"DeEpEsT HoUsInG BuBbLe cRaSh eVeR in the world in 2014/2015"
I'm sorry but I have to repost this again.
Imagine reading this chart and thinking that 2014/2015 was 'the worst ever'.
Like, seriously.
Chinese Economics Thread
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"DeEpEsT HoUsInG BuBbLe cRaSh eVeR in the world in 2014/2015"
I'm sorry but I have to repost this again.
Imagine reading this chart and thinking that 2014/2015 was 'the worst ever'.
Like, seriously.
Initial conditions matter given the chaotic nature (uncontrolled system) of the economy. Had we not had the lockdowns in 2022 (which *really* sapped confidence - businesses/consumers alike - people on the ground were of the view that the government did not care about the economy), we would be looking at a different situation - in that case I would be arguing against any change to the current actions.
As a counterfactual, if consumption growth was say 10% in 2023 and running at 6% in 2024 (as opposed to 7.6% and 3.5%), that's a trillion+ delta which would be additive to GDP, and without this deflationary pressure (meaning deflator is positive, and not negative).
There are those who would argue that consumer confidence would've come down anyways with real estate prices coming down, but a slower (as opposed to an immediate) grind down would've been easier to manage.
Given that you can't dial back time on Covid lockdown failures in 2022 and the drastic negative impact of 2022, you cannot simply stick to the original plan and pretend everything is on track.
Based on the "toothpaste squeeze" of easing measures, I am of the view that regulators look like they do not have a credible long term plan and the policymakers are behind the curve (if not shellshocked) - even if they did have a plan.
Had there been stimulus in early 2023 (Jan-March consumption data was extremely strong - baijiu was growing at 25% during the CNY in 2023), you likely would've erased any doubt that 'the government didn't care about growth'.
The longer they wait, the bigger the eventual stimulus would need to be. I'd say we have about 18-24 month before we run out of policy room to reverse this debt-deflation loop.
Put in other words, this would've likely been fixed with:
- 1.4 trln package (1000 RMB per person as a "Thank you for doing your part to help us combat the pandemic" dividend) in early 2023
- 2-3 trln package in to bail out real estate in early 2024
- 7-10 trln package today that would need to do both of the above + do more on social security.
Note, this isn't to say that technological improvements won't keep happening - but there is a point after which an entire generation's mindset will have been set - esp. with respect to their habits. As an extreme scenario, the economy does not very work well when everyone wants to save 1 or 2mln RMB and lie flat in Lijiang. (even though that isn't a bad life)
And look my final point is, I really hope I'm wrong about my worries here.
I'd rather look like a fool here and be wrong and this works out w/o a major hitch - because I've got a lot more to gain in my real life if that happened. But hope has never been a strategy.
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proelite
Junior Member
What about 100 billion package, 500 billion package, and 1 trillion package?
The economy is 125 trln - those won't work just as a Bandaid would not work when your artery is broken.
Why is broad based stimulus good, targeted stimulus towards housing better, targeted stimulus towards strategic industry bad?
And why does it look suspiciously like any stimulus benefiting existing capitalists and rich good, stimulus benefiting scientists and engineers in strategic industries bad?
If all that matters is money being spent why is spending on machine tools, chemicals and semiconductor equipment any worse than hotels or luxury watches?
Is social security in China funded by the central government or local government?
Well presumably, because targeted stimulus only targets limited sections of society, and when you target an "industry" rather than "people", the people being stimulated are those who own the company, not really those who work it.
Well presumably, because targeted stimulus only targets limited sections of society, and when you target an "industry" rather than "people", the people being stimulated are those who own the company, not really those who work it.
proelite
Junior Member
The best way for China to boost consumption is by getting rid of regulations that impede consumption, like visa-free travel for tourists, removing censorship in media, allowing foreign companies more market access, providing guaranteed housing, and creating more stable jobs.
The people are paid wages. These wages would otherwise not be paid because their employer was destroyed by foreign competition and sanctions.
Then they'd have to work as fast food drivers or Bilibili streamers instead of technicians, scientists and engineers, wasting the embedded value of 2, up to 10 years of schooling and uncountable years of experience.
That's the India trap. India even has PhDs applying to government janitorial jobs because high tech jobs they trained for do not exist. That's what happens if you allow strategic industries to be destroyed.
In fact China fell into this trap before. 做导弹不如做茶叶蛋 was a rallying cry in 1989. Hmm.
What was scary back then is how fast prices were coming down and from how high and worst of all who owned those investment."DeEpEsT HoUsInG BuBbLe cRaSh eVeR in the world in 2014/2015"
I'm sorry but I have to repost this again.
Imagine reading this chart and thinking that 2014/2015 was 'the worst ever'.
Like, seriously.
it could have bring the entire China banking system down, in fact that was the narrative in the West, pretty much akin to the 2005 US housing bubble and subsequent mortgage crisis that almost bring a economic depression. Due is bubbly nature China Housing sector was pretty speculative in nature, pretty much like the stock market, a lot was owned by shadowish financial institutions in both housing as investment and housing debt, there was a lot of panic in China in 2014, I think there was massive stimulus back then.
I think what people are seeing more today is the market digesting the excesses itself, is too early to tell, but I think at the end of the day market prices are going to stabilize, probably not as high 2017, 1% or 2% and people will get accustomed but I think in 10 years in the future a young 20 year old would be able to buy an apartment or a house for a reasonable price for his wife and kids. That if the Chinese government not launch a bazooka stimulus and push prices to double in a single year.
I have never argued against spending money on basic research. Also, like who died and made you the normative arbiter of what's waste and not waste? By this logic, you wasting time on this forum shitposting is also a waste of time? How are you allowing yourself to do this and not learning how to cure cancer?
In fact this is the exact dumb rationale that shut down the AAA gaming scene in China - and therefore GPUs were never deemed to be a national priority.
Look at the best 'hard tech' companies coming out of China - Huawei, United Imaging, Inovance, BYD, CATL - which one of those are government owned/operated?
Given that you raised the point about benefiting the rich - are you suggesting that the billionaire founders of these companies (Ren Zhengfei, Xue Min, Zhu Xinming, Wang Chuanfu, Zeng Yuqun) wouldn't benefit from your so called 'stimulus to the engineers'?
On your last point, if you are of the view that the government should decide what people want or not want to buy you should live in North Korea - or if you have a time machine, the USSR.
Oh this is a long story, but it depends. And this is something that has to get worked out.
I'm not sure about the media, but the visa-free travel has been the best policy decision in 2023/2024 - and much more effective than the stupid Confucius Institutes at promoting what China is like.
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