Chinese Economics Thread

[hereforsemithread]

They make it very clear they'd like to see markets (real estate and equity) stabilize. That is the point of a market stabilization fund. Meaning they are okay with it staying flat or going up, but they will put a floor in if it goes lower. If you are aware of the concept of risk in equity markets what the central government has done is to significantly enhance the risk adjusted returns of investing in A shares.

Okay.

 

[abenomics12345]

No.

Lets get this straight:

1) you asked me 18 months ago what I thought the priorities were;
2) I stated clearly (with screenshots/quotes) that LGFV debt relief is a priority.
3) In Nov 2024, Lan Fo'an comes out with a 12 trillion LGFV debt swap plan.

And you claim that central government doesn't share "my priorities" because you-were-too-lazy-to-look-up-what-I stated-in-the-first-place-so-instead-you-make-up-shit-about-what-I-wrote?

Got it. Intellectual Honesty.

 

[tphuang]

Alright, this is not going anywhere. Please move on to next topic rather than just arguing back and force.

 

[dingyibvs]

I never said you have to remember, but don't make up shit if you can't remember the details.


They make it very clear they'd like to see markets (real estate and equity) stabilize. That is the point of a market stabilization fund. Meaning they are okay with it staying flat or going up, but they will put a floor in if it goes lower. If you are aware of the concept of risk in equity markets what the central government has done is to significantly enhance the risk adjusted returns of investing in A shares.

It's gonna go lower. I don't really care what they say, it's obvious from what they do that they just don't want the RE market to fall too fast. What they're doing is not enough to stop the RE market from going lower. They have at their disposal the resources to do more as you've advocated many times before, but they're not doing it despite saying they'd want to rescue the RE sector, to stop deflation, etc.

I think the key difference in opinion is this: you seem to think that the explanation is that they don't actually understand the consequences of their actions (or inactions), i.e. they don't understand that what they're doing is not enough to accomplish their stated goals. I believe they do. I believe that the explanation is that they don't actually care to stop those things, they just want to manage the RE crash and mitigate deflation until other growth factors can take over. When that happens, citizens' wealth will increase again and issues with consumer confidence and deflation will take care of itself.

Whether you agree with this assessment is inconsequential. None of us can prove what the true intentions of the Chinese state is. What we can do though is to make predictions. I believe the Chinese government's line of thinking and action are as stated above and I believe them to be correct. As such, I predict that the RE market will continue to fall, but at a slower rate, until ~2028-2030. By then, newer industries will have grown sufficiently for the populace's wealth to again increase at a fairly rapid and steady pace, both directly through employment and wages and indirectly via stock market participation. Consumer confidence will be recovered by then and deflation will be gone. The RE market will never truly recover, it'll remain anemic even after it stops falling.