Chinese Economics Thread

[hereforsemithread]

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。



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(using google translate)

What party leaders say and what they actually think are not always the same, in fact they very often are not.
The central government has given out statement after statement about its desire for stability in the real estate market, and yet has done nothing to increase the ability of developers to roll over their massive debt piles despite having more than enough capability to do so.
Of course the premier is going to claim a desire for stability in valuations, but whether he actually means that should be measured by what MOF and the PBOC do about it. If they do nothing, then chances are he doesn't.

 

[FriedRiceNSpice]

China has nearly free healthcare, education, transportation, various utilities, and other parts of infrastructure. Way cheaper manufactured products, way better distribution of wealth, etc.

For example, I don't doubt that the Chinese middle class is already wealthier than the US middle class, not just more numerous. That is because most of US paper wealth goes to oligarchs and upper-class asset holders.

For example, half of us US population has a net worth of less than 15k. US citizens have the highest debt rates in the world, while Chinese have the highest savings in the world.

The top 10% of the US hold 66.6% of all wealth in the US, and the bottom 50% hold around 2.6% of total wealth in the US. So, average people get distributed less of the total US GDP number than in China.

So yeah, the gist is that China's market is pretty hot right now because of this thriving middle class who are ready and able to spend, unlike the situation in the US where the wealth is more top-heavy.

Although the problem has not become as severe as in the US, wealth distribution in China leads much to be desired. Although the level of inequality in wealth distribution has leveled off in the past few years, the general trend over the past 4 decades has been in the wrong direction. In terms of GINI coefficient, China is only slightly ahead of the US and significantly behind South Korea and Japan. Rapidly increasing wages and wealth creation from real estate has for the most part staved off any negative societal and economic consequences from inequitable wealth distribution. However, moving into the future, with wage growth slowing and the real estate market already tapped, distribution of wealth will become an ever more important issue.

 

[Serb]

Although the problem has not become as severe as in the US, wealth distribution in China leads much to be desired. Although the level of inequality in wealth distribution has leveled off in the past few years, the general trend over the past 4 decades has been in the wrong direction. In terms of GINI coefficient, China is only slightly ahead of the US and significantly behind South Korea and Japan. Rapidly increasing wages and wealth creation from real estate has for the most part staved off any negative societal and economic consequences from inequitable wealth distribution. However, moving into the future, with wage growth slowing and the real estate market already tapped, distribution of wealth will become an ever more important issue.

China has good "software" for great and equal wealth distribution (socialism) in places that are already urbanized and relatively economically prosperous. It is not a class problem, but more so geographical - an urban/rural(still close to 500 million people), and inner/coastal problem.

China's inequality is not a structural problem like in the US, but more so of a "catching up" problem. After all, economically China is still in its nascent stages relative to its absolute potential and it started rising this much only a few decades ago (so not every geographical area managed to get its share of the pie yet due to scarcity of developmental opportunities, and urbanization rate is only 66%, it all needs time to happen).

China still has 120% economy in GDP PPP (at least officially) of the US, but 425% of its population. But once China realizes its full potential in a few decades, its Gini Index will naturally climb up to become one of the best-rated in the entire world. (If they had a US population, they would've had an impeccable Gini Index already). No amount of state policy could speed this up, only time, urbanization, and economic growth.

It's already pretty amazing what level of general equality China managed to achieve with this many people and this kind of a gigantic base.
Those people who are already considered middle class, are mostly in large coastal cities, in which they have better wealth distributions than the US general population, or else they wouldn't have become the middle class, in these numbers, at all, if the country followed the US "model".

 

[Biscuits]

For conservative purposes, it is better to stick to gdp rather than speculative measures even if the latter has more real world proof behind it.

Still, the idea that US would somehow have surpassed China because it has a bigger stock market is extremely laughable. Do coping westerners even realize that different stock markets can be a different proportion of the whole economy? Your stock market that is say 50% of your economy surpassing someone else's stock market that is say 3% of their economy is not the flex you think it is.

 

[donjasjit]

China has good "software" for great and equal wealth distribution (socialism) in places that are already urbanized and relatively economically prosperous. It is not a class problem, but more so geographical - an urban/rural(still close to 500 million people), and inner/coastal problem.

China's inequality is not a structural problem like in the US, but more so of a "catching up" problem. After all, economically China is still in its nascent stages relative to its absolute potential and it started rising this much only a few decades ago (so not every geographical area managed to get its share of the pie yet due to scarcity of developmental opportunities, and urbanization rate is only 66%, it all needs time to happen).

China still has 120% economy in GDP PPP (at least officially) of the US, but 425% of its population. But once China realizes its full potential in a few decades, its Gini Index will naturally climb up to become one of the best-rated in the entire world. (If they had a US population, they would've had an impeccable Gini Index already). No amount of state policy could speed this up, only time, urbanization, and economic growth.

It's already pretty amazing what level of general equality China managed to achieve with this many people and this kind of a gigantic base.
Those people who are already considered middle class, are mostly in large coastal cities, in which they have better wealth distributions than the US general population, or else they wouldn't have become the middle class, in these numbers, at all, if the country followed the US "model".

All these millions in the rural areas will migrate to urban areas. This will not only prop up the property market but also help in keeping labor costs down in the highly competitive manufacturing sector.

In Japan and Korea(most similar to China, culturally and economically), the urbanization rate is nearly 90%

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China’s urbanization rate is only 66 %.

So, there is huge potential for millions of people to migrate from low paying jobs in rural areas to higher paying jobs in urban areas. This will boost the overall economy.

In fact, this is one of the main reasons why China is unlikely to suffer a prolonged deflation like Japan which many western commentators are predicting. Japan had an urbanization rate of around 80% by 1995, the high point of Japan’s economy.

 

[BrokeGambler]

ell, strange enough CCP seems not taking into account the experts' opinion that stocks don't matter much but rather western likes

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and now in panic mode without any coordination with yesterday PBOC leaving-prime-rates-unchanged-descision is weighing on $278 bln rescue plan. Which of course is too little too late and will be probably served with more futile attempts to restrict short selling and more purges, aka corruption cases. I suppose this is irrelevant for the majority here who neither own stocks nor real estates but obviously not for all Chinese and above all not for CCP. And GDP is bigger than in USA but maybe there is less efficiency, like more electricity is used in older semi technology rather than 2-4 nm which doesn't lead to productivity gains, etc.

 

[FairAndUnbiased]

ell, strange enough CCP seems not taking into account the experts' opinion that stocks don't matter much but rather western likes

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and now in panic mode without any coordination with yesterday PBOC leaving-prime-rates-unchanged-descision is weighing on $278 bln rescue plan. Which of course is too little too late and will be probably served with more futile attempts to restrict short selling and more purges, aka corruption cases. I suppose this is irrelevant for the majority here who neither own stocks nor real estates but obviously not for all Chinese and above all not for CCP. And GDP is bigger than in USA but maybe there is less efficiency, like more electricity is used in older semi technology rather than 2-4 nm which doesn't lead to productivity gains, etc.

EVs are extremely electricity intensive. A single electric car can power a home for a week. China has more EVs.

 

[BrokeGambler]

EVs are extremely electricity intensive. A single electric car can power a home for a week. China has more EVs.

Thanks for the information, I didn't know that. Just wanted to say there are many reasons for high electricity usage besides GDP increase which of course doesn't mean that China GDP is not bigger. I think it is and there are many overprices services in the West and inefficient funds. But if the Chinese financial situation gets out of control the big GDP ain't be for long. And all the macro can change in a moment if the political stability is destroyed and I don't think that everyone is that calm and optimistic in China as in this forum. This explains the situation well (using the same site cause I saw they placed an updated article on China since my last quote)

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[Arij Javaid]

Xi has plans to develop china's financial sector however it's clear that china has primarily prioritized industrial sector more and cares far more about real economy.

After all, the values of socialism isn't rely friendly with stock market model.

 

[Chevalier]

Xi has plans to develop china's financial sector however it's clear that china has primarily prioritized industrial sector more and cares far more about real economy.

After all, the values of socialism isn't rely friendly with stock market model.

Financial sector isn’t just cosplaying wolf of Wall Street or Charlie sheen, it’s also insurance ~ and that’s an area China can and should muscle London out of the way, especially Lloyd’s when it comes to insurance pricing, for their part in the Opium wars and slavery.
finance is also wealth and asset management for the Chinese middle aged and soon to be retirees who don’t just want to rely on the Chinese pension and in fact, wealth management could alleviate government budgets when it comes to pensions. In fact, I have high confidence that Chinese finance will be much more principled and adept at wealth building than say Jewish finance which relies on abusing its workers ahem KPMG, Goldman Sachs, Ernst & Young etc