China Economic News

[dreamybear]

I do think Mr George Yeo's lecture is very worth watching. Of particular interest to me was SG's relations, US-China relations and explaining the rationale of China's way of doing things.

Another insightful video would by Ray Dalio's Changing World Order.

-----------------------------------

[Lecture] An Afternoon with Mr George Yeo: A Private Luncheon for LKYSPP Benefactors & Friends (New)
https://www.youtube.com/watch?v=aNFwae0wXCQ  
"..... At the luncheon, guests listened to Mr George Yeo (Visiting Scholar, Lee Kuan Yew School of Public Policy and Founding Patron, Asia Competitiveness Institute), who shared his view on key aspects about the ever-growing complexities of international relations and arising challenges that policymakers face today. With great wit and candour, he offered insights about the strategic importance of ASEAN nations to Singapore, the unique potential that Indonesia has and China’s reaction to growing US hostility...."

Principles for Dealing with the Changing World Order by Ray Dalio
https://www.youtube.com/watch?v=xguam0TKMw8

[specuvestor]

@CY09 you mean Li Keqiang wants to be another Zhou Enlai?

@BlueKelah I don't think China will be Japan 2.0 or GFC 2.0 because these 2 were deflated by market forces but China deflated it by policy. Whether the execution is optimal is up for debate but China looks at history of others quite closely, including politics

@dreamybear thanks for this link. It's actually pretty good
https://www.youtube.com/watch?v=aNFwae0wXCQ

The situation in China is not good to be honest- there are 65 million completed empty homes and a few tens more that are to be built and ready. On the demand side, their population growth is stagnating. This means demand for housing be it rental/owned will be below supply.

This is ironic considering that China has a population of 1.4 billion yet it has somehow managed to overbuild. Li Keqiang is right- to solve the over housing problem, one way is to open up and attract foreigners to enter to stay. But the actions by Xi Jinping is that China is closing up instead and foreigners will not want to live in such a country. It is likely XJP will need to find a way to solve the housing overbuild

Li Keqiang was also the vice premier who said that tech regulations should come to an end in end March 2022. However, the CCP has not stopped its tech regulations. This has spooked the china tech sectors and they have not hesitated to axe workers. The axing of workers makes things worse as workers are going to find it hard to fund their mortgage instalments.

In terms of economic implementation, Li Keqiang words are probably the most logical in solving China's problems in the short term. However, he is merely a vice premier and will not be elected the president in the upcoming meeting. XJP on the other hand seems to be following the path of Mao Zedong where he wants to be viewed as a charismatic leader drumming up a legion of nationalist pride via the internet brigade on weibo. However, in terms of economic history, we know Mao Zedong did terrible economic policies which resulted in the great famine in China which killed millions and yet the China population ppl loved Chairman Mao despite their suffering.

This could be a repeat

As I have often harped about, China is very likely to end up like Japan 2.0. Currently that trajectory is gaining pace with negative population growth and a property sector that is finally reaching its end game.

Xi has no choice but to clamp down on all the out of control bubbles in tech sector and property sector, otherwise things will eventually fall apart and he would have zero control and be blamed for it. At least now he has an excuse to say the gov was proactive in clamping down on all those bubbles even though its resulting in a lot of pain.. 

However China does have the BRICS gold currency in progress as well as other financial innovation like digital yuan and CIPS system which will be able to facilitate trade should the world give up on USD/SWIFT system. That may be their saving grace from ending up like Japan(THIS COULD BE A REPEAT  ).

[BlueKelah]

@CY09 you mean Li Keqiang wants to be another Zhou Enlai?

@BlueKelah I don't think China will be Japan 2.0 or GFC 2.0 because these 2 were deflated by market forces but China deflated it by policy. Whether the execution is optimal is up for debate but China looks at history of others quite closely, including politics

@dreamybear thanks for this link. It's actually pretty good
https://www.youtube.com/watch?v=aNFwae0wXCQ

The situation in China is not good to be honest- there are 65 million completed empty homes and a few tens more that are to be built and ready. On the demand side, their population growth is stagnating. This means demand for housing be it rental/owned will be below supply.

This is ironic considering that China has a population of 1.4 billion yet it has somehow managed to overbuild. Li Keqiang is right- to solve the over housing problem, one way is to open up and attract foreigners to enter to stay. But the actions by Xi Jinping is that China is closing up instead and foreigners will not want to live in such a country. It is likely XJP will need to find a way to solve the housing overbuild

Li Keqiang was also the vice premier who said that tech regulations should come to an end in end March 2022. However, the CCP has not stopped its tech regulations. This has spooked the china tech sectors and they have not hesitated to axe workers. The axing of workers makes things worse as workers are going to find it hard to fund their mortgage instalments.

In terms of economic implementation, Li Keqiang words are probably the most logical in solving China's problems in the short term. However, he is merely a vice premier and will not be elected the president in the upcoming meeting. XJP on the other hand seems to be following the path of Mao Zedong where he wants to be viewed as a charismatic leader drumming up a legion of nationalist pride via the internet brigade on weibo. However, in terms of economic history, we know Mao Zedong did terrible economic policies which resulted in the great famine in China which killed millions and yet the China population ppl loved Chairman Mao despite their suffering.

This could be a repeat

As I have often harped about, China is very likely to end up like Japan 2.0. Currently that trajectory is gaining pace with negative population growth and a property sector that is finally reaching its end game.

Xi has no choice but to clamp down on all the out of control bubbles in tech sector and property sector, otherwise things will eventually fall apart and he would have zero control and be blamed for it. At least now he has an excuse to say the gov was proactive in clamping down on all those bubbles even though its resulting in a lot of pain.. 

However China does have the BRICS gold currency in progress as well as other financial innovation like digital yuan and CIPS system which will be able to facilitate trade should the world give up on USD/SWIFT system. That may be their saving grace from ending up like Japan(THIS COULD BE A REPEAT  ).

Well China has tried to loosen one child to 2 child to now 3 child policy with not much effect. along with lockdowns I reckon this year 2022 their population growth may finally go negative. hence they will face similar demographic headwinds as Japan whether they like it or not. 
https://www.macrotrends.net/countries/CH...rowth-rate

the property deleveraging could be made worse by current market forces like the current worsening global recession and if the USD goes up even more as global credit tightens and funding costs go up, things could get much uglier. Granted a lot of their debt is internal, but china banks still deal with a lot of "eurodollar" type debt/loans. 

Time will tell though, let's revisit this in a year or so and see if China ends up in a similar situation as Japan 1990s.

[CY09]

https://www.channelnewsasia.com/asia/cov...ng-2919461

Its going to be another round of economic pain and especially the remaining bright spot of China's economy- Tech; who are going to be affected by a lock down. Based on past ordeals of the chinese people, it is going to be a month of suffering.

While the whole world has progressed with COVID, China is one of the last few to regress from COVID. Economically, China is no longer strong and is appearing to be the 'sick man'

[Behappyalways]

https://mobile.twitter.com/MacroAlf/stat...5931200512


美元吸力超強!人民幣若"破7" 專家警告:亞洲金融風暴重演｜非凡財經新聞｜20220906
https://m.youtube.com/watch?v=HIPquHmeUZI&t=1s

[weijian]

Mr George Yeo believes that China's Covid Zero will end by Nov 2022.

If one were to study Chinese history and civilization, a "bright, wise and longevity" Emperor would do wonders for the country - Examples include Han Gaozu, Tang Taizong and KangXi. But the flip side is that exceptions to the former do much worst off. That explained why the Chinese Civilization started its slow decline after the Ming emperor burnt all its naval vessels after ZhengHe's expedition. Towards the latter part of the Qing dynasty, innovation, enterprise and free exchange of ideas/trade allowed the Barbarians (West) to firmly overtake the Middle Kingdom.

The Weakness of Xi Jinping

Predictably, China has seen its economic growth slow, and most analysts believe it will slow even more in the coming years. Although several factors are at play—including U.S. sanctions against Chinese tech companies, the war in Ukraine, and the COVID-19 pandemic—the fundamental problem is the CCP’s interference in the economy. The government constantly meddles in the private sector to achieve political goals, a proven poison for productivity.

Many Chinese entrepreneurs live in fear that their businesses will be seized or that they themselves will be detained, hardly the kind of mindset inclined to innovation. In April, as China’s growth prospects worsened, Xi hosted a meeting of the Politburo to unveil his remedy for the country’s economic woes: a combination of tax rebates, fee reductions, infrastructure investment, and monetary easing. But since none of these proposals solve the underlying problem of excessive state intervention in the economy, they are doomed to fail.

https://www.foreignaffairs.com/china/xi-...ten-future

[CY09]

https://www.theedgesingapore.com/news/ch...perty-woes

HSBC does not see the chinese property market improving for 2 more years. This would mean investors can expect more china property companies collapsing and defaults. As evident by our local dasin REIT, they are on perpetual short term extension as Singapore banks are reluctant to give them a long leeway due to possible losses in bank's loan granted to them

Till now china evergrande and shimao property have fallen. Wonder which are the names who would fall in the next 2 years. It dosent look good for China

[CY09]

https://www.reuters.com/article/china-pr...SKBN2QP02Z

It is a signficiant step done by China Central government to transform one of its big 4 state bank into a bank and real estate company.

This bears resembelance to DBS in 1990s where it held a large portfoilo of real estate before being forced to spin off by law.

[weijian]

I listened to a Bloomberg Oddlots' podcast (dated end Aug 2022), which featured the Thomas Orlik, author of the book "China: The Bubble that Never Pops" (this book will be top on my reading list) and it mentioned the same thing of "pre selling real estate paper projects and then using the monies to buy new land to sell more real estate paper projects".

On one hand, the unravelling ain't gonna be pretty and there will be expected (but unknown) secondary effects as well. But OTOH, as what specuvestor astutely pointed out - The Chinese are pragmatic and have aplenty of past lessons to learn. But essentially, China will have its own real estate crisis that is uniquely its own, and wouldn't be similar to US/ASEAN/Japan..

A Ponzi scheme by any other name: the bursting of China’s property bubble

For years, preselling homes – mainly apartments in large blocks and newly styled urban villages – kept the developers flush with cash and, along with borrowing on an epic scale, meant they could buy more land and keep building. In 2021, about 90% of homes were sold off plan in China.

But Xi’s decision two years ago to crack down on “reckless” lending starved developers of their funding and, when the music stopped, it emerged they could not finish homes they had already taken money for because they had spent it on buying the next parcel of land or project.

In short, it resembles a Ponzi scheme where money taken from new investors is used to pay off existing clients in an ever-decreasing spiral to collapse. It is even how the sober pages of the Economist sees it.

https://www.theguardian.com/business/202...ande-group

[specuvestor]

If we invert it, what would have happened if China didn't clamp down past few years (remember 3 red lines and developers cautious in 2019, and spinning off services companies, yet record profit in the end?) and arrive in 2022 US interest rate hikes?

I listened to a Bloomberg Oddlots' podcast (dated end Aug 2022), which featured the Thomas Orlik, author of the book "China: The Bubble that Never Pops" (this book will be top on my reading list) and it mentioned the same thing of "pre selling real estate paper projects and then using the monies to buy new land to sell more real estate paper projects".

On one hand, the unravelling ain't gonna be pretty and there will be expected (but unknown) secondary effects as well. But OTOH, as what specuvestor astutely pointed out - The Chinese are pragmatic and have aplenty of past lessons to learn. But essentially, China will have its own real estate crisis that is uniquely its own, and wouldn't be similar to US/ASEAN/Japan..

A Ponzi scheme by any other name: the bursting of China’s property bubble

For years, preselling homes – mainly apartments in large blocks and newly styled urban villages – kept the developers flush with cash and, along with borrowing on an epic scale, meant they could buy more land and keep building. In 2021, about 90% of homes were sold off plan in China.

But Xi’s decision two years ago to crack down on “reckless” lending starved developers of their funding and, when the music stopped, it emerged they could not finish homes they had already taken money for because they had spent it on buying the next parcel of land or project.

In short, it resembles a Ponzi scheme where money taken from new investors is used to pay off existing clients in an ever-decreasing spiral to collapse. It is even how the sober pages of the Economist sees it.

https://www.theguardian.com/business/202...ande-group