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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

#111

Post by harias »

chvid wrote: 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…

Chinas GDP is higher than that of the US if you take Purchasing power parity into account.[0] [0] - https://en.m.wikipedia.org/wiki/List_of_countries_by_GDP_(PP...

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

#112

Post by gnarcoregrizz »

Theodores wrote: post #90
chvid wrote: 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 t…

I've heard their directed investments referred to as 'qualitative easing' https://blogs.wsj.com/chinarealtime/2014/08/11/how-chinas-tr....

Unfortunately in the US, like you said, it seems like a lot of the capital has gone into west coast real estate and the stock market. Why wouldn't it? It's a lot easier to make money from rents than to actually build things.

I'm always awed by how much indirect ROI you can get from infrastructure, and I'm always disappointed in how bad the US is at it these days. I like to cite the hoover dam as a wildly successful infrastructure project - I visited it for the first time recently and learned that it was built for ~49M USD (639M USD in today's dollars). The indirect ROI on it is epic. It spawned Las Vegas and allowed other west coast cities to grow all along the southwest, not to mention the money it's made back in hydroelectric power and tourism. It did take a crisis (the great depression) to build it for so cheap though... The recession probably would have been a good time to do this stuff. Unfortunately, we got higher asset prices instead.

As for the GDP, yeah, it's a poor measure of growth. Yay, homes are now twice as expensive and people are relatively poorer, but we've succeeded in meeting our growth target!

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

#113

Post by echochamberhn »

woah wrote: post #72
Four_Star wrote: post #71

Earlier quoted context omitted.

If the US decided to spend trillions of dollars a year building skyscrapers in Alaska it could be 'growing' at 7% a year too. http://www.businessinsider.fr/us/china-ghost-cities-satellit...

If the US decide to spend trillions building skyscrapers its cities, then housing might be affordable

Except that the ghost cities in China are of incredibly poor quality and falling apart a mere months after construction. Other than that, good point!

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

#114

Post by paradite »

KaoruAoiShiho wrote: post #93

ITT: Nobody knows what they're talking about. People need to stop assuming all governments work identically and that numbers are comparable in any way. In China local governments COLLECTS NO TAXES, thus they fund all their expenditures by debt. In 2 years there's going to be widespread tax reform and all this debt will be wiped away.

From my understanding and reading, local government does collect taxes, though not much.

Links in Chinese:

1. https://zh.m.wikipedia.org/wiki/地方税务局

2. https://wapbaike.baidu.com/item/地方税/4480452?fromtitle=地税&fro...

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

#115

Post by paradite »

seanmcdirmid wrote: post #101
icebraining wrote: post #99

Earlier quoted context omitted.

Who lends money to a local government which has no revenue?

They make money by selling land, and they also get a smallish cut of the VAT (replacing business taxes they used to get). They also outsource their debt spending to locally controlled SOEs who theoretically should be able to make money by being an state-owned enterprise. Also, they make the state-owned banks lend to them regardless, at a low interest rate since there is an implicit garauntee they won’t default. It is…

According to Wikipedia local government collects taxes, including property tax:

https://zh.m.wikipedia.org/wiki/地方税

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

#116

Post by Retric »

harias wrote: post #111
chvid wrote: 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…

Chinas GDP is higher than that of the US if you take Purchasing power parity into account.[0] [0] - https://en.m.wikipedia.org/wiki/List_of_countries_by_GDP_(PP...

China has a huge population so Per person China's GDP is much lower even including PPP.

Per capita GDP depends on things like natural resources and corruption levels. So China is likely to lag behind on that measure long term, still they plenty of room for improvement.

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

#117

Post by seanmcdirmid »

paradite wrote: post #115
seanmcdirmid wrote: post #101

Earlier quoted context omitted.

They make money by selling land, and they also get a smallish cut of the VAT (replacing business taxes they used to get). They also outsource their debt spending to locally controlled SOEs who theoretically should be able to make money by being an state-owned enterprise. Also, they make the state-owned banks lend to them regardless, at a low interest rate since there is an implicit garauntee they won’t default. It is…

According to Wikipedia local government collects taxes, including property tax: https://zh.m.wikipedia.org/wiki/地方税

ATM, property taxes only have limited rollout in Chongqing and Shanghai on second properties. See https://www.bloomberg.com/gadfly/articles/2018-03-08/don-t-b....

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

#118

Post by _ptgt »

ChrisLomont wrote: post #86
zajd wrote: post #81

Earlier quoted context omitted.

> 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.

This might be an overgeneralization in this case...

While generally true for developing be developed countries, are you actually familiar with China's infrastructure development practices? If one thing is for sure, it's that there isn't a shortage of bridges, trains, airplanes, and roads... The Chinese government uses infrastructure-building programs to ensure it meets its centrally-planned GDP targets and to make sure everyone has jobs. Economists are actually concerned that the infrastructure is so overbuilt that the costs of future maintenance may make the return on many new infrastructure projects negative.

Meanwhile the US is notorious for crumbling infrastructure...

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

#119

Post by api »

chvid wrote: 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…

The USA could be a developing nation too. We should be building our first settlements on the Moon and Mars right now, eliminating biological limitations like aging and various sources of heritable inequality, sending our first probes to nearby stars with a high probability of hosting living biospheres in habitable zones, wiring every address in the nation with low latency gigabit+ broadband, and upgrading our infrastructure to be fully renewable and post-carbon. That's a very incomplete list of actual first world problems.

A "developed nation" should be called a "day two nation." See Jeff Bezos' excellent shareholder letters. A developed nation has a "day two mentality." No nation is developed but some are stuck.

Part of the problem is that we compare ourselves to other nations and think "wow, we're awesome." We should ignore all other nations and think "what can we do now?"

Unfortunately I'm not optimistic. The last election was a contest between a narcissistic reality TV star and a dull apparatchik with no vision. Our selection of such inferior representatives reflects our collective expectations about our future, or lack thereof.

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

#120

Post by repolfx »

xutopia wrote: post #25
repolfx wrote: post #22

Earlier quoted context omitted.

No, it seems to be the other way around. China's GDP figures are definitely false but likely to be inflated, not suppressed.

Can you explain why that is for the ignorant ones like me?

Chinese GDP is suspiciously stable at exactly the same value for long periods of time, and doesn't seem to correlate with other statistics that usually do correlate, like electricity usage.

IIRC it's not even a secret that China's GDP stats are useless. It's a problem the government has officially admitted to. As a sibling comment notes, the issue is that they aggregate stats from regional governors who are incentivised to tell the party what it wants to hear.

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