Chinese Economics Thread

[advill]

The Chinese are always hard working & willing to bear great difficulties, both in home country and overseas since past centuries even up till to date. Those successful and prosperous Overseas Chinese have always been generous and donated to various projects: charities & the setting up of Universities, learning institutions, hospitals, medical centres etc. (Some examples in Singapore: Singapore Chinese Girls School - first for Chinese girls during the British Colonial days; Nanyang University, Tan Tock Seng Hospital, and fairly recently Khoo Teck Phuat & Ng Teng Fong Hospitals). We owe a lot to them. I am certain there are other examples in several other countries.

 

[Jura The idiot]

now I read
China's tax cut measures to support real economy: experts
Xinhua| 2018-09-29 13:53:06

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China's new tax and fee cuts will boost the real economy through reducing corporate burdens and creating a stable and fair business environment, experts told the Xinhua-run Economic Information Daily.

Starting from Oct. 1, the minimum threshold for personal income tax will be raised from 3,500 yuan (about 510 U.S. dollars) to 5,000 yuan per month, or 60,000 yuan per year.

Those whose monthly salaries range from 5,000 yuan to 20,000 yuan will see their tax get cut by over 50 percent and those whose monthly salaries range from 20,000 yuan to 80,000 yuan will see their tax get cut by 10 to 50 percent.

Individual income tax was the third biggest contributor to China's total tax revenue, following value-added tax and enterprise income tax. Last year, China collected individual income tax worth nearly 1.2 trillion yuan, about 8.3 percent of the country's total tax revenue.

Last month, a State Council executive meeting chaired by Premier Li Keqiang saw the unveiling of new tax cut measures aimed at boosting the real economy while working to ensure the full implementation of all existing tax reduction measures.

All tax cut incentives decided at the meeting were expected to cut corporate tax burdens by more than 45 billion yuan this year.

Analysts agree that tax reduction has played a significant role in further boosting market vitality and driving industrial development.

"These tax cut measures will help create a stable, fair and transparent business environment, inject vitality into market entities, and allow more people to enjoy bonuses of the reform," said Prof. Xu Zhengzhong with the Party School of the Communist Party of China (CPC) Central Committee.

Zhang Lianqi from Ruihua Certified Public Accountants said that China's tax reform is conducive to the transformation and upgrading of the real economy and the stabilization of economic growth.

 

[Franklin]

The negative impacts of easy money policies in China is beginning to show.

Citizens prefering to speculate rather than to save.

Asset bubbles developing in the economy especially in real estate.

Growing income inequality.

Things in China are not as bad as in Japan or the West yet, but China is on a slippery slope.

China is sliding towards where the West is now and the West is sliding towards Zimbabwe and Venezuela.

The solution to this problem is very obvious which is to raise interest rates and tightening the monetary and fiscal policies to allow the economy to squeez out the excesses that have been building up over the years. But this means more bankruptcies and defaults, higher unemployment and slower growth. Deleverging in China is one step forwards and two steps back. Every time deleveraging is starting to do its job ie defaults, bankruptcies and slowing the economy. The government starts to get cold feet and reopens the money spigots again. Creating more debts and bubbles in the process. The longer this goes on the more difficult it becomes to resolve.

You would think that the Chinese leaders who don't have to face elections will be better able to do the hard things that are in the long term interest of the country. But instead they are just as afraid as their Western counterparts if not more to let the economy have a few bad years for the longer term good.

 

[Jura The idiot]

now noticed the tweet

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General Motors' joint venture in China, SAIC GM, will recall more than 3.3 million vehicles from Oct. 20 because of a defect with the suspension system, China's market regulator said on Saturday

 

[montyp165]

The negative impacts of easy money policies in China is beginning to show.

Citizens prefering to speculate rather than to save.

Asset bubbles developing in the economy especially in real estate.

Growing income inequality.

Things in China are not as bad as in Japan or the West yet, but China is on a slippery slope.

China is sliding towards where the West is now and the West is sliding towards Zimbabwe and Venezuela.

The solution to this problem is very obvious which is to raise interest rates and tightening the monetary and fiscal policies to allow the economy to squeez out the excesses that have been building up over the years. But this means more bankruptcies and defaults, higher unemployment and slower growth. Deleverging in China is one step forwards and two steps back. Every time deleveraging is starting to do its job ie defaults, bankruptcies and slowing the economy. The government starts to get cold feet and reopens the money spigots again. Creating more debts and bubbles in the process. The longer this goes on the more difficult it becomes to resolve.

You would think that the Chinese leaders who don't have to face elections will be better able to do the hard things that are in the long term interest of the country. But instead they are just as afraid as their Western counterparts if not more to let the economy have a few bad years for the longer term good.

In a way the trade war is a good opportunity to introduce policy reforms and changes to tackle these types of issues before they are allowed to amplify.

 

[AndrewS]

Yeah ,that is the eurozone population. my bad.

The coastal regions are usually more wealthy than the inland, big part because they make income by facilitating the trade between the sea and landlocked regions.

So, it is quite debatable that if you cut off the inland regions from the coastal regions then both GDP should be the same.

There is high chance to see the inland GDP increase and the coastal decrease .

And the EU problem is not the above that you described.

IT is quite simple: the EU central government hasn't got income and real power.

R&D : Japan is in the top three R&D spender in the past decades ( half century maybe? ), but it haven't prevented them to stagnate for close to thirty years.


And generally everyone is playing with the GDP %.
That is a bit tricky, because say if you cut back a country GDP to the quarter , that is a 75% drop.
but now it is possible to show a good 7% growth for 20 years afterwards.

That happened with China.
The imperial system was absolutely rubbish, but generally the Chinese are organised, well behaving and civilised chaps.
Due to the ineffective governance the economical activity in China collapsed to bellow the Nigerian level .

As soon as the country received same leadership who shown competency the economic activity went to the "natural" level.

So, a Chinese can be proud of the growth, or can be ashamed because the politician system of China wasn't capable in the past 300 years to prevent the appearance of Cixi kind incompetent leaders.

No, coastal regions tend to be wealthier because they have the benefit of low-cost seaborne freight transport compared with expensive low-capacity trucks or trains.

So it just makes sense for population/industry/jobs to gravitate to where transportation costs are lowest.

Even if the EU central government has got an income and real power, it still doesn't solve the issue that the EU is a fragmented market split up by different languages/cultures/currencies. It means people, companies, goods and services are stuck within their respective national borders. Of course, there could be a single market if the EU mandated a SINGLE national language and therefore a single political forum for all of Europe, but we all know that is not going to happen.

Japan is already a wealthy developed country with amongst the highest living standards in the world and a slowly declining population.
So of course it is going to show zero to stagnant economic growth.

If we talk about China's growth returning to the mean, remember that China's peer group are the other confucian East Asian Economic Tigers (Japan, Korea, Taiwan, Hong Kong , Singapore). And they did grow fast enough to get through the middle income trap

 

[taxiya]

The negative impacts of easy money policies in China is beginning to show.

Citizens prefering to speculate rather than to save.

Asset bubbles developing in the economy especially in real estate.

Growing income inequality.

Things in China are not as bad as in Japan or the West yet, but China is on a slippery slope.

China is sliding towards where the West is now and the West is sliding towards Zimbabwe and Venezuela.

The solution to this problem is very obvious which is to raise interest rates and tightening the monetary and fiscal policies to allow the economy to squeez out the excesses that have been building up over the years. But this means more bankruptcies and defaults, higher unemployment and slower growth. Deleverging in China is one step forwards and two steps back. Every time deleveraging is starting to do its job ie defaults, bankruptcies and slowing the economy. The government starts to get cold feet and reopens the money spigots again. Creating more debts and bubbles in the process. The longer this goes on the more difficult it becomes to resolve.

You would think that the Chinese leaders who don't have to face elections will be better able to do the hard things that are in the long term interest of the country. But instead they are just as afraid as their Western counterparts if not more to let the economy have a few bad years for the longer term good.

You forget that a panic crowd is not rational. A clear headed person in such crowd can not survive by doing the "right thing in theory". But has to follow (forced) the crowd even one knows the long term danger. The only thing truly right to do is to not to stay at the front of the panic crowd, but stay at the end, so to minimize the danger and be the front when the tide turns.

Think about you are stuck in a panic crowd in a stadium after a false alarm, everyone is rushing to the tinny exist, if you run against the crowd you will be crashed to death, if you are at the front you will be crashed to death. Stay at the back side, you have the chance to live to the point when people realize the alarm is false and calm down.

Now to your proposal "Raise interest rates". China can only raise RMB's interest rates, against all other currency. That measure will only prevent common Chinese people from borrowing domestically, stopping them to speculate/build bubble, BUT will NOT stop foreign cheap loans to flood in to China to build the bubble . These flooding foreign currency will push up RMB, destroying Chinese export. We have seen this kind of Foreign hot money not long ago. Your proposal will only work if China block these hot cheap USDs, but that requires currency control which works against market-driven principles which is a foundation for RMB internalization.

Neither way is good. One can only choose the least damaging way. The whole world is connected, when one is in it, one can not always do the right thing. That is why China did the stimulus after US, EU and Japan did it at the beginning of 2008 crisis. 人在江湖，身不由己。A Chinese saying that means "It is not up to oneself what to do in the wild world".

 

[Anlsvrthng]

Even if the EU central government has got an income and real power, it still doesn't solve the issue that the EU is a fragmented market split up by different languages/cultures/currencies. It means people, companies, goods and services are stuck within their respective national borders. Of course, there could be a single market if the EU mandated a SINGLE national language and therefore a single political forum for all of Europe, but we all know that is not going to happen.

History showing different result.
The current European map is the result of a big push by US/GB axis to make the convenient more "manageable".
divide and conquer.

Astro-Hungarian monarchy example ,that was the mayor target of the WW.

Before WW it was natural to speak multiple language, and live in mixed culture/language.

EU should work, if there is a central transfer mechanism.

 

[AndrewS]

History showing different result.
The current European map is the result of a big push by US/GB axis to make the convenient more "manageable".
divide and conquer.

Astro-Hungarian monarchy example ,that was the mayor target of the WW.

Before WW it was natural to speak multiple language, and live in mixed culture/language.

EU should work, if there is a central transfer mechanism.

You really need to study up on history and current geopolitics.

Austria-Hungary was just a side casualty of WW1.

Nationalism in the form of one language/ethnicity started around the time of the French revolution and Napoleonic Wars, some 100+ years before WW1.

So it was NOT normal to live in a mixed culture or language. Most of the population were either rural villagers or simply too poor to move to another country.

 

[solarz]

Not everybody has the talent to start their won business. For every entrepreneur I bet there are hundred who slave away as courier working 14 hr a day and share a room Can't even afford to bring wife or kids
Charity is meant to send a message that the rich does not forget the downtrodden There is social solidarity here It and a lesson by example. It will strengthen the social cohesiveness of Chinese society and benefit the country a whole.
Beside it is the right thing to do an ever increasing circle of virtue start with you family, clan, village, provincial and country.

Charity is the hallmark of overseas Chinese. It has been so for generation and they still doing it today

Charity is a personal thing. As I have mentioned above, Jack Ma is the highest contributor to charity in China, yet you have nothing but contempt for him because he doesn't do charity in the manner you would prefer?