Chinese Economics Thread

[zgx09t]

The problem here is that sketchy Chinese companies link up with corrupt Chinese officials - and are often the same people. The notion that the corruption problem has been cleaned up after Xi is not true - as shown by the latest CCDI documentaries. At this point a serious question that needs to be asked is, can this be accomplished? If not, then is there even a point to try and rat out everything. What is an acceptable level of corruption?

The US doesn't have corruption because it's all legalized and operationalized.

Before anyone brings 'buh Singapore' - that's a citystate the size of Chaoyang district, not exactly comparable.



The PBoC is cutting rates and RRR to.....cool an overheating economy. Keep coping bro.



This is a lot of "foreign investors are good long term value investors whereas domestic investors are speculators" energy.

Where's your domestic confidence now?

Oh medicare drug price gouging and the freedom loving stinking congress? Remember this guy, congressman Kurt Schrader? Casualty of inflation reduction act and he jumped right into big pharma lobby, his long time donors all along. That level of legalized and operationalized corruption is world class and something to be desired.

Na, China would better fight the corruption war forever.

RRR got 50 bps cut from Feb 5. Still got 10%. So what about it?
It's a perfect move, not too much not too little, just about RBM 1T into the system, given the new year activities and priming for onshore bonds.

confidence? that's a funny way of saying stock valuation my foot.

 

[zgx09t]

As I've made extremely clear, the *future* growth of the Chinese economy, as predicated by the goal of common prosperity, is contingent on a well functioning capital market. For someone who claims to have made money in the stock market, you don't seem to understand that the past is not necessarily indicative of the future.



I am talking about primary source document, not some third party interpretation that may or may not be unreliable. Where did you get that from? Come on dude - do better.



If you actually did some work on this, the 4 trln RMB in 2008 stimulus was a underestimation of the actual fiscal impulse by historic proportions. The LGFV problem we have today was created in the aftermath of 2008.

In 2015, the shanty-town renovation drove another dose of fiscal impulse that flowed through.

Rather than me doing all the work, why don't you do some work and tell me what China's Debt/GDP was in 2008 and 2015? What is it today in 2024?

Consolidating power into one umbrella =/= that the bureaucracy is better run.

The gaming regulation fiasco in Dec 2023 was *plenty* evidence that they have significant coordination problems.

GDP and its growth are not everything. Certainly GDP doesn't necessarily equal prosperity, or well being of society at large.

How did they grow GDP up in US? Remember this 2020 Rand study?

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That's not counting Big pharma price gouging in trillions , a useless dead weight, none the less in GDP.
No wonder Trump phenomenon is gripping the country, no doubt more will come.
China, in contrast, is going slow, focusing now on quality, meaning equality, not growth itself.
That's something to notice, don't you think?

As long as China hitting 4.5% minimum for next 4 - 5 years, she will be graduating to a new economy, outgrow everyone for the longest time sustainably and equitably. US? That 50 T will become 100 T and it will be Trumpland. Win win.

 

[abenomics12345]

Yes LGFVs played a major role in the 2008 stimulus. They were set up and owned by local governments, injected with land owned by local governments, and then used that land as collateral to take out loans from banks owned by local governments (or the cg). Every step of the way state power and control was involved, and by extension that of the party.

This experience is proof that the party can exert very powerful control over the economy when it wants to, which is exactly to the contrary of what you claimed. And yes it caused problems,

There was so much power and control involved that.....this is now the biggest problem on the Central Government's hands. Yes, they have so much control that this debt pile is exactly what they planned for. Got it. You're making a lot of sense here.

they could prop up stocks, but only at the cost of other social/economic goals, chief among them deflating the real estate bubble, since any kind of sustained support for the stock market from the cg would require a substantial monetary expansion, which would fuel the exact cancer they're in the middle of debriding.

Aren't you arguing that they have total control and influence? How can there be any constraints?

There are many ways to deleverage a debt bubble - namely - you can pay down the debt; or you can grow the equity and deleverage by growing yourself out of it.

In the US stock market, 95% of the wealth created is diverted to 1% of the population.

"the US concentration of wealth is bad so it be the stock market's problem" is your line of reasoning - is it *maaaybe* possible that share ownership of companies can be maybe allocated to the employees based on merit so that there isn't such concentration like the US? /shock

So that when companies do well and pay dividends, employees (common) also gets to participate in the profits (prosperity). Or you know, that large stakes of SOEs held at governments gets transferred to the Social Security or Healthcare Insurance so that everyone's (common) retirement is taken care of (prosperity)? /shock

Seriously people, read Huang Qifan's book - the guy wasn't on the 3rd plenum of the 18th party congress planning committee for no reason.

Na, China would better fight the corruption war forever.

To be clear I am not saying that the US model is good if there was any confusion on your part. But my point is, cutting your nose to spite your face is not a winning strategy.

Exhibit A:

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The former CCDI Secretary of the ICBC was indicted recently for being....a non-Chinese citizen and the alphabet soup of crimes. Most incredulously, he was leading a committee for inspection work as recently as 2015. Not exactly confidence inspiring when the people running the anti-corruption process are.....as corrupt as he was.

RRR got 50 bps cut from Feb 5. Still got 10%. So what about it?

It is deeply unserious if you are suggesting PBoC can cut RRR to zero.

 

[FriedRiceNSpice]

"the US concentration of wealth is bad so it be the stock market's problem" is your line of reasoning - is it *maaaybe* possible that share ownership of companies can be maybe allocated to the employees based on merit so that there isn't such concentration like the US? /shock

So that when companies do well and pay dividends, employees (common) also gets to participate in the profits (prosperity). Or you know, that large stakes of SOEs held at governments gets transferred to the Social Security or Healthcare Insurance so that everyone's (common) retirement is taken care of (prosperity)? /shock

Seriously people, read Huang Qifan's book - the guy wasn't on the 3rd plenum of the 18th party congress planning committee for no reason.

You mean devising a model for capital markets to serve as a means of wealth creation where wealth is more evenly distributed than in the US model? Sounds like exactly what I was arguing for. In theory distributing shares to employees sounds like a good idea. But in the US equity grants have just become an excuse to pay lower cash salaries, since equity grants are considered part of the total compensation. As a result, companies can pay low salaries by using stock options / RSUs to make up the bulk of the total compensation. So giving shares is not like an "extra" on top of salary - it reduces the amount of real cash companies need to pay to employees.

 

[Randomuser]

The last 2 days or something the Hang Seng Index/CSI 300 have gone back up. Just a temp bump or will there be more action to be taken to keep it up? Hard to know in such a short time frame

 

[mossen]

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• Clean-energy investment rose 40% year-on-year to 6.3tn yuan ($890bn), with the growth accounting for all of the investment growth across the Chinese economy in 2023.
• China’s $890bn investment in clean-energy sectors is almost as large as total global investments in fossil fuel supply in 2023 – and similar to the GDP of Switzerland or Turkey.
• Including the value of production, clean-energy sectors contributed 11.4tn yuan ($1.6tn) to the Chinese economy in 2023, up 30% year-on-year.
• Clean-energy sectors, as a result, were the largest driver of China’ economic growth overall, accounting for 40% of the expansion of GDP in 2023.
• Without the growth from clean-energy sectors, China’s GDP would have missed the government’s growth target of “around 5%”, rising by only 3.0% instead of 5.2%.

A good example of how you can combine doing the right thing for the climate with economic prosperity. It's not a trade-off!

 

[BrokeGambler]

US printed out $12T of quantitative easing to fix post-Lehman Bros. It handed out free cash at the tune of $4T for COVID.

And how exactly did US "print" those $12T? There are differences between Lehman QE vs recent COVID programs and government spending where only the latter could qualify as printing. Apart from that fed is currently reducing its balance sheet and at present there are no easy monetary conditions in contrast to COVID times. Yes, there are ridiculous US deficits and government spending but it's not solely US problem and different from post-Lehman times which you have mentioned.

China can't do better than a measily $278B stock QE if it wanted to? Nope, China doesn't want to because it is not existential.

Yes they can, but is this really so simple? Or are there some other inconveniences which everyone here tends to associate only with us:

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In the moment when the US has more and more historical record-breaking debt levels by year, month, day,

Their bonds are less and less attractive.

And this sounds not like a "moment" but the opposite - a long process. How long is anyone's guess. And apart from few auctions with larger tails there is no indication of less attractiveness in us bonds. Which really surprises me because after China cannot afford (and maybe don't want) to accumulate more I'm not sure who will. Doubt to be Japan.

The US simply has higher interest rates, indicating the worse situation of their economy. Really bad treasury auctions during the past year.

In major economies higher interest rates indicates the opposite (unless they go really high which would be inflationary). Higher rates mean capital is allocated into the economy, economy growth is projected and rates must compete with rising capital cost. But now EU is heading into recession and probably US and then rates will go down which would mean the economy cools. And that's why FED will cut as well. So actually it's the opposite of what you think regarding rates.

And again, where are the "bad treasury actions"? (and i don't mean single events which always have been occurring like sept 2022)

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[resistance]

Again, population decline is actually a good thing now if china doesn't expand their territory. 98 percent automated.

https://twitter.com/i/web/status/1750125873359958390

 

[abenomics12345]

In theory distributing shares to employees sounds like a good idea. But in the US equity grants have just become an excuse to pay lower cash salaries, since equity grants are considered part of the total compensation. As a result, companies can pay low salaries by using stock options / RSUs to make up the bulk of the total compensation. So giving shares is not like an "extra" on top of salary - it reduces the amount of real cash companies need to pay to employees.

Is there any data to back up your claims?

 

[GiantPanda]

The last 2 days or something the Hang Seng Index/CSI 300 have gone back up. Just a temp bump or will there be more action to be taken to keep it up? Hard to know in such a short time frame

It went up from the rumors of a possible $278B stocks rescue plan.