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China’s dodgy-debt double act

economist.com

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Re: China’s dodgy-debt double act

#21

Post by starfallg »

throwaway4good wrote: post #14
another_story wrote: post #12

Earlier quoted context omitted.

They have been investing in infrastructure, housing and energy. The return on that investment has been decreasing. The CCP has been kicking the can down the road as best it can trying to maintain growth numbers, which in part acts as justification for its single party rule.

You (and most other western commentators) underestimate just how long the road is.

China is rapidly heading towards the middle-income trap. All of the positioning in the past decade is in the hope of avoiding it. This is a massive challenge as the prosperity of the upper classes is based on cheap labour. All of the advanced economies overcame this by moving jobs up the value chain. China can't easily to do this due to its massive population, a large part of not very well educated. There is a real risk of social instability when semi-skilled jobs dry up.

Re: China’s dodgy-debt double act

#22

Post by powerapple »

chunghuaming wrote: post #10

Chinese citizen living in US, posting anonymously for obvious reason. Huarong and evergrande are just the tip of the iceberg. If you wish to know what all the things fester below for CCP, here's a very timely summary video from laowhy86, one of the YouTube expert on China https://www.youtube.com/watch?v=RpwtZLzDM_o Unfortunately you will not find many outspoken Chinese native citizen on YouTube, for they all fear CCP…

I wouldn't call a foreigner a China expert. I wouldn't be a China expert as Chinese, and I can read Chinese.

And, it is not abnormal at all that big company defaults on tens of billion debts. Without digging deep into the issue, I think the company is playing a too-big-to-fail game with the government, by bundling itself with many small investors, it will have more leverage with the government since the government is cracking down on big real estate companies. This is actually not the first time the company use this strategy. The interesting thing now is that is the government going to allow bankruptcy to happen or not.

EDIT: especially the foreigner lives in China spending time with his expats friends, no knowledge of the society, no knowledge of the business at all.. I just started reading Red Roulette, you will know, even you are Chinese, if you are not in the business circle, you don't know business..

Re: China’s dodgy-debt double act

#23

Post by powerapple »

roenxi wrote: post #13

We live in very exciting times. The question isn't "Is China's economy good?" or "Is China's economy bad?". The question is "How will it perform relative to Europe and America?". The US's economic fundementals aren't great. I'm expecting to see US government spending be the majority of GDP in my lifetime. That sort of centralised planning doesn't bode well for the West.

Economy can evolve, what we consider as fundamentals can change, people would think it is crazy to have a currency not backed up by gold previously has worked, it is time printing money becomes normal, it is just numbers anyway. Unless there is an alternative, the economy will go forward as it is. As long as everyone is buying into this game, the game can continue forever.

Re: China’s dodgy-debt double act

#24

Post by enaaem »

hikingsimulator wrote: post #19
chunghuaming wrote: post #10

Chinese citizen living in US, posting anonymously for obvious reason. Huarong and evergrande are just the tip of the iceberg. If you wish to know what all the things fester below for CCP, here's a very timely summary video from laowhy86, one of the YouTube expert on China https://www.youtube.com/watch?v=RpwtZLzDM_o Unfortunately you will not find many outspoken Chinese native citizen on YouTube, for they all fear CCP…

Having watched that video, laowhy presents a biased view on the topic. Not a biased view of China mind you, but because his views echo the triumphant 90s zeitgest that capitalism, liberalism, and what can be cast as a "laissez-faire" attitude (supposedly being necessary to the development of a country) is for him the de-facto aka obvious best system. The underlying thread is still that "Fukuyama take" that capitalism…

Are there any specific points in the video you disagree with?

Just saying something is biased does not make you correct. It is just very elaborate way to say “oh no it isn’t!”.

Re: China’s dodgy-debt double act

#25

Post by quincunx »

imtringued wrote: post #20
quincunx wrote: post #18

Earlier quoted context omitted.

So I thought "gov't spending, majority of GDP" was preposterous, but then I looked at the graph at https://en.wikipedia.org/wiki/Government_spending_in_the_Uni... Looks like it already blipped the 50% mark in WW2 and is quite close now. Seems to (visually) be leveling though.

What is preposterous about it? If anything we can probably guess that the 40s to 80s were so nice because government spending went up. The 2008 blip was just the bank bailout. It looks like government spending has stabilized 40 years ago. Considering how much the economy got "worse" from the perspective of the average because China got more powerful since 2000 it's actually strange how the numbers remained stable.

What is preposterous about it?

You mean why I felt it was preposterous? Well allow me to demonstrate my naivety...

I would have expected 50% to be "socialist Europe" type spending, and indeed, a bit of googling reveals France is at about 60% of GDP right now, Germany at about 50%, Netherlands at 47%... That 60% of all income is determined by the policies and decision making of politicians, apparatchiks and bureaucrats is, I find, shockingly close to a planned economy.

So why preposterous? Because the US, on so many fronts, positions itself in contrast to Europe - free market ideology, small government rhetoric, fiscally conservative. Anyway, obviously, I was wrong.

Re: China’s dodgy-debt double act

#26

Post by throw3434053 »

enaaem wrote: post #24
hikingsimulator wrote: post #19

Earlier quoted context omitted.

Having watched that video, laowhy presents a biased view on the topic. Not a biased view of China mind you, but because his views echo the triumphant 90s zeitgest that capitalism, liberalism, and what can be cast as a "laissez-faire" attitude (supposedly being necessary to the development of a country) is for him the de-facto aka obvious best system. The underlying thread is still that "Fukuyama take" that capitalism…

Are there any specific points in the video you disagree with? Just saying something is biased does not make you correct. It is just very elaborate way to say “oh no it isn’t!”.

Laowhy only offers this slimey smug clickbait view of China that is exactly what American powers want people to believe. He is constantly releasing videos saying "China will fall any day now!", it is just giving people what they want to hear and it's totally reasonable for this person to point out how biased and uncritical he is.

Re: China’s dodgy-debt double act

#27

Post by guerby »

Perspectives :

"The level of debt is jaw-dropping. The private non-financial sector owed the equivalent of 222% of GDP at the end of 2020. Most of that sits with companies. By comparison, private non-financial debt in America is 164% of GDP."

GDP per capita China :

https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?location...

   2010  4550 USD (current)
   2020 10500 USD (current)
USA GDP per capita

https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?location...

   2010 48466 USD (current)
   2020 63543 USD (current)

Re: China’s dodgy-debt double act

#28

Post by pjc50 »

quincunx wrote: post #18
roenxi wrote: post #13

We live in very exciting times. The question isn't "Is China's economy good?" or "Is China's economy bad?". The question is "How will it perform relative to Europe and America?". The US's economic fundementals aren't great. I'm expecting to see US government spending be the majority of GDP in my lifetime. That sort of centralised planning doesn't bode well for the West.

So I thought "gov't spending, majority of GDP" was preposterous, but then I looked at the graph at https://en.wikipedia.org/wiki/Government_spending_in_the_Uni... Looks like it already blipped the 50% mark in WW2 and is quite close now. Seems to (visually) be leveling though.

Very important question: are pensions counted as "spending" in the breakout of federal/local/state spending? Because if they are then the number will inevitably go up as life expectancy beyond pension age increases.

I'm slightly surprised to see that the War On Terror didn't register as a visible discontinuity on the graph, even as a smaller one compared to WW2. I suppose the money would have been spent on the military anyway.

Re: China’s dodgy-debt double act

#29

Post by christophilus »

This was covered on yesterday's Real Vision Daily Briefing[0]. It does feel like it could be China's Lehman moment. We'll have to wait and see.

There seem to be a lot of cracks and fraying in China's economy at the moment, and it feels like the sort of thing that could bring on a global economic crisis, if not handled with care.

[0] https://www.youtube.com/watch?v=_w8twoGZR_Q

Re: China’s dodgy-debt double act

#30

Post by dmix »

roenxi wrote: post #13

We live in very exciting times. The question isn't "Is China's economy good?" or "Is China's economy bad?". The question is "How will it perform relative to Europe and America?". The US's economic fundementals aren't great. I'm expecting to see US government spending be the majority of GDP in my lifetime. That sort of centralised planning doesn't bode well for the West.

Why does every single conversation about China have to devolve into a contest with America? This is usually a way to distract from problems in China with whataboutisms. The soviets did this obsessively too the minute anyone critiqued them.

It is in fact possible to evaluate a countries economy in isolation as well as comparatively globally … and America (and the rare EU anecdote) is not the only economy to compare to.

America’s issues don’t alleviate other country’s issues. The Chinese economy, population, and political/legal system are often very different so direct comparisons are usually only partially valuable.

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