Chinese Economics Thread

[Blackstone]

Here is an article that clearly position the private sector as engine of growth. The author has an updated version for 2016

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Private Companies Are Driving China's Growth

Nicholas Lardy recently gave a lecture at the Petersen's Institute stating pretty much what your enclosed article said, and that's the good news for the Chinese economy. The bad news is private corporation funding has decreased substantially, while SOE funding increase, thus suggesting easy credit for less-efficient enterprises crowding out China's real engine of growth- small and medium private companies.

 

[Hendrik_2000]

Nicholas Lardy recently gave a lecture at the Petersen's Institute stating pretty much what your enclosed article said, and that's the good news for the Chinese economy. The bad news is private corporation funding has decreased substantially, while SOE funding increase, thus suggesting easy credit for less-efficient enterprises crowding out China's real engine of growth- small and medium private companies.

Bank is not the only source of capital for startup. In fact most start up in China is funded by friend and family. But now there is new twist it is called venture capital combined with fintech.
It can garner enormous capital harnessing the asset of 1.3 billion people.

I guess you didn't even bother to view the video done by NHK. Even the Japanese are impressed with the ingenuity of Chinese venture capital. In china the yield on bank is low and stock market is too risky. Real estate is sky high. But a lot of people has accumulated money and no where to invest. Since foreign investment are still restricted.

So they all clamoring for guaranteed 9% interest with 100% capital preservation. And those young lady is the go between She invested in startup for percentage of ownership with the sight of going public .

That is now the fuel of mom and pop startup get their funding and NOT bank they are too clumsy . Read this

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The western press are too fixated to Banking financing that is the old paradigm. Like old general they are fighting the last war. They didn't have a clue of the nimbleness of Chinese startup. I see with my own eye it is not for nothing they are called the "agent of prosperity" in SEA. both admired and hated at the same time

 

[Blackstone]

Bank is not the only source of capital for startup. In fact most start up in China is funded by friend and family. But now there is new twist it is called venture capital combined with fintech.
It can garner enormous capital harnessing the asset of 1.3 billion people.

I guess you didn't even bother to view the video done by NHK. Even the Japanese are impressed with the ingenuity of Chinese venture capital. In china the yield on bank is low and stock market is too risky. Real estate is sky high. But a lot of people has accumulated money and no where to invest. Since foreign investment are still restricted.

So they all clamoring for guaranteed 9% interest with 100% capital preservation. And those young lady is the go between She invested in startup for percentage of ownership with the sight of going public .

That is now the fuel of mom and pop startup get their funding and NOT bank they are too clumsy . Read this

Please, Log in or Register to view URLs content!

The western press are too fixated to Banking financing that is the old paradigm. Like old general they are fighting the last war. They didn't have a clue of the nimbleness of Chinese startup. I see with my own eye it is not for nothing they are called the "agent of prosperity" in SEA. both admired and hated at the same time

I saw the video you referenced, and it's encouraging for China's future. Nevertheless, most startups fail and until some succeed, they're just potential. Important potentials be sure though, but more vapor than substance.

SOE crowding out existing businesses, on the other hand, is here and now, and it negatively affect China's private sector; the portion of China's economy that generates more economic activities and profits than SOEs, both per capita and in total. It also does that with greater efficiency. What would happen if China's private sector gain equal access to capital as SOEs? No one knows for sure, but concrete evidence show it (the private sector) would provide much better ROI.

 

[Yvrch]

I saw the video you referenced, and it's encouraging for China's future. Nevertheless, most startups fail and until some succeed, they're just potential. .

Yeah sure, water is wet.

Important potentials be sure though, but more vapor than substance.

Really? How do you know that?

SOE crowding out existing businesses, on the other hand, is here and now, and it negatively affect China's private sector; the portion of China's economy that generates more economic activities and profits than SOEs, both per capita and in total. It also does that with greater efficiency. What would happen if China's private sector gain equal access to capital as SOEs? No one knows for sure, but concrete evidence show it (the private sector) would provide much better ROI.

Wow, how did you figure that out? Bravo !!!

 

[advill]

Let the evidence show that China Chinese private sector provides better ROI than SOEs, before correct analyses & conclusions could be made. I don't believe President Xi & his cabinet are unaware of the consequences vis-a-vis Economic progress/growth, but also importantly, they would take into consideration issues related to Politics, Social Cultural and Provincial interests. If SOEs are run by professionals, and not by favoured CP cadre members, than it could be successful like Chinese private sector business entrepreneurial corporations (Alibaba etc). Foreign good examples are the GLCs (Government-linked Corporations) in Singapore, where the CEOs & Senior Managers/Directors are professionals. They are well paid & rewarded according to GLCs' profitability - & corrupt practices are NOT tolerated. The Singapore GLCs co-existed for many years with the private sector without bias relating to government tenders etc. Externally & domestically, they compete e.g. Banks - DBS (a long time GLC) & the pioneering Entrepreneurial Chinese (majority of shares owned by respective families): UOB (United Overseas Bank), OCBC (Overseas Chinese Banking Corpn).

 

[In4ser]

I don't think the CCP cares all that much that SOE efficiency and profitability and see it as rather the cost of doing business so long can be losses are minimized. Certain strategic industries are crucial levers in maintaining party control over the nation and propping them up allows hundreds of thousands of people to keep their jobs which would otherwise be lost to obsolescence without gov't support particularly in steel and mining industries (think of it kind of like a social safety net).

 

[broadsword]

The government has been downsizing the steel and mining industries. It is an ongoing process and hundreds of thousands of jobs has been and will be lost.

Hence, Hendrik's post on "Private Companies Are Driving China's Growth" is a welcome surprise.

 

[Yvrch]

 

[In4ser]

The government has been downsizing the steel and mining industries. It is an ongoing process and hundreds of thousands of jobs has been and will be lost.

Hence, Hendrik's post on "Private Companies Are Driving China's Growth" is a welcome surprise.

It has been indeed 500,000 recently and 700,000 last year but its doing restructuring and layoff on its own terms, managing layoffs merging inefficient companies, selectively keep ones that have the best quality and most skilled instead of simply the cheapest at incremental rate instead of a more abrupt process which would happen if they all when private beholden to market forces.

 

[broadsword]

It has been indeed 500,000 recently and 700,000 last year but its doing restructuring and layoff on its own terms, managing layoffs merging inefficient companies, selectively keep ones that have the best quality and most skilled instead of simply the cheapest at incremental rate instead of a more abrupt process which would happen if they all when private beholden to market forces.

That is their alternative to trade unions.