Chinese Economics Thread

Maikeru

Major
Registered Member
Proposition (from a guest on the Hidden Forces podcast): China's apparent reduction in UST holdings is accounted for/offset by:
  • Mark to market of holdings at reduced UST prices;
  • Agency bond holdings increasing (additional $100bn in 2022);
  • USTs being held through non-US custodians in e.g. HK, Cayman, Lux, etc. and so not showing as PRC-owned.
This sounds at least plausible to me. Thoughts?
 

KYli

Brigadier
It is just a repeat of what a few so called experts claimed but there is no proof one way or the other. However, China has increased its gold reserve for 11 months, so there is no denial that China has diversified some of its reserve to gold.

Another important data is foreign countries holding of US treasuries peak in 2014 at 7.7 trillion and have gone to 7.4 trillion in 2023. China's holding of treasuries have gone down from peak at 1.3 trillion in 2013 to 820 billion now which is around 500 billion difference which correspond with total decrease of foreign holding of US treasuries.

In a way, even if you assumed Belgium and Luxembourg played a role of being intermediaries. All sign points to a drop of Chinese holding of US treasuries. In both 2015 and 2017, China has formally mentioned that is reserve in dollar has gone down from 79% to 58%. There is no update ever since. More importantly, I think it is a far fetched to claim most recent increase of Belgium and Luxembourg treasuries holding is from China.

As for agency bonds, the total foreign holding of agency bond is just 1.2 trillion which China has about less than 20%. China's holding of agency bonds peak in 2008 at 420 billion and 118 billion in 2021. I don't have a recent data but the claim is that it has gone up over 100 billion. It is possible but it is still much smaller than the peak.
 

Biscuits

Major
Registered Member
You should look at the estimates in national currencies, not in USD. You can't guess the future exchange rate.

In the current report, China's GDP in 2028 is estimated at 167 trillion RMB, at an exchange rate of 7.08

In the April estimate, China's 2028 GDP is estimated at 169 trillion RMB, at an exchange rate of 6.16

So the only real difference is that the IMF now projects the USD to remain overvalued

The RMB needs to strengthen to about 5.1 to overtake US GDP in 2028. But that would be bad for exports. So why would should China damage its own economy, just to claim the title of largest economy in the world?

I'm not sure if the USD can remain this expensive in the long term anyway. It's quite damaging for the US trade balance and they might see a recession soon. So the exchange rate is probably going to come down next year
You have to adjust gdp for inflation before you compare 2 economies, unless the 2 economies use the same currency (such as comparing 1 province with another).

China claimed title of largest economy in 2015, and it's not something that is projected to change in the near future.
Even if China started heavily trashing it's own economy like EU/Russia/Israel, US surpassing China would still hinge on US itself having amazing and sustainable growth.

And the non US top economies are even worse than US by signficant margin. They're honestly unlikely to even catch US, let alone China. So those (for example India, Japan, Germany) are non entities when it comes to discussing who can surpass China in gdp.
 

Stierlitz

Junior Member
Registered Member
China's vehicle sales surged by 9.5% year-on-year in September 2023, marking the second consecutive month of growth, helped by increased discounts and tax incentives for environmentally friendly and electric vehicles. Specifically, sales of energy vehicles rose by 27.7%. Considering January to September, new vehicle sales grew by 8.2% compared to the 4.4% increase recorded during the same period in 2022. Notably, energy vehicle sales saw a substantial surge of 37.5% during this time frame.

source: China Association of Automobile Manufacturers
 

siegecrossbow

General
Staff member
Super Moderator
The underestimation of the consumption component of China's GDP is being more widely recognized
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Less well known are the struggles of China’s statisticians to account for goods and services that governments provide to individuals at little or no cost. These transfers include education and health care, such as reimbursements for medicines. They also encompass cultural amenities and subsidised food. Zhu Hongshen of the University of Virginia has highlighted community canteens, often housed in state-owned buildings but operated by private contractors, which provide tasty dishes, such as oyster mushroom or spicy cucumber, at heavily discounted prices.

According to international standards, these goodies should appear in the official statistics as “social transfers in kind” (sometimes abbreviated to stik). They can then be added to household income and consumption to provide a fuller “adjusted” picture. “In principle, social transfers should be included in a complete definition of income”, argued an international team of experts known as the Canberra Group in 2001, although they recognised it is not straightforward to do in practice.
These arrogant economists should dedicate a quarter of their work time to studying Xi Jinping thoughts like the Black Rock executives.
 
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