Chinese Economics Thread

[Michaelsinodef]

i think this is just trying to cope a serious problem. Even if Inflation is 0.5% for non-food items. Why is it so low? That means there is a lot of deflationary pressure in the economy. That's cause China is not using its monetary and fiscal policy to increase the money supply.

They have the firepower to raise lending, money supply to such a level that inflation reaches the 2% target. But they are being too cautious. So, inflation is still too low. China needs to do a strong round of money printing and lending, hopefully in the right sectors such as chip making to boost economy and inflation to a respectable 2% level.

No.

First of all, there isn't actually any deep theory of why there should be '2%' inflation every year.

And second, there shouldn't be a round of printing and lending just for 'reaching some x inflation %', people doing that are basically idiots (printing and or lending can be done for various other reasons, but if the above is the primary, it is a big lmao).

 

[Staedler]

i think this is just trying to cope a serious problem. Even if Inflation is 0.5% for non-food items. Why is it so low? That means there is a lot of deflationary pressure in the economy. That's cause China is not using its monetary and fiscal policy to increase the money supply.

They have the firepower to raise lending, money supply to such a level that inflation reaches the 2% target. But they are being too cautious. So, inflation is still too low. China needs to do a strong round of money printing and lending, hopefully in the right sectors such as chip making to boost economy and inflation to a respectable 2% level.

lol there's nothing in economics that dictates inflation must be 2%. The actual desired inflation rate with absolute control over prices is 0% because any inflation is bad. 2% is just the fudge factor Western economists give themselves to cope with their states' relative lack of control over the economy. For mature economies inflation is theoretically the lesser poison pill compared to deflation, but still a poison pill.

Western economic theory was developed for developed nations; mature economies with basically no growth available because they're at the edge of the current PPF. Their theories have been an absolute disaster everywhere else and the verdict's not out yet on their own economies. In any case, China isn't a mature economy yet and won't be for a while simply because of its massive and poorer interior. It also has far more levers of control in the economy than Western economies and thus don't need as large a fudge factor.

No point in bringing out the crocodile tears.

 

[Serb]

No.

First of all, there isn't actually any deep theory of why there should be '2%' inflation every year.

And second, there shouldn't be a round of printing and lending just for 'reaching some x inflation %', people doing that are basically idiots (printing and or lending can be done for various other reasons, but if the above is the primary, it is a big lmao).

It's simple, I explained it partly in my last answer. The less exessive consumer debt-rising and consumer spending on 'stupid' things (like in the US), and the higher the interest rates are kept, the more money for 'smart' high-tech sectors financings and investments from the Chinese state-controlled banks higher people's savings and deposits, for the incoming confortation against the West that will determine the fate of the world.

That's probably why the Chinese goverment doesn't boost the consumption like it could. It's better for them for people to spend less now, and keep more in banks the goverment control entirely, and then they couild boost their high-tech sectors with more financing, win the global confortation against the West, control the future of this world, and then the people will spend more on all 'dumb' things like in the US currently.

 

[tamsen_ikard]

its obvious you guys have not studied economics if you say deflation is good or 0% inflation is good. That's a sign of a an economy that is stuck and not moving forward.

Inflation is not just price growth, it is wage growth as well. It keeps economy moving and active. A low and positive inflation rate can encourage spending and investment. If people expect that prices will generally rise over time, they may be more inclined to spend and invest rather than hoarding money. This contributes to economic growth.

That's why you see in China that people are hoarding money instead of actually spending it for investment or consumption. They are too afraid to spend. That's not good for economic growth.

Government needs to step up and increase the money supply, raise people's greed for gains. That's when they will invest, start businesses and do stuff with their savings.

 

[Serb]

its obvious you guys have not studied economics if you say deflation is good or 0% inflation is good. That's a sign of a an economy that is stuck and not moving forward.

Inflation is not just price growth, it is wage growth as well. It keeps economy moving and active. A low and positive inflation rate can encourage spending and investment. If people expect that prices will generally rise over time, they may be more inclined to spend and invest rather than hoarding money. This contributes to economic growth.

That's why you see in China that people are hoarding money instead of actually spending it for investment or consumption. They are too afraid to spend. That's not good for economic growth.

Government needs to step up and increase the money supply, raise people's greed for gains. That's when they will invest, start businesses and do stuff with their savings.

So, 5% GDP growth, and one-third of global growth contribution is not moving forward? All that theoritical bullshit about deflation, is just like I explained - theoretical. And Chinese leaders are very data-driven and practical, they don't care about theories, they care about realities. Once they see something new, they will act on it. For now, the current fiscal and monetary policies are clearly the most optimal judging by the data.

 

[Staedler]

its obvious you guys have not studied economics if you say deflation is good or 0% inflation is good. That's a sign of a an economy that is stuck and not moving forward.

Inflation is not just price growth, it is wage growth as well. It keeps economy moving and active. A low and positive inflation rate can encourage spending and investment. If people expect that prices will generally rise over time, they may be more inclined to spend and invest rather than hoarding money. This contributes to economic growth.

That's why you see in China that people are hoarding money instead of actually spending it for investment or consumption. They are too afraid to spend. That's not good for economic growth.

Government needs to step up and increase the money supply, raise people's greed for gains. That's when they will invest, start businesses and do stuff with their savings.

Ironically, your very reply demonstrates you never studied economics. You're just repeating the ideal 2% inflation rate without understanding why that number even came to be.

Not to mention that you believe the low consumption/investment FUD when there's been plenty of alternative measurements that show it's not actually that low.

 

[AndrewS]

lol there's nothing in economics that dictates inflation must be 2%. The actual desired inflation rate with absolute control over prices is 0% because any inflation is bad. 2% is just the fudge factor Western economists give themselves to cope with their states' relative lack of control over the economy. For mature economies inflation is theoretically the lesser poison pill compared to deflation, but still a poison pill.

Western economic theory was developed for developed nations; mature economies with basically no growth available because they're at the edge of the current PPF. Their theories have been an absolute disaster everywhere else and the verdict's not out yet on their own economies. In any case, China isn't a mature economy yet and won't be for a while simply because of its massive and poorer interior. It also has far more levers of control in the economy than Western economies and thus don't need as large a fudge factor.

No point in bringing out the crocodile tears.

The latest studies indicate that even 5% inflation isn't noticeable.

And isn't some inflation desirable, as it prompts consumption now instead of waiting for prices to fall?

 

[BlackWindMnt]

Yuan shouldn't get internationalize. I would rather find middle man like HKD SGD or AED.

Video is freaking weird so People bank of China lends(?) to other Chinese institutional banks who then uses the money to invest in projects at home and abroad around the Belt and Road. How can one say that China still owns those dollar if the dollars have been invested in projects....That like saying i bough this gaming pc, so i now own this gaming pc and i still own my money i needed to spend to buy the gaming pc.

Sounds like a copium video to me, don't worry the dollar isn't being attacked because China's dollar reserves is 3 times bigger.

lol there's nothing in economics that dictates inflation must be 2%. The actual desired inflation rate with absolute control over prices is 0% because any inflation is bad. 2% is just the fudge factor Western economists give themselves to cope with their states' relative lack of control over the economy. For mature economies inflation is theoretically the lesser poison pill compared to deflation, but still a poison pill.

Western economic theory was developed for developed nations; mature economies with basically no growth available because they're at the edge of the current PPF. Their theories have been an absolute disaster everywhere else and the verdict's not out yet on their own economies. In any case, China isn't a mature economy yet and won't be for a while simply because of its massive and poorer interior. It also has far more levers of control in the economy than Western economies and thus don't need as large a fudge factor.

No point in bringing out the crocodile tears.

You know i once heard the 2% eternal inflation came from a new zealand experiment that somehow worked. So now we are stuck with eternal inflation target of 2% in the west. Its a good way to make the bottom of gdp growth always 2% in a mostly service based economies.

 

[tamsen_ikard]

So, 5% GDP growth, and one-third of global growth contribution is not moving forward? All that theoritical bullshit about deflation, is just like I explained - theoretical. And Chinese leaders are very data-driven and practical, they don't core about theories, they care about realities. Once they see something, they will act on it. For now, the current fiscal and monetary policies are clearly the most optimal judging by the data.

China is actually in semi-recession overall and probably in full recession in several sectors of the economy such as property, export sector and software tech sector. China used to have 9% nominal growth each year due to 6% real growth plus 2-3% inflation. So, growing just 5% nominally is a big slowdown. Yes, they have 5% growth, but that's a low bar for China which is still urbanizing rapidly, growing extremely fast in R&D and moving up the value chain in manufacturing.

So, no I don't think China is growing at its full potential at the moment. Xi has held China's economy down.

He is probably doing this cause there is probably a risk of a big recession across the globe just like 2008. So, he is keeping his ammunition in reserve for such a black swan event. There is also fear in China that if too much easing is done, it will again fuel the property and tech bubble like what happened in 2020-21.

That's why I said, Chinese government is too cautious and afraid at the moment. So, they are holding China's economy back by not easing more.

 

[Serb]

China is actually in semi-recession overall

???

and probably in full recession in several sectors of the economy such as property, export sector and software tech sector.

???

China used to have 9% nominal growth each year due to 6% real growth plus 2-3% inflation. So, growing just 5% nominally is a big slowdown.

Nominal GDP growth (inflation) literally doesn't mean anything good in real world outisde the heads of some low-IQ Westerners.

And real GDP growth in China slightly slowed down (from 6% to 5%) due to the collapsing purchasing powers of their export partners in the West, and by the extension global economy as a whole.

Also it's worth pointing out that China in this year pretty much deflated its real estate bubble and stopped lending that sector so much,

Instead it turned financing more and more high tech sectors which pay greater divindents in the future, and are not short term engines of growth like the real estate sector is.

That's also geopolitically connected with the West. And it's their own decision, they could've grown 6% easier had they not done that.

Another thing worth pointing out is that China contributed to 1/3 of all global GDP growth in 2023, more than the entire West combined + India combined.

That's why I said, Chinese government is too cautious and afraid at the moment. So, they are holding China's economy back by not easing more.

I explained exactly why are they doing this 2 times in my previous responses, but you are too concerned with trolling to read over that.