Chinese Economics Thread

[SanWenYu]

Not sure if I can agree. US and all other top tier economies definitely need FDI as a key source of tech innovation. You want foreign companies to spend and steadily increase their R&D in your country rather than spend it elsewhere.

Do you agree on this part of my post: "as the west tightening up technology exports to China"?

If you disagree, we are not on the same page to continue the discussion.

If you agree, do you still think new FDI from the west will do "important R&D" in China?

 

[Overbom]

Interesting take by DPG.

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If China had chosen to not burst the property bubble and instead went with the old ways to find ways of fueling its real estate, this year GDP's growth would probably be around 8%...

That tells you all you need to know about the importance of the headline GDP number. Its infinitely better to burst the bubble and direct the credit to more productive sectors even if that "lowers" your GDP

 

[ougoah]

If China had chosen to not burst the property bubble and instead went with the old ways to find ways of fueling its real estate, this year GDP's growth would probably be around 8%...

That tells you all you need to know about the importance of the headline GDP number. Its infinitely better to burst the bubble and direct the credit to more productive sectors even if that "lowers" your GDP

And we should also note though that this is at the expense of short to medium term drops in consumption and general industrial and economic activity. Everyone got a little bit poorer on paper but that's the thing with money. It's all a relative ledger.

If everyone got poorer by 100 units, deflationary. Contrast to west where everyone but the elites got +100 units from stimulus sources but elites got +10,000 units. Wealth gap widens. Social economic pressures impact industrial output.

Popping property bubble comes with associated costs but in China's case, they can do it with authoritarian methods and some short term economic pain for restructuring capital allocation should have been done half a decade ago imo. CCP better late than never... At least theyre able to do the right thing. Australia property prices is becoming a joke. Capital trapped in number inflation joke. No average home owner is truly rich despite millions on the books if they want to remain housed in capital cities.

How many are insightful enough to even figure these basics out?

 

[Franklin]

https://twitter.com/i/web/status/1721591526483018223

This is a very common misconception. According to this logic, the 4 Asian Tigers, Japan, Germany, and other high income countries would have stopped being competitive a long time ago. What really matters is productivity, not income. In addition, rising income increases consumption and demand, which is necessary for more economic expansion.

Good, more gold, less US dollar/paper money:

https://twitter.com/i/web/status/1721814863951823301

Its not that China’s industries are becoming less competitive. But there is a active policy of de-risking trying to move production away from China. And that is one of the reasons for the high inflation in the West. It has more to do with Western politics than with the Chinese economy. China is in fact so competitive that the West need government policies and has to make laws to move industries and imports away from China.

 

[Petrolicious88]

Do you agree on this part of my post: "as the west tightening up technology exports to China"?

Yes. Agree of course.

If you agree, do you still think new FDI from the west will do "important R&D" in China?

Yes. I think global FDI and especially those from advanced developed countries are still very important for China.

 

[Biscuits]

By far the most important factor is the internal investment from the largest advanced economy in the world - China itself.

As long as the domestic market works, the economy will stay booming.

Foreign investors mostly come to earn money for themselves. They indirectly assist smaller time Chinese companies to build up over longer periods of time, but the bulk of direct growth comes from local markets.

 

[Petrolicious88]

By far the most important factor is the internal investment from the largest advanced economy in the world - China itself.

Depending on how you want to count, the largest advanced economy is still the U.S.

As long as the domestic market works, the economy will stay booming.

Foreign investors mostly come to earn money for themselves. They indirectly assist smaller time Chinese companies to build up over longer periods of time, but the bulk of direct growth comes from local markets.

FDI brings in knowledge and innovation. Even the most developed countries actively develop policies to welcome FDI.

Xi is set to meet personally with a panel of U.S. executives/investors in the coming days. I think he understands the continual importance of foreign businesses, investors, entrepreneurs for China.

 

[pipaster]

Depending on how you want to count, the largest advanced economy is still the U.S.

FDI brings in knowledge and innovation. Even the most developed countries actively develop policies to welcome FDI.

Xi is set to meet personally with a panel of U.S. executives/investors in the coming days. I think he understands the continual importance of foreign businesses, investors, entrepreneurs for China.

The question I have is if the calculated FDI is including only SWIFT transactions, or all transactions? Not that I expect there to be a huge difference.

 

[BoraTas]

FDI into China fell below zero in Q3, for the first time on record, but China's outbound direct investment rising
View attachment 121079View attachment 121082

It is mostly because foreign corporations are reporting negative earnings this year as exports are down and Chinese domestic consumer sentiment is bad. Reinvested earnings were like 40% of the FDI of China. The other reason is Chinese rich taking money outside as money is hard to use in China right now. China notoriously has an underdeveloped financial industry. Since house prices were doing bad too, the rich are trying to get out.

True FDI (foreign corporations bringing money) into China is still strong.



Note: China as a country with a massive trade surplus is bound to have money flows outside. It just has a lot of forex entering the economy.

 

[tamsen_ikard]

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With China facing deflation and rapid deleveraging, their money supply should be going down. This is the time to do big monetary expansion aka money printing press. But China is being very cautious to do monetary and fiscal stimulus at the moment. That 1 trillion yuan stimulus is nothing compared to China's total GDP which was 121 trillion yuan last year.

With a global recession ongoing and a big recession coming in the US and Europe, Beijing might be keeping its ammunition in reserve if a big crash happens similar to 2008. That will really cause big drops in exports compared to even now.