Chinese Economics Thread

[Franklin]

When we are talking about the state sector taking up most of the capital at the expense of the private sector and creating assets that have a very low ROI. We need to understand what we are talking about here.

When people think about SOE people may have the image of Soviet style factories producing things that no one wants. But those kind of factories largely closed down back in the 1990's. There maybe still a few here and there but the numbers are very small.

Most of the expansion in the state sector has been in transport (metro systems, HSR, roads etc ), energy (solar, nuclear, hydro etc), water management (sewerage systems, water treatment etc). And strategic area's like aerospace and semi-conductors. China's government is building all these infrastructure at great costs (with money lend from the banks). Because these are state runned enterprises they are not out there to maximize profits. And that's why they are able to make these services and facilities available to the people under affordable prices.

The availability and affordability of these services and facilities has helped the private sector and the common people enormously. Those investments is what is in part help to underpin the growing prosperity in China today. Because they are not out there to maximize profit is what is making the ROI on these investments so low. But the spin off effect of these investments on the rest of the economy cannot be underestimated.

But the sort of abuses that @Blackstone and the too big to fail that @Hendrik_2000 is talking about does exist.

 

[Blackstone]

Yeah sure, water is wet.



Really? How do you know that?




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

So, you have no argument on points, and have resorted to Elementary School antics. I'm disappointed in you.

 

[Blackstone]

When we are talking about the state sector taking up most of the capital at the expense of the private sector and creating assets that have a very low ROI. We need to understand what we are talking about here.

When people think about SOE people may have the image of Soviet style factories producing things that no one wants. But those kind of factories largely closed down back in the 1990's. There maybe still a few here and there but the numbers are very small.

Most of the expansion in the state sector has been in transport (metro systems, HSR, roads etc ), energy (solar, nuclear, hydro etc), water management (sewerage systems, water treatment etc). And strategic area's like aerospace and semi-conductors. China's government is building all these infrastructure at great costs (with money lend from the banks). Because these are state runned enterprises they are not out there to maximize profits. And that's why they are able to make these services and facilities available to the people under affordable prices.

The availability and affordability of these services and facilities has helped the private sector and the common people enormously. Those investments is what is in part help to underpin the growing prosperity in China today. Because they are not out there to maximize profit is what is making the ROI on these investments so low. But the spin off effect of these investments on the rest of the economy cannot be underestimated.

But the sort of abuses that @Blackstone and the too big to fail that @Hendrik_2000 is talking about does exist.

Problem with China's SOEs isn't they can't produce quality goods, evidence show they can and have, but evidence also show SOE's are less inefficient, impede innovation, and encourage rent-seeking behaviors. Remember I'm not saying China shouldn't have SOEs, since that's my opinion at all, I am, however, saying China's private sector provide a better path to Xi's "China Dream" of strong and wealthy China. That path, however, needs both SOEs and private industries.

 

[vesicles]

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.

I think you are confusing two separate but equally important issues: providing enough capital to allow startups to begin; having expertise to continue and eventually succeed. These are two separate issues.

The fact that China has increasing number of startups shows that they do have enough initial capital to start the business. This, I think, has been the issue that others are discussing: whether there is sufficient sources of capital for small business owners to start a company in China.

Whether these startups can succeed is much more complex. Expertise and experience of the owners, quality of their products, marketability of their products, competition from peers and much bigger multinational corporations, etc will be key to how successful their business will be. Availability of capital is still Important but is no longer the biggest obstacle these small businesses face. And you can't blame China for not providing enough capital when a company simply makes crappy products, or a dumb owner who doesn't have a clue of how to run a business.

As such, I don't think you can use whether these small businesses can be successful to judge how easy they can secure capital. Two separate issues.

 

[Hendrik_2000]

Most of the expansion in the state sector has been in transport (metro systems, HSR, roads etc ), energy (solar, nuclear, hydro etc), water management (sewerage systems, water treatment etc). And strategic area's like aerospace and semi-conductors. China's government is building all these infrastructure at great costs (with money lend from the banks). Because these are state runned enterprises they are not out there to maximize profits. And that's why they are able to make these services and facilities available to the people under affordable prices.

In general this is true but SOE also include a lot of outdated and inefficient plant leftover from communist era,

Please, Log in or Register to view URLs content!

This is problematic because in some cases they are the only job provider in the hinterland. So how can you shut off a plant that is the only source of income for the area. There is no easy answer.

But the situation get worst because of duplication and lack of idea on how to spend the money . So they just copy what is the next town is doing and create the overcapacity. The 2008 financial spending spree doesn't help

I never know how venturer capital is until I watch that video
Chinese bank are flat footed they need competition and this fintech come venture capital is giving them run for their money. They had it easy for too long

China’s fintech investments surge to record high in 2016
Record investment is yet another sign that the Chinese digital financial services industry is undergoing explosive development.

Please, Log in or Register to view URLs content!

By

Please, Log in or Register to view URLs content!

,

Please, Log in or Register to view URLs content!

FEBRUARY 22, 2017 8:56 AM (UTC+8)Investments in venture capital-backed Chinese financial technology companies hit a record high in 2016, bucking a global decline in such spending, consulting firm KPMG said in a new report.

The record setting pace is yet another sign that the country’s digital financial services industry is undergoing

Please, Log in or Register to view URLs content!

development, especially in mobile payments.

“Tech giants in China have become very active in fintech, leading to significant large deals which tend to boost the fintech sector,” Arthur Wang, Partner and Head of China Banking at KPMG China, said in a statement.

The report said that investment in venture capital-backed fintech firms in China breached US$6.7 billion in 2016. The number of deals declined to 25 last year, from 40 a year earlier, but the value increased 42.6 percent.

The strong performance was largely the result of three mega-deals in the first half of 2016, with the record-setting funding round of $4.5 billion to China-based Ant Financial.

Payments and wealth management dominated, with some 70 percent of all investments falling into these sectors. “This is an interesting trend, as payments have begun to ‘cool’ in Europe and the US, while picking up steam in Asia”, the Pulse of Fintech report said.

Global investment activity in VC-backed fintech firms fell 14% to 1,076 deals, while the value declined 46.8% to US$ 25 billion. The consulting firm said that this was largely due to the absence of merger and acquisitions and private equity investment.

In China, the surge of fintech services is a growing headache for traditional banks which have been left painfully behind in the competition for e-commerce and new payment methods.

The world’s four most valuable fintech unicorns – a startup company worth more than US$1 billion – are Chinese. The largest is Ant Financial, an arm of e-commerce giant Alibaba, which is valued at US$60 billion. Second is the peer-to-peer lender Lufax at US$18.5 billion). That’s followed by JD Finance, a joint venture between e-commerce site JD and Tencent, valued at US$7 billion, and then instalment payment firm Qufenqi worth US$5.9 billion.

“After experiencing significant success domestically, larger fintech players in China are beginning to look globally to fuel their continued growth and expect collaboration to be a critical part of their success,” Wang said. “It is expected that further collaboration between fintech giants in China and companies in other regions will likely continue throughout 2017.”

The big Chinese tech companies are also investing heavily in smaller startups to access the next generation of financial services, including blockchain technology, as used by Bitcoin, and artificial intelligence.

The report said data and analytics is set to be a key focus of fintech investment in Asia in 2017.

The ability to access and analyse customer data is an important enabler to the success of many fintech product offerings. Interest in internet of things (IoT) technologies that provide adjacent value — such as home automation technologies that can be used by the insurance industry — is also expected to grow.

 

[Yvrch]

So, you have no argument on points, and have resorted to Elementary School antics. I'm disappointed in you.

I don't think you missed the dripping mockery in my post.
Argument on points? Your points are so lame and cliche it is almost copy and paste. LoL.

 

[Blackstone]

I don't think you missed the dripping mockery in my post.
Argument on points? Your points are so lame and cliche it is almost copy and paste. LoL.

Keep up the dripping mockery dear boy, I give you an A for effort.

 

[Yvrch]

Keep up the dripping mockery dear boy, I give you an A for effort.

That's exactly my point, lame, cliche, copy and paste.
Run along now and go tell your dear daddy. LoL.

 

[Blackstone]

That's exactly my point, lame, cliche, copy and paste.
Run along now and go tell your dear daddy. LoL.

Not a good try this time, you might want to research a bit more material and try again.

 

[Orthan]

Interesting article of a comparition betwen china and japan´s historic rise from poverty and what are the similarities and diferences betwen both. I dont agree with everything it says, but IMO it says some hard truths about china´s economy.

Please, Log in or Register to view URLs content!