Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

China's Zombie Economy

newleftreview.org

Post reply on HN
Print view View original

131–140 of 156 posts

Re: China's Zombie Economy

#131

Post by prewett »

seanmcdirmid wrote: post #78
Aunche wrote: post #67

Earlier quoted context omitted.

Rent helps a lot when it comes to PPP. Also, services like healthcare, plumbing, education, etc

Buying a house is more expensive even if rents are cheaper (well, they are still in a big property bubble). Service in general are cheaper, but anything imported will be same or more expensive (obviously, since USD is being used to buy those). Cars were generally more expensive, and luxury cars still are, but low to mid end cars are about the same now. China has high taxes on luxury goods, and what is considered a lu…

> what is considered a luxury good is pretty strange

Considering a tasty Western meal in Beijing was about 100 RMB, a nice Chinese meal about 50-75 RMB per person, and Peking duck at a fancy place was 250 RMB, I’d say a pair of jeans for 600 RMB is fairly luxury. Especially since Levi’s in the US only cost 1-2 normal meals. (This was about 2012, not sure how inflation has been) But then, I’d also say that a $100 pair of jeans is also luxury in the US. (And a poor deal if they’re already fashionably pre-shredded)

Re: China's Zombie Economy

#132

Post by stale2002 »

Vt71fcAqt7 wrote: post #94
stale2002 wrote: post #81

Earlier quoted context omitted.

The point though, is that China isn't going to have a revolution, or dramatic collapse. Instead, it is going to have a long and slow stagnation. Therefore, the people saying "well, people have been talking about a China collapse for a decade but I haven't seen anything dramatic happen!!" Are wrong and missing the point. Because a decade of stagnate growth for China is still a big deal, while not being dramatic in a w…

>it is going to have a long and slow stagnation. How slow? "Japanification" is 1% growth.[0] That's ridiculus for a growing economy. I can't take the claim that China will have 1% growth seriously. If you mean "stagnate at 6%," my claim is that 6% is "enough" for a low middle imcome economy, Cf. Japan in 1970. So your claim in that case is wrong that it will be "a big deal." At most we can say that China will reach a…

Sure, stagnate at 1 or 2% for a couple decades.

That's both bad for china, while also not a literal revolution.

> That's ridiculous for a growing economy.

It is low for a normal growing economy, sure. But China has a lot of problems, which is the entire point.

If you want to call low and stagnate growth as something that is very bad, sure.

But most people, when they are objecting" to the term "dying" are simply objecting to the idea of a sudden collapse, which is it not likely to happen.

Instead was is likely is very low growth for a long time.

Which you are free to call very bad if you want, but that's not the same definition as what other people are referring to.

Re: China's Zombie Economy

#133

Post by [deleted] »

dirtyid wrote: post #119
isykt wrote: post #100

Anyone who took a high-speed train from Beijing to Shanghai over the past decade might have caught on to this phenomenon. The number of cities built in the middle of nowhere, with concrete skyscrapers standing empty, is stark and staggering. Seeing them is not only surreal, but gives one the sense of seeing something they ought not to, despite it being right outside the window. The only rationalization that withstand…

>rationalization that withstands any cursory scrutiny I mean yeah, that's the rationalisation, that useful idiots deliberately try not to see. PRC currently @65% urbanzation, with goal of 75-80% by 2035, aka 140-200M people. PRC "only" has 50M empty flats. Having excess housing inventory is fine, it's inefficient, but no more inefficient that US health sector at 20% GDP with medicore life expectancy. Which is only a…

[deleted]

Re: China's Zombie Economy

#134

Post by r00fus »

nine_k wrote: post #112
SkyMarshal wrote: post #15

Earlier quoted context omitted.

You can safely ignore any story that includes “collapse” in its title when referring to a G-20 country. They’re all just clickbait.

"Collapse" is not turning into a war-torn wasteland. I's just losing much / most of the power, and getting by in that mode somehow. Japan is a mild example, but I bet you have much fewer "Made in Japan" things in your house than you would in 1985. Argentina is a much more painful example, with no recovery in sight. Wait what's going to happen when Russia loses the war.

Perhaps not in the house but in your car and phone? They just transitioned industries.

Re: China's Zombie Economy

#135

Post by Vt71fcAqt7 »

stale2002 wrote: post #132
Vt71fcAqt7 wrote: post #94

Earlier quoted context omitted.

>it is going to have a long and slow stagnation. How slow? "Japanification" is 1% growth.[0] That's ridiculus for a growing economy. I can't take the claim that China will have 1% growth seriously. If you mean "stagnate at 6%," my claim is that 6% is "enough" for a low middle imcome economy, Cf. Japan in 1970. So your claim in that case is wrong that it will be "a big deal." At most we can say that China will reach a…

Sure, stagnate at 1 or 2% for a couple decades. That's both bad for china, while also not a literal revolution. > That's ridiculous for a growing economy. It is low for a normal growing economy, sure. But China has a lot of problems, which is the entire point. If you want to call low and stagnate growth as something that is very bad, sure. But most people, when they are objecting" to the term "dying" are simply objec…

Sorry, a decade of 1-2% growth is just not happening. There is still so much low hanging fruit in the Chinese economy and plenty of talented (perhaps overqualified) workers to pick them. I suppose this is where we disagree. Thier automobile industry is just begining in earnest, for example. They are in 1965-1970 era Japan, not 1990.

This was Japan's economy:

Junk -> steel -> automobiles -> computers/chemicals

China is only now geting to automobiles. They are making good progress on electronics as well. Thinking they will suddenly go to 1% is just ridiculus in my view when they have so much left. They also aren't strictly speaking as dependent on exports as Japan was considering the size of their domestic market. To me all of this signals that China will stay in the 6-7% range and will reach 40k GDP per ca in 15-20 years or so.

Re: China's Zombie Economy

#136

Post by lamontcg »

isykt wrote: post #100

Anyone who took a high-speed train from Beijing to Shanghai over the past decade might have caught on to this phenomenon. The number of cities built in the middle of nowhere, with concrete skyscrapers standing empty, is stark and staggering. Seeing them is not only surreal, but gives one the sense of seeing something they ought not to, despite it being right outside the window. The only rationalization that withstand…

skyscrapers standing empty?

zombie economy based on cheap debt?

good thing the US doesn't have any of that.

Re: China's Zombie Economy

#137

Post by stale2002 »

Vt71fcAqt7 wrote: post #135
stale2002 wrote: post #132

Earlier quoted context omitted.

Sure, stagnate at 1 or 2% for a couple decades. That's both bad for china, while also not a literal revolution. > That's ridiculous for a growing economy. It is low for a normal growing economy, sure. But China has a lot of problems, which is the entire point. If you want to call low and stagnate growth as something that is very bad, sure. But most people, when they are objecting" to the term "dying" are simply objec…

Sorry, a decade of 1-2% growth is just not happening. There is still so much low hanging fruit in the Chinese economy and plenty of talented (perhaps overqualified) workers to pick them. I suppose this is where we disagree. Thier automobile industry is just begining in earnest, for example. They are in 1965-1970 era Japan, not 1990. This was Japan's economy: Junk -> steel -> automobiles -> computers/chemicals China i…

Growth isn't just determined by some video game tech tree. It is determined by a large number of other factors.

> Thinking they will suddenly go to 1% is just ridiculus in my view when they have so much left.

One way that "growth" can go down is by simply marking down the value of existing capital projects.

In China's case, this would be all the debt and real estate that they have, which is overvalued.

You can borrow lots of money over the short and medium term, to create fake growth, but eventually there is a limit to debt fueled projects. And china is starting to hit that limit of an overleveraged economy.

IE, that powerplant, that was previously "included" in previous growth rate metrics as being "worth" 1 billion dollars, is actually only worth 500 million dollars, even if "the books" say otherwise right now.

If all those capital intensive to create buildings that they have are actually worth half as much as they are incorrect marked on the books right now, that would account for the "apparent" decrease in growth that will happen over the next decades, even though technically it would just be revealing past fake/debt fueled growth.

Does that make sense how if they lose X trillion dollars (but over time!) because of overvalued real estate/capital projects, that this would account for an apparent decrease in growth, even if china still has gains from other parts of the economy?

Re: China's Zombie Economy

#138

Post by ElectricalUnion »

jacquesm wrote: post #82
adventured wrote: post #16

Earlier quoted context omitted.

Both ends (takeover / collapse) are exaggerations for the benefit (attention) of the person making the claim. The US and EU/Eurozone/Western Europe are not going away. Their significant allies are not going away (eg Japan, South Korea, Australia, New Zealand, India, etc.). China isn't taking over, they're becoming (have become) a peer global power. China has accumulated vast wealth, infrastructure, manufacturing, kno…

China could still turn into a North Korea writ larger with as extra lever the fact that they hold the keys to the manufacturing kingdom.

But then you keep adding countries to this special "sanctioned from normal economy and normal institutions" status and it will keep undermining the effect being "sanctioned from normal economy and normal institutions" are supposed to bring.

So then after a while if the things keep going on North Korea stops being "that isolated contry"?

Re: China's Zombie Economy

#139

Post by soVeryTired »

satvikpendem wrote: post #40
have_faith wrote: post #17

Earlier quoted context omitted.

Banks don't generally lend out deposits.

Yes they do? That's what fractional reserve banking is about.

What's taught in undergrad economics courses is incorrect. Fractional reserve banking doesn't really exist anymore. Banks don't lend out the deposits they recieve, they create new ones 'out of thin air'.

Arguably the most important constraint on a bank's ability to create new loans (and hence new deposits) is its core tier one capital ratio: that is, its total liabilities divided by its shareholders' equity.

Re: China's Zombie Economy

#140

Post by kwere »

FrustratedMonky wrote: post #9

Question. For 20 years I've been hearing China will takeover, and also that it is about to collapse. It seems like daily there is some story about how China will collapse, and then also stories of how it will still takeover. I did read it, but not seeing what this article brings new. What is the point being made here? Except, things are bad, and nobody realizes it. The term Zombie Economy has been used for a lot of y…

>The term Zombie Economy has been used for a lot of years, when will it actually manifest?

Around 30% of the economy is linked to real estate, seems pretty zombified. Export economy is being strangled by increased labour costs/shortages and carefully rolled sanctions. Consumption economy has difficulties to grow due to a lack of "hope in better times" from consumers. But the elephant in the room is the CCP, which is looking more concerned with "political stability" at the expense of everything else.

Things are bad since Xi Jimping first years with first wave of delocalization of (textile) industries, politicization of society, political infightings that target the economy, etc...

Post reply on HN