Chinese Economics Thread

vincent

vincent

Grumpy Old Man
Staff member
Moderator - World Affairs
AndrewS said:
Great Post below on Chinese investment

But I would add the following.

For a lower-income economy, infrastructure investment allows the economy to address basic bottlenecks that prevent economic activity to take place. However, we've seen that this only takes an economy to middle-income status.

But the examples of Japan and Korea have demonstrated that in order to move up the value chain from middle-income to high-income, it requires an economy to develop its own high technology industries. But note that the rest of the economy can still be relatively inefficient and that it can still undertake wasteful infrastructure investment, as per the Japanese and Korean experiences.

On this measure, China is already devoting 2.1% of GDP on R&D spending, which is an exceptionally high figure for a developing country, as everyone else maxes out at half that level.

We've seen the next 5 year plan target an increase to 2.5%, which compares favourably with:

Germany: 2.8%
US: 2.7%
France: 2.2%
UK: 1.7%

Also remember that wasteful investment can actually be seen as a form of consumption.
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There are plenty of opportunities to develop domestic component suppliers for OEMs. Think of the capacitors in laptops, composite materials for cars/planes/trains, ball bearings for high speed trains, etc. China needs to makes sure US can't pull a ZTE ever again.
 
Brumby

Brumby

Major
antiterror13 said:
It seems George Soros (and many others) would lose his bet shorting Chinese Yuan

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The content of the article and the technical picture of the Yuan/US dollar is clearly not in sync and charts don't lie. The technical picture of the Yuan by any measure is bearish i.e. it is in a down trend (series of lower highs and lows; strong failure at breakdown point; and unable to even take out a single bearish bar even after 9 weeks). If the hedge funds had positioned their shorts at the consolidation/contest zone (a logical place to build up their short) their position would still be in the money. I think it would be more than silly for any hedge funds to take up short dated options (as alluded that they did in the article) because of the exponential curve in time decay of such instruments as it approaches expiry.

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F

Franklin

Captain
antiterror13 said:
It seems George Soros (and many others) would lose his bet shorting Chinese Yuan

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Part of the reason why the Chinese stock market and currency went down over the past year is for the same reason why the currencies and stock markets went down in countries like India, Malaysia, Indonesia and South Korea etc. And that is the prospect of a tightning cycle coming from the US. As the FED raises interest rate at the end of 2015 and promises more in 2016 is what is causing these currencies, stock markets and commodity prices around the world to go down at the beginning of the year. Because when the US started easing the hot money flew out of the US and largely went to the EM countries. But now that the US has started to tighten the hot money is flowing back in to the US again. And flowing out of the EM countries causing asset prices and currencies to fall in these countries. Now that interest rate rises in the US is off the table in the short run all these currencies and markets are going back up again. Including the US markets that is also going up but the USD is going down.
 
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Hendrik_2000

Hendrik_2000

Lieutenant General
Yup another myth bit the dust. Real estate, the western press has been prophesying the end of China economic growth because overbuilding and rampant speculation, leaving the bank holding the bag , and follow japan decades long of malaise
Surprise surprise the real estate sale is picking up again. All the government do is loosing up few string and tap the still large demand of quality housing.

BEIJING (Reuters) - China's home prices rose at their fastest clip in almost two years in February thanks to red-hot demand in big cities, but risks of overheating in some places combined with weak growth in smaller cities threaten to put more stress on an already slowing economy.

Average new home prices in 70 major cities climbed 3.6 percent in February from a year ago, quickening from January's 2.5 percent rise, according to Reuters calculations based on data released by the National Statistics Bureau (NBS) on Friday.

That was the quickest year-on-year increase since June 2014.

The NBS data showed 32 of 70 major cities tracked by the NBS saw year-on-year price gains, up from 25 in January. Tier 1 cities, including Shenzhen, Shanghai and Beijing, remained the top performers, with prices surging 56.9 percent, 20.6 percent and 12.9 percent respectively.

A slew of government measures and increased lending helped boost the housing market in the biggest cities, but signs that some places may be overheating even as prices remain depressed in smaller cities complicate matters for policymakers.

China's housing market is a crucial engine of growth, accounting for 15 percent of gross domestic product. With the broader economy decelerating amid weak exports, factory overcapacity, slowing investment and high debt levels, authorities are hoping the property market will help stabilise growth.

But a breakdown of NBS data points to persistent softness in property markets in smaller cities where a glut of unsold houses have weighed on prices. Most third-tier cities still saw on-year prices drops in February, though the declines eased from the previous month, the NBS data showed.

The uneven recovery in the housing market makes Beijing's job harder as it looks to support a faltering economy without inflating bubbles.

China's housing Minister Chen Zhenggao acknowledged on Tuesday that price divergence in China's big and small cities poses a challenge for housing market policy controls.

Official data showed last week that the growth in China's property investment in the first two months of 2016 rose 3 percent from a year ago, quickening from 1 percent gains in the full year of 2015.

(This version of the story corrects price changes for three cities in the fourth paragraph)

(Reporting By Xiaoyi Shao and Nicholas Heath; Editing by Shri Navaratnam)
 
plawolf

plawolf

Lieutenant General
These articles are just full of examples where the western media is bought and paid for by special interests.

When writing in support of western exporters, the yuan is always undervalued, but when it's a story where western hedge funds are betting against the yuan and loosing big, the yuan is overvalued and needs to fall damn it! :rolleyes:

As I have said may time before, in the western market, the truly big players play by very different rules to everyone else. That's not even just an unspoken rule, it's frigging institutionalised! You need $1.5bn in capital to get an ISDA, which will pretty fundamentally change the rules of the game for you in the stock markets if you have one, as you will be able to get margins and deals simply unavailable to anyone who doesn't have an ISDA. Another way of looking at it is that the western stock market is fundamentally skewed against the little guys.

Since a large part of the modern stock market is about wealth redistribution rather than creation (the only way anyone can consistently 'beat the market' - if you are making money way faster than the rate the market is growing, it means you are making money from other investors, who get the loosing end of the deal that allows you to make the big returns), it's actually increasingly turning into a cacino style arrangement, with the 'big boys' acting as the house and anyone trading without an ISDA the punters. Sure you can still win against the house, but the odds are very much against you doing so.

The very public speculation taken by the likes of Soros is also a form of market manipulation. They know that if they publicly take such a position, a significant part of the market will follow suit and create a snowball effect. So they are operating at a level above even your ISDA wielding traders.

The western financial industry is wrotten to the core because people like Soros have been able to buy enough influence and write the rules and laws that govern that industry to maximise their own advantages.

China is, and will continue to pay a heavy price to resist being played and ripped off by those people because it is forced to play by their rules.

A big part of the very public anger being vented by very senior Chinese financial officials towards foreign speculators is precisely because they know the game is rigged, and why they are so determined to write their own rules for China's financial sector rather than allow the west to impose those same fundamentally flawed and self-serving rules on China.
 
Blackstone

Blackstone

Brigadier
plawolf said:
A big part of the very public anger being vented by very senior Chinese financial officials towards foreign speculators is precisely because they know the game is rigged, and why they are so determined to write their own rules for China's financial sector rather than allow the west to impose those same fundamentally flawed and self-serving rules on China.
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But of course only CCP overlords may impose self-serving rules on China's citizens, and they do a great job on that.
 
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