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Will China Bring an Energy-Debt Crisis?

Consumption

It is easy for those of us in the West to overlook how important China has become to the world economy, and also the limits it is reaching. The two big areas in which China seems to be reaching limits are energy production and debt. Reaching either of these limits could eventually cause a collapse.

China is reaching energy production limits in a way few would have imagined. As long as coal and oil prices were rising, it made sense to keep drilling. Once fuel prices started dropping in 2014, it made sense to close unprofitable coal mines and oil wells. The thing that is striking is that the drop in prices corresponds to a slowdown in the wage growth of Chinese urban workers. Perhaps rapidly rising Chinese wages have been playing a significant role in maintaining high world “demand” (and thus prices) for energy products. Low Chinese wage growth thus seems to depress energy prices.

(Shown as Figure 5, below). China’s percentage growth in average urban wages. Values for 1999 based on China Statistical Yearbook data regarding the number of urban workers and their total wages. The percentage increase for 2016 was based on a Bloomberg Survey.

The debt situation has arisen because feedback loops in China are quite different from in the US. The economic system is set up in a way that tends to push the economy toward ever more growth in apartment buildings, energy installations, and factories. Feedbacks do indeed come from the centrally planned government, but they are not as immediate as feedbacks in the Western economic system. Thus, there is a tendency for a bubble of over-investment to grow. This bubble could collapse if interest rates rise, or if China reins in growing debt.

China’s Oversized Influence in the World

China plays an oversized role in the world’s economy. It is the world’s largest energy consumer, and the world’s largest energy producer. Recently, it has become the world’s largest importer of both oil and of coal.

In some sense, China is the world’s largest economy. Usually we see China referred to as the world’s second largest economy, based on GDP converted to US dollars. Economists use an approach called GDP (PPP) (where PPP is Purchasing Power Parity) when computing world GDP growth. When this approach is used, China is the world’s largest economy. The United States is second largest, and India is third.

Figure 1. World’s largest economies, based on energy consumption and GDP based on Purchasing Power Parity. Energy Consumption is from BP Statistical Review of World Energy, 2017; GDP on PPP Basis is from the World Bank.

Besides being (in some sense) the world’s largest economy, China is also a country with a very significant amount of debt. The government of China has traditionally somewhat guaranteed the debt of Chinese debtors. There is even a practice of businesses guaranteeing each other’s debt. Thus, it is hard to compare China’s debt to the debt level elsewhere. Some analyses suggest that its debt level is extraordinarily high.

How China’s Growth Spurt Started

Figure 2. China’s energy consumption, based on data from BP Statistical Review of World Energy, 2017.

From Figure 2, it is clear that something very dramatic happened to China’s coal consumption about 2002. China joined the World Trade Organization in December 2001, and immediately afterward, its coal consumption soared.

Countries in the OECD, whether they had signed the 1997 Kyoto Protocol or not, suddenly became interested in reducing their own greenhouse gas emissions. If they could outsource manufacturing to China, they would be able to reduce their reported CO2 emissions.

Besides reducing reported CO2 emissions, outsourcing manufacturing to China had two other benefits:

  • The goods being manufactured in China would be cheaper, allowing Americans, Europeans, and Japanese to buy more goods. If more “stuff” makes people happy, citizens should be happier.
  • Businesses would suddenly have a new market in China. Perhaps the people of China would start buying goods made elsewhere.

Of course, a major downside of moving jobs to China and other Asian nations was the likelihood of fewer jobs elsewhere.

Figure 3. US Labor Force Participation Rate, as prepared by Federal Reserve Bank of St. Louis.

In the early 2000s, when China started competing actively for jobs, the share of people in the US workforce started shrinking. The drop-off in labor force participation did not level out until mid-2014. This is about when world oil prices began to fall, and, as we will see in the next section, when China’s growth in average wages began to fall.

Another downside to moving jobs to China was more CO2 emissions on a worldwide basis, even if emissions remained somewhat lower locally. CO2 emissions on imported goods were not “counted against” a country in its CO2 calculations.

Figure 4. World carbon dioxide emissions, split between China and Rest of the World, based on BP Statistical Review of World Energy, 2017.

At some point, we should not be surprised if countries elsewhere start pushing back against the globalization that allowed China’s rapid growth. In some sense, China has lived in an artificial growth bubble for many years. When this artificial growth bubble ends, it will be much harder for China’s debtors to repay debt with interest.

China’s Rapid Wage Growth Stopped in 2014

Rising wages are important for making China’s growth possible. With rising wages, workers can increasingly afford the apartments that are being built for them. They can also increasingly afford consumer goods of many kinds, and they can easily repay debts taken out earlier. The catch, however, is that wage growth cannot get ahead of productivity growth, or the price of goods will become too expensive on the world market. If this happens, China will have difficulty selling its goods to others.

China’s wage growth seems to have slowed remarkably, starting in 2014.

Figure 5. China’s percent growth in average urban wages. Values for 1999 based on China Statistical Yearbook data regarding the number of urban workers and their total wages. The percentage increase for 2016 was estimated based on a Bloomberg Survey.

This is when China discovered that its high wage increases were making it uncompetitive with the outside world. Wage growth needed to be reined in. Its growth in productivity was no longer sufficient to support such large wage increases.

China’s Growth in Energy Consumption Also Slowed About 2014 

If we look at the annual growth in total energy consumption and electricity consumption, we see that by 2014 to 2016, their growth had slowed remarkably (Figure 6). Their growth pattern was starting to resemble the slow growth pattern of much of the rest of the world. Energy growth allows an economy to increasingly leverage the labor of its workforce with more energy-powered “tools.” With low energy growth, it should not be surprising if productivity growth lags. With low productivity growth, we can expect low wage growth.

Figure 6. China’s growth in consumption of total energy and of electricity based on data from BP Statistical Review of World Energy, 2017.

It is possible that the increased rate of electricity consumption in 2016 is related to China’s program of housing migrant workers in unsalable apartments that took place at that time. The fact that these apartments were otherwise unsalable was no doubt influenced by the slowing growth in wages.

This decrease in energy consumption most likely occurred because the price of China’s energy mix was becoming increasingly expensive. For one thing, the mix included a growing share of oil, and oil was expensive. The proportion of coal in the mix was falling, and the replacements were more expensive than coal. There was also the issue of the general increase in fossil fuel prices.

Lower Wage Growth in China Likely Affected Fossil Fuel Prices

Affordability is the big issue with respect to how high fossil fuel prices can rise. The issue is not just buying the oil or coal or natural gas itself; it is also being able to afford the goods made with these fuels, such as food, clothing, appliances, and apartments. If wages were depressed in the developed countries because of moving production to China, then rising wages in China (and other similar countries, such as India and the Philippines) must somehow offset this problem, if fossil fuel prices are to remain high enough for extraction to continue.

Figures 7 and 8 (below) show that oil, natural gas, and coal prices all started to slide, right about the time China’s urban wages growth began shrinking (shown in Figure 5).

Figure 7. Oil and natural gas prices, based on BP Statistical Review of World Energy data.

Figure 8. Coal prices between 2000 and 2016 from BP Statistical Review of World Energy. Chinese coal is China Qinhuangdao spot price and Japanese coal is Japan Steam import cif price, both per ton.

The lower recent increases made China’s urban wage growth look more like that of the US and Europe. Thus, in 2014 and later, Chinese urban wages present much less of a “push” on the growth of the world economy than they had previously. Without this push of rising wages, it becomes much harder for the world economy to grow very rapidly, and for it to have a very high inflation rate. There is simply not enough buying power to push prices very high.

It might be noted that the average Chinese urban wage increases shown previously in Figure 5 are not inflation adjusted. Thus, in some sense, they include whatever margin is available for inflation in prices as well as the margin that is available for a greater quantity of purchased goods. Because of this, these low wage increases may help explain the recent lack of inflation in much of the world.

Quite likely, there are other issues besides China’s urban wage growth affecting world (and local) energy prices, but this factor is probably more important than most people would expect.

Can low prices bring about “Peak Coal” and “Peak Oil”?

What does a producer do in response to suddenly lower market prices–prices that are too low to encourage more production?

This seems to vary, depending on the situation. In the case of coal production in China, a decision was made to close many of the coal plants that had suddenly become unprofitable, thanks to lower coal prices. No doubt pollution being caused by these plants entered into this decision, as well. So did the availability of other coal elsewhere (but probably at higher prices), if it is ever needed. The result of this voluntary closure of coal plants in response to low prices caused the drop in coal production shown in Figure 8, below.

Figure 8. China’s energy production, based on data from BP Statistical Review of World Energy, 2017.

It is my belief that this is precisely the way we should expect peak coal (or peak oil or peak natural gas) to take place. The issue is not that we “run out” of any of these fuels. It is that the coal mines and oil and gas wells become unprofitable because wages do not rise sufficiently to cover the fossil fuels’ higher cost of extraction.

We should note that China has also cut back on its oil production, in response to low prices. EIA data shows that China’s 2016 oil production dropped about 6.9% compared to 2015. The first seven months of 2017 seems to have dropped by another 4.2%. So China’s oil is also showing what we would consider to be a “peak oil” response. The price is too low to make production profitable, so it has decided that it is more cost-effective to import oil from elsewhere.

In the real world, this is the way energy limits are reached, as far as we can see. Economists have not figured out how the system works. They somehow believe that energy prices can rise ever higher, even if wages do not. The mismatch between prices and wages can be covered for a while by more government spending and by more debt, but eventually, energy prices must fall below the cost of production, at least for some producers. These producers voluntarily give up production; this is what causes “Peak Oil” or “Peak Coal” or “Peak Natural Gas.”

Why China’s Debt System Reaches Limits Differently Than Those in the West

Let me give you my understanding regarding how the Chinese system works. Basically, the system is gradually moving from (1) a system in which the government owns all land and most businesses to (2) a system with considerable individual ownership.

Back in the days when the government owned most businesses and all land, farmers farmed the land to which they were assigned. Businesses often provided housing as part of an individual’s “pay package.” These homes typically had a shared outhouse for a bathroom facility. They may or may not have had electricity. There was relatively little debt to the system, because there was little individual ownership.

In recent years, especially after joining the World Trade Organization in 2001, there has been a shift to more businesses of the types operated in the West, and to more individual home ownership, with mortgages.

The economy acts rather differently than in the West. While the economy is centrally planned in Beijing, quite a bit of the details are left to individual local governments. Local heads of state make decisions that seem to be best based on the issues they are facing. These may or may not match up with what Beijing central planning intended.

Historically, Five-Year Plans have provided GDP growth targets to the various lower-level heads of state. The pay and promotions of these local leaders have depended on their ability to meet (or exceed) their GDP goals. These goals did not have any debt limits attached, so local leaders could choose to use as much debt as they wanted.

A major consideration of these local leaders was that they also had responsibility for jobs for people in their area. This responsibility further pushed them to aim high in the amount of development they sought.

Another related issue is that sales of formerly agricultural land for apartments and other development are a major source of revenue for local governments. Local leaders did not generally have enough tax revenue for programs, without supplementing their tax revenue with funds obtained from selling land for development. This further pushed local leaders to add development, whether it was really needed or not.

The very great power of local heads of state and their administrators made these leaders tempting targets for bribery. Entrepreneur had a chance of getting projects approved for development, with a bribe to the right person. There has been a recent drive to eliminate this practice.

We have often heard the comment, “A rising tide raises all boats.” When the West decided to discourage local industrialization because of CO2 concerns, it gave a huge push to China’s economy. Almost any project could be successful. In such an environment, local rating agencies could be very generous in their ratings of proposed new bond offerings, because practically any project would be likely to succeed.

Furthermore, without many private businesses, there was little history of past defaults. What little experience was available suggested the possibility of few future defaults. Wages had been rising very rapidly, making individual loans easy to repay. What could go wrong?

With the central government perceived to be in control, it seemed to make sense for one governmental organization to guarantee the loans of other governmental organizations. Businesses often guaranteed the loans of other businesses as well.

Why the Chinese System Errs in the Direction of Overdevelopment

In the model of development we are used to in the West, there are feedback loops if too much of anything is built–apartment buildings (sold as condominiums), coal mines, electricity generating capacity, solar panels, steel mills, or whatever else.

In China, these feedback loops don’t work nearly as well. Instead of the financial system automatically “damping out” the overcapacity, the state (or perhaps a corrupt public official) figures out some way around what seems to be a temporary problem. To understand how the situation is different, let’s look at three examples:

Apartments. China has had a well-publicized problem of  building way too many apartments. In about 2016, this problem seems to have been mostly fixed by local governments providing subsidies to migrant workers so that they can afford to buy homes. Of course, where the local governments get this money, and for how long they can afford to pay these stipends, are open questions. It is also not clear that this arrangement is leading to a much-reduced supply of new homes, because cities need both the revenue from land sales and the jobs resulting from building more units.

Figure 9 shows one view of the annual increase in Chinese house prices, despite the oversupply problem. If this graph is correct, prices have increased remarkably in 2017, suggesting some type of stimulus has been involved this year to keep the property bubble growing. The size of an apartment a typical worker can now afford is very small, so this endless price run-up must end somewhere.

Figure 9. Chinese house price graph from GlobalPropertyGuide.com.

Coal-Fired Power Plants. With all of the problems that China has with pollution, a person might expect that China would stop building coal-fired power plants. Instead, the solution of local governments has been to build additional power plants that are more efficient and less polluting. The result is significant overcapacity, in total.

May 2017 article says that because of this overcapacity problem, Beijing is forcing every coal-fired power plant to run at the same utilization rate, which is approximately 47.7 % of total capacity. A Bloomberg New Energy Finance article estimates that at year-end 2016, the “national power oversupply” was 35%, considering all types of generation together. (This is likely an overestimate; the authors did not consider the flexibility of generation.)

Beijing is aware of the overcapacity problem, and is cancelling or delaying a considerable share of coal-fired capacity that is in the pipeline. The plan is to limit total coal-fired capacity to 1,100 gigawatts in 2020. China’s current coal-fired generating capacity seems to be 943 gigawatts, suggesting that as much as a 16% increase could still be added by 2020, even with planned cutbacks.

It is not clear what happens to the loans associated with all of the capacity that has been cancelled or delayed. Do these loans default? If “normal” feedbacks of lower prices had been allowed to play out, it is doubtful that such a large amount of overcapacity would have been added.

If China’s overall growth rate slows to a level more similar to that of other economies, it will have a huge amount of generation that it doesn’t need. This adds a very large debt risk, it would seem.

Wind and Solar. If we believe Darien Ma, author of “The Answer, Comrade, Is Not Blowing in the Wind,” there is less to Beijing’s seeming enthusiasm for renewables than meets the eye.

According to Ma, China’s solar industry was built with the idea of having a product that could be exported. It was only in 2013 when Western countries launched trade suits and levied tariffs that China decided to use a substantial number of these devices itself, saving the country from the embarrassment of having many of these producers go bankrupt. How this came about is not entirely certain, but the administrator in charge of wind and solar additions was later fired for accepting bribes, and responsibility for such decisions moved higher up the chain of authority.

Figure 10. China current view of solar investment risk in China. Chart by Bloomberg New Energy Finance.

Ma also reports, “Officials say that they want ‘healthy, orderly development,’ which is basically code for reining in the excesses in a renewable sector that has become yet another emblem of irrational exuberance.”

According to Ma, the Chinese National Energy Administration has figured out that wind and solar are still about 1.5 and 2.5 times more expensive, respectively, than coal-fired power. This fact dampens their enthusiasm for the use of these types of generation. China plans to phase out subsidies for them by 2020, in light of this issue. Ma expects that there will still be some wind and solar in China’s energy mix, but that natural gas will be the real winner in the search for cleaner electricity production.

Viewed one way, we are looking at yet another way Chinese officials have avoided closing Chinese businesses because the marketplace did not seek their products. Thus, the usual cycle of bankruptcies, with loan defaults, has not taken place. This issue makes China’s total electricity generating capacity even more excessive, and reduces the profitability of the overall system.

Conclusion

We have shown how low wages and low energy prices seem to be connected. When prices are too low, some producers, including China, make a rational decision to cut back on production. This seems to be the true nature of the “Peak Coal” and “Peak Oil” problem. Because China is reacting in a rational way to lower prices, its production is falling. China is already the largest importer of oil and coal. If there is a shortfall elsewhere, China will be affected.

We have also given several examples of how the current system has been able to avoid defaults on loans. The issue is that these problems don’t really go away; the get hidden, and get bigger and bigger. At some point, all of the manipulations by government officials cannot hide the problem of way too many apartments, or of way too much electricity generating capacity, or of way too many factories of all kinds. The postponed debt collapse is likely to be much bigger than if market forces had been allowed to bring about earlier bankruptcies and facility closures.

Chinese officials are now talking about reining in the growth of debt. There is also discussion by heads of Central Banks about raising interest rates and selling QE securities (something which would also tend to raise interest rates). China will be very vulnerable to rising interest rates, because stresses that have been allowed to build up in the system. For example, many mortgage holders will not be able to afford the new higher monthly payments if rates rise. If interest rates rise, factories will find it even harder to be profitable. Some may reduce staff levels, to try to reach profitability. If this is done, it will tend to push the system toward recession.

We likely now are in the lull before the storm. There are many things that could push China toward an energy or debt crisis. China is so big that the rest of the world is likely to also be affected.

Our Finite World by Gail Tverberg



33 Comments on "Will China Bring an Energy-Debt Crisis?"

  1. makati1 on Wed, 8th Nov 2017 6:27 pm 

    Currently, China bashing is the preferred topic of anyone connected to the dying US Empire. Usually, it is nothing more than ‘what ifs’ and ‘maybes’. A lot of wishful thinking by Westerners. Nothing of real substance. Difficult to be original and interesting when nothing changes but the guesses.

    If I were to put money on it, I would say say that the US will go down first. It has more debt, spread over all of its economy, than any other country. (And is in a state of chaos/insanity.)

    The US government is failing.
    States are failing.
    Cities are failing,
    Citizens are failing.

    Banks only exist on the Fed’s faux dollar printing. Corporations. and the wealthy, are keeping their profits outside the US’ IRS clutches and likely in gold or other real wealth.

    There is nothing positive about the shrinking/dying Empire these days. Nothing.

  2. Davy on Wed, 8th Nov 2017 7:15 pm 

    China will be the end of the world player. What happens in China will not stay in China. Watch China for the end game.

  3. makati1 on Wed, 8th Nov 2017 7:21 pm 

    “Few appreciate the uncomfortable fact that, while China and India have advanced rapidly in recent decades, even this is only a partial reversal back to the historical norm….

    For Asia, excluding the Middle East, the comeback started slowly, between 1950 and 1980. The climb then accelerated, with that share surging past 30% by the turn of the century, and standing at 43% today, a 160-year high.

    Meanwhile, the combined share of the U.S. and Western Europe has fallen to just one-third – a 166-year low. And the U.S. share is now half of its mid-20th century peak. It’s the headlong pace of this decline that’s worthy of notice. …

    The decline in American dominance is driven by more than China and India’s resurgence. Separately, there’s been a downshift in U.S. trend growth, driven by demographics and productivity growth, as partly acknowledged by the latest IMF projections of five-year-ahead annual GDP growth: 1 2/3% for the U.S. – close to Fed and CBO estimates – compared to 5¾% for China and 81/6% for India.”

    https://www.businesscycle.com/ecri-news-events/news-details/economic-cycle-research-ecri-lakshman-achuthan-why-so-many-in-the-west-are-angry

    Slip sliding away…

  4. Davy on Wed, 8th Nov 2017 7:31 pm 

    Those growth figures are bogus Mad Kat when you
    Consider the malinvestment and bad debt. You are
    Being played like a drum yet again. It must be your age. You believe what you want to believe at the expense of the truth.

  5. Anonymouse1 on Wed, 8th Nov 2017 8:33 pm 

    Not at all odd to listen to an amerikan, the undisputed heavyweights of debt, lecture China on the subject. Even more so when she admits she really has no real idea how to measure debt in that nation to begin with.

    Then she decides to mix a grab-bag of unrelated topics together into one article, all while trying to string them all together, somehow.

    Debt, ‘private’ ownership, coal plants and solar. I would suggest she pick *a* topic, and stick with it.

  6. Boat on Wed, 8th Nov 2017 8:40 pm 

    mak,

    The US government is failing.
    States are failing.
    Cities are failing,
    Citizens are failing.

    You forget whats important. We invest in sports. 750,000 showed up for the World Series parade in Houston. Can’t go anywhere without seeing an orange t-shirt.

  7. GregT on Wed, 8th Nov 2017 9:16 pm 

    “You forget whats important. We invest in sports. 750,000 showed up for the World Series parade in Houston. Can’t go anywhere without seeing an orange t-shirt.”

    Circus Boat. SNAP would be the bread.

    Those who ignore history, are destined to repeat it.

  8. DMyers on Wed, 8th Nov 2017 9:43 pm 

    Chinaman: “I notice the Yankees are so rich because they print their money out of thin air.”

    C2: “Ahh so. You thinking what I’m thinking?”

    Chinaman: “We could do it too!”

    And so they did. Gail is right on this. It’s dry but it’s true. China saw the light of debt and will probably see its darkness. The USA is no different.

    China will have a greater affect on the world economy, as a matter of the numbers.

  9. Antius on Thu, 9th Nov 2017 3:34 am 

    Makati wrote: “Currently, China bashing is the preferred topic of anyone connected to the dying US Empire. Usually, it is nothing more than ‘what ifs’ and ‘maybes’.”

    Oh yeah. I suppose it’s too much to ask that you actually read the article and provide reasoned feedback on what the author actually said. Do you disagree with some specific point?

  10. makati1 on Thu, 9th Nov 2017 4:05 am 

    Antius, I have read a lot of Gail’s stuff over the years and they are all about a paycheck. Many pretty pictures and graphs. Pieces of supposed facts from other sources pieced together for the unthinking masses. No real insight into the real China, just a rehash of guesses. Only the Chinese leaders know where China is going.

    I would be more interested in a thorough, honest evaluation of the huge US debt load and fast shrinking economy/wages. China is still growing. The US is contracting. The US needs to clean up its own shit before it points to that of others. But then, it is easy to point to China and ignore the shit at home.

  11. Davy on Thu, 9th Nov 2017 4:38 am 

    “No real insight into the real China, just a rehash of guesses. Only the Chinese leaders know where China is going.”
    The typical dumbass extremist with binary views of the west bad and the east good. Antius rightfully shows your distortion of the truth. In the real world there is a variety of issues good and bad especially with a huge country like China.

    “I would be more interested in a thorough, honest evaluation of the huge US debt load and fast shrinking economy/wages.”
    WTF, I guess you don’t read your comments because you overproduce them daily on the subject you stupid old man. Read what you post for once.

    “China is still growing. The US is contracting.”
    You have references?

  12. Tim on Thu, 9th Nov 2017 6:25 am 

    “I have read a lot of Gail’s stuff over the years and they are all about a paycheck. Many pretty pictures and graphs. Pieces of supposed facts from other sources pieced together for the unthinking masses. No real insight into the real China, just a rehash of guesses.”

    You are a fucking idiot. If you read any of her works you’d come to find out she’s visited and lectured in China on several occasions, invited by University professors to discuss China’s future energy predicament.

    She has gotten a close up view on the workings of China as well as how they live during her tours which included touring the countryside. I say she knows a hell of a lot more about China than you ever will.

    As the previous poster said all you are interested in is America bad, the East good. And if you do in fact live in the Philippines, that is one poverty stricken shithole you chose.

  13. Tim on Thu, 9th Nov 2017 6:35 am 

    “The decline in American dominance is driven by more than China and India’s resurgence.”

    India is an overpopulated, poverty stricken shithole of a country where many still prefer to defecate in public where Unicef has started a campaign to teach them where to properly take care of business. Please pick a better choice than India.

  14. makati1 on Thu, 9th Nov 2017 7:02 am 

    Tim, you can “visit” anyplace, but that does not make you an expert on it. Most never get off the tourist path and really see a country and it’s people. Arrogance makes a lot of Americans believe they know everything about a place after a few days visit. Just like your comments on places you probably have never personally visited or live in. All you can do is parrot propaganda.

    I am putting America in the frame of truth, not propaganda. The truth is, it is dying and the rest of the world hopes it is soon. No empire has deserved the pain that is coming to the the US more then America. None.

    IF you don’t like my comments, don’t read them.

  15. makati1 on Thu, 9th Nov 2017 7:09 am 

    BTW Tim, if you live in the drugged up, dumbed down, chaotic, insane, terrorist, police state called the US, you are the one living in a “shithole” not me. You immaturity is showing. Are you a relative of Davy and MM?

    I do in fact live in the Ps and have for 10 years. I know more about Asia first hand than you will ever learn in the censored propaganda the US calls “news”. lol

  16. fmr-paultard on Thu, 9th Nov 2017 7:11 am 

    aswang regime is backing down from china’s demand not to develope the islands. plus aswang needed significant help from us in fighting isis. what a bunch of dummy letting lease of subic bay to lapse to the tune of billions. and now fawning over shipping of few czar era mosins from russia!

  17. makati1 on Thu, 9th Nov 2017 7:14 am 

    Insanity in action! “Trump Slams China For Unfair Trade But Praises XI, Blames Predecessors; Unveils $250BN In Deals”

    http://www.zerohedge.com/news/2017-11-09/did-xis-warm-welcome-fool-trump-china-visit

    “The main focus, however, was always going to be the trade issue. What surprised us was Trump’s about turn on blaming China for the trade deficit, to blaming previous governments in his own country. Perhaps he was simply overwhelmed by the (apparent) warmth of the welcome he received from Xi and the rest of the Chinese leadership.”

    I wonder if Trump ever gets dizzy doing those 180 degree turns in his declarations? US credibility? ZERO!

  18. fmr-paultard on Thu, 9th Nov 2017 7:15 am 

    better hope us presence will speak for small clusters of expats. if not aswang tells people white meat is approdisiac and aby sayaf needs kidnap for exchange for money for arms and foods

  19. makati1 on Thu, 9th Nov 2017 7:17 am 

    After thought… I wonder if Trump is planning to build a new Trump Tower in Beijing?

    He has one about finished in Manila, about a mile from my condo.

  20. Antius on Thu, 9th Nov 2017 7:31 am 

    Here is Gail’s analysis for the US.
    https://ourfiniteworld.com/2017/10/18/the-approaching-us-energy-economic-crisis/

    US economic growth has not in fact halted. However, since the late 1980s real wages per hour in the US have stagnated or fallen for middle and working class earners. An increasing proportion of earnings go to the top 1% wealthiest of the population. This introduces stresses because that top 1% of the population does not purchase goods in the same proportion per unit wealth. Buying also tends to be tipped towards services, which explains why the energy intensity of GDP is falling in the US. Ultimately, these system pressures stem from diminishing returns in worker productivity, which are directly related to increasing real energy cost. This is because energy is needed to manufacture and operate new tools, which is what drives improved worker productivity.

    The situation in the US is ultimately unsustainable and has been aggravated by globalisation and the offshoring of manufacturing jobs to China. The Chinese were able to do this because their domestic energy production costs were low and their labour costs were close to zero. These advantages have steadily eroded since 2001. China is suffering systematic pressures and that is what Gail’s most recent article is about. Increasing real energy costs are putting a downward pressure on worker productivity and wages are now depressed for the simple reason that the rest of the world cannot afford to pay prices that would allow Chinese workers to earn good wages on exports. Economic growth is increasingly driven by increasing debt rather than reinvesting earnings. With exploding levels of debt, state owned enterprises are attempting to cut the costs that they can still control, which is basically the wages they pay. This throws a spanner into Chinese attempts to build an economy based upon internal consumer spending, as Chinese earnings growth is rapidly tapering off.

    Exactly how and when a correction will occur and how this will play out, I do not know. But we will get to watch it happen in real time over the next 5 years.

  21. fmr-paultard on Thu, 9th Nov 2017 8:14 am 

    thank you antius. this is the county who will partner with russia to defeat america we’re told. china and eurotard sphere will be the end of us. chuckle.

    any luck finding virgin bribes?

    virgin bribes and genital harvest. we have interesting personalities

  22. Davy on Thu, 9th Nov 2017 8:27 am 

    Shut up Mad Kat, you are talking more and more desperate. Could it be becuase your extremist support network dumped you! Lol

  23. Tim on Thu, 9th Nov 2017 8:31 am 

    “BTW Tim, if you live in the drugged up, dumbed down, chaotic, insane, terrorist, police state called the US, you are the one living in a “shithole” not me. You immaturity is showing. Are you a relative of Davy and MM?
    I do in fact live in the Ps and have for 10 years. I know more about Asia first hand than you will ever learn in the censored propaganda the US calls “news”. lol”

    I know first hand about shithole’s and the USA is miles from the shithole infested Asia. You seem to be a bitter individual for whatever reason but trying to convince/sell me that Asia i.e. the Philippine’s/India is a better place than the USA is like trying to tell me that a broken down rusted out 1986 Toyota Corolla is more desirable than a 2018 “LaFerrari”.

    What you’re trying to sell is a con job and makes you look like an agenda driven/bitter idiot.

  24. fmr-paultard on Thu, 9th Nov 2017 8:35 am 

    if we could just focus on genital farming and finding virgin bribes plus hiding from abu sayaf we’d avert PO crisis. the tard mollyneux is hard on women assuming traditionalist roles and go back to church. haven’t we heard that before? somehow that big head and the ability to dance around the devil creates a disharmony between the advices and teh person, ie insincere.

    but this is a tard who “refused” to run for US President due to principles only…never because he’s not us born citiz.

    in other words, advices are for thee not for me!

    thanks President Trump for not grabbing the bumpski. I dislike you because I’m a liberal who became blue republican to vote for Ron Paul. But I stopped saying you’re a p*ssy grabber. I like your steadfast policy on bumpski control, the lack of it.

  25. fmr-paultard on Thu, 9th Nov 2017 8:40 am 

    very rarely anyone ever succeeded being an expat. george bush bought vast tracts of land in ecuardor but he lives in dallas. some succeeded but the nubmer is too small which amounts to negilible.

    a guy with money and power can’t make it then who will? i don’t like diseases in the phils, suicide shower, abu sayaf, and aswang. i could go on and say the lack of public health due to inexistence plumbing so people have to go open defecation and anti biotic resistance on and on

  26. Antius on Thu, 9th Nov 2017 9:12 am 

    “thank you antius. this is the county who will partner with russia to defeat america we’re told. china and eurotard sphere will be the end of us. chuckle.”

    China is still a centrally planned economy. When wages were low and energy costs were low its internal inefficiencies didn’t matter so much. Now they are threatening to bring the house down.

    “any luck finding virgin bribes?
    virgin bribes and genital harvest. we have interesting personalities”

    Not sure what a ‘virgin bribe’ actually is. Genital harvest sounds like something a serial killer might do. I’ve been happily married since my early 20s and have no complaints. Why do you ask?

  27. Sissyfuss on Thu, 9th Nov 2017 10:28 am 

    Some of these comparisons are of the apples to oranges varieties. China is a communist/capitalist hybrid economy still evolving into its final form. I keep reading that limits to growth is killing capitalism and perhaps this hybrid is what is rising from the ashes. We live in interesting times with life dynamics deviating off into many directions. We are nowhere near any solutions as of yet, with new complications arising with each supposed solution.

  28. JuanP on Thu, 9th Nov 2017 1:01 pm 

    Fmr “thank you antius. this is the county who will partner with russia to defeat america we’re told.” I don’t think the USA needs any help destroying itself. I don’t think the Russians, Chinese, or anyone else could do a better job of destroying the USA than US citizens are doing. US citizens who think their country’s destruction will come for abroad are missing the point. The USA is being destroyed from the inside out.

  29. DerHundistlos on Thu, 9th Nov 2017 3:54 pm 

    Siss, my kindred spirit, I would enjoy the opportunity to know you better!!!! Your thinking is astute, balanced, erudite.

  30. makati1 on Thu, 9th Nov 2017 5:22 pm 

    No, Tim. What I am trying to point out is that you are brainwashed into thinking Asia is a “Shithole” while America is so great. I can see they succeeded. I will not try to educate you.

    Like a few others here, you will wave the American flag, dipped in the blood of 3rd world children, as long as it gives you a comfy life. That life is at the cost of the lives and welfare of others in countries that cannot defend themselves from the US terrorist bully. Enjoy you life while it lasts and think about all of the innocent children’s blood in every gallon of gasoline you waste. You day is coming.

  31. Davy on Thu, 9th Nov 2017 5:30 pm 

    Mad kat, Tim is right, there is a lot of shit holes in Asia so quit looking stupid saying there is not. You can also stop your “blood dripping talk” because it is pure old man drama. Ask the Chinese and Indians about wasting gas too. You are a disgusting human being and increasingly people are stopping your anti-American parade as hollow and fake.

  32. Boat on Thu, 9th Nov 2017 5:40 pm 

    Ode to shorts camel pee.

    HOUSTON, Nov. 9, 2017 /PRNewswire/ — Freedom Oil and Gas Ltd (Freedom) (ASX: FDM, OTCQX: FDMQF) today announced the initial production from the first two horizontal wells drilled in its Eagle Ford Shale acreage. The Wilson B-1 and Wilson B-2 have averaged a gross 30-day production rate of 1,244 and 1,256 barrels of oil equivalent per day (BOED), respectively.

    The oil gravity is 45 degrees API, which is a light sweet crude oil, and is being sold at premium LLS pricing instead of WTI pricing. The gas has a high caloric value and the liquids recovery is about 250 barrels of NGLs per million cubic feet of gas produced.

    ps, LLS is priced at 62.77.

    http://markets.businessinsider.com/news/stocks/Freedom-Announces-30-Day-Average-Production-and-Oil-and-Gas-Sales-From-First-Two-Horizontal-Eagle-Ford-Shale-Wells-1007422691

  33. Dredd on Thu, 9th Nov 2017 11:23 pm 

    “Will China Bring an Energy-Debt Crisis?”

    To whom?

    They have a target (First Shots Fired In The Currency Wars – 2).

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