Chinese Economics Thread

[GiantPanda]

PBoC wading into equity is nothing new. They have done it before in 2015 sell off, about similar size, though the delivery mechanism was only through csf. Pan Gongsheng was already there in those times.

Nowhere as much as the "Quantitative Easing" from 2008 to 2022:


If people think China can and should pump $8T into its market to make it "better" then I can tell you it is far better to put those trillions as government bank loans to chips, EV, aircraft factories and the like -- as China is doing now.

Far more direct and far less likely for the wealthy class to cash out and smuggle out to convert into real estate in Vancouver, San Fran or Sydney.

Don't use the US stock market as an example for China or any other country outside the West.

 

[henrik]

Nowhere as much as the "Quantitative Easing" from 2008 to 2022:
View attachment 136550

If people think China can and should pump $8T into its market to make it "better" then I can tell you it is far better to put those trillions as government bank loans to chips, EV, aircraft factories and the like -- as China is doing now.

Far more direct and far less likely for the wealthy class to cash out and smuggle out to convert into real estate in Vancouver, San Fran or Sydney.

Don't use the US stock market as an example for China or any other country outside the West.

Pumping $8T into the economy is going to increase inflation. The way China is doing it does not really create more money. They are just using mostly existing money.

 

[fatzergling]

Pumping $8T into the economy is going to increase inflation. The way China is doing it does not really create more money. They are just using mostly existing money.

The Fed doesn't buy commodities or goods, but financial assets. Inflation in the US is relatively unaffected because the extra money is not flowing into the consumer goods economy. The asset economy, however, has seen significant asset appreciation due to the influx of Fed inflation. Additionally, asset appreciation does not show up in the CPI giving the illusion of stable inflation in both the asset economy and the consumer goods economy. The thing to watch out for is if there is a massive sellout on the asset economy to spend on consumer goods, which would undoubtedly spike inflation.

 

[horse]

Billionaire investor David Tepper on China: Central bank comments 'exceeded expectations'

Sep 26, 2024

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Okay, I think I should make a half-assed comment on this video, and not a full-assed comment.

This is what I learned over the years.

When it comes to money, listen to what rich people have to say.

There is a reason why they are rich, and stay rich.

Furthermore, anyone rich has something to lose, so they more fully have their attention on such matters regarding the market.

If they are Jewish, that probably is even better.

Tepper spoke with a Brooklyn accent I think.

 

[Michaelsinodef]

https://twitter.com/i/web/status/1839715024832811009

Also this post

https://twitter.com/i/web/status/1839676615988551772

 

[mossen]

If you compare Chinese investment ratios with their East Asian peers, then China reached levels far above what Korea or Japan used to have even at their peaks. Moreover, China held investment rates at those high levels for much longer. Some of that had very good side effects, such as a huge HSR network and metro systems in almost every major city. But a lot of that became increasingly wasteful and even speculative (e.g. housing during the 2010s).

The metric often used to look at capital efficiency is the ICOR: Investment Capital-Output Ratio. The lower the number is, the better it is. China is at around 8. That means China needs to invest 8 percentage points of GDP to get 1% of GDP growth. The US is at 10 and Germany is at 40(!). Some of this is just due to the Covid and Ukraine crisis which hit Germany worse. So at first blush, China doesn't really waste much investment. But the other way to see efficiency is how much growth you can get without large increases in debt. And on that count, China has been showing a less sanguine side.



China's public debt will soon have a profile of an advanced economy but with a per capita GDP far lower. The upshot is that private debt has stopped increasing in recent years, particularly household debt.

 

[gelgoog]

Most of the debt is internal so it doesn't matter much. The government controls the banking sector and has several ways to make it go away if they want to.

 

[ren0312]

..............

 

[Michaelsinodef]

Most of the debt is internal so it doesn't matter much. The government controls the banking sector and has several ways to make it go away if they want to.

Not to mention that a lot of it is backed by hard assets.

While a lot of the debt for western economies isn't.

 

[Chish]

Yeah, that is what I believe, what Prof Micheal Hudson talks about.

It is FIRE, which stands for finance, insurance, real estate.

A few years ago, after accumulating a lot of capital over the decades, the Chinese real estate market was the biggest single asset class in the entire world.

The E in FIRE is for Entertainment which includes sports. Hollywood, Disney, gaming companies, Music, NBA, American football, etc contribute billions to the GDP.