Fundamental crux of the issue is that China is simultaneously over-financialized and under-financialized at the same time.
By not having functional capital markets that can effectively allocate capital to firms that need it to expand and fund necessary capital projects; it shoves large household savings into either bank accounts that yield 0% or real estate speculation that has no benefit to the real economy but does make small business development and homeownership prohibitively expensive to new homebuyers; instead of real estate being financialized by being used as collateral for commercial real estate developments, it's now financialized by being used as a pure speculative instrument and various short-termism leads to either gigantic financial crises (wealth effects, sentiment shocks, capital flight, etc) or kicking the can down the road.
LOL Drug peddler saying everything is better on drugs. No. China runs down US tech with none of the mechanisms you use to actually rob the poor and enrich the elite. That's what your markets are for, after all, for your politicians to get favors trading with inside knowledge. Instead, China directs those resources through the state and achieves superior results outpacing the entire rest of the world in tech on a daily basis.
The government provisioning public goods like infrastructure is well established but Chinese biotechs needing to go find US-based partners to take their drugs to trial because China has catastrophically apocalyptic equity capital markets that don't allow for effective funding of risky capital projects like clinical trial or the government needing to waste precious time and effort on gigantic VC rounds for SMIC building a foundry because China's dysfunctional and illiquid capital projects blocked it from issuing a bond with a maturity timed to its completion? yeah - that's from China's poor capital markets governance.
"Catasrophically apocalyptic" LOLOL You have a funny way with words. I thought you were talking about the streets of Detroit and California's homeless encampments for a second. Equity markets aren't a problem in China if the government approves of your work. And those that do go through that approval gain the support to make world-beating tech.
Heck, China needed to beg and cry and threaten so that state-owned life insurers and banks would buy China Government Bonds to fund China's unsustainable budget deficits (in part, for infrastructure) because for even those close to the government, they don't trust the risk and liquidity profiles of CGBs while treasury bills are cash equivalents
Oh you have our governments confused. You see in China, the government gives orders and the mega-corps follow (but oddly, you said state-owned so it means they begged and threatened... themselves?). This is different from the US, a land in which it's legal for companies to bribe politicians under the name of lobbying. In that system, the state begs the corporations. Not in ours.
It's an illiquid market (
) that needed to be super backstopped by the PBoC more or less all the time.
Not to mention all of China's capital flight (this needs no citation because it happens so much it might as well be common knowledge)
Capital flight is much less than capital gain. Unlike the US, we don't let the rich use their money to run the show, and we're still growing faster in every metric.
The 2008 Great Financial Crisis vs. the ho-hum financial markets of 2023
Is that why China has a real estate meltdown right now since private households couldn't channel private savings anywhere?
Yeah, we deflated that bubble to ensure affordable housng to all and our economy still outgrew every major economy in the world despite already being #1 in PPP. Meanwhile, Americans are screaming about eating the rich.
yes, and the Dodd-Frank Act largely put and end to excessive (residential) real estate speculation through the financial sector
Did a shit job. US home ownership is far less than in China
yeah, imagine the country with the largest data center capacity and a ton of capacity coming online, leading the technological frontier on GPUs and LLMs, SpaceX (with by far more space launches than the rest of the world), substantial and well-paid SME employment (as opposed to everyone trying to hide from economic chaos in the public sector or large SOEs) because the financial sector can actually intermediate instead of just giving gigantic C&I loans to favored political cronies.
You mean the political cronies in DC who clean up billions of dollars every time there's a crash or crisis putting the regular investors in the poor house?
"The dominance of the US, Synergy noted, is mainly down to two key factors – almost 60% of the world’s hyperscale operators are headquartered in the country, including the four biggest, while the US accounts for almost half of all cloud market revenues."
Looks like China's coming up from behind again for the win. How long to do reckin it'll be on this one before the US gets run down again?
So China is increasing faster ("estimated electricity from 2022") from a much smaller base
And now it's bigger than everyone else combined. Is that supposed to be a dig at China?