Chinese Economics Thread

[AndrewS]

Just a little aside. I think the US automotive sales market is actually still slightly bigger than in China. China sells more new vehicles, but when you add in used vehicle sales the US auto market is slightly larger. For example, there were a combined 49.31 million vehicles sold in China while there were a combined 51.4 million vehicles sold in the US for 2023.

This won't last for long though, and I expect that in 2024 the total number of vehicles (new & used) will exceed that of those sold in the US based on growth rates.

I wanted to point this out because just looking at new vehicle sales hides how massive the US used vehicle market is. Estimates put the 2023 used vehicle market sales in the US at 35.9 million. To put that in perspective, that puts used vehicle sales in the US ahead of new vehicle sales in China (30.09 million) for 2023.

Also, this isn't meant as a US is better then China post, but just to put some perspective on the size of the auto markets in each country. With 1.2 billion plus people, eventually Chinese automotive sales will far eclipse those of the US. I think these numbers highlight how much growth potential there could still be.

Used car sales just tell you how often people change cars and how long cars are kept for. Suppose people decide to keep their cars for longer and used car sales decline?

But if you don't like [new vehicle sales] as a metric, you're better off looking at [total number of vehicles] to determine the size of the overall auto market. On that measure, it looks like China is slightly larger in terms of numbers.

 

[manqiangrexue]

China can definitely beat the US in a 1 on 1 on all metrics due to its larger population. Hence why the US ropes in the 5 Eyes, the EU, NATO, and the Quad. But China can also rope in Pakistan, Russia, Iran, ASEAN, the Middle East and Africa.

And due to our better population, which are shown to far outperform average Americans 1 on 1 in all Western academic institutions.

The only difference is China doesn't have formal allies & doesn't put nearly as many if any troops in foreign territory.

LOL There are so many more differences than that it's like playing "spot the difference" between pictures of Scarlett Johansson and Terry Crews.

 

[pmc]

Just a little aside. I think the US automotive sales market is actually still slightly bigger than in China. China sells more new vehicles, but when you add in used vehicle sales the US auto market is slightly larger. For example, there were a combined 49.31 million vehicles sold in China while there were a combined 51.4 million vehicles sold in the US for 2023.

This won't last for long though, and I expect that in 2024 the total number of vehicles (new & used) will exceed that of those sold in the US based on growth rates.

I wanted to point this out because just looking at new vehicle sales hides how massive the US used vehicle market is. Estimates put the 2023 used vehicle market sales in the US at 35.9 million. To put that in perspective, that puts used vehicle sales in the US ahead of new vehicle sales in China (30.09 million) for 2023.

Also, this isn't meant as a US is better then China post, but just to put some perspective on the size of the auto markets in each country. With 1.2 billion plus people, eventually Chinese automotive sales will far eclipse those of the US. I think these numbers highlight how much growth potential there could still be.

you will need to subtract new from used unless the brand of used vehicles is different than what was previously sold in the market. US is not known to importing used vehicles except those 25 years old Japanese in very small quantity. I will also subtract certain trucks that are not really personal vehicles. US auto market is not that big when you consider distance travel and population distribution.

 

[abenomics12345]

For the people who believes that the CPC doesn't care about the stock market and is okay with this rout of the HSI and CSI300:

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会议强调，要进一步健全完善资本市场基础制度，更加注重投融资动态平衡，大力提升上市公司质量和投资价值，加大中长期资金入市力度，增强市场内在稳定性。要加强资本市场监管，对违法违规行为“零容忍”，打造规范透明的市场环境。要采取更加有力有效措施，着力稳市场、稳信心。要增强宏观政策取向一致性，加强政策工具创新和协调配合，巩固和增强经济回升向好态势，促进资本市场平稳健康发展。





(using google translate)

 

[Serb]

For the people who believes that the CPC doesn't care about the stock market:

Please, Log in or Register to view URLs content!

会议强调，要进一步健全完善资本市场基础制度，更加注重投融资动态平衡，大力提升上市公司质量和投资价值，加大中长期资金入市力度，增强市场内在稳定性。要加强资本市场监管，对违法违规行为“零容忍”，打造规范透明的市场环境。要采取更加有力有效措施，着力稳市场、稳信心。要增强宏观政策取向一致性，加强政策工具创新和协调配合，巩固和增强经济回升向好态势，促进资本市场平稳健康发展。



View attachment 124278

(using google translate)

To be honest, there is a limit to how much the central government could actually influence the stock market.

After all, the stock market is famously not rational and mostly led by market participants' feelings, emotions, convictions and speculations (or else you wouldn't have Chinese stocks with such good P/Es priced so relatively low).

If investors (mainly foreign) still remain so braindead in 2024 totally ignoring attractive valuations and corporate earnings, then what can you do.

The CIA starts avalanche of anti-China barrage in their MSM and those supposedly "professional" investors follow it like sheep.

But I think that the Chinese equites bottomed out in general, and with anticipated more loose central policy, this year could see strong returns.

Starting from the end of 2023 we clearly saw some policy trends shifting to really boosting consumption even more.

 

[abenomics12345]

If investors (mainly foreign) still remain so braindead in 2024

Foreigners own ~4% of the A share market. I don't know where you get your 'mainly foreign' idea from.

 

[Serb]

Foreigners own ~4% of the A share market. I don't know where you get your 'mainly foreign' idea from.

But, A share market is 75% of Chinese total equity. Other types of shares are more easily accessible to foreigners. Foreigners probably own the most of B shares for example. There are H-shares and ADRs too.

So, even if foreigners don't hold many A shares, other types they do own more are correlated with them at least up to a certain point, due to potential arbitrage opportunities (not just overall market connections, but many individual companies issue multiple share types). So, foreign sentiment could easily play a role in it.

They could create the initial motion, and then domestic markets follow on instinct. It's not like a 11% downturn couldn't be caused by them.





Here is article confirming exactly what i thought that it's foreign fault:

Over 75% of foreign money invested into Chinese stocks in 2023 has left​

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Stock market is mostly about sentiment, and this could quite shape it easily.

 

[abenomics12345]

There are H-shares and ADRs too.

H-share/ADRs are not considered to be 'domestic'.

arbitrage opportunities (not just overall market connections, but many individual companies issue multiple share types).

There are no arbitrage opportunities between HK and A-share - that is precisely why certain companies have significant differences in valuation - Wuxi Apptec/Hangzhou Tigermed to name a couple.

Over 75% of foreign money invested into Chinese stocks in 2023 has left​

There is a lot of "FT is a good source when it confirms my views and FT is a bad source when it disagrees with my views" vibe here. Specifically, flows do not demonstrate anything about the *make up* and *composition* of investors. Hedge funds looking for a trade of course will have left. You actually have no idea whether the money flowing out in 2023 were the same people who bought in in 2023, of if it was the others.

domestic markets follow on instinct

You may very well believe this, but you've provided zero evidence as to whether domestic investors are driving the bus or whether they are following.

 

[Serb]

H-share/ADRs are not considered to be 'domestic'.

No, but they can influence A shares too.

There are no arbitrage opportunities between HK and A-share - that is precisely why certain companies have significant differences in valuation - Wuxi Apptec/Hangzhou Tigermed to name a couple.

Maybe difference in valuations, but overall similar direction of movement?

You may very well believe this, but you've provided zero evidence as to whether domestic investors are driving the bus or whether they are following.

I didn't provide direct evidence, but I have something to base this view from.

Mainly if we look at foreign vs Chinese media representation of Chinese economy throughout this year.

Here, I correct my statement: To me personally it looks like it is initially caused by foreigners.

 

[abenomics12345]

Maybe difference in valuations, but overall similar direction of movement?

By definition, if the same shares listed on HKEX vs. NYSE tracked each other's movement exactly, there would be zero difference in valuation. That there is a difference in valuation is the *result* of cumulative impact of stocks' daily trading that did not match. As is the case with US Listed ADRs and their HK Listed trackers - there is virtually perfect arbitrage between HK/US.

And by the way, in general A shares trade at *substantial* premium to HK listed entities.

You are correct in suggesting that foreigners are more negative - and this is precisely why HK is at a discount.

However, due to the fact that foreign ownership in A-share is so low, foreign shareholders have extremely limited influence in how the domestic A-share trade - so your argument that 'foreign media and foreign shareholders are behind this' does not explain why the CSI300 is tanking.

No, but they can influence A shares too.

Again, there is no clear evidence of independent/dependent variable.

Mainly if we look at foreign vs Chinese media representation of Chinese economy throughout this year.

The media in China is directed by the Party's Propaganda Department - is it so hard to believe that they would *always* say good things and sweep bad things under the rug? Again, the lack of evidence of the Chinese media saying bad things is not the evidence for the lack of bad things.