Chinese Economics Thread

[FairAndUnbiased]

>> ansy1968 "the NEW SYSTEM created by Xi"
I think the removal of Hu Jintao was an early indicator what this system might be. Do you think this was made in a civilized way? And if you are based in China, do you think you will be free to answer me honestly?
I've watched the part with Eric Li. He actually reminds me of Jack Ma. And most what he is saying are just best wishes. How can he speak in such way of Alibaba and Byd? Are there better electric cars worldwide? And ok, Alibaba might be an old lifestyle company but what about Amazon, or the magnificent 7 in us, are they not? And what is the alternative, CATL? where ppl work 16 hours a day and are busy to see that their company is down 30% last year? If they work voluntarily 16 hours a day and believe in their company why not buy some company shares? The biggest mistake he is making is believing that the economy can be managed from above. I've lived in eastern europe during USSR times and know exactly what planned economy is. And that's another reason ppl in Taiwan don't want to join the party. Plus, they can see what happened to Honk Kong, and speaking of that:

>> Serb "The stock market is basically 99% irrelevant to the real economy and to real life. To me, to you, to nearly everyone"
No, it's not. For example I have invested in Chinese companies which are now worth pennies compared to western analogues. A lot of ppl in Honk Kong have their pension plans ruined (especially the ones opting for more mainland stocks vs usa). My friends from China also invested in real estate and I don't want to ask them how they feel now. You might think that ruining people wealth is insignificant but that's one of the reasons why people go against their governments.

>>Wrought "Your mistake is in thinking that different people cannot, for example, be successful in semiconductors while failing in stocks"
On the contrary, they can be and I know it. But when stocks are annihilated and real estates down and some of them will never be finished this means that most of the people are not doing well. They will not spent money. And internal demand will slow. Money velocity will slow. Disinflation will come, then deflation, then depression and then there will be no one to buy the new Huawei phone, which btw have very bad support outside of China I still struggle to use NFC emulation on my Huawei watch 3 in EU while this is already released for other regions..

I have never seen a revolution led by shareholders. Even in the US it is unclear despite record numbers owning stock.

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In 1990, at the peak of US power, only ~30% of the population owned stock. And much of the increase is driven by 401k investing which replaced traditional retirement pensions. The difference, of course, is that with 401k the individual assumes all risks of investment while the company has 0 risk.

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Turns out the biggest use of said 401ks is to be used as emergency funds due to economic stress, leaving nothing for retirement.

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In China, most of the population doesn't own stock.

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In their annual poll of people with yearly incomes between 125,000 and 1 million yuan, only 17.3 per cent of the 18-24 age group stated they own stocks this year, compared to 26.6 per cent in 2021.

This proportion also declined for the 25-34 age group, from 32.8 per cent in 2021 to 17.9 per cent this year.

 

[ansy1968]

>> ansy1968 "the NEW SYSTEM created by Xi"
I think the removal of Hu Jintao was an early indicator what this system might be. Do you think this was made in a civilized way? And if you are based in China, do you think you will be free to answer me honestly?

To answer your question Hu Jin Tao is the one who endorsed Xi to the position of power to combat the vested interest group inside the CPC so your information is false to begin with. I'm based in Manila, not a Mainlander BUT a Hua Qiao, I'm an avid admirer and a keen student of China socialism development because for me its the answer for most of Global South woes.

I've watched the part with Eric Li. He actually reminds me of Jack Ma.

Way different, Eric Li talk in economic details while Jack Ma talk nonsense.

And most what he is saying are just best wishes. How can he speak in such way of Alibaba and Byd? Are there better electric cars worldwide? And ok, Alibaba might be an old lifestyle company but what about Amazon, or the magnificent 7 in us, are they not?

That's the old model where Jack Ma and his other Techno oligarch buddies thrive, Xi want to create a Common Prosperity, to enable a thousand flower bloom you need to level the field and destroy the old structure.

And what is the alternative, CATL? where ppl work 16 hours a day and are busy to see that their company is down 30% last year? If they work voluntarily 16 hours a day and believe in their company why not buy some company shares?

From what I know most of the new industries (batteries , AI and NEV) are fully automated, so I don't know where you get your information.

The biggest mistake he is making is believing that the economy can be managed from above. I've lived in eastern europe during USSR times and know exactly what planned economy is. And that's another reason ppl in Taiwan don't want to join the party. Plus, they can see what happened to Honk Kong, and speaking of that:

Well his reasoning is sound if you compare it to US, where vested interest groups aka the kleptocrat dictates policy and had regulatory capture major government institution.

 

[Serb]

>> Serb "The stock market is basically 99% irrelevant to the real economy and to real life. To me, to you, to nearly everyone"
No, it's not. For example I have invested in Chinese companies which are now worth pennies compared to western analogues. A lot of ppl in Honk Kong have their pension plans ruined (especially the ones opting for more mainland stocks vs usa). My friends from China also invested in real estate and I don't want to ask them how they feel now. You might think that ruining people wealth is insignificant but that's one of the reasons why people go against their governments.

I don't follow any stock market, including Chinese, but there are surely some stocks that gained value in 2023. Only indices fell completely.

So if someone lost money, it is their fault that they gambled on the wrong stocks. I don't think this is a state level problem, this is maybe a personal problem for some individuals.

That is all a minority pool of people that are probably looked as a non-factor by the government due to how many more pressing and impactful matters there are that they need to focus on.

And if you are worried that the Western companies gained more in value, then it's also your personal fault you didn't invest differently.

But then again, that entire Western stock valuations depend on the financial engineering (false global image, generational low interest rates, quantitative easing, bloated financial sector), global hegemony status, etc.

In the future, let's say 5-10 years from now, whenever their global financial hegemony ends, they won't be worth anything.

That is all virtual, outside of reality. Nothing can last forever. Even if Chinese companies "worth less" now, they will have more longevity.

If you look at actual P/E ratios, then the US stocks are way, way, overvalued, and Chinese stocks are massively undervalued in real life.

I'm more worried about the US society and financial health as a whole, who cares about stocks, they are literally rotting from the inside now.

That country as a whole has really disturbing fundamentals to me, so it doesn't matter how their stocks are priced.

And China has very strong fundamentals as a country, social, political cohesion, better financial health, economic growth, etc.

So, Chinese stock market may grow less now, but due to different country-level fundamentals, it will eventually overtake the US in my opinion.

 

[siegecrossbow]

Only in relative percentage terms. In absolute terms, this is still one of the highest growth values in the history of China (and of the world).

And that's with their intentional crushing of the real estate sector + Western and global economic slowdowns, leading to lowered exports.





It doesn't matter that 14.9% are not working when those who work contribute more than enough to make China grow at a historic pace as a hyperpower in the making.

Unlike in the US, where only 11% of their economy (GDP) is in manufacturing. What value do they get from all those retail stores, flipping burgers, lawyers, government administration, and liberal arts jobs?

China can't print money out of thin air and then boost the economy artificially and give people to spend for basically "free", while all work structurally easier jobs.

It's easy for the US to have better youth employment when their younger can basically all work in those easy 80% service-based jobs.

Meanwhile, in China, there is a much higher focus on very demanding, high-productivity manufacturing in high-tech more and more.

As I already stated, you see that most of the fixed asset investment this year got into high-tech industries that not everyone could work in (not everyone is innately that intelligent), as opposed to low-tech production and service sector fixed asset investment.

Everything is a tradeoff, yes, they have higher youth unemployment but are much more technologically and industrially advanced and sturdier economically than America.

You definitely need to curb youth unemployment because your current batch of workers are going to get old and leave the market eventually. When that happens you have no replacement. A lot of companies nowadays want a capable worker straight out of the box and provide no training. This is going to bite them in the butt a few years down the road.

 

[siegecrossbow]

On the subject of stock market, a lot of us in the tech field wish that the greedy CEOs would stop doing layoffs to prop up their miserable stock prices. When even someone as talented as Kevin Bourillion is fair game, who knows when you are next.

With the state of global economy right now, I would advise investing in anything other than CDs and bonds even though you might get a hike in the short term. Cost cutting is the running theme even in traditionally strong companies like FAANG. Anything you buy right now is guaranteed to be bought “high”.

 

[Staedler]

To be precise, they are cutting their exposure with more then 10% and the reason, again from this article, is:
"Those in younger generations, meanwhile, appear to have far less interest in investing than their elders as stability is increasingly cherished and confidence in China’s future growth has slackened"
I mean, there is a difference between not investing in sth because, let's say it's not popular, vs to have been invested but now getting out because you aren't confident in China’s future growth. And even the official numbers are very bad - import, export, etc. and yearly changes are vs low base as previous year was pandemic with lock downs. Btw 17-33% isn't that small percentage.

Of course you repeat the bad economy cliche, while ignoring that China's has been hovering slightly above break-even PMI while the West and friends have been at 42-44 PMI the entire year. Given they still represent 40-50% of global GDP that's a hell of a lot of global demand that is missing. That's also reflected in Chinese official PMI (mainly SOEs with an export focus) consistently being a few percentage below Chinese private PMI (mainly smaller businesses focused domestically).

Wasn't that what Mao tried during the Cultural Revolution? They got lucky then that Deng Xiaoping showed up to fix the mess afterwards.

Deng didn't fix anything, he built on a strong foundation. Without the cleared and fertile field Mao left him, Deng would never have amounted to much. Otherwise every self-styled Dengist in the world would have repeated China's economical rise, but they didn't. It's almost like leadership is a collaborative activity instead of an exercise in razing each previous group's work.

you are correct - west is a mess. It's completely corrupt and rotten and stock and other markets aren't real and are manipulated and pumped up. But there are also still positives like personal freedom (although declining), financial freedom - is bitcoin mining still banned in China?

There's not more personal freedom in the West. You just trade some freedoms for different freedoms. Similar for financial freedom. The trade is between earning from speculation and not needing to speculate. Consumption is very cheap in China, and that's partly because these non-productive speculative activities are suppressed. Not perfectly of course, but it's still quite a bit better than the west.

Anyway, I just tried to get some insights why China's reopening after Covid never materialized. Thought this is a legit question as even Xi admits there are problems

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They literally took the chance to restructure the economy with the re-opening boon. That's why there was no sharp jump in growth. Yet if we look at investment breakdowns, we see the major decline in real estate investment and corresponding major rise in high tech investment. Xi didn't say the economy was in trouble, just that you can't expect the same high growth as the past during a period of structural adjustment.

Revealed yourself by quoting an Indian newspaper too. That's not a thing actual eastern Europeans do.

 

[Serb]

Just a random rant from me here: The more developed a country gets, the harder it is to grow in general due to rising complexity in trying to build up more and more new economic activity which gets more complex to get involved in as you transcend different levels and pluck out easiest business models/ideas first. This is like a basic economic principle. So, I don't understand what the problem in the heads of some media idiots from the West is who always point this out. It's obvious that relative growth in China would be slowing down over the decades. It's like saying 2 + 2 = 4. It's not very surprising. And it's not "Xi's fault" or whatever else they cope, it's the stupidest thing that some could even say. Guyana grows 30% yearly in recent times, so does it make it better performing economy than China's?

No, because my mother could run Guyana due to its small population size and poor starting base (and big natural oil reserves) to grow 30% as well. But imagine the difficulty of trying to lead a 1.4 billion people to escape the middle-income trap through high value-added manufacturing and industries as there is no more space to grew in "width" and you must grow in "depth" only if you want to achieve your common prosperity and national rejuvenation goals, and your main competitors have 500 years of earlier positioning than you and various advantages and wealth accumulation built since that time thanks to colonialism. That's a totally new dimension of difficulty. And the job Xi and the government are doing in China are still so successful objectively that it's crazy. They added around new 2 trillion $ to GDP in PPP this year (close to Canada's entire GDP, above Australian GDP, both values are in PPP). But Canadians and Australians are telling them what to do for example, it's crazy.

 

[Minm]

Retail sales are up 7.2% last year. You can't discuss deflation fears without looking at retail spending. The fear is that because of defeating prices people delay buying stuff. They're clearly not

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[ZeEa5KPul]

Revealed yourself by quoting an Indian newspaper too. That's not a thing actual eastern Europeans do.

SleepyStudent?

 

[abenomics12345]

We have heard tunes like yours before. How do you come up with 8% retail growth? Why not 1%? 20%?
Chinese government is pushing for house renovations as the next big consumption.

Closing the loop here.