Chinese Economics Thread

[horse]

Footnote, okay, I think I should explain myself more fully, in case we have forum members who find this economic stuff to be occult and arcane.

Just one point, a detail.

A debt fueled boom ...

How do we keep a debt fueled boom to keep on going?

We need more fuel to sustain a debt fueled boom.

We need more debt, and more debt after that.

For example, think of a recent event.

The Chips Act from the American government, to provide money (which they don't have so that is debt) to semi-conductor companies.

However, more experts in the IC industry, say that is not enough cash to keep this going.

Hence, for the Chips Act to work and make IC boom in America, they would probably need at one or two more rounds of massive subsidies. To keep this boom in IC in America going.

Will this work?

All I know is that they will keep throwing money at it because they are Liberals.

The Chinese are not white Liberal. No more real estate boom, means no more real estate boom. CCP just wants to avoid a bust.

 

[jwnz]

Footnote, okay, I think I should explain myself more fully, in case we have forum members who find this economic stuff to be occult and arcane.

Just one point, a detail.

A debt fueled boom ...

How do we keep a debt fueled boom to keep on going?

We need more fuel to sustain a debt fueled boom.

We need more debt, and more debt after that.

For example, think of a recent event.

The Chips Act from the American government, to provide money (which they don't have so that is debt) to semi-conductor companies.

However, more experts in the IC industry, say that is not enough cash to keep this going.

Hence, for the Chips Act to work and make IC boom in America, they would probably need at one or two more rounds of massive subsidies. To keep this boom in IC in America going.

Will this work?

All I know is that they will keep throwing money at it because they are Liberals.

The Chinese are not white Liberal. No more real estate boom, means no more real estate boom. CCP just wants to avoid a bust.

That's one difference between China and the liberal democratic West, in that no political parties / govts in the West has the guts nowadays to end a bloom, for fear of losing the next election even though when popping the bubble is the right thing to do.

 

[ansy1968]

Footnote, okay, I think I should explain myself more fully, in case we have forum members who find this economic stuff to be occult and arcane.

Just one point, a detail.

A debt fueled boom ...

How do we keep a debt fueled boom to keep on going?

We need more fuel to sustain a debt fueled boom.

We need more debt, and more debt after that.

For example, think of a recent event.

The Chips Act from the American government, to provide money (which they don't have so that is debt) to semi-conductor companies.

However, more experts in the IC industry, say that is not enough cash to keep this going.

Hence, for the Chips Act to work and make IC boom in America, they would probably need at one or two more rounds of massive subsidies. To keep this boom in IC in America going.

Will this work?

All I know is that they will keep throwing money at it because they are Liberals.

The Chinese are not white Liberal. No more real estate boom, means no more real estate boom. CCP just wants to avoid a bust.

Bro you know who owns a lot of Evergrande debt and why the Chinese gov't will not bailed it out....lol The CCP should change their moniker to China Capitalist Party. Now I know why George Soros hate Xi so much, he is having a nightmare each day for losing a lot of monieeee....lol

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[KYli]

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[resistance]

COVID change many things. I wonder china will do better if there's no pandemics.

https://twitter.com/i/web/status/1694599460628652406

 

[ougoah]

Not an economist but can a member who is explain how this isn't the case;

1. Realestate bubble needs deflating and/or popping by CPC
- ridiculously overpriced realestate encourages continued investment, greed, fear of missing out, speculation (all the shit stuff of making a necessity a capitalist plaything) ->draining of capital that should be going to genuinely productive assets and investments, actual productivity and you know... science, tech, industrial progress of China.
- high prices have been keeping young people out of home ownership, forcing them to plan and save for what is essentially a very fundamental, basic good. When they should be using the money the make to spend and invest on much more worthwhile pursuits with outcomes that are far more favourable to China than yet another concrete tower going up.

2. EU is mostly in recession AND has high inflation. US has record inflation and USD reserve currency status continues being eroded by increasing number of nations trading without it. USD value over pretty much all other currencies in the last half year on one hand is a force contributing towards its decline from that reserve status as more countries have more reason to establish trade away from USD as it becomes increasingly expensive to store/buy USD just to facilitate trade between themselves and a non-US country. On the other hand, higher USD buys more of others than it would have. Again that's a double edged sword as more nations know deep down how the US is desperately weaponising the USD in a last ditch effort to save the US economy.

3. China has slight deflation being reported as terrible but we remember that China is the global manufacturer and exporter. Meaning its products are getting more affordable relative to other nations in inflation ahem who is in inflation? and what chance have they got from diversifying now? This is pretty much a couple - parallel force in opposite directions. What is this accelerating? China becoming cemented in global supply chains even further. Of course this is ignoring the internal economic downside of deflation and the effect on slowing tech and industrial progress from internal economic activity.

Global economy is buying less from China but is buying even less (overall) from each other! It's all relative but the headlines do not even explore this. US bought less last month from China than the month before that but the US also bought less from nearly every other trading partner.

What's important aren't these nominal numbers. Not even the trends and relatives but actually who holds the important stuff - energy, material, labour, manufacturing, capability, tech, industry. Pretty much everyone is in decline and getting "poorer" on both sides of the buy sell equation.

4. EU and US both in their own serious economic strife but without the important bit. Actual substance rather than overvalued "services" and luxury products. Luxury product sales tanking HARD. Rolex starting to sell watches again (for the last ten years they've refrained from selling to anyone who can pay RRP preferring to create some superficial market hype and manipulated scarcity). Hermes Birkin exports drop because most of their sales are to Chinese consumers who have to put their money towards popping this property bubble.

5. I suspect CPC timed this property bubble popping EXACTLY in the moment the US is being economically called with a bluff. Looming disaster for the US where it either defaults on debt or keeps borrowing and becoming increasingly unaffordable-impossible to service. Saudi dumping US bonds, banks collapsing, unemployment needs to rise, interest rates need to rise while economic stimulation is also required... an impossible task to really balance.

Meanwhile EU is in arguably bigger economic strike than the US and so have been seeking out meetings nonstop with China for the last year. Chinese consumers having less money to spend on overpriced handbags, fashion, designer brands, luxury cars, means death to EU industries. Chinese market is quite literally between 30% to 60% the income for most luxury brands depending which product. Imagine losing even 20% of your usual income in an inflationary time with high interest rates and scarcer material and logistic availability.

 

[ougoah]

CPC wants to kill five birds with one pin.

1. deflate China's overpriced property bubble.

2. make possible young Chinese home ownership to facilitate work, productivity, play, more free spending.

3. short to medium term effect of property bubble deflating/bursting is Chinese consumers buy less from the west.

4. discourage Chinese inconspicuous consumption particularly of foreign goods.

5. mild deflation in Chinese economy while western economies are in higher than usual inflation, also low spending, and still high interest rates means strengthens global economy's reliance on Chinese manufacturing and supply chains.

Not to mention China's economic growth not being in double digits and a "measly" 4% is measured against deflation for a manufacturing and substance based economy... and now a technology exporting economy (has been for over 10 years if the idiots can even wake up and realise that). That is VASTLY better than the "US is growing faster than China :O" crew's claim where US growth is against under-reported inflation, low spending, high interest. In real terms, both are about equal in growth rate this quarter. Except one counts a $10,000 legal document that took 15 mins to write up as GDP... lel.

I'm no economist but many things are self evident and economics is vastly more complicated than engineering. To the point where one has to imagine these days that modern western economists are the academic and professional equivalents of psychedelic addicts. The self delusion of some economists you find from youtube to FR... it's mindboggling.

 

[Hendrik_2000]

I completely agree China is far away from contracting Japanese disease. Chin still has 200 million of surplus labor that needs to be moved into cities. China has plenty of well-educated young people who will create new technology and drive prosperity like we see now in EV, Renewable energy, now semiconductors, etc. Just take car ownership China's car ownership is less than what 50%. The animal spirit to better one life is still prevalent in Chinese young people Don't believe in Western media that exaggerate low flat living. Here is what Andy Xie said from AT. China should not flood the economy with easy money Let the market find it own equilibrium. Ignore the Western media prediction of doom and gloom. I once watched a video of Pang Mama She is a Japanese lady who chronicles her life in Shanghai and speaks perfect Putong hua She often has guest one of them married to a Chinese guy and she said Japan and China is close but there is also a difference She said she admired exactly this animal spirit" to better one life and work hard and strive for it " While in Japan people just happy to maintain the standard of living

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“Market-driven restructuring is driving China’s deflation,” argues Xie, formerly a top Morgan Stanley economist. “It leads to more efficient allocation of resources and greater purchasing power for consumers.”

Xie continues that “if China can resist the reflationary pressure from those who lose out due to the deflation of

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, a healthier and more sustainable growth cycle is coming, which will turn China into a high-income country.”

The thing about so-called “Japanification,” Xie explains, is that Japan’s malaise was less about the level of the money supply than a slow-moving economic system unable to see that its competitiveness was waning.

“As the generation of entrepreneurs who built Japan’s economy retired in the late 1980s and early 1990s,”

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in SCMP, “their successors have behaved like bureaucrats, hanging onto what they have. They were paralyzed as Japan’s neighbors peeled off its industries one by one with better tech and lower prices.”

By 1999, when then-BOJ governor Masaru Hayami slashed rates to zero and began pioneering QE, a first for a Group of Seven nation, several years of political apathy were already stymying what was then Asia’s biggest economy.

Around 2011, when China first surpassed Japan in gross domestic product (GDP) terms, Tokyo had a chance to reboot — an opportunity to rekindle its entrepreneurial mojo. It doubled down on monetary easing instead.

 

[FairAndUnbiased]

CPC wants to kill five birds with one pin.

1. deflate China's overpriced property bubble.

2. make possible young Chinese home ownership to facilitate work, productivity, play, more free spending.

3. short to medium term effect of property bubble deflating/bursting is Chinese consumers buy less from the west.

4. discourage Chinese inconspicuous consumption particularly of foreign goods.

5. mild deflation in Chinese economy while western economies are in higher than usual inflation, also low spending, and still high interest rates means strengthens global economy's reliance on Chinese manufacturing and supply chains.

Not to mention China's economic growth not being in double digits and a "measly" 4% is measured against deflation for a manufacturing and substance based economy... and now a technology exporting economy (has been for over 10 years if the idiots can even wake up and realise that). That is VASTLY better than the "US is growing faster than China :O" crew's claim where US growth is against under-reported inflation, low spending, high interest. In real terms, both are about equal in growth rate this quarter. Except one counts a $10,000 legal document that took 15 mins to write up as GDP... lel.

I'm no economist but many things are self evident and economics is vastly more complicated than engineering. To the point where one has to imagine these days that modern western economists are the academic and professional equivalents of psychedelic addicts. The self delusion of some economists you find from youtube to FR... it's mindboggling.

Just read up on what they post between themselves @coolgod

open racial discrimination, 'race science', etc. it is literally the same language that Nazi Germans and Imperial Japanese use, and they were IP tracked to institutions like UCLA, Harvard, MIT, Chicago, etc.

 

[Hendrik_2000]

Another excerpt from Andy Xie at GT I completely agree They need to pop up the real estate bubble even at the cost of default I have no sympathy for people who speculate in real estate and now that the chicken come home to roost. Beijing should put discipline back into the economy and not rescue this speculator. The whole society is at fault. I don't understand the obsession with real estate.I see that in overseas Chinese too. But Beijing too encourages speculation by not imposing property tax on real estate

Concerns that Country Garden, once China’s largest builder, might miss a series of bond payments have global investors on default watch. That came the same week China Evergrande Group, the country’s largest property company, filed for bankruptcy protection in the US.

Are more Chinese shoes about to drop? Let’s not forget, too, that the China Securities Regulatory Commission last week launched an investigation into possible violations of disclosure rules by Evergrande’s onshore unit, Hengda Real Estate Group, observes analyst Sandra Chow at advisory CreditSights.

As China’s real estate crisis deepens, the pressure is on President Xi Jinping, Premier Li Qiang and Pan to bail out the property sector. Yet doing so might just re-incentivize bad behavior, increasing financial leverage and setting back efforts to weed out corrupt speculators.

Here, the value of the yuan is a key indicator of how the PBOC is addressing the challenge. Yet, as Xie argues, it would be a mistake for the PBOC to give in to short-term concerns.

After all, Xie says, it was a “misallocation of resources during China’s boom years” that stands as the “cause of today’s challenges. A vast property bubble hijacked the country’s

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.”