when the central banks lower interest rates (because of deflation), it becomes cheaper to borrow. Econ 101
Chinese Economics Thread
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your what-if scenario isn't happening in China right now. China actually has a competent central bank that knows what it's doing. I'm not sure why you keep on jerking this deflation thing when it's just not a big deal. China is experiencing deflation because more efficient industries are taking over old ones. Unless you want bail out old inefficient companies, deflation is bound to happen.
按照央行前行长易纲的说法，CPI在2%-3%之间是一个黄金区域。如果太低，低于1%靠近0左右，会有通缩风险；太高，就会担心有通胀的风险。当前CPI离这一区间还有差距。
Anon, Yi Gang is telling you you're wrong. Just stop.
潘功胜在讲话中含蓄地承认了中国面临着通缩压力，称中国国内价格增长和消费需求“可以更强劲”，并指过去中国经济主要是由投资驱动，现在更加重视消费。
Anon, Pan Gongsheng is also telling you you're wrong. Just stop.
Also, where are my "China doesn't need to consume more" enjoyoors? Governor of the competent central bank PBoC (the only thing @doggydogdo is right about) is telling you you're wrong.
Hey @coolgod is it anti-China to agree with Pan Gongsheng? Asking for a friend.
Why do we care about what this guy thinks? Was China "uninvestable" when he said it was so?
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To increase the birth rate, you will also need to adopt the “drill” mantra
Hey man, don't drag me into this. I already said I don't think deflation is good (in general, especially within current economic systems), but I don't have strong opinion on what the best CPI/Inflation target for China is right now. I also never commented on anything to do with how much China needs to consume, personally I'm not a big fan of consumerism, but it is undeniably a crucial part of China's current economy.
TBH, I think most ppl agree to a large degree with what you mostly write, no need to pick fights with us.
What level of hell do we banish people who call Politburo/Central Economics Work Conference readout wrong?
The government is targeting 2% in 2025 - they targeted 3% historically - I think that should tell you all you need to know for what is a 'good CPI target'.
Well if your last comment is true I think @doggydogdo has some explaining to do. I also do recall lots of people here who seem to hate on anything that points to an 'under consumption' issue in China. Which begs the question:
Now that the PBOC Governor and the Politburo has called out under consumption as an issue/problem - are the people who say "China needs to consume more" wrong? Or is the Politburo wrong?
I do realize I am dunking - but I dunk on people who cannot observe problems as I do on Brad Setser/Michael Pettis when they are being retarded. I.E I'm an equal opportunity hater when it comes down to bad takes.
I'm not sure if the PBOC targeting 2% is scientific, or if they just thought if the Feds and other central banks does it, might as well. As I recall the origin of this mythical 2% rate in central banks around the world was kind of arbitrary.
Macroeconomics, especially dealing with large economies like China and US is often very counter intuitive and puzzling. I'm sure people here and in China have different views on consumption and what is the optimal level. PBOC is also just one branch of the Chinese government, it doesn't see eye to eye with the Ministry of Finance all the time either.
Personally I think what Pan Gongsheng and Yi Gang said in their position as the leader of the PBOC is correct, they are giving suggestions which from their perspective as central bankers would boost China's overall economy. But this might not be the most optimal path for China though, in an extreme example, suppose China follows the path of the US and fully liberalizes the economy, the GDP would skyrocket but the end result might not be what CPC truly desires. If China one day has the highest nominal GDP, and the Yuan becomes the de facto sole reserve currency, then ironically people would be asking but at what cost?
Anyways like I said, most ppl agree with most of what you said. Is it really necessary to dunk on members here for disagreeing with 10% of what you said? Especially in a manner which can easily irritate people?