The Economic Health of BRICS – Part 2/7

January 12, 2012

China’s banking system has undergone significant changes in the last two decades and is functioning more like western banks than before but remains owned by China’s government.

That is a significant difference. For example, in America, there are no government owned banks but the public sector insures any risk taking the private sector banks take.  This means that private sector banks may lose trillions and the government will step in, as Washington D.C. did in 2008, and go deep into debt to save the banks from drowning and taking America and the West’s economies down with them into a black hole.

The biggest difference between the west and China is the money trail.

In America and the west, most people borrow from private banks to buy private property and when the value of the property drops, as it has in the United States, and the borrowers walk away letting the bank reposes a property that is worth much less than the loan amount, much of the money is gone—when the house sold, the equity went to the previous owner and any mortgage that existed was paid off. The US government made no money on the deal (property tax goes to state governments).

It doesn’t work that way in China because the banks are owned (and controlled) by the central government and so is the land. A better idea of the difference between buying private property in the west and government owned property in China comes from Global Property that says, “The slowdown (drop in property values in China) follows market-cooling measures first introduced in April 2010. The campaign intensified in 2011. The down payment for first-time buyers’ mortgages was increased to 30% from 20%, and for second homes rose to 60% from 50%.”

By comparison, in America, down payments may be as low as no money down or 3.5% and as high as 20% depending on the loan and the qualifications of the buyer/s.

Continued on January 13, 2012 in The Economic Health of BRICS – Part 3 or Return to Part 1


Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.

Subscribe to “iLook China”
Sign up for an E-mail Subscription at the top of this page.

About iLook China

The Economic Health of BRICS – Part 1/7

January 11, 2012

In 2001, Jim O’Neill, the chief economist for Goldman Sachs, coined the BRIC acronym to represent the combined economies of Brazil, Russia, India and China. He was also so bold as to predict that by 2032, or sooner, the BRIC would overtake the six largest western economies (which includes America) in terms of economic might.

Then in 2010, South Africa joined the BRIC turning that acronym into the BRICS.

In fact, the International Monetary Fund (IMF) has predicted that China, a member of BRICS, will beat the United States as the world’s largest economy by 2016 with a GDP of $19 trillion compared to $18.8 trillion for the US.

There are about seven billion people on the planet and almost half live in Brazil, Russia, India, China, and South Africa. The US, by comparison [I prefer factual comparisons over opinions], holds less than 5% of the world’s population. However, I thought I’d throw in this comparison as a footnote. The King’s College of London reported that in 2009, “More than 9.8 million people are held in penal institutions throughout the world… About 2.3 million were in the US,” which means 23% of the total global prison population was in America.

About prison slavery in the United States.

Did you pay attention?  A country [the US] with less than 5% of the global population has 23% of the  global prison population.

By comparison, the five BRICS countries [without the freedom American citizens seem to enjoy] has almost half of the world’s population but only 35% of the global prison population.

What does that tell us—that the more freedom and wealth a country has, the more crooks it grows and attracts?

Anyway, the world’s combined GDP, according to The World Bank was more than $63 trillion (US) in 2010. The GDP of the US was $14.6 trillion, while the BRICS’ combined GDP equaled about $11.6 trillion (US).

Recent drops of property values in China, sometimes reaching 50%, caused dire predictions in the Western media that China’s economy would soon crash and take the BRICS down with it causing their economies to suffer as well.

However, it is best to understand China’s economy and banking system to see if this wishful thinking on the part of China’s Western critics is valid.

Continued on January 12, 2012 in The Economic Health of BRICS – Part 2


Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.

Subscribe to “iLook China”
Sign up for an E-mail Subscription at the top of this page.

About iLook China

The “BRICS” Emerging Powers Summit

June 22, 2011

On April 14, 2011, Chinese President Hu Jintao and leaders from Brazil, Russia, India and South Africa (countries now known as the BRICS) met on the far southern Chinese island-province of Hainan Island.

The most telling result of the summit was the decision to refuse mutual payments in US dollars. This means that the BRICS countries will give credits to one another in their national currencies and the development banks of these countries have signed an agreement about a further gradual withdrawal from loans in American dollars.

The move opened lines of credit in these countries national currencies in order to dilute their overreliance on the U.S. dollar as the BRICS seeks more independence from American political influence.

In addition, China and India agreed to reestablish defense ties and initiate closer border cooperation. China also agreed to deepen its “strategic partnership” with Russia. The biggest gains to come out of this summit may be the BRIC access to Africa due to its newest member, South Africa.

The BRICS nations now accounts for over 40% of the world’s population, but only 18% of its GDP in 2010 and the IMF says the BRIC nations will account for 21.6% of the world’s GDP by 2015, while the International Business Times reports that these nations are expected to represent 47% of the world’s GDP by 2030.

Aljazeera English says, “While many developed nations are struggling with the aftermath of the global recession, the economies led by the leaders of the BRICS nations are still booming.”

Another way to look at this is to compare the BRICS with the GDPs and labor force of the European Union and the United States.

We often hear that the United States has the largest GDP in the world, which was $14.72 trillion in 2010 with a labor force of 154.9 million as estimated by the CIA World Factbook.

The CIA World Factbook listed the European Union (probably due to the Euro) as the world’s largest economy at $14.89 trillion with a workforce of 225.2 million (2009 est.).

When we combine the GDPs and the labor force of the BRICS nations, we see a combined GDP of $21.079 trillion and a labor force of almost 1.5 billion people.  If the BRICS developed a standard currency as the European Union has done that would create the largest economy on the planet with largest work force.

The BRICS is also calling for a greater say on the UN Security Council, which only China and Russia have a permanent seat on now.

Goldman Sachs investment banker Jim O’Neill to highlight Brazil, China, Russia and India’s similarities in terms of their potential for development and growth, created the term BRIC. South Africa was not a member at the time.

To discover more about the BRIC/S see Move Over America, the BRIC is Coming, The Growing BRICs, Brazil’s Growth Depends on China and China Reaching out to South Africa


Lloyd Lofthouse is the award-winning author of the concubine saga, My Splendid Concubine & Our Hart. When you love a Chinese woman, you marry her family and culture too.

To subscribe to “iLook China”, look for the “Subscribe” button at the top of the screen in the menu bar, click on it then follow directions.

China Reaching out to South Africa

February 9, 2011

Aaron Back of India Real Time reports that Brazil, Russia, India and China have invited South Africa to join their group of emerging economies referred to as the BRIC possibly changing that acronym to BRICSA.

Aaron asks how South Africa could join the BRIC when the “rainbow nation” lacks the main unifying characteristic of the group: a fast-growing economy.

However, my answer to Aaron is that India Real Time may have missed the fact that Brazil’s economy was also sluggish until China became a major trading partner. Now Brazil is growing at about 8% a year.

Another factor is that China is now South Africa’s largest trading partner, and Radio Netherlands Worldwide says South Africa (unlike the US) enjoys a trade surplus with China that may only grow. The Chinese ambassador Zhong Jianhua, says that it is the warm diplomatic ties between China and SA since 1998 matched by growing economic engagement, which has put SA among China’s top three African trading partners.

South Africa also has another alternative to a fast-growing economy. The CIA says, South Africa is rich in these natural resources — gold, chromium, antimony, coal, iron ore, manganese, nickel, phosphates, tin, rare earth elements, uranium, gem diamonds, platinum, copper, vanadium, salt, natural gas.

The South African Guide says, the mining industry is one of the most productive in the world and raw materials make up about 60% of the country’s exports… South Africa is also the single country in the world to produce fuel from coal.

Then the BBC reports that South Africa faces major problems. Many South Africans remain poor and unemployment is high—about 25%.

After all, what South Africa has, China needs to continue the growth of its middle class, and it was these same factors that caused China to become Brazil’s major trading partner. As the trade surplus grows in South Africa’s favor, unemployment will shrink.


Lloyd Lofthouse is the award-winning author of the concubine saga, My Splendid Concubine & Our Hart. When you love a Chinese woman, you marry her family and culture too.

If you want to subscribe to iLook China, there is a “Subscribe” button at the top of the screen in the menu bar.