Chinese Economics Thread

[spring2017]

This seems pretty silly to me. The core issue with the Chinese economy and the priority of the latest 5 year plan is to boost consumer spending. Liberalizing the capital account and boosting RMB internationalization actually fucks with domestic wage earners and consumers pretty hard, just look at Great Britain and the US.

Agree.

This will cause capital flight from China, as Chinese capitalists want to secure the wealth they made of the sweat of Chinese workers by moving the money abroad. The move will benefit those capitalists, but hurt the workers and ordinary consumers. It shows the influence of capitalist forces in Chinese government.

In addition, Chinese foreign reverse will be depleted by exchanging RMB to hard currencies. China's last RMB internationalization effort several years ago resulted in 1 Trillion dollar reduction in foreign reserve. With $1 Trillion, how many many J-20s/aircraft carriers can be built or how many children can be fed and educated?

 

[Xizor]

Good choice. No, the days of HSR are not over.

From the article



Good work from central gov. Nobody wants expensive HSR if it doesn't make sense. I dont say the lines must be profitable, however they must also not be wasteful, the below 80% utilisation rate ban is good IMO

This is just great!
Seems like the government is not very interested in just constructing infrastructures. Earlier, they moved against constructing skyscrapers above 500m. I'd be concerned if they continued the unabated construction.

But some outlets are cynical.
Damned if I don't, damned if I do.
Just like the One child policy.

 

[In4ser]

It's Caixin. It's a CIA puppet

If it's a media organization based out of HK or another country I'd be more inclined to agree with you. However, Caixin is headquartered in Beijing. I doubt CCP would willingly allow 5th columnists next door to Central Government institutions.

 

[spring2017]

If it's a media organization based out of HK or another country I'd be more inclined to agree with you. However, Caixin is headquartered in Beijing. I doubt CCP would willingly allow 5th columnists next door to Central Government institutions.

Chinese government is not monolithic, but with different factions representing different interest. With countless party officials family and friends in the private sector, not to mention billionaires among CCP's rank, it is natural for them to have their own mouth piece, such as Caixin. CIA would love to see "peaceful evolution" from within, just as the case in USSR.

 

[voyager1]

Guys, Ciaxin is a good source. You shouldn't jumb to accuse them of "CIA", and CPC "factions" etc

 

[visitor123]

Agree.

This will cause capital flight from China, as Chinese capitalists want to secure the wealth they made of the sweat of Chinese workers by moving the money abroad. The move will benefit those capitalists, but hurt the workers and ordinary consumers. It shows the influence of capitalist forces in Chinese government.

In addition, Chinese foreign reverse will be depleted by exchanging RMB to hard currencies. China's last RMB internationalization effort several years ago resulted in 1 Trillion dollar reduction in foreign reserve. With $1 Trillion, how many many J-20s/aircraft carriers can be built or how many children can be fed and educated?

foreign reserve to do what? wipe ass with?
what can you buy with "foreign reserve" that the RMB cannot?

can't buy jet engines because "muh security." Can't buy EUV because "muh security?"

 

[gadgetcool5]

Agree.

This will cause capital flight from China, as Chinese capitalists want to secure the wealth they made of the sweat of Chinese workers by moving the money abroad. The move will benefit those capitalists, but hurt the workers and ordinary consumers. It shows the influence of capitalist forces in Chinese government.

In addition, Chinese foreign reverse will be depleted by exchanging RMB to hard currencies. China's last RMB internationalization effort several years ago resulted in 1 Trillion dollar reduction in foreign reserve. With $1 Trillion, how many many J-20s/aircraft carriers can be built or how many children can be fed and educated?

Reduction in foreign reserves does not mean China is $1 trillion poorer. It just means that more Chinese money is held in China in RMB and not invested overseas in foreign assets, such as US government bonds. If you ask me China should not hold too many foreign reserves, in fact it should try to reduce its amount of dollar reserves to as near zero as possible, and encourage other countries to do the same. Holding dollars just gives the US govt license to print more money and deplete the value of China's savings.

Liberalization of the capital account is a good thing. It will bring more funds into China, as international investors want to hold a currency that is liquid. This will raise the value of the RMB and the purchasing power of Chinese workers and consumers.

 

[voyager1]

foreign reserve to do what? wipe ass with?
what can you buy with "foreign reserve" that the RMB cannot?

can't buy jet engines because "muh security." Can't buy EUV because "muh security?"

Agreed. Thats why I call dollars, toilet paper for China. China needs "money" to buy all these foreign advanced IP products.

If the world denies China to buy these products then why should China sell its own products to the world for dollars?

China will instead stop using dollars because it cant buy what it wants. Thats where digital Yuan comes into play. Eventually the Chinese cross border payments will be made with the digital Yuan and not with dollars

 

[PUFF_DRAGON]

Household consumption share of Chinese GDP has declined to like 40% of GDP; Functionally speaking the PRC cannot consume its own production of goods and services and is now trapped in devaluing its currency and seeking more exports. The amount of revenue generated per dollar of debt in China is now below 1 indicating that investment has reached its productive limits.

So how does opening the capital account, which will increase investment not exacerbate the problem?

This is literally western style supply side voodoo thinking and we've all seen how that's gone for the past 40 years in the west.

 

[KYli]

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