
In 2010 China will become the world’s second-largest economy - pg
http://www.economist.com/daily/chartgallery/displayStory.cfm?story_id=15096188&source=features_box4
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r_u_i
I'm extremely worried about China's real estate bubble. Chinese labourers are
working their asses off, while factory owners crop most of the profit. These
money is pours into real estate market. Today an apartment is worth 30X anual
income of an average worker(my estimation). Hope when I finish grad school in
US and go back, I don't have to pay this much.

~~~
trevelyan
Not until China relaxes its exchange controls. As long as the RMB can't get
out of the country to investments offering higher return, there's nowhere else
for it to go.

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patrickgzill
In the USA, a (somewhat) free country where open debate and some level of
government transparency is maintained, the "official" government numbers are
10% unemployment.

Actual unemployment is closer to 22% (according to shadowstats.com, using the
pre-Clinton Administration formula).

Aside from this article referencing their own "Economist Intelligence Unit" -
how do we know the numbers are not similarly fudged by the Chinese government?
Are there not billions of dollars of loans marked as "good" on state-run banks
that are in fact, never going to be repaid?

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fauigerzigerk
There's a pretty interesting analysis of China's current investment boom:
[http://www.pivotcapital.com/reports/Chinas_Investment_Boom_t...](http://www.pivotcapital.com/reports/Chinas_Investment_Boom_the_Great_Leap_into_the_Unknown.pdf)

It argues that China's investment boom is not going to continue and that
private consumption cannot possibly fill the void. They think the bubble is
going to burst in 2010/2011 and they have pretty convincing numbers. I'd love
to hear why they are wrong.

~~~
garply
I don't have the data to respond to this entire paper, especially on big stuff
like GDP ratios, etc, but an important part of their argument stuck out as
shaky to me.

The paper argues that China's urbanization rate is already much higher than is
commonly believed, due to China's definition of an urban centers. It notes
that Houston or Brisbane would not be counted as cities, due to low population
density. But, as a Chinese resident, I don't find it unreasonable at all that
Houston wouldn't be counted as a city here - Houston, w/ a population of 2.2m
and a density of 1375 people / square kilometer, is dwarfed when you compare
it to a dense city of 11+ million like Tianjin, which is considered a bit of a
hick town here in Beijing.

It seems unreasonable to use American standards for the definition of a city
when China's population to usable land ratio is much higher than is frequently
encountered in the West.

~~~
fauigerzigerk
I didn't find the population density comparison very convincing either. But
the main point they are making is that not as many people as expected by the
financial community are going to move to more urbanized centers in the years
to come. Their argument would be more convincing if it was based on economic
opportunity instead of population density though.

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Volscio
What I find interesting about this is how China is predicted to have almost
double the US's GDP by 2050, but GDP per capita tells a different story: US
GDP/capita will be double China's in 2050. Then some good debate on whether an
authoritarian mixed economy can allocate its GDP more effectively than the
US's democratic mixed economy. Which will define the next 40 years? Aggregate
or per capita GDP?

~~~
ardit33
one implication of the above is: by 2050 china will be able to spend twice
more than the us in military spending, and afford having four times more
soldiers/manpower than the US (as costs of personel would be twice lower).

hmmm.... new superpower indeed, in paper at leas

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iamelgringo
According to the Telegraph:
[http://www.telegraph.co.uk/finance/economics/6890189/Chinese...](http://www.telegraph.co.uk/finance/economics/6890189/Chinese-
economy-overtakes-Japan.html) , China's statistics bureau recently revised
their economic growth statistics for the past year. That would mean that China
already overtook Japan as the world's second largest economy at some point in
the last 6 months.

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cperciva
So... when does YC China launch? :-)

~~~
pg
We're still trying to grow YC within the US before we think about expanding to
other countries. We're still learning.

~~~
msort
I think it'd be great if YC can go to China. The growing economy and market,
the huge talent tool, super low cost of labors and office. It works very well
with YC philosophy.

One downside is Chinese government's tight control on internet.

~~~
liuliu
The downside you mention becomes a central issue these days. The recent
launched cntv.cn is a good example when the national TV in China attempt to
take a big share from Internet VOD business (hulu model). To launch the site,
they first use their popularity to fire bullets on other video sites for
reasons such as adult content, copyright content or unauthorized content
(every imported video has to be censored or it is illegal in China, the rule
actually causes recent trouble in WTO). Under this pressure, many sites are
closed.

The argument is, like what China did to its steel/telecom/coal business (FYI,
are controlled by the nation itself). It tries to gain control on Internet,
not only in management standpoint but actual business (nationalization). A
more interesting view is that as most children of China's high level officials
are in their 20s. They are likely to do Internet related business. Well,
powerful parents bring benefits. It is not bad or unfair and it is
understandable worldwide. But using your parents' money and relations to build
business is millions light years far from what they do today in China. For
example, Li Hehe, the son of Li Zhaoxing (former foreign minister of China)
established a SNS website called 99sushe (<http://99sushe.com>). He actually
uses his father's relation to have everyone who attend national English test
(known as CET-4, required for college graduation) to register on his site in
order to review their scores (<http://cet.99sushe.com/>). I see it as a
classic abuse of their power. Far worse, to my knowledge, it is only a
beginning.

YC is a institution which only provides a little money, good atmosphere,
relations and access to first tier VC and law firms. Good lawyer, enough money
and a brilliant you, that is the only things you need for doing "free"
business in open countries (EU or U.S.). But in China, you need to build
relations with high level officials. For a UGC site, you have to hire a person
to delete contents immediately when the Internet cops phone you. It is just
not economical for startup. But unfortunately these are crucial for your
business success in China, and these are something YC China (in my
imagination) cannot provide.

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Arun2009
Congrats! About time too!

They're nearly 1/6th of mankind. It's just amazing how such a large number of
people can pull themselves out of the most wretched kind of poverty.

Indias and Africas of the world should take note.

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artpop
It's already the largest non-democratic economy, for what that's worth.

