Chinese Economics Thread

[Awenumick]

As a review of 2024 expectations from Jan as we head into December - here is how my estimates looked. Most importantly, I was very much on the point with respect to the key questions I asked. As well, some of these questions remain very relevant as we head into 2025.

GDP Growth in 2024
As the first 3Q came out to 4.8% and for all intents and purposes Q4 is looking to be running ahead of Q3 (which was 4.6%), I think it is with very high likelihood that GDP growth for 2024 will be anywhere between 4.8% to 5.0% - call it 4.9% for simplicity sake. Which is firmly within the 'around 5%' target set in March. However, we were likely looking at 4.6% growth in 2024 had the pivot in 9.24/9.26 not happened. Which, as I initially said - 2024 GDP growth was going to be highly dependent on stimulus efforts.

How much additional central government bonds will they issue?
They issued 1 trillion of long term special purpose central government bonds - I expect this to continue into 2025 with a minimum of 1trln (possibly 2trln). This is something to watch closely going into 2025.

Where are they on solving LGFV issues?
With the NPC Meeting announcement in November - we have a very good start at solving the local government debt issues - with a 6+4+2 trillion RMB plan over the next 3-5 years at removing some 12 trillion (of the ~60 trillion) of so called 'platform debt'. This should significantly improve liquidity at local government levels.

What about urban village renovation?
The MoHURD announced an initial round of 1 million units (initially targeted at 35 top cities but expanded to 300 cities). This initial 1 million units would've been sufficient in addressing the inventory issues in the top 35 cities but would not be nearly enough for 300 cities. This is something to watch closely going into 2025.

When will the 3rd plenum happen? What comprehensive reforms will they announce as part of that?
July 2024.

Comprehensive reforms have been already discussed in this thread (I've weighed in on that already - search it up). In conjunction with the policy pivot on 9.24/9.26, I think it is extremely important for anyone interested in the Chinese economy to understand that the consumption & capital markets are going to be extremely important *going forward* (emphasis here being that it *has not been* as important historically). It is functionally retarded to linearly extrapolate anything and imagine things as always the same as before (imagine linearly extrapolating PLA development from 1995-2005 and assuming the next 10 years were of the same pace/trajectory).

Latest on Shenzhen wanting 15 trillion RMB of market cap by 2027 (vs. 9 trillion today):

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A bit of a victory lap here, but I've been very much correct on the economy in the past 2 years - so do understand that when you do not like what I have to say, it is likely you who needs to adjust/update your priors.

Will focus on capital market lead to financialization of the Chinese economy?

 

[tokenanalyst]

Self-explanatory. The direction of travel is clear and China has no excuse not to be fully prepared.

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Like I said before, this obsession with China is creating downward spiral of self-destruction in the US. Is not only US consumers but the entire US manufacturing and production base needs cheap imports to keep being competitive in the international arena. Export controls has costed the US almost half trillions dollars and is now the main cause of the expanding trade deficit with China despite tariffs, this stooges plan to expand export controls to even more areas. Well, you are correct China should be prepare but I don't think US companies are.

 

[proelite]

yes, there is no need to make aluminum and copper cheaper for other countries. It just decreases your own industry's competitiveness in the downstream products.

I say go a step further and buy up all the commodities inputs from around the world for the next 4 years. With China's scale of buying, no other nation can match. We can sell these commodities for cheaper to Chinese manufacturers and any nation that are also being unfairly tariffed by Trump.

Long term goal would be to create an America-less and USD-less global trade network.

 

[abenomics12345]

Will focus on capital market lead to financialization of the Chinese economy?

Yes.

The other point to make here is - financialization of an economy could be a good or a bad thing, depending on the initial starting point of an economy.

For some reason 'financialization' has been deemed as a dirty word on this forum when it comes to describing an economy.

Just because the US economy is over financialized, does not mean that financializing the Chinese economy is a bad thing.