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Sunday, 15 August 2010

Have you ever been to Shijiazhuang?

No, neither have I. In fact, I had never heard of it until afew moments ago, but it turns out that Gucci have a store there, which is all the more remarkable because the average Gucci handbag costs the same as 2 years wages for the average Shijiazhuang resident, although for all I know they earn that much by running up imitations to sell to gullible Westerners.

What this really tells us is that a lot of people in China are buying Gucci and other fancy goods in fairly remote cities, and to buy the real thing, they have to have real money, probably a lot more than the official statistis reveal.

Indeed, the Chinese Reform Foundation say that China’s households hide as much as 9.3 trillion yuan ($1.4 trillion) of income that is not reported in official figures, with 80 percent accrued by the wealthiest people. The money, much of it likely “illegal or quasi-illegal,” equates to about 30 percent of China’s gross domestic product. Personally, I think it is highly questionable whether such a body could determine this figure with any accuracy, but they have produced a report to that effect.

So which august international body has commissioned a report into hot money in the fastest growing economy in the world. No, not the UN, OECD or even the IRS, but that fine upstanding corporate citizen (and not a purveyor of tax evading offshore deposits looking for a replacement for its lost US business, no,no,never): Credit Suisse AG .

1 comment:

Steven_L said...

"Keeping up with the Wangs" (not my phrase, some fund managers) a reason to look harder at EU exporting stocks in unloved nations apparently!