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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

#121

Post by vkou »

microdrum wrote: post #83
dnomad wrote: post #43

Earlier quoted context omitted.

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.

As long as you keep buying cheap (And a few expensive) things made in China, you're buying into the story.

Where do you think your iPhone is built?

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

#122

Post by vkou »

tonyedgecombe wrote: post #37
MLR wrote: post #12

Earlier quoted context omitted.

China is (officially) growing at ~7% per year right now, so adding $700 billion to their debt pile barely changes the debt/GDP ratio, it might even still fall but I'd have to check the exact figures.

Does anybody believe that growth rate anymore?

Anybody who has actually been to China in 1998, 2008, and 2018 would.

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

#123

Post by jeffreyrogers »

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.

My understanding is this is partly because they had a hard time collecting taxes in the past due to having weak institutions, so local governments raised money from external sources in return for giving those who gave them money a cut of the profit. As China develops it starts replacing these ad-hoc arrangements with more formal ones like you see elsewhere.

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

#124

Post by baursak »

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.

This, but also for central government debt, the government is the issuer of its own currency. As long as the debt is denominated in the same currency, the government can never become insolvent on its debt. The real constraints are always real resources and real economic activity, the lack of which would cause inflationary pressures.

Here's an insightful bit in US context, but it's much the same for China: https://youtu.be/pex89N9Oqog

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

#125

Post by dv_dt »

ihsw2 wrote: post #53
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…

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.

At least China's Gini coefficient is going in the correct direction. The US's Gini has been getting worse all while we still have third-world conditions festering for far too long.

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

#126

Post by gruez »

vkou wrote: post #122
tonyedgecombe wrote: post #37

Earlier quoted context omitted.

Does anybody believe that growth rate anymore?

Anybody who has actually been to China in 1998, 2008, and 2018 would.

All that will tell you is "china grew a lot". It won't tell you whether they grew 10%/year or 8%/year.

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

#127

Post by seanmcdirmid »

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...

No it isn’t.

Also, PPP is a dumb metric, many things in China beyond services and food are much more expensive than they are in the USA.

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

#128

Post by seanmcdirmid »

dv_dt wrote: post #125
ihsw2 wrote: 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.

At least China's Gini coefficient is going in the correct direction. The US's Gini has been getting worse all while we still have third-world conditions festering for far too long.

China’s official GINI coefficient doesn’t include grey income (e.g. that official making 10k RMB/month yet driving a black Audi A9). Well, they stopped reporting it in the early part of this decade when it started getting really bad.

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

#129

Post by dv_dt »

seanmcdirmid wrote: post #128
dv_dt wrote: post #125

Earlier quoted context omitted.

At least China's Gini coefficient is going in the correct direction. The US's Gini has been getting worse all while we still have third-world conditions festering for far too long.

China’s official GINI coefficient doesn’t include grey income (e.g. that official making 10k RMB/month yet driving a black Audi A9). Well, they stopped reporting it in the early part of this decade when it started getting really bad.

There are always reporting problems, especially tracking the wealth of the extreme rich. Estimates of hidden income and wealth are in the trillions. Gini in both China and the US are likely worse in actuality. But when you're in the middle of the process of converting your economy from rural to modern then it's much easier to swing the Gini change in the more equal direction.

But because it's a different situation and harder to change in the US, doesn't mean we shouldn't be strongly aware of the implications of its worsening in the US.

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

#130

Post by vkou »

gruez wrote: post #126
vkou wrote: post #122

Earlier quoted context omitted.

Anybody who has actually been to China in 1998, 2008, and 2018 would.

All that will tell you is "china grew a lot". It won't tell you whether they grew 10%/year or 8%/year.

No, but it'll pretty definitively tell you that they are not 10x off published GDP numbers.
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