Yeah. I gather that. I just wonder if it's more to it. I guess not. It's just pure U.S. protectionism at play again. The land of free enterprise strikes again.
Chinese Economics Thread
- Thread starter Norfolk
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Yeah. I gather that. I just wonder if it's more to it. I guess not. It's just pure U.S. protectionism at play again. The land of free enterprise strikes again.
People in China may not see paying taxes as a assault on their personal freedom like in America. But people in China still don't like paying taxes.
antiterror13
Brigadier
China is forcing the property sector and the local governments to deleverage their debts. Financial stability is now a top priority. Leverage and debt is now called a national security threat. All good stuff. The problem with China is that once the pain of deleveraging start to get real they begin to backtrack. This has been the pattern since 2009. Debt deleveraging in China is always one step forward two steps back.
You are right but I think that this time the CPC has quite a lot of breathing room with China's projected GDP growth in 2021 to be strong.
Thus, they have more space to start solving old problems without fearing that the growth will be impacted too much. AFAIK deleverage has started showing some initital success on winding down the debt-to-gdp ratio
True but as I said if its about raising funds then create a tax but if its about adjusting behaviour then why use a tax? it may have peripheral benefits for sure but what is the longevity and how flexible is it? Excessive property ownership is only a near term symptom as the avenues for investment are limited that's why people pile into property, once there's alternatives it will moderate and with it will reduce the proceeds from that source as a natural consequence of obtaining the desired outcome.
The other end of the equation if you are not the most sophisticated investor and there's rumours that the government will introduce a new tax on your asset if people think it will materially impact their wealth there could be a run as everyone tries to dump their assets, creating chaos!
A cap was not meant as a perfect solution merely one that's simple for everyone to understand and fits in better with the concept of removing 'illicit income' rather than 'taxing the rich'.
As the CPC seems to constantly preach conditions are a key factor in policy determination, not saying a broad based tax system is a bad thing simply a step wise approach is safer if you got from A to B using a bike all your life, a car might be better next step rather than a teleportation machine even if the latter is clearly superior at getting you from A to B.
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Deleted member 15949
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5-6% are the composite nominal GDP growth rates of the Tigers after reaching 10K in GDPPC. 5-6% is not "easy"
For China it is achievable. It is still massively urbanising its rural population. Almost half of the population have an extremely low salary (Premier's claim) which also provided a very low economic base which can quickly start generating growth if appropriate policies ("common prosperity") and investments are made.
China is also still upgrading its entire industry value chain in order to start producing and exporting higher value goods which can start creating X times more wealth for the country than the old labour-intensive low-value industries and the low-jobs created by it.
China is also at the "gates" just before the start of the 4th Industrial Revolution. China is currently at the forefront for utilising this new paradigm shift which could act as another
In addition a new regional trade agreement RCEP, will open up further opportunities for Chinese enterprises having a unified market of ASEAN countries and most importantly, for the first time having China-S.Korea-Japan in the same trade framework/deal. This is more of an increase of wealth than a simple 1 +1 + 1 =3.
Moreover, China has already started setting up clusters of cities with populations of dozens and hundreds of million of people. These initiatives have started recently and due to the huge undertaking we haven't seen any significant results from greater synergies. I estimate that by 2025, initial policies for each cluster will start showing some results.
If this seems underwhelming to you, have no worries. With hundreds of millions of people in "cluster-economies" just having "some" results is equal to an economic earthuquake for supercharging growth in these areas/regions/clusters etc.
There are a lot more reasons why China can support such high growth in the future (e.g. Dual circulation strategy among others) but I would need another hour of typing which I am not willing to do.
The Chinese leadership, western media propaganda aside, is extremely competent and it is pursuing multiple vectors of growth so that if 1 strategy fails, China could still keep growing its gdp by a lot.
The only pitfall is the demographics, which is another matter altogether and is much more nuanced and complex than western propaganda would make you believe. I wouldnt term it as a crisis as of now but more of a "serious challenge+++", which could become a "crisis" if a serious turnaround on the TFR doesn't start happening in the following years
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Deleted member 15949
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Okay great, your describing capital formation but 5-6% in GDPPC growth is really unlikely given that the Tigers had the same lack of capital density when they were on their growth spurt and that they only grew at 5-6% in *GDP* and slower in GDPPC while China has a declining "capita" as well. I don't doubt that China's government is highly competent but to multiples of times more competent than everyone else (?). No
after hitting 10k, currency appreciation will contribute very substantial nominal growth, more than real growth, check Deutsche mark, and jap yen. RMB could be an over valued currency in ten years.