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

China’s dodgy-debt double act

economist.com

Post reply on HN
Print view View original

31–40 of 59 posts

Re: China’s dodgy-debt double act

#31

Post by pjc50 »

quincunx wrote: post #25
imtringued wrote: post #20

Earlier quoted context omitted.

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 bureaucrat…

It's pensions. On both sides of the Atlantic. https://www.usgovernmentspending.com/pensions_spending

The difference in military spending (which might otherwise be a likely suspect) is more like 3.5%ish (US) to 1-2%ish (Europe)

Re: China’s dodgy-debt double act

#32

Post by hikingsimulator »

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!”.

The other answer to your message offers the gist of my point.

Laowhy does not offer the research that backs his point besides the general doxa around China. I don't see why I should have to prove a negative.

China has many issues, but the feel-good doomsday rhetoric offered by Laowhy does not help OP's argument especially when channels like Polymatter have covered those issues, better, with less bias and more down-to-earth conclusions.

Re: China’s dodgy-debt double act

#33

Post by sparsely »

echelon wrote: post #3

Is there any way to short evergrande, buy puts, etc.? I didn't find them listed in my brokerage. Is smart money already doing so? Any other dominos that will fall because of this, and similar plays to take advantage of them?

"Smart" money has been betting against Evergrande for years, and losing money on it until very recently. I heard of one asset manager who in hindsight was totally correct about the fundamentals give up trading them at all, they so consistently lost so much money on it (the market can stay irrational etc.). It's a dangerous game!

Mike Bird at the WSJ has been going on about this for years as well.

Re: China’s dodgy-debt double act

#34

Post by throwaway4good »

guerby wrote: post #27

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…

Another perspective - central bank lending rates:

   China: 3.875%
   ECB and FED: about 0.25%

Re: China’s dodgy-debt double act

#35

Post by pjc50 »

throwaway4good wrote: post #17
baybal2 wrote: post #16

The surreally large "shadow debt" that modern China has accumulated was my undergrad essay topic 10 years ago. Since then, it seem to have grown from "surreally large" to "absurdreally large" Go to any big Chinese city. Look around. Every skyscraper around is a mountain of secret debt few times its value. China is really very close to Sri Lanka in how GDP numbers were financially engineered from massive, but well dis…

So why were you wrong, 10 years ago, when you assumed that the debt burdens were unsustainable?

Parent didn't use the word unsustainable, merely "large". And remember "Market can remain irrational longer than you can remain solvent"? There's no particular reason why it should "correct" on any particular timescale. Kick the can hard enough and the problem is solved for your lifetime.

Re: China’s dodgy-debt double act

#36

Post by dragonelite »

throwaway4good wrote: post #9

It seems like the Chinese authorities are trying to deleverage by explicit policy (very evident in the stock market), here when the leverage in the western economies is at its highest. We in the west have a tendency to overestimate China's debt problems by comparing the numbers and ratios to that of the west. Forgetting that 1) China is very big and has a lot of people 2) most people in China are poor and live essent…

This is what I have heard more from other China investing podcasts, that the next China is in rural China. Not ASEAN, not India but rural China will become the next China. Like you said most of them are probably just getting by. Moving them to the cities and make sure the next generation is educated will give China its next two decades of growth. From what I also gathered in land rural China grows at like 10% plus a year compared to single digit coastal regions.

Re: China’s dodgy-debt double act

#37

Post by thaumasiotes »

guerby wrote: post #27

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…

> "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."

So they have about a third more debt than we do? "Jaw-dropping" seems like an overstatement.

Re: China’s dodgy-debt double act

#38

Post by ackbar03 »

RileyJames wrote: post #2

Wondering if this and the everglade situation could be the undoing of tether. Tho Tether seems to be completely disconnected from any sort of reality. Tether is speculated to be backed by a lot of Everglade ‘commercial paper’ debt. https://news.ycombinator.com/item?id=27959852

What?

As fascinating as this would be the only connection the tweeter makes between the two is that Tether bought a lot of CP and Evergrande happens to need a lot of money. Tweeter needs to get off whatever he's smoking

Re: China’s dodgy-debt double act

#39

Post by temp8964 »

quincunx wrote: post #25
imtringued wrote: post #20

Earlier quoted context omitted.

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 bureaucrat…

“ the US, on so many fronts, positions itself in contrast to Europe - free market ideology, small government rhetoric, fiscally conservative.”

No. Not the whole US. This idea is not in majority. Some people do think so, but they don’t get to control the whole country.

Re: China’s dodgy-debt double act

#40

Post by DisjointedHunt »

thaumasiotes wrote: post #37
guerby wrote: post #27

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…

> "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." So they have about a third more debt than we do? "Jaw-dropping" seems like an overstatement.

The US Dollar is the primary currency in which trade is conducted in much of the world. The US banking and financial system has much of the most powerful entities in the world relying on it for their future financial gains.

China, by comparison is a relatively more fragile economy with much of the growth there coming from manufacturing and real estate , both of which are sectors that are starting to struggle because, either there's pressure to move manufacturing away from external forces or internal force in China are clamping down on real estate speculation to free up the capital allocation crisis there where people would rather put their money on brick and concrete rather than back scientific innovation or commercial enterprise.

In short, the US can print $4-$5 Trillion dollars and get away with it while China simply does not enjoy the same luxury.

Post reply on HN