I get a strong suspicion that too many people are too overweight in Chinese stocks now. The reason for this is that after posting the China Tax and China Labour Law changes on a number of sites, there has been absolutely no response at all on most. High profile names ignore the posts, nobody commenting at all, either pro or against.

It therefore suggests to me that lots of people are presently very overweight in China stocks, they have got caught with the market weakness, and are now holding at a loss - waiting to sell any rise.

If, and its only an "if", the market weakness continues, and more and more of these people are trapped into China plays - you can foresee, imv, a lot of weakness coming into that sector, as more and more give up and bail out.

Quite remarkable that so many got duped into buying "China" as a safety against US/EU credit fears and recessions - only to now find its not as safe as they thought, and China stocks are also falling.

My own suspicions were that the China stock dream would go into breakdown and start its fall once the 2008 Summer Olympics had passed and the government can afford the luxury of upsetting lots more people and not caring about "face" during the Olympics that the world will be watching.

Is there another boom left in them before the Olympics comes and goes ? Will the boom not happen as its sold into ? Will they all meakly fade now and continue to do so ? Will they just keep on booming and not fall back again ?

Please discuss !!

http://www.china.org.cn/business/highlights/2008-07/03/content_15950947.htm

CCB: Future tightening should keep stagflation in mind

Chinese government should tighten macro-economic policies while simultaneously watching out for signs of a major economic downturn and possible stagflation, China Construction Bank (CCB) said in a recent report, the official Shanghai Securities News reported Thursday.

According to the report, China is now facing new challenges the possible emergence of high inflation, an overheated economy, and an economic downturn.

Guo Shikun, head of the research department of CCB, told the newspaper that the Chinese government needs to take a balanced approach when coping with multiple economic problems. He said that, under the current circumstances, expansionary or prudent macro-economic policies may be able to sustain economic growth, but their side-effects would cause further increases in commodity prices; tightening measures would help keep down prices and curb inflation, but would hurt the domestic economy which is already facing the risk of a downturn.

"Preventing the economy from overheating and preventing the current structural price hike from turning into major inflation remain the major goals of Chinas current macro-economic controls, said Guo, but we should also be alert to the danger of a possible economic slump and stagflation.

For more details, please read the full story in Chinese

(http://paper.cs.com.cn/html/2008-07/03/content_15941742.htm).

(China.org.cn by Yan Pei July 3, 2008)


+++++++++++++++++++++++++++++++

http://www.wsws.org/articles/2008/jul2008/chin-j04.shtml

Inflation worsens as China lifts petrol prices

By John Chan

4 July 2008

In a major shift, the Chinese government raised retail fuel prices by 16-18 percent on June 19. The move will inevitably stoke further inflation and follows similar meas................

http://www.asia-inc.com/index.php/china/100-may-june-2008/160-move-up-out-or-shut-down

.....................Today, Cheng faces another disaster, one that is as challenging as his kidnapping 15 years ago: The Chinese yuan has appreciated 18% against the US dollar in the past 18 months, while labour costs have risen 30% in the same period after Chinas new labour contract law kicked in forcing a rise in employment benefits. Net profits have fallen from 8% to nearly zero.


We cannot possibly survive in this environment, lamented Cheng, who recently shut five factories and laid-off 2,000 workers. We either have to move our manufacturing offshore or die.................................

^^^^^^^^^^^^^^^^^^^^^^^^^^^^

http://www.industryweek.com/ReadArticle.aspx?ArticleID=16778

Welcome Back U.S. Manufacturing

It's too early to tell whether high fuel prices and the falling dollar will be enough to bring offshored operations back home, but some recent moves suggest it's possible......................

http://www.manufacturing.net/Articles-Eastern-Europe-The-Next-Big-Thing.aspx?menuid=242

Eastern Europe The Next Big Thing?

By Amy Radishofski, Features Editor

Manufacturing.Net - July 18, 2008

First manufacturers moved their operations to China. Lower wages and government incentives helped China become a key destination for manufacturing. With a large labor pool, it served as the low cost option.

However, after the manufacturing boom, the countrys raw materials and labor costs have gone up, and quality has become a concern following a series of recalls. China simply isnt as attractive for foreign companies as it had been in the past.

The number of businesses in China has caused problems .......................................

EASTERN EURO .INVESTMENT TRUSTS, EST.BEE.

Would be a bad thing for many many companies in China, ramping up costs, ramping up wage increase demands etc...


http://in.reuters.com/article/asiaCompanyAndMarkets/idINPEK34395420080723

China parliament warns on inflation, export slowdown

Wed Jul 23, 2008 10:24am

BEIJING, July 23 (Reuters) - China's inflation is in danger of worsening and the government should liberalise pricing of oil and power to reduce the risks, the country's parliament said in a report published on Wednesday.

China should adjust policies for exports of textiles and toys, to avoid any slump in the export sector, according to the report by the financial committee of National People's Congress, which was published on the Xinhua news agency website.

"The national economy is moving from the stage of 'high growth and low inflation' to a state of 'high growth and high inflation' or even 'low growth, high inflation'," the report said.

The report was written at least a week ago, since it only included economic figures of the first five months instead of the first-half figures that were released on Thursday.

The report did not specify a timeframe for the proposed policy changes, but it noted the Chinese government's current policy of keeping some prices deliberately low through price caps would only worsen inflation in the long-term.

"It is just ineffective to control inflation through price controls," it said.

The report cited Venezuela as an example to support its view: "Venezuela, an oil producing country, has kept its oil prices artificially low, but the country's inflation was still 20 percent."

Liberalising oil and electricity pricing, on the contrary, can be helpful to curb inflation because it eases demand, even though such measures can push up short-term inflation.

On the export sector, the report said China's policies aimed at curbing exports of polluting products and balancing trade were badly timed because they coincided with the economic slowdown in the United States and the EU
"We suggest to pause the launch of any new policies targeted at the processing trade to maintain stable policies and to give exporters breathing time in order to avoid big impacts on the export sector," it said.

It added that a tight monetary policy and prudent fiscal policy should be maintained, but advocated "flexibility" when carrying out the policies. (Reporting by Zhou Xin; Editing by Ken Wills)

out of curiosity, i just took a peek at TAIH, GNG, WCC and HAIK ...... in all instances, volumes were between nil and minuscule whereas a couple of months back i guess several 100 000s were being traded in each every day.

cynic, loads of people are trapped in, and the attempted ramping of them, plus CHNS and RCG and the other nasties that have people locked into losses will surely start soon.

Interesting article, the "shadow" factories are well known, as it also well known that many "auditors" get paid off to "sign off production runs" ignoring the fact they know the product comes from the "shadows"

The simple fact is, provided the buying corporation (whoever it may be) get the product at the price they want, and someone else has given them the "get out of jail free" card of a "compliant production run", and provided the supplier makes profit on the production - then who is going to complain ?

The local government often officials get kickbacks to ignore the shadow factory which are not labour law complaint, the auditor sent by the overseas corporation gets kickbacks to sign that "all is well" - and so it continues.

Its good to see someone bringing it more into the public spotlight, what it needs really is for a major corporation to be caught out by Panorama or similar to really bring all this shady business into the limelight.

If they continue to get away with eye, and blind eyes are turned, then why not go back to a Prison labour system......thats nice and cheap too.

IMO.



http://sify.com/finance/fullstory.php?id=14729737&cid=20742

Revealing the dirty secret behind the low 'China Price'

Vivek Kaul/DNA MONEY |

Saturday, 02 August , 2008, 11:49

From pitchkaris and colours used to play Holi in India, to mobiles, PCs and laptops used the world over, everything seems to be Made in China.

How did China become the factory of the world? The answer is obvious: China produces goods at such a low cost that no country can seem to compete with it.

Given that, 'profit-hungry' corporations across............. ...........

Also an interesting article on the rising cost of shipping :



http://www.nytimes.com/2008/08/03/business/worldbusiness/03global.html?_r=1&oref=slogin

Shipping Costs Start to Crimp Globalization

By LARRY ROHTER
Published: August 3, 2008

When Tesla Motors, a pioneer in electric-powered cars, set out to make a luxury roadster for the American market, it had the global supply chain in mind. Tesla planned to manufacture 1,000-pound battery packs in Thailand, ship them to Britain for ............................

Very interesting article to read in full, link below and a snippet from it, and this is written by a Chinese. :

http://seekingalpha.com/article/89641-the-great-bubble-of-china-next-to-pop

The Great Bubble of China: Next to Pop?

by: Frank Rong posted on: August 07, 2008


.........................China is well known for its corruptions. I was told by someone that in Shanghai, realtors, buyers, builders and bankers are all colluded to make big money. Banks lend to anyone who applies and to any builder who builds, as long they get piece of the pie. Banks belong to the government and corrupted bureaucrats are in charge of handing out loans

Subprime in the U.S. was a disgrace, but in China, its lending standards are much worse the subprime. Banks lend to who they know or lend to anyone for social reasons. The primary lending decision is not based on whether borrowers can repay.

I dont have the figures, but l know too many foreigners are investing in China, reminiscent of the Gold Rush in 1849. Decisions to expand manufacturing capacities in China are not based on economics, rather for social reasons. One indication of excessive capacity is this: now you can buy a 52 Hitachi (HIT) LCD TV for $1,500 in store, I dont know how the manufacturers can make any money in making that TV.

The commodity bubble is fueled by the Chinese construction bubble. Building roads, skyscrapers and expanding manufacturing plants take lots of steel and energy. But underneath every bubble, theres a pin. I think it will burst very soon. China's stock market bubble has already burst. When the real estate bubble bursts, then the whole economy might fall into a very deep recession.

When you have a true bubble, nobody sees it. We only recognize it when the bubble is over. The American housing bubble is small scale when compared to China. Everyone warned about the American housing bubble for years before it popped; therefore, I dont think it can be called a housing bubble.

China is a true bubble. No one believes that a slowdown is even possible.

Investing in China is a sure thing to many foreigners. Yet history has told us that foreigners are the dumb money and they have been very consistent: buying high and selling low...........................

http://www.nationalpost.com/opinion/story.html?id=710744

The coming Chinese slowdown

David Frum, National Post

Published: Saturday, August 09, 2008

The leaders of China have carefully planned an imposing Olympics. They have bought new stadiums, new airports, new facilities of every kind -- in fact, just about everything available to an authoritarian state with a full treasury and low labour costs.

They overlooked only one possibility: that the Olympics would arrive at the same time as China's economy braked to a stop.

To understand what is happening in China, compare two statistics. In the 12 months ending ...............

Taking this Times article :

http://business.timesonline.co.uk/tol/business/economics/article4492816.ece


From The Sunday Times August 10, 2008

The dream is over as China wakes up to global downturn

The stock markets are falling and exporters are going to the wall - Michael Sheridan in Shenzhen

IT IS RARE to see an estate agent running out of his office after a prospective client, but the young........................






When taking in with this article :

http://seekingalpha.com/article/89641-the-great-bubble-of-china-next-to-pop




Starts to lead to, as the writer said, the pin thats under the bubble. The construction boom in China has employed many people, though its corrupt ways its left banks holding far too much NPL's (Non Performing Loans) - the real NPL figures would frighten people, even the official statistics are worrying.

The building has gone on because it could even though it was not needed, because people made loads of money and at the end of the day nobody cared if the property remained empty as the "book value" could be kept high and was rising so nobody knew about all the corruption that went into it.

This has been happening for years and years now, and as I have often said if you are in China then go around at night and see just how many buildings are completely empty.

Lots of "analysts" have been imo hyping away about so many people going to migrate to cities.........but how can they.

They need a job and money to move........and with unemployment rising how are all these "rice farmers and peasants" going to be moving into these luxurious new apartments being built everywhere.... It was always a load of nonsense but in bull markets people overlook it and ride the wave.


If, as its suspected, that a property collapse is coming, it would be devastating for the Chinese economy. As the writer said a true bubble is one where people cannot see it ever stopping - and when it does, the effect is stunning.

Wonder what people in China know.......... ?????? Perhaps they are not getting ramped into the hype about their own country....... ?


http://money.cnn.com/2008/08/11/markets/china.ap/index.htm?postversion=2008081107

China shares fall to 19-month low

Benchmark Shanghai Composite Index tumbles 5.2% on economic fears.

Last Updated: August 11, 2008: 7:04 AM EDT

SHANGHAI, China (AP) -- China's benchmark Shanghai Composite Index fell 5.2% Monday following the release of economic data showing wholesale price inflation jumped to its highest level in 12 years in July.

The Shanghai index closed at 2,470.07 on Monday, down 135.65 points. That was its lowest close in more than a year and a half.

The Shenzhen Composite Index of China's smaller, second market plunged 6.6% to 698.37.

Airlines, textile exporters and refiners led the decline. Two of three major publicly traded airlines dropped by the daily maximum 10%.

The government reported Monday that the producer price index rose 10% in July over a year earlier, its highest rate of increase since 1996 and a jump over June's 8.8% rate. Such increases, fueled by rising energy and raw materials costs, add to pressure on consumer prices, complicating Beijing's effort to rein in politically sensitive inflation.

Chinese investors have become increasingly jittery over the economic outlook amid signs that the malaise afflicting the U.S. and Europe might be spreading to Asia, with corporate earnings bound to suffer. Analysts said the start of the Beijing Olympics last week had quashed any lingering hopes for a games-related rally.

"Investors still think the market is weak," said Qian Qimin, a strategist at Shenyin Wanguo Securities. "They are disappointed," he said.

So-called "B-shares," which are denominated in U.S. dollars and take up only a small segment of market volume, fell sharply in Shanghai, dropping 9% and helping to pull the composite index lower.

Stricter foreign exchange controls and a strengthening of the U.S. dollar against the Chinese yuan could be leading speculative investors to pull out investments that had been targeting gains in the local currency, said Zhang Linchang, a strategist at Guotai Junan Securities in Shanghai.

"It's hard to calculate, but it's possible that hot money is leaving China because of that," Zhang said.

In share trading, a steadying of global crude oil prices failed to buoy airlines amid concern over weakening passenger demand.

Among the airlines hitting the daily downside limit, flag carrier Air China ended at 7.82 yuan and China Eastern Airlines dropped to 6.17 yuan. China Southern Airlines dropped 9.9% to 6.09 yuan.

China Eastern Airlines announced late Sunday that a deal to sell a strategic stake to Singapore Airlines and Temasek Holdings, the investment arm of the Singaporean government, was off after they failed to meet Saturday's deadline for reaching a final agreement.

Oil refiner China Petroleum & Chemical Corp. fell 5.4% and PetroChina plunged 5.54%.

Aluminum giant Chinalco also fell by the 10% limit. Property developer China Vanke slumped 5.6%.

Chinese investors dont have a clue about investing - typical buy high sell low going on...

Most were first time investors sucked in by the market, which was clearly a bubble. Is probably overshooting to the downside now.

It also has sod all to do with AIM chinese stocks as they have never enjoyed high p/e's, in fact quite the opposite.

Strange you dont mention about inflation dropping, or exports gaining 28% etc on here isnt it???

Is PP solvent?

With US, UK, Germany, Spain, Australia and Japan all facing recession, China can only be next...

Long term investors start to buy chinese stocks.

http://uk.reuters.com/article/stocksAndSharesNews/idUKARO23549420080912?feedType=RSS&feedName=stocksAndSharesNews

PP wiping all his threads now? All those low p/e threads and stock picks (all now losing heavily) all erased. LOL

Well, now even the so called "experts" are seeing and forecasting China is in trouble. Love it.

Said to everyone back in January this year to sell everything, as stocks were going to crash and got berated by the rampers and their abusive multiple alias names.

Said China was going into recession in 2009 and will suffer badly in 2009 and 2010, and now as it looks ever more firm as an event to happen, even the big boys start to acknowledge it.

I am so glad I stopped posting on AD v FN, the abusive rampers on there will now have lost so many people so much money by egging them on to buy these awful Chinese stocks with nothing but ramping, I tried to warn people but they prefer to listen to abusive rampers and not people putting out decent, if negative, opinions of stocks and markets.

Now, I can sit back and feel sorry for anyone still in stocks, or ramped into them by the uber bullishness of other posters. In this market speculative big potentials are worth a punt, certainly Chinese aim rubbish is not, anything linked with China is surely on for a very bad 2009, their credit crunch ad recession is only just starting, and the effect there will be bigger imv.

This from an article today :

http://www.telegraph.co.uk/finance/markets/3148364/Russia-and-Brazil-crumble-as-commodity-prices-crashRussia-and-Brazil-crumble-as-commodity-prices-crash.html

"""""""""Albert Edwards, global strategist at SociGenerale, said China depends on exports to US and Europe for its lifeblood, and could face banking problems of its own.

I think China is going into recession as well. This is going to catch investors off-guard. """""""""""""


I feel sorry for most caught in this mess, but a few people deserve everything that is coming their way, and hopefully some of those burned by these people, will let them know in no uncertain terms :)

Agree with you, Papalpower. SOLA, CREO, GNG, WCC, HAIK, etc all crumbling.

hyleo, it will be a double whammy effect. First they will get hit along with all other AIM stocks are liquidity is removed and people sell their shares for much needed cash.

Then, when the UK/US are over the worst, the double whammy occurs in all likelihood, and thats the China recession and credit crisis bites, so rather than rise along with other AIM stocks, they will get sold off even more as everyone scrambles out of the mess coming their way in 2009/2010.

I hope that people sold off all these Chinese stocks and have no risk weighting in them.

The headline should be "Get out of anything Chinese, before that all goes bang too"...........remember, they said UK housing would never go down...........the same idiots say China is bulletproof.................