Chinese Economics Thread

[GiantCanofWater]

I don’t think that is feasible for China. Chinas political system is different, with the party prioritizing their absolute control over the market at all cost. So I don’t think it’s realistic to expect them to open up the capital and stock markets anytime this century.
so I think it’s better to look at others sectors which is much more likely to be liberalized, but definitely not the stock/capital markets.

I don’t mean opening up the entire stock market to the world, but just making it more investable for the Chinese people. The stock market can be successful within China with Chinas huge savings rate. The way I see it, if they want to improve consumption they have to either improve their stock market or improve safety nets. Wage increase alone wont crack it unless everyone somehow becomes UAE local levels of rich.

If they don’t do either of these, then nobody will consume and people will continue to shove their money into savings or funnel it out of China. China will have to continue subsidizing and relying on export, bringing more debt. It’s just not sustainable. Even if they introduce more capital controls, so long as there is no safe and good way to build wealth in China, people will always try to smuggle it out.

Improving social welfare for over a billion people would be insanely costly and bring huge debt and I don’t see much effort towards it. This along with the extra benefits of a growing stock market for chinas current situation make me think that they will likely put effort into fixing the stock market.

Like I said before (Assuming low social welfare, which is the current situation) people will always funnel their money out if wealth building prospects in China are terrible compared to the outside world. And no matter the capital controls, humans are humans and they’ll always find a way. However, you give them a good way to grow their money inside the country then they will feel less need to escape and less motivated to skirt capital controls.

I think that capital controls and stabilizing the stock market will be a big influence on drawing China’s massive savings (which are sitting doing nothing) into the stock market, allowing Chinese people to build wealth, companies to have massively more capital to grow their business/industries, and reduce debt by reducing the need for subsidizing. All of this on top of increasing consumption. I see growing the stock market (along with their consistent progress on wage increase) as currently, the only viable option for China to grow their consumption and transition to a more healthy economy.

 

[Quan8410]

I don’t mean opening up the entire stock market to the world, but just making it more investable for the Chinese people. The stock market can be successful within China with Chinas huge savings rate. The way I see it, if they want to improve consumption they have to either improve their stock market or improve safety nets. Wage increase alone wont crack it unless everyone somehow becomes UAE local levels of rich.

If they don’t do either of these, then nobody will consume and people will continue to shove their money into savings or funnel it out of China. China will have to continue subsidizing and relying on export, bringing more debt. It’s just not sustainable. Even if they introduce more capital controls, so long as there is no safe and good way to build wealth in China, people will always try to smuggle it out.

Improving social welfare for over a billion people would be insanely costly and bring huge debt and I don’t see much effort towards it. This along with the extra benefits of a growing stock market for chinas current situation make me think that they will likely put effort into fixing the stock market.

Like I said before (Assuming low social welfare, which is the current situation) people will always funnel their money out if wealth building prospects in China are terrible compared to the outside world. And no matter the capital controls, humans are humans and they’ll always find a way. However, you give them a good way to grow their money inside the country then they will feel less need to escape and less motivated to skirt capital controls.

I think that capital controls and stabilizing the stock market will be a big influence on drawing China’s massive savings (which are sitting doing nothing) into the stock market, allowing Chinese people to build wealth, companies to have massively more capital to grow their business/industries, and reduce debt by reducing the need for subsidizing. All of this on top of increasing consumption. I see growing the stock market (along with their consistent progress on wage increase) as currently, the only viable option for China to grow their consumption and transition to a more healthy economy.

Improve social welfare demand high birth rate to get the pyramid scheme running and China will not reverse the decline anytime soon.

 

[Michael90]

I don’t mean opening up the entire stock market to the world, but just making it more investable for the Chinese people. The stock market can be successful within China with Chinas huge savings rate. The way I see it, if they want to improve consumption they have to either improve their stock market or improve safety nets. Wage increase alone wont crack it unless everyone somehow becomes UAE local levels of rich.

If they don’t do either of these, then nobody will consume and people will continue to shove their money into savings or funnel it out of China. China will have to continue subsidizing and relying on export, bringing more debt. It’s just not sustainable. Even if they introduce more capital controls, so long as there is no safe and good way to build wealth in China, people will always try to smuggle it out.

Improving social welfare for over a billion people would be insanely costly and bring huge debt and I don’t see much effort towards it. This along with the extra benefits of a growing stock market for chinas current situation make me think that they will likely put effort into fixing the stock market.

Like I said before (Assuming low social welfare, which is the current situation) people will always funnel their money out if wealth building prospects in China are terrible compared to the outside world. And no matter the capital controls, humans are humans and they’ll always find a way. However, you give them a good way to grow their money inside the country then they will feel less need to escape and less motivated to skirt capital controls.

I think that capital controls and stabilizing the stock market will be a big influence on drawing China’s massive savings (which are sitting doing nothing) into the stock market, allowing Chinese people to build wealth, companies to have massively more capital to grow their business/industries, and reduce debt by reducing the need for subsidizing. All of this on top of increasing consumption. I see growing the stock market (along with their consistent progress on wage increase) as currently, the only viable option for China to grow their consumption and transition to a more healthy economy.

Ok I get your point. However, can you explain why the government has refused to reform the stock/capital markets for so long? I assume there is a reason they are wary of such reforms . Else I believe they would have done so long ago. So I guess the risks are higher than the rewards(in their eyes). There is a reason why most people don’t take the Chinese stock market seriously, its almost completely detached from the country’s real economy anyway. So I don’t think there will be much change and reforms here anytime soon. The party is very wary of anything to do with capital reforms/liberalization. So I’m not optimistic on that side.
there are other sectors which are less sensitive and have a higher probability of being reformed . So we should look towards those for reforms this coming years.

 

[Michael90]

Improve social welfare demand high birth rate to get the pyramid scheme running and China will not reverse the decline anytime soon.

Yes , that’s something that the CCP is powerless to reverse . I think they realized their earlier mistakes . So they can only try and manage the inevitable births decline which has recently even fallen behind South Korea and Japan. They should be able to manage it so it doesn’t cause too much of damage to the economic productivity of the country. Plus it will take 2 to 3 decades for it to really start taking a toll on the country’s economy and productivity . Since China started witnessing this sharp decline fairly recently, they still have the momentum of the former 50s to 70s generations who were allowed to have a large family . It’s the next generation born in the 90s to 2000s that will feel the burden of the collapsing birth rates a few decades from now . Japans situation is a sneak peek of what kind of society/country that can lead to since they have been facing this situation for much longer( to the point they have been forced to relax their immigration policies to welcome immigrants in large numbers despite being far more conservative/foreigner adverse than the Chinese). South Korea and Taiwan would also face same issue. Would be interesting to see how each country manage this phenomenon.

 

[RavenClaws]

Yes , that’s something that the CCP is powerless to reverse . I think they realized their earlier mistakes . So they can only try and manage the inevitable births decline which has recently even fallen behind South Korea and Japan. They should be able to manage it so it doesn’t cause too much of damage to the economic productivity of the country. Plus it will take 2 to 3 decades for it to really start taking a toll on the country’s economy and productivity . Since China started witnessing this sharp decline fairly recently, they still have the momentum of the former 50s to 70s generations who were allowed to have a large family . It’s the next generation born in the 90s to 2000s that will feel the burden of the collapsing birth rates a few decades from now . Japans situation is a sneak peek of what kind of society/country that can lead to since they have been facing this situation for much longer( to the point they have been forced to relax their immigration policies to welcome immigrants in large numbers despite being far more conservative/foreigner adverse than the Chinese). South Korea and Taiwan would also face same issue. Would be interesting to see how each country manage this phenomenon.

The CPC will have to take the birth rate problem extremely seriously. It is the most important long term issue.
Importing the Korean/Japanese work grind and the consumerist culture was always going to do this. Their societies are sickly and treated people as disposable fuel for the system.
China has the ability to implement mass socialist changes along with sweeping reforms but right now the people in charge do not fully understand this. They are from the generation where people had so many kids they can't relate to young people's realities. It's a multifaceted issue that require actual socialism as well as a cultural shift to solve.
I'm confident that the Chinese leadership of the future will at least take this problem as seriously as possible, unlike Western leaders happy with short term solutions and mass migration.

 

[GiantCanofWater]

Ok I get your point. However, can you explain why the government has refused to reform the stock/capital markets for so long? I assume there is a reason they are wary of such reforms . Else I believe they would have done so long ago. So I guess the risks are higher than the rewards(in their eyes). There is a reason why most people don’t take the Chinese stock market seriously, its almost completely detached from the country’s real economy anyway. So I don’t think there will be much change and reforms here anytime soon. The party is very wary of anything to do with capital reforms/liberalization. So I’m not optimistic on that side.
there are other sectors which are less sensitive and have a higher probability of being reformed . So we should look towards those for reforms this coming years.

I don’t know. I just think that given the current circumstances, China doesn’t really have any other choice but fix the stock market if it wants to grow.

Just throwing out whatever I’m thinking (complete bs speculation) but pre made in China 2025, china’s economy was largely driven by infrastructure investment and manufacturing. And most people already had their money in the infrastructure/real estate instead of the stock market. It was useful to keep it there instead of stocks. I’m not ruling out the possibility that it’s because of control or ideology though.

You say that there are other sectors that can be reformed. Can you list them? I really cannot think of anything else that would really make an impact.

 

[RavenClaws]

I don’t know. I just think that given the current circumstances, China doesn’t really have any other choice but fix the stock market if it wants to grow.

Just throwing out whatever I’m thinking (complete bs speculation) but pre made in China 2025, china’s economy was largely driven by infrastructure investment and manufacturing. And most people already had their money in the infrastructure/real estate instead of the stock market. It was useful to keep it there instead of stocks. I’m not ruling out the possibility that it’s because of control or ideology though.

You say that there are other sectors that can be reformed. Can you list them? I really cannot think of anything else that would really make an impact.

The stock market as it is in the West is already very far off from its original mission of pooling risks to fund ventures. It has become a casino that the higher class and the house can rig at will at the expense of the working class. Things like private equity are literal cancer that feast and harvest regular functioning companies for short term gains.

It may suck for the boomers with lots of money looking to make gains by parking their money and doing nothing but I'd rather the lives of the ordinary people be the priority of the government and not the index funds.

What's more important, having ways for the rich to make more money with money? Or mastering all technologies domestically and ensuring everyone has a shot at a life with an affordable life?

 

[GiantCanofWater]

Then how else can the Chinese people safely and efficiently build wealth? cause it’s either that or they forgo wealth building completely and move to massively increase safety nets which at this stage doesn’t even seem possible with how expensive it will be. Maybe a sovereign wealth fund could help with that? But can it provide 1.4billion * Xk yuan amount of money?

Some sacrifice is going to have to be made. If they cannot provide a wealth building method or strong welfare then China is bound to continue suffering from low consumption and debt driven, lower levels of growth. Please let me know if there’s another way around it cause I can’t see it.

 

[vincent]

Then how else can the Chinese people safely and efficiently build wealth? cause it’s either that or they forgo wealth building completely and move to massively increase safety nets which at this stage doesn’t even seem possible with how expensive it will be. Maybe a sovereign wealth fund could help with that? But can it provide 1.4billion * Xk yuan amount of money?

Some sacrifice is going to have to be made. If they cannot provide a wealth building method or strong welfare then China is bound to continue suffering from low consumption and debt driven, lower levels of growth. Please let me know if there’s another way around it cause I can’t see it.

How about building wealth by WORKING?! There are enough parasites in the world, don’t need more of them.

 

[Hitomi]

Then how else can the Chinese people safely and efficiently build wealth? cause it’s either that or they forgo wealth building completely and move to massively increase safety nets which at this stage doesn’t even seem possible with how expensive it will be. Maybe a sovereign wealth fund could help with that? But can it provide 1.4billion * Xk yuan amount of money?

Some sacrifice is going to have to be made. If they cannot provide a wealth building method or strong welfare then China is bound to continue suffering from low consumption and debt driven, lower levels of growth. Please let me know if there’s another way around it cause I can’t see it.

There is no surefire safe and efficient investment, if it's safe and efficient, the access or things it can be used on will be limited, there is no free money in this world lol, what you are seeing in the Nordics and Europe is an aberration that they are slowly unwinding, France is already feeling the heat.

If anything, China should allow both paths and let the people decide if they prefer explosive growth or secure safety nets. Anyway boths paths have been tried to their extremes in this world and the outlook is not looking good. Nothing will beat sound investment and hard work.