antiterror13
Brigadier
why? care to elaborate?
Chinese Economics Thread
- Thread starter Norfolk
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why? care to elaborate?
Why wouldn't this be fixed easily when that debt is internal for once (way better management and restructuring capability), and Chinese entire economy has a much healthier (more prudent) fiscal/monetary policy in general than countries in the West? Overall total economy debt ratio to GDP, government debt to GDP ratio, lower budget deficit to GDP ratio, higher interest rates, less QE done in the past and way lower inflation.
There is no reason to separate Chinese local government and Chinese central government when talking about Chinese local debt when in the US for example you have FED directly printing money and buying even corporate bonds and taking on their commercial bank debts. Why is it a problem for China to help their local governments with debt, but not for the US to do it directly to even their private entities? Double-standards.
They can slowly deleverage thanks to restructuring, cut down on unnecessary infrastructure projects for now (still retain sci-tech based projects), focus on repaying their existing debts, and the overall economic growth will lead into more local government revenue over time, allowing for more new infrastructure projects resumptions of all kinds.
And if some kind of contingency happen anywhere meantime, the central government can just transfer them some money in the end. You can do all as many calculations of their state as you want, but if you don't understand that central government and local government are basically the same thing, then all the math you do is useless/incomplete.
That is Chinese corporations building China's geopolitical influence abroad, as well as their profits as some investment simply isn't logical to be made in China and is better made elsewhere due to various market reasons. But even that probably can't happen without government's approval as their control the outflow of capital if not the entire corporate sector itself.
This is a positive sign because it shows that China isn't afraid to invest globally anymore and is not depended on the FDI inflow/outflow balance anymore like it was in the past. It shows the strengthening of the economy and a country as a whole.
And that is not financial capital exiting China like I think you were describing (like some funds or individuals buying minority stakes in foreign shares or other securities and moving their positions from China to elsewhere around the globe), that is not a part of FDI, and it isn't a proof for that, that is FPI - foreign portfolio investment.
It depends in which sector we are talking about. If we are talking about transferring/opening of any manufacturing business (you want to produce something tangible there), there are not many promising conditions present. The US is totally deindustrialized and succeeding in manufacturing there can be said to be otherworldly level difficulty. So, this is one reason why.
If we are talking about just parking your already created wealth and leaving (investing in some assets), that is maybe beneficial in the short term.
But in the long run when the empire collapses due to historic, civil-war level political and social divisions in many crucial areas (as well as ideological, financial, ethnical, racial), loss of geopolitical power, bankruptcy level financials, etc, then you will lose nearly all the money you parked there, so you might've as well left it in China in the first place. This is my personal analysis.
China rose economically so fact precisely because it didn't follow market neutrality on a both foreign/domestic competition dynamic,
As well as domestic competition itself when it always chooses some local and national champions after they prove themselves and help them win.
I don't think that will ever change, judging by how far this brought them. And to be honest, this is the most proven development policy.
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manqiangrexue
Brigadier
How do Chinese flaunt their wealth in the West when nothing you hold in your hand can be as luxurious as the pride that you can have in your heart? Now that sounds like some crazy philosophical stuff that's not grounded in reality, and it might be to those who have never left China but in the US, it is very real here. One thing that Americans are known for is thinking they are better than you just because they are American even if personally, they are poorer, less educated, weaker, shorter and fatter than you; they have that confidence that they are the best just because of their country dominated the world. That type of pride is a luxury that money cannot buy and that's really the only type of luxury worth working for.
No matter what clothing you wear, what jewelry/watch you carry, what car you drive or house you live in, if you are not native and/or you belong to a nation that is hostile to theirs, your wealth only draws an unwanted type of attention. Innocently, this can be similar to people looking at a chimp at the zoo wearing a jacket covered in $100M worth of diamonds; more deviously, this can be just hatred towards you.
I have an acquaintance in the US who is very rich; his parents were engaged in very questionable activities in China. One night, he selected his $80K BMW out of his car garage, dressed up in an Italian suit and shoes, took out one of his Rolex watches, and went to the club feeling like a million bucks. He came back telling me that the only attention he got was when leaving the club, a bunch of black guys called him a Chink and pulled up the edges of their eyes at him while making ching-chong sounds. He's not an ugly guy at all but that night, he learned that all his wealth is useless when he doesn't live in a society where he can walk proudly for who he is.
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If it is as easy as you say it is, why isn't it already done? Are you suggesting that the Chinese government is so dumb as to not recognize what you say?
Pick one - do you want the Chinese monetary/fiscal policy to be prudent, or do you want the PBoC to be like the FED and print like a fiend?
Your gross misunderstanding of the way the FED can act - i.e as a reserve currency, vs. the way PBoC can act - is a telling sign of how you misunderstand the things as they are *today*. The USD is the currency of the USA but it is the problem for the rest of the world when the US tightens interest rates. Yes, the FED has shown no prudence in managing the reserve currency given the way they printed - but these things change over decades, not quarters.
There is an entire thread about the Internationalization of the RMB - the reason we discuss it is because RMB isn't a reserve currency yet.
Stop living in the future.
Sure, but that means less jobs in manufacturing in China for Chinese people looking for jobs. That means less income to workers. As the 'capitalist' of the company, they are indifferent as to the money is earned globally or domestically but that is not the case for Chinese workers. Are you supporting Chinese workers or Chinese capitalists? Pick one.
FDI has also shrunk this year because companies are taking out profits instead of reinvesting them like before:
In this sense, FPI and FDI are behaving similarly.
How long is long run? A Ray-Dalio short term cycle is 5-7 years, a Ray Dalio long term cycle is 50-75 years. In the long run we are all dead.
Sorry to burst your bubble, but competitive neutrality is the stated goal of reforms.
Is this type of pride not called ignorance or even national chauvinism which could sometimes be used by authoritarian regimes to manipulate and unite them against fake external enemies? Don't see what is worth being less educated, weak, fat and actually stupid. But obviously the world is going in this direction, Americans proud to be American and Chinese being proud just to be born in China, regardless what they have achieved.
what's ROA of us interstate system? No wonder us rail tracks look like wet noodles when ROA looks very good.
Name dropping a garden variety lot in this cottage industry of China watchers and talkers doesn't actually help anything.
Ever heard of gilded age? us got here because of that. China shot and jailed quite a few of those excesses, so it's good at this similar stage.
Market and foreign investment money, plus the standard verbiage of western liberal economics are not everything, China 101.
Just bizarre.
Too much disconnect in what you wrote in the first place and what you now said you meant. Mental.
Yum China earning calls way back last month was pretty good, we should stick to that.
I wholehartedly agree. This "looking tough on the current competition" thing that every past present and future Western governments do is imo a very tiring bullshit and it only worked the last time due to the USSR's inherent vulnerabilities. It also shows how immature their audience or society in general deep down really is.
I think some restructuring and transfer of funds from central government to local governments for infrastructure was already done this year.
Has any local government defaulted so far? This shows that there is a good management of this in place already.
Did social services stop? Infrastructure spending in China still grew around 5-6% this year. This is quite in line with the current GDP growth too.
Even if the USD is still a global and reserve currency, there is a limit at how much the FED can print and not go into inflation themselves (what the rest of the world can't "absorb").
Especially at the time when they are massively de-risking from the dollar, despite the dollar's high appreciation rates simply due to the geopolitical concerns.
The FED is printing more and more dollar, but the rest of the world is using the fewer and fewer dollars for trade and reserves due to geopolitical concerns.
I'm tired to list those geopolitical reasons but it's mainly due to fear of stupid sanctions (after the Russo-Ukrainian war it exploded), and the whole world is already reacting in some kind of way, with Russia completely re-risking already, and China following closely.
Not to mention that due to the slowing global growth, there would simply be less demands for dollars even if those countries weren't de-risking so much.
Another point is that if the excessive money printing gets into a disbalance with the supply side of the economy suddenly like during Covid, you will have inflation naturally.
Anyways, even if PBOC can't print money at the rate that the US can due to the lower RMB internalization level, I think that it still has the ability to increase money supply quite well due to near-zero inflation. (I don't think this is the best policy, the current price rates are good).
But you forgot about fiscal policy, you think that China can't raise its budget deficit to GDP ratio some more, in 2023 was 3.8%, US for example had 6.2%.
Also, Chinese people also aren't broke and into debt like the US people are, they have highest savings rates in the world. And have tremendous trust in their authorities, you think that they simply couldn't buy more public bonds of various classes if their government tells them suddenly?
It needs to be relative prudent compared to the rest of the world. But let's simplify this, if the US/West debt rises by X, there should also be some kind of creeping rise in China as well by some value just so they don't get left behind in this global competition on all levels.
No, if those companies didn't invest abroad, due to various market reasons it doesn't mean that they've would've invested in China instead.
That capital could've simply stayed unused. The government probably recognized this fact and let them pick profits from outside and build geopolitical clout.
Again, you are looking at economical/political/sociological/geopolitical problems through the lens of a finance guy. You see only one dimension of the much bigger problem. You think all those factors mentioned above can't influence the finance too? Especially in a country like the US whose whole existence is basically determined by their hegemonical geopolitical status and who have historic levels of social indicators and divisions pointing to their impeding collapse judging from history books? And you conveniently look just at the positives even within the finance sector, completely overlooking the various debt levels within that country.
This link addressed the issues between leveling the competition between the state and private enterprises, which already basically happened if we look at the historic data about economic activity generation between these two types of enterprises. SOEs area basically only dealing with sectors related to social wellbeing, national security, and national economic competitiveness like raw material extraction and refinement now.
I was talking about picking "winner" companies from the private sector and going full-on supporting them (by supporting them from the government level in various ways - allowing them to have less competition so they can focus fully, and have bigger margins, for R&D, technologies of the future, exports, instead of pointless price wars with other domestic companies. This is the most powerful developmental model in the world. This is how Germany, Japan, South Korea, the only non-colonial related economic ascensions, rose in the past as well, but then stupidly abandoned this model due to politics).
The other article is too long so I didn't read it, but I guess it explains the same thing - leveling the playfield between state and private companies as two poles, not stopping the support of different highest impact/value companies within two sectors itself, that is a big advantage of China.
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