Chinese Economics Thread

[HighGround]

It is a reasonable assessment because it touched on the generational shift that is going on in China.

This is the furthest thing from burying one's head in the sand.

They've actively popped the RE bubble. They've actively and massively moved investment from RE to a plethora of high value sectors.

I don't think "actively popped" is accurate. I doubt China wanted Evergrande to implode. If I'm reading the news correctly (or having it translated correctly), China's initial policy was to curb over-leveraging and they were hoping that the RE companies would take the hint and start de-leveraging themselves.

The ideal situation would be that everyone would de-leverage themselves successfully and RE companies would massively scale down their ambitions.

 

[supercat]

In dollar terms, for the first 8 months, China's export grew 4.6% year-over-year, while imports grew 2.5% yoy. China's trade surplus for the first 8 months is $608.5 billion, which is equivalent to an annual rate of $912 billion.

https://twitter.com/i/web/status/1833342526247604346

ASEAN is China's largest trading partner now.

https://twitter.com/i/web/status/1833356731050549501

China sold 18.766 million passenger vehicles in the first 8 month, an annualized rate of 28.1 million units. It's a 3% growth yoy.

https://twitter.com/i/web/status/1833412165824614584

 

[GiantPanda]

I don't think "actively popped" is accurate. I doubt China wanted Evergrande to implode. If I'm reading the news correctly (or having it translated correctly), China's initial policy was to curb over-leveraging and they were hoping that the RE companies would take the hint and start de-leveraging themselves.

The ideal situation would be that everyone would de-leverage themselves successfully and RE companies would massively scale down their ambitions.

No, it was actively popped. This whole episode began with the three red lines in 2020 that dictated banks cannot lend to developers with high thresholds of debt to equity, to cash and to assets. Everyone knew exactly how those they would impact Evergrande and other developers adversely since they were all highly and dangerously overleveraged.

There was no time to de-leverage by 2020. The banks simply stopped lending to the developers and forcing them to reform or die. Warnings and hints had been around for years and they had not listened. They thought they were too big and too important for the government to allow them to fail.

No wanted Evergrande to die but no one could have seen any other outcome when the Three Redlines were put into place. This was deliberate action to pop a bubble in 2020.

 

[henrik]

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Primary listing of Alibaba in Hong Kong would boost more ipos in the Hong Kong market.

 

[supersnoop]

It is a reasonable assessment because it touched on the generational shift that is going on in China.

This is the furthest thing from burying one's head in the sand.

They've actively popped the RE bubble. They've actively and massively moved investment from RE to a plethora of high value sectors.

I've said this over and over. The dividends from this shift to high end research, development AND manufacturing away from RE have not yet arrived.

But at the same time China has still managed growth and from what increase in electricity demand tells us, it is still pretty fast growth in the real economy at that.

Again, insisting that China is "doing nothing" is nothing but silly code term for idiots and more malign actors saying " we do not see short-term stimulus."

There is no greater change, no greater transition going on in the world right now than what we see in China.

I don't think that the government is burying their head in the sand for sure. I think they are still measuring up how things will play out. Right now the effects are fairly soft, this is why I think people in this thread aren't too concerned. That being said, there are many financial indicators as others point out that are not great.

The other thing I sense, I think people are pooping on financialization a bit too much, like "the stock market doesn't matter" etc. One of the reasons why the US economy can basically ride on value-add vs. hard goods is that the flow of capital is really efficient. Only the HK stock market is good at measuring company value and even then, it is more focused on attracting foreign investment. That being said, as you mention, this is a bit of a generational shift being as the stock market is decades old vs. centuries in the west.

 

[tphuang]

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Cainiao is now building up second batch of global eHub and it's deploying L4 delivery vehicles.

 

[BoraTas]

I don't think "actively popped" is accurate. I doubt China wanted Evergrande to implode. If I'm reading the news correctly (or having it translated correctly), China's initial policy was to curb over-leveraging and they were hoping that the RE companies would take the hint and start de-leveraging themselves.

The ideal situation would be that everyone would de-leverage themselves successfully and RE companies would massively scale down their ambitions.

I too believe they wanted a softer landing for the real estate sector. The global economy didn't rebound from the pandemic as fast as people hoped. China wouldn't be alone among the countries which overestimated how well the global economy would be in 2022-2025 period.

 

[FairAndUnbiased]

I don't think that the government is burying their head in the sand for sure. I think they are still measuring up how things will play out. Right now the effects are fairly soft, this is why I think people in this thread aren't too concerned. That being said, there are many financial indicators as others point out that are not great.

The other thing I sense, I think people are pooping on financialization a bit too much, like "the stock market doesn't matter" etc. One of the reasons why the US economy can basically ride on value-add vs. hard goods is that the flow of capital is really efficient. Only the HK stock market is good at measuring company value and even then, it is more focused on attracting foreign investment. That being said, as you mention, this is a bit of a generational shift being as the stock market is decades old vs. centuries in the wewest.

The reason their stock market is even viable is because they can force a significant fraction of the global population to invest at gunpoint, either directly or via the threat of poverty in old age without a national pension system.

It's not age alone. France and Netherlands have some of the oldest stock markets in the world.

 

[Wrought]

I don't think "actively popped" is accurate. I doubt China wanted Evergrande to implode. If I'm reading the news correctly (or having it translated correctly), China's initial policy was to curb over-leveraging and they were hoping that the RE companies would take the hint and start de-leveraging themselves.

The ideal situation would be that everyone would de-leverage themselves successfully and RE companies would massively scale down their ambitions.

How many years have we heard 房住不炒? The real estate big shots were warned many times. They thought they were too big to fail, that the government was just bluffing and would never squeeze them. Even today you still hear some people calling for bailouts.

Yes it's painful, but that doesn't make it any less necessary.

 

[lube]

The reason their stock market is even viable is because they can force a significant fraction of the global population to invest at gunpoint, either directly or via the threat of poverty in old age without a national pension system.

It's not age alone. France and Netherlands have some of the oldest stock markets in the world.

People commenting on stock market = strength of economy, human capital, tech frontier, whatever probably weren't even born, or aware of US stock market performance in the 2000s..... when they had the same advantages.

We will see another stretch of poor stock market performance and correction in the future, predicting when however is a good way to gamble away your money.

Only tech-bros, crypto-bros and nationalists are saying this time is different.

For China though, if we have less stock market speculation and more people parking money in high-dividend stocks/index funds etc. That would help transition away from real estate.