Chinese Economics Thread

[Anlsvrthng]

Well again, you're wrong. Wealth is not defined as the expected future cash flow. Where the hell did you get that definition? An unskilled man who won the lottery is not wealthy? Someone who inherited millions of dollars from his grandfather is not wealthy? A guy with no money, no house, no car but a briefcase full of unrealized designs with the potential to make him a billionaire is already considered wealthy? You get more ridiculous by the post.

Have no clue what you talk about.
Having 1 billion of dollars in your basement , organised in nice piles means you loosing 3-5% of your wealth in each year.
Your loosing wealth, not making it.

Accumulated money , time ,work, nice collection of jesus shaped stones doesn't guarantee future cash flow from your investment.

So, at the moment the Alibaba P/E ratio is above 40, if the cost of workforce going up, and the cheap capital drying up ( the money nothing else just accumulated work that can be called of...) then the P/E ratio will be way too high.

Say the salary increase will be double the GDP, the job market become tight, the inflation is in the 4-6 % digit, and the cost of loans is 7-8%.
How a P/E ratio of 40 can be supported in that case?

How many % of the Alibaba owner will loose in that case?

Maybe because I have repeated myself so you think it is emotional. No, it is because you still don't understand the simple principle of NOT trying to disprove things that are already true. China has been and is still growing its middle class, increasing the number of people who can afford to buy urban housing. That's a fact. You can't argue against facts. This has nothing to do with my emotion and everything to do with your stupidity.

Have you got a flat in Beijing?
The cost/salary ratio is in the 30 range in China, vs the 8 in UK.
And I consider the UK as overpriced already .

 

[manqiangrexue]

Have no clue what you talk about.

Then improve your English. There is nothing wrong with the sentences I wrote and they cannot be simplified.

Having 1 billion of dollars in your basement , organised in nice piles means you loosing 3-5% of your wealth in each year.
Your loosing wealth, not making it.

Wealth and losing/gaining wealth are different concepts; the relationship is that of a number/equation and its derivative. A guy with a $1 billion USD in his basement is losing wealth but he's also wealthy even though he's not earning anything. By your definition, he would be poor. Nobody anywhere would agree with your fictional definition of wealth.

Accumulated money , time ,work, nice collection of jesus shaped stones doesn't guarantee future cash flow from your investment.

But accumulated money is the definition of wealth. And if those Jesus shaped stones are worth millions of dollars as artifacts, then they will contribute to wealth as well.

So, at the moment the Alibaba P/E ratio is above 40, if the cost of workforce going up, and the cheap capital drying up ( the money nothing else just accumulated work that can be called of...) then the P/E ratio will be way too high.

Say the salary increase will be double the GDP, the job market become tight, the inflation is in the 4-6 % digit, and the cost of loans is 7-8%.
How a P/E ratio of 40 can be supported in that case?

How many % of the Alibaba owner will loose in that case?

This is exactly what I said before about your inflexible thinking. You are thinking how Alibaba can afford to pay its janitors and assembly workers more for the same work. If not, then China's middle class cannot expand. I'm talking about assembly line workers becoming engineers and developing machines or programs to automate a job that it took 20 people to do. He will be paid magnitudes more than what he would earn as a blue-collared worker. But then wouldn't he be killing 19 Chinese jobs? No, those guys must also improve their position in the value chain through education so they can also be paid more to do similar engineering/innovative jobs for other new start-up companies. And the creation of those entirely new entities will both expand China's economy and transform poor low wage workers into the middle class who can afford to buy housing in places like Beijing and Shanghai. We're talking about moving in a direction that leaves simple manual labor (the kind that earns you barely livable pay) to machines so all the people will use their education and mental dexterity to do high-valued work and thus be paid much more for it. And there will be more and more of those high-paying jobs springing up in China, which is the world's fastest growing major economy and number one location for new start-up companies.

If you didn't understand that, just read it again and again until you do. Your inability to understand that concept is the fundamental reason why you are hung up thinking that Chinese middle class cannot grow even though they are growing.

Have you got a flat in Beijing?
The cost/salary ratio is in the 30 range in China, vs the 8 in UK.
And I consider the UK as overpriced already .

Yes, I do. And I also know many Chinese people who plan to move there after studies are completed and buy a house to start their families. It's very expensive to own a place in Beijing, but it has nothing to do with the UK, and being expensive doesn't change the fact that every year, more and more Chinese people can and do choose to afford it. Once again, you're confusing the number/equation with its derivative just like you're done in your incorrect definition of wealth.

 

[pipaster]

Statistics on Macau new business start ups and dissolutions:

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, suprised at the small numbers being talked about 10s of millions.

Perdicted increase in service imports into China anticipating over 10% of the world's overall service trade from 9% last year with 2.5 trillion USD cumulative in the next five years:

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Tianjin to increase its polluting fuel free zone to 3900 km^2 from 830 km^2, "By the end of October 2018, a total of 3.62 million additional households in Beijing, Tianjin and 26 other cities in nearby regions will have had their coal-fired heating systems converted, according to an official plan released in September." can be found here:

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[Anlsvrthng]

If you didn't understand that, just read it again and again until you do. Your inability to understand that concept is the fundamental reason why you are hung up thinking that Chinese middle class cannot grow even though they are growing.

The problem is no one really capture the incompatible behaviour between the next parameters:
-growing middle class
-growing GDP
-Social stability
-not growing debt level
-increasing trade surplus
And many of the above is only transient, debt increase can make bigger middle class with growing GDP for a while, but stable debt level means either growing GDP , but stagnating /decreasing middle class and social instability, or stagnating GDP but growing middle class , or growing GDP and middle class but growing trade surplus and many other proportional combination of the above.

However as soon as the debt capability of households reached the maximum the options for the policy makers will dramatically decrease, and the cost of failures will be magnified several-fold.

OF course you can hope to see "deus ex machina" , but I seriously doubt that .
The reality is Zhongnanhai has no clue about the next steps, they just try to patch the leaks.
In the past few decade the interest of powerful and wealthy was in line with the interest of average chinese other, but nothing guarantee that it will last longer.

Yes, I do. And I also know many Chinese people who plan to move there after studies are completed and buy a house to start their families. It's very expensive to own a place in Beijing, but it has nothing to do with the UK, and being expensive doesn't change the fact that every year, more and more Chinese people can and do choose to afford it. Once again, you're confusing the number/equation with its derivative just like you're done in your incorrect definition of wealth.

There is a market for 10 million £ flats in London, but that doesn't show the average prosperity of the country.
The AVERAGE Chinese new dwelling cost 30 times more than the disposable income of a family.
It is close to the valuation of the Alibaba : D.

 

[manqiangrexue]

The problem is no one really capture the incompatible behaviour between the next parameters:
-growing middle class
-growing GDP
-Social stability
-not growing debt level
-increasing trade surplus
And many of the above is only transient, debt increase can make bigger middle class with growing GDP for a while, but stable debt level means either growing GDP , but stagnating /decreasing middle class and social instability, or stagnating GDP but growing middle class , or growing GDP and middle class but growing trade surplus and many other proportional combination of the above.
However as soon as the debt capability of households reached the maximum the options for the policy makers will dramatically decrease, and the cost of failures will be magnified several-fold.

OF course you can hope to see "deus ex machina" , but I seriously doubt that .

It's like you don't understand what real growth is. All you talk about is "transfer" of wealth. Transferring things doesn't grow them; it just moves the same stuff around. Have you been in Europe for so long that you don't even understand what growth is? LOL

First of all, China actually has one of your selections, which is growing GDP, growing middle class, growing trade surplus. That's what's going on now. But it is not reliant on the continued growth of trade surplus. Do you not even understand the concept of a society that produces more due to technological advances and thus consumes more to improve standard of living? That's real economic growth. That's how every economy grew in the old world where there wasn't global trade. Now that there's global trade, you don't even understand how basic growth works?

The reality is Zhongnanhai has no clue about the next steps, they just try to patch the leaks.

LOL The reality is you don't understand anything about the secretive business of Zhongnanhai. You don't even understand the parts of China that are laid before public eyes, and you pretend to understand its most secret inner workings? That's funnier than you pretending to "analyze" economics without knowing how to read a chart!

In the past few decade the interest of powerful and wealthy was in line with the interest of average chinese other, but nothing guarantee that it will last longer.

Nothing "guarantees"? LOL What are you, imagining a future that soothes your fears?

There is a market for 10 million £ flats in London, but that doesn't show the average prosperity of the country.
The AVERAGE Chinese new dwelling cost 30 times more than the disposable income of a family.
It is close to the valuation of the Alibaba : D.

And yet, every year, more and more Chinese people are able to afford housing. Same bottom line no matter how you try to twist facts.

 

[Anlsvrthng]

It's like you don't understand what real growth is. All you talk about is "transfer" of wealth. Transferring things doesn't grow them; it just moves the same stuff around. Have you been in Europe for so long that you don't even understand what growth is? LOL

It is not about money, this game is about POWER.

The wealthy, politicians , connected wants the power above others, not the money.

The money is a way to get into the position of power.

Anyway, the transition is to transfer this control from the few to many.

And this is the reason why it is so difficult. It require from the politburo to loose its power, and transfer it to the masses.

 

[manqiangrexue]

It is not about money, this game is about POWER.

The wealthy, politicians , connected wants the power above others, not the money.

The money is a way to get into the position of power.

Anyway, the transition is to transfer this control from the few to many.

And this is the reason why it is so difficult. It require from the politburo to loose its power, and transfer it to the masses.

You have completely lost scope of the discussion, or rather this is a poor attempt to escape the conclusion that you've lost and have nothing left to say. Transfer of political power has nothing to do with how many Chinese people can afford housing. That's about money, and that's the topic being discussed.

Power will never be transferred from the few to the many because the masses are not able to act in a highly intelligent and coordinated way, therefore, they cannot hold power without chaos. The masses need to be led by a highly elite team of thinkers who make educated decisions for the good of the country, act on them quickly and efficiently, and if needed, can keep them in reasonable secrecy so that they cannot be countered effectively by antagonistic forces.

In every country, the few hold power over the many. China is no exception. This discussion is not about that, but if you start it, you will lose this one as well.

 

[Anlsvrthng]

You have completely lost scope of the discussion, or rather this is a poor attempt to escape the conclusion that you've lost and have nothing left to say. Transfer of political power has nothing to do with how many Chinese people can afford housing. That's about money, and that's the topic being discussed.

Power will never be transferred from the few to the many because the masses are not able to act in a highly intelligent and coordinated way, therefore, they cannot hold power without chaos. The masses need to be led by a highly elite team of thinkers who make educated decisions for the good of the country, act on them quickly and efficiently, and if needed, can keep them in reasonable secrecy so that they cannot be countered effectively by antagonistic forces.

In every country, the few hold power over the many. China is no exception. This discussion is not about that, but if you start it, you will lose this one as well.

You don't capture the magnitude / complexity of issue, and the motivation of the affected parties.

USA / Europe wealthy not because they have a lot of paper/ electronics currency, but because the citizens of those countries has bigger say about the events than say in India or China.

And this is not simply about "elections" ,that is small part of the story , it is about legal system, applicability of law onto everyone, freedom of business and independent juridical system.
Think about the ratio between the salaries and business profit on a full economy level like recognise who hold the real power in the economy.
If the business makes less ( more less) profit than the wage pool of workers then the workers has the power.

The increase of wages doesn't simply a numerical value for factory owners , but means money can not buy any more profit opportunity , only knowledge and capability.

Electoral power and so on came from this, and can be built onto this, not the opposite way around.

So saying that "it is just simply faster increase of wages than the GDP growth" is like calling the ice age as a "a bit cold weather".

Power will never be transferred from the few to the many because the masses are not able to act in a highly intelligent and coordinated way, therefore, they cannot hold power without chaos.

The elections only an insignificant part of the story.
And generally, the masses are more wise than the few, the best become idiot when infected by the corruption of power. China is not exception, only the fast rise from extreme deep poverty masked it for few decade.
See Switzerland. Compare its story with China in the past 150 years since the tenure of Cixi.

The country is not a military unit, that has to execute a command precisely .

The country is a group of people, who want to live undisturbed and well. The politicians wants to push they own cart, not the chasing the interest of the country.

There was few politicians in the history who valued his standing and power less than the interest of the people . And even the best start to spend best part of his time to keep on power when realise the successors are more ruthless and self centred than them.

 

[Hendrik_2000]

Guys cut it down on back and forth discussion with He is typical westerner and the worst of them East European which is newly converted to capitalism They are like recent protestant convert very ideologue and believing in Dogma
When China cannot be explain using standard text China defy all kind of stereo type and has been confounded their critic that is failed in their ever present prediction of China doom and gloom
New York time come with new excellent article as to why China has confounded their critic A must read for any one interested in Chinese Economy

But again one of the reason for success is combination of resourceful young economic wanting to build prosperous China and the Overseas Chinese indispensable role in China rise and not western investment Here is the excerpt. It is the latter managerial skill ,marketing savvy and knowledge of the western consumer that provide the impetus of Chinese rise
Once derided as loose grain of sand meaning people with no consequent It ironic they heralded China rise amazing for descendant of look down poor farmer

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The United States and Japan, both routinely vilified by party propagandists, became major trading partners and were important sources of aid, investment and expertise. The real game changers, though, were people like Tony Lin, a factory manager who made his first trip to the mainland in 1988.

Mr. Lin was born and raised in Taiwan, the self-governing island where those who lost the Chinese civil war fled after the Communist Revolution. As a schoolboy, he was taught that mainland China was the enemy.

But in the late 1980s, the sneaker factory he managed in central Taiwan was having trouble finding workers, and its biggest customer, Nike, suggested moving some production to China. Mr. Lin set aside his fears and made the trip. What he found surprised him: a large and willing work force, and officials so eager for capital and know-how that they offered the use of a state factory free and a five-year break on taxes.

Mr. Lin spent the next decade shuttling to and from southern China, spending months at a time there and returning home only for short breaks to see his wife and children. He built and ran five sneaker factories, including Nike’s largest Chinese supplier.

“China’s policies were tremendous,” he recalled. “They were like a sponge absorbing water, money, technology, everything.”

Mr. Lin was part of a torrent of investment from ethnic Chinese enclaves in Hong Kong, Taiwan, Singapore and beyond that washed over China — and gave it a leg up on other developing countries. Without this diaspora, some economists argue, the mainland’s transformation might have stalled at the level of a country like Indonesia or Mexico.

The timing worked out for China, which opened up just as Taiwan was outgrowing its place in the global manufacturing chain. China benefited from Taiwan’s money, but also its managerial experience, technology and relationships with customers around the world. In effect, Taiwan jump-started capitalism in China and plugged it into the global economy.

Before long, the government in Taiwan began to worry about relying so much on its onetime enemy and tried to shift investment elsewhere. But the mainland was too cheap, too close and, with a common language and heritage, too familiar. Mr. Lin tried opening factories in Thailand, Vietnam and Indonesia but always came back to China.

Now Taiwan finds itself increasingly dependent on a much more powerful China, which is pushing ever harder for unification, and the island’s future is uncertain.

There are echoes of Taiwan’s predicament around the world, where many are having second thoughts about how they rushed to embrace Beijing with trade and investment.

The remorse may be strongest in the United States, which brought China into the World Trade Organization, became China’s largest customer and now accuses it of large-scale theft of technology — what one official called “

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.”

Many in Washington predicted that trade would bring political change. It did, but not in China. “Opening up” ended up strengthening the party’s hold on power rather than weakening it. The

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, however, was felt in factory towns around the world.

In the United States, economists say

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as a result, many in districts that ended up

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.

 

[manqiangrexue]

OK, just to be clear, the housing discussion is over. I have fully laid out how China will continue to grow its middle class and this is to the concurrence of the fact that every year, more and more Chinese people are able to afford the housing, despite its expense.

Now I will continue to educate you on the new topic you started: transition of power from the few elite to the many common people.

Since your writing includes many small mistakes and is disorganized, I will not write a point-to-point on all. I have picked the most fundamental mistakes you've made and the rest of your problems stem from them. So let's focus on them:

USA / Europe wealthy not because they have a lot of paper/ electronics currency, but because the citizens of those countries has bigger say about the events than say in India or China. The elections only an insignificant part of the story.

Your definition of wealth is severely obstructed. You have defined wealth, first as the ability to make money in the future, and now as political power. Neither are acceptable definitions as it pertains to economics. Remember, we are talking about economics; in a philosophy discussion wealth can be defined as anything from health, happiness, to longevity, but in economics, there is only one definition: ownership over private resources.

That said, the USA/Europe are wealthier than China on a per capita measure simply because its citizens have more stuff/money. It has nothing to do with political power. Technically, India should be grouped with the US and Europe because while you say voting is insignificant, the rest of the world defines a large part of "power to the masses" as having democratic elections. Your alternate definitions of wealth and power make your argument a complete mess.

And that's not to mention that your entire claim that there is more power to the masses in the US than in China (without regard to voting rights) is incorrect and unsubstantiated. I have lived in both countries and I don't feel any different in terms of power or significance in either. The biggest difference is that in the US, I know that the police kill people for no reason so I'm much more relaxed when the police are involved in a situation in China than in the USA. If anything, it makes me feel more vulnerable and less empowered as a citizen in the US than in China.

And generally, the masses are more wise than the few, the best become idiot when infected by the corruption of power. China is not exception, only the fast rise from extreme deep poverty masked it for few decade.

That is mathematically impossible for the masses to be wiser than the few; that is like saying that the average value of 1 million numbers is larger than the 5 highest outliers.

Rule by the masses
1. has no coordination. Without hierarchy, no one can determine the outcome; it will be perpetual argument.
2. means that the stupid will always outnumber the smart by a vast margin and drown out the voices of those who have better ideas than the simple/obvious ones.
3. has no ability to keep plans in secret. Opposing (foreign) forces will have luxurious lead time to counter.
4. is short-sighted and skewed for immediate gratitude rather than long-term solution. It takes calm and patience to develop the latter; mobs don't have it.
5. Is not a form of government used anywhere in the civilized world. Voting is the closest to mass rule as it gets in any functioning country.

Rule by the elite
1. can select extremely talented individuals to take command with solutions so ingenious that average people don't even comprehend them.
2. can deploy those plans efficiently; a council can move much faster than a national vote/mob fight.
3. can deploy those plans in secrecy, leaving antagonists with little to no reaction time.
4. Is susceptible to corruption, but the risk can be mitigated by structure and the nationalism.
5. Is employed in every civilized government in the world as the only way to organize a country.

The country is not a military unit, that has to execute a command precisely .The country is a group of people, who want to live undisturbed and well.

This applies to Switzerland, not China. Switzerland is small, inconsequential, and poses no threat to anyone. It is a fly living its life with no disturbance and no significance; it's a very enjoyable way of living. China is a tiger; tigers are challenged by other large territorial beasts on a daily basis. Bears, lions, panthers etc... all wait to see weakness in the tiger to snatch his territory and deal him injury. To the tiger, the only way to live well is to be disciplined and to build elite power.

The only way the Chinese can live well is to operate as much like a military unit as a vast country of civilians can; if it is disorganized, if it is not ready, then India, Japan, USA will all jump at the oppertunity to humiliate and rob it.

The politicians wants to push they own cart, not the chasing the interest of the country. There was few politicians in the history who valued his standing and power less than the interest of the people . And even the best start to spend best part of his time to keep on power when realise the successors are more ruthless and self centred than them.

You have no choice but to trust these politicians because there is no such thing as rule by the masses. Rule by the masses is what happens in the last few weeks before a country collapses. As a matter of fact, your entire vision of transfer of power from the few to the many is completely unclear. Most people would assume that meant democratic voting rights. What exactly the hell do you think that means? Describe a model and keep in mind, it needs to be suitable for China, not Switzerland.