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The Chinese Government Likely Borrowed More than the US in 2017

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Re: The Chinese Government Likely Borrowed More than the US in 2017

#81
post #18

China is still a developing nation. That means that China can invest in infrastructure (roads, trains, airports, education) which have high real return making the increase in debt much less of a problem. This is also the reason why China has grown persistently 7-10% over the past two decades compared to USA which have grown 2-3% in the same period. Per person China's GDP is less than a fifth of the US hinting that th…

> China is still a developing nation.

> That means that China can invest in infrastructure (roads, trains, airports, education) which have high real return making the increase in debt much less of a problem.

What does that have to do with being a developing nation? The US could do the same.

Re: The Chinese Government Likely Borrowed More than the US in 2017

#82
post #65
post #53

Earlier quoted context omitted.

Using per person GDP when discussing China is a cruel joke. Like most usages of per person GDP in any country, it glosses over regional disparities and (more importantly) economic equality measures like Gini coefficient. Taking Gini coefficient into consideration, China still has a long way to go.

The point was that even based on GDP per capita, China still has a long way to go.

But the scale of China population is so that if they double their GDP per capita, they will have an upper and middle class population bigger than most if not all individual countries in the world (EDIT: except India).

Re: The Chinese Government Likely Borrowed More than the US in 2017

#83
post #43
post #7

Earlier quoted context omitted.

It absolutely isn't. The funny part is, for the past 12+ years voices predicting an economic collapse of China have gotten stronger and stronger, but it just doesn't happen. Every time they passed some magic number in some statistic it was all "zomg collapse is imminent!" I guess with a government like they have you have greater possibilities to cover up and postpone the effects, but who knows how this will manifest.…

Eh it's absolutely sustainable. China is a monetary sovereign. All of this debt is issued in a currency that they can literally create out of thin air. There is zero possiblity that China will default on this debt. And China has been very careful to avoid externally denominated debt. The only real risk here currency revulsion. At some point there is a risk that nobody will want the currency. But the risk of internal…

"monetary sovereign"

It still requires them to get many other rich countries to generally buy into their story.

Re: The Chinese Government Likely Borrowed More than the US in 2017

#84
post #20

Earlier quoted context omitted.

I've taken the train across china from Hangzhou to Beijing and there is no lack of living space, or empty housing from the speculative bubble. The threat of south-irian is basically the classic yellow-peril threat model. Its a really bad argument. As long as we are happy to export tertiary education and then proffer immigration channels, there is no basis to argue the Chinese polity wants to invade: it can get people…

> I've taken the train across china from Hangzhou to Beijing and there is no lack of living space, or empty housing from the speculative bubble. The point of the parent's reference isn't to a lack of actual space, it's to Germany's complaint in the 1930s of not having enough Lebensraum : https://en.wikipedia.org/wiki/Lebensraum ... which was similarly spurious -- the Germans had plenty of room for their population to…

Specious though the south china sea argument feels to us, Its entirely consistent with a long held vision of China and its sphere of influence. What rankles, is the extent to which the opposition to it, the open-seas sailing policy, is being taken by actors (the US, Australia) who chose otherwise to disregard mediation and international law in matters of their own spheres of influence: East Timor for instance. This is not whataboutism, its directly relevant, contradictory behaviour. The Chinese have a long standing stated claim to the spratleys (which btw, I think is entirely bogus) but in no sense simply emerged into a state of claiming them in recent times. The laws being used to push back, are entirely a product of the post-WWII polity, were an attempt to construct a legal mechanism to mediate between states, which is being (forcefully) applied here by some states, who choose to disregard the same legal basis when applied to cases of their own.

Lebensraum was a manufactured need of political expediency and an explicitly expansionist act. The South China Sea is not lebensraum, its open-fishing rights, and over-flight and sailing rights, and mineral rights. It's also a vision of a defensive ring.

You know, that domino theory we used to be sold about chinese expansionist policy in S.E. Asia? its being played in reverse: they need this barrier, because we are trying to re-apply opium war logic to opening chinese capital investment markets, and land in China...

Re: The Chinese Government Likely Borrowed More than the US in 2017

#85
post #51

US is exporting $500 billion currency to China; And China is investing that money back in https://en.wikipedia.org/wiki/United_States_Treasury_securit... resulting in $1,181 billion debt to USA

If you include HK and Taiwan, they own a whopping $1500 billion in US debt via treasuries. But these are just savings instruments for them, a way to deal with excess foreign reserves without messing with their own exchange rates. It isn’t like the USA is begging them to buy treasuries, more like treasuries are provided as a service that makes the dollar so useful in trade.

The yuan does not provide the same service to other countries, nor could it since it isn’t fully convertible anyways.

Re: The Chinese Government Likely Borrowed More than the US in 2017

#86
post #81
post #18

China is still a developing nation. That means that China can invest in infrastructure (roads, trains, airports, education) which have high real return making the increase in debt much less of a problem. This is also the reason why China has grown persistently 7-10% over the past two decades compared to USA which have grown 2-3% in the same period. Per person China's GDP is less than a fifth of the US hinting that th…

> China is still a developing nation. > That means that China can invest in infrastructure (roads, trains, airports, education) which have high real return making the increase in debt much less of a problem. What does that have to do with being a developing nation? The US could do the same.

Adding infrastructure has a higher rate of return when there is less infrastructure to begin with. Adding one interstate highway system greatly increased US economic mobility. Adding a second would not have such benefit.

So China, not having the infrastructure the US does, likely gets a benefit on doing projects that would be a loss in the US.

Re: The Chinese Government Likely Borrowed More than the US in 2017

#87
post #6

Earlier quoted context omitted.

The thing is, they don't show the hardware which would go with the spend. The construction equipment used to occupy the Spratleys has to then be followed by new ships, new airplanes, new heavy armor. Domestically, the provinces are very powerful. the PLA is not out in force in complex, expensive hardware, its paramilitary presence which is not a huge increasing cost given mandatory post-university universal conscript…

They are literally manufacturing islands in the ocean.

Cheaply btw. Pumping sand is not hard. And, they're doing it on existing reef structures. The sand only lasts because there is an anchor there.

This is not primarily military budget, any more than the US army corps of construction is military budget when it builds dams and Levees in the USA mainland (which btw, it does, a lot)

Military budget is materiel. Sand, even runways, is not Materiel.

Re: The Chinese Government Likely Borrowed More than the US in 2017

#89

Earlier quoted context omitted.

What makes you think that the debt has to be bought?

Government debt, much like large corporate debt, almost always takes the form of bond issues. By definition, to raise debt capital via a bond issue someone needs to buy those bonds. Buying bonds is buying debt. Thus, governments cannot raise money through debt issues if people are unwilling to buy the debt.

Over half of US debt is held by Federal retirement funds -- e.g. Social Security. So you put that money away for your retirement, and that retirement fund automatically buys close to no return t-bills. It's all really a giant pyramid scheme, and is only tenable with unsustainable population growth. The US can run an enormous deficit for as long as they can convince the population that their retirement funds should pay for today.

Savings bonds end up being the poster child of the debt, but less than 1% of the debt is actually bonds like that.

Re: The Chinese Government Likely Borrowed More than the US in 2017

#90
post #18

China is still a developing nation. That means that China can invest in infrastructure (roads, trains, airports, education) which have high real return making the increase in debt much less of a problem. This is also the reason why China has grown persistently 7-10% over the past two decades compared to USA which have grown 2-3% in the same period. Per person China's GDP is less than a fifth of the US hinting that th…

China spend money on infrastructure, meanwhile in the West there is 'Quantitative Easing' with money going straight to the banks.

As you state there is real return in infrastructure expenditure - roads, trains, airports, education is genuine investment. A business case can be made for putting in a new 300kmh train set that spans the country. Over in the West we don't get that, instead we have to pay untold billions to the banks because if we don't then the sky will allegedly fall in so we have to kick the can down the road.

GDP is also a useless figure. If we all decide to decide that our houses are worth double what they were worth five years ago and go about buying and selling these crumbling piles of bricks then have we really increased GDP? If, on the basis of these increasing property values everyone remortgages and buys fancy German sportscars and monster SUVs then have we really increased GDP?

I am sure there is plenty of hubris going on in the Chinese economy and that status anxiety drives people to buy pointless luxury goods as per what happens in America, however, GDP is not all it is cracked up to be and there is a big difference in debt used to build an economy compared to debt used to prop up the rent-seeking classes.

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