Chinese Economics Thread
- Thread starter Norfolk
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As posted previously in this thread, China's manufacturing production is 35% of the global total - more than the next 9 countries combined, but China's manufacturing exports are just 20% of the global total while the next 9 countries combined account for 40% of global exports - double that of China. In other words, Chinese manufacturing is actually much more geared toward domestic consumption than that of other top manufacturing nations.
Chinese Economics Thread
One interesting observation I've found browsing through the IMF's April 2024 World Economic Outlook statistics is this: In terms of nominal GDP at current prices, the US-China gap is actually widening the US' lead and China's GDP has essentially plateaued since 2021 up to the IMF's estimated...
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reminder that US 1 year treasury yield was close to 0% for much of 2009 to 2021
Germany's 1 year bond was negative for much of 2010s
From a debt point of view, having 1 to 4% yield on bond (across the yield curve) is good when it comes to government managing debt as long as it's not just your central bank buying up all the bond to suppress yield.
For different country, there is different implication. Not a fan of everyone going to Japan every time low yield is discussed.
Germany's 1 year bond was negative for much of 2010s
From a debt point of view, having 1 to 4% yield on bond (across the yield curve) is good when it comes to government managing debt as long as it's not just your central bank buying up all the bond to suppress yield.
For different country, there is different implication. Not a fan of everyone going to Japan every time low yield is discussed.
Obsessing over yield isn't really relevant IMO, because the central bank of any country with a sovereign currency can just buy up all the debt if it wants to. That's why "China holds US treasuries, checkmate America" was always a dumb talking point. It never mattered.
Japan's problem isn't low yields but very high gross debt to GDP, which limits how high their interest rates can be. But they are in a category of their own and have few if any comparable countries.
Japan's problem isn't low yields but very high gross debt to GDP, which limits how high their interest rates can be. But they are in a category of their own and have few if any comparable countries.
Not to mention these countries had near zero or negative interest rates in periods where their inflation were substantially positive. Even now, 2-year German government bonds are yielding just 2% while Germany's inflation in November was 2.2% YoY so the real yield (after adjusting for inflation) is actually negative. Because inflation in China is ~zero, the real yield for Chinese government bonds are still very much positive for all durations and longer duration Chinese government bonds have similar real yields as US government bonds and higher than most other Western countries.
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Probably why personal and institutional investors in China still buy CGBs. Unfortunately, when the stock market is struggling, this is also another signal that institutional investors are putting more money in bond market because they don't feel safe having it in other asset classes.
