployment, migration, and factory closings give rise to political unrest. You are starting to see this happen now. So what's their plan B? The chilling reality is very different to anything Wall Street and the Chinese government would have you believe. Read the full version of our shock report (http://www.eec-newsletter.com/china2.htm) to discover the deadly truth about how China plans to get themselves out of this mess and save their own necks. Discover what you can do to prevent their evil plan, whilst allowing America to undergo a major manufacturing revival. Bottom line, China’s economy is a bubble economy right now. And bubbles do not deflate; they pop. Anyone who thinks this will not end badly is in for a rude awakening. Our shock report is orientated towards a U.S audience but the deadly facts we expose are equally as applicable to Europe. Discover the real threat China poses to the world right now. If you buy into the China miracle, you are buying your own doom. This is an extract from the main report (facts you will want to know)

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