Whats the point of working hard, getting rich, but you can’t spend it or show off your wealth. What’s the point?
Chinese Economics Thread
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They can spend their wealth however they want; it is just that there isn't such a big margin between the poor and the rich in China like there is in the West or developing countries because of socialism.
This is not a matter of spending wealth; this is a matter of power. Those wealthy that are leaving China are probably mad they can't piss over the general common populations like the wealthy in the West can.
This is not a matter of wealth, this is some kind of primal desires to be above others so much, they are mad because they can't game the system and be above the law and government and civilian population in such overwhelming manner.
There are all kinds of luxury markets in China (I'm not sure if China is first or second in the world in terms of luxury markets), spending their wealth isn't prohibited there. But them amassing tremendous amounts of POWER (not wealth) is prohibited.
Also, the poor and middle class have all kinds of free/cheap services that they don't have in the rest of the world, so the margin of advantages for the rich, and their domination over others, isn't so pronounced.
But this is important for national stability, even though the rich in China are not so much above the rest like the rich in the US for example, they will have more continuity in keeping their wealth.
Socialism in China basically cements that China will last for hundreds of years, whereas the US economic system could collapse at any time, and then those selfish oligarchs there will be left with nothing.
If I were a rich guy in China, I would be very grateful that the government assured such enormous social stability, not like in the US where my country could go into a civil war at any time, and my wealth disappears.
you can't buy luxury goods, good houses and sports cars in China?
wealth won't buy you in China are just 3 things:
1. ways to make additional wealth simply by owning existing wealth
2. legal access to regional or national political power
3. protection from the legal system
I don't understand why it would be beneficial to society as a whole for the ultra rich to have easy access to these things.
Good luck with that. Making solar cells is a highly energy intensive process. Try looking into how to make polysilicon and the Czochralski method to make single crystal ingots. Do you expect India, Vietnam, or even Mexico to have the huge amounts of cheap energy to make solar cells?
What you will see is these countries getting involved in the low energy parts of the business. Like bundling the solar cells into frames. This has already been happening. To make the solar cells you would need a country with huge amounts of cheap thermal energy. Maybe you could do it in the US but not in those other countries. But good luck building that kind of industry in the US. It left the US for several good reasons.
If the EU has any brains at all they will import the batteries from China and slap tariffs on imported cars from China. This way you can keep the industry.
You know what. Try looking into other world stock markets. If you go to stock markets in Europe and elsewhere, they don't grow in the same insane way the US stock market does either. The US has that hugely inflated stock market for several reasons. People in the US basically put the money for their retirement into the stock market either directly or indirectly. Local governments do it as well. Stock buybacks are legal. This isn't considered good practice anywhere else. And then there is the fact that if you take the major players in the market out, the rest of the US stock market hasn't grown that much either.
lots of people think that the rich complaining means that there is instability. actually, that's just a mind game. the rich will never, ever risk their lives or even their wealth for their counterrevolution. the only way they can win is by tricking the poor to die for them. You don't need to trust me for this. The rich have already outright said this:
Well, you get dunked on every time you post here, yet you still do it. What's the point?
hey guys look! i found someone who thinks the stock market is economy lol
Do you have a mortgage? That is a stock. What's your monthly payment? That is a flow.
This is not conflating stock vs. flow but the fundamental definition of carrying and paying off debt. Just because you don't understand doesn't mean that I am automatically being "fallacious". The correct response from you should be going to Investopedia and reading up on these terms. Get educated.
Hot off the press from the World Bank: ROA of LGFV is estimated to be in the range 1-3% whereas the debt issued by LGFVs generally are in the MSD to HSD ranges - meaning collectively they are not....financially sustainable by themselves.
The argument you should be making is that bridges/roads have additional externalities not factored into the tolls they collect (as Glenn Luk and I have discussed in private), but this structural imbalance/problem still need to be fixed given this debt pile is starting to threaten financial stability. Which is why I framed my initial question regarding LGFVs the way I did.
This is the type of thinking that speaks more about your personal values than how things work. Remember 10 years ago when Jack Ma was the hero? I know for a fact that Alibaba used to have its own coordination department at the State Council to help it deal with any local governance issues. They no longer have that. Whereas Huawei and BYD now enjoy that privilege.
You may celebrate this, but put yourself in the shoe of a company owner - are you really going to be interested to have what happened to Jack Ma happen to you? (Sidebar: virtually zero private company founders are entirely clean of corruption problems with local government officials so technically they can all get investigated - so this speaks more to the system than the people.)
Why would you be interested in a place where one day you're the hero and the next day you're trash? Why not put money in the US where you get to decide how the world works? You may very well think this is fucked up (as do I), but that does not change how some capitalists feel and act according to their own personal interests. Unfortunately, the fact today is that the USD still rules today and the US has disproportionate influence in culture and especially how global capital markets work. You may want to hate on this, but that doesn't change how people especially people in that 'class' behaves. Going back to my earlier point, this may very well change, but being early is no different than being wrong.
Furthermore, how is favouring one industry while shitting on another any indication of competitive neutrality for the market? This goes in direct contrast to the stated policy goals of reform ("national large market", competitive neutrality between private/public enterprises, "the two unwaiverings" etc). If you don't understand what I mean by these terms, I suggest you read up on why they are important.
Most importantly, the private sector in China represents "50 percent to national tax revenue, more than 60 percent to the national GDP, more than 70 percent to technological innovation achievements, more than 80 percent to urban employment, and 90 percent to the total number of enterprises in China."
So while you celebrate SOE tech breakthroughs (deservedly so), the private sector keeps people employed and fed and that is what keeps the economy humming.
Finally, assume Xi is making all the right decisions today and doing all the right things today. What happens when he gets old and no longer makes the right decisions? When will he leave? What if he accidentally kicks the bucket without a succession plan? Nobody outside of the extreme inner circle actually knows how to answer these questions.
As a capitalist, one wants long term certainty to deploy fixed asset investments. As a response to all the uncertainty I've laid out above, the response is that capitalists behave with increasingly short term decision making to get paid back quickly (cut corners, bribe officials etc) because they do not have a perception of long term certainty. This invites more significant regulatory pushback which invariably will have collateral damage.
And the vicious cycle goes on.
While I fully understand the necessity of this painful transition, the problem is that not everyone in China is in a position to weather the pain, and not everyone in China wants to endure this pain. And there we have the risk of a self fulfilling prophecy (or what George Soros labeled as reflexivity) that someone here mentioned earlier.
There are entire industry parks in Mexico filled with Chinese companies. The lack of evidence of Chinese FDI in Japan or India is not evidence for the lack of outbound Chinese FDI. Confirmation Bias 101.
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They could ban and China could ban.
The market in China for cars is nearing 30M twice that of the US. The foreign share of that market is still 50% even with the rise of Chinese EV companies. That's 15M cars. The size of the foreign share of China's market is about size of the US market. Just taking over the foreign share of the Chinese market more than enough to satisfy Chinese companies for ages. The airliners market in China is 99% foreign. I see nothing but upside for COMAC.
The Road and Belt project is to deal with this encirclement from a few select countries. It has 155 members. China's trade has grown in volume and Yuan terms since the West has started "derisking." The world is not just the West.
You can, but you probably can’t flaunt as freely as those in the west. There’s always the risk of reprisal/regulatory scrutiny if you show off your wealth too much. It is a socialist society and how did these ultra rich get their money without guan xi bribes, etc… And there’s the campaign for Common prosperity (sort of on hold for now), but the rich knows it’s coming back eventually.