China

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Submitted by FlyerInHi on October 12, 2018 - 5:12pm

Just watched an interesting lecture by Kai Fu Lee on Chinese innovation and Artificiial Intelligence.
Very interesting talk about the future.

https://youtu.be/bh0TXtB0NxU

Submitted by FlyerInHi on December 9, 2018 - 4:07pm.

phaster wrote:
FlyerInHi wrote:
The-Shoveler wrote:

3D printing and AI will overcome any manufacturing capacity advantage china has over USA in the next 20 years.

I don’t know about the future. But 3D is shit plastic.

FWIW 3D will also be "metals" and its happening now,... GE Will Laser Print Turboprop Engines (for new cessna certification 2020??)

https://www.youtube.com/watch?v=DaldjP0VDNM

https://www.youtube.com/watch?v=pBmLHDANDKM

https://www.youtube.com/watch?v=SxrWoIPZdkg

Very cool. Do you think GE shares are undervalued?

Submitted by The-Shoveler on December 10, 2018 - 8:50am.

If GE spins off the Jet engine biz, I may invest some in that.

Submitted by FlyerInHi on December 15, 2018 - 9:22pm.

I watched this very interesting talk with Kevin Rudd and Orville Schell.

China has implemented 2/10 of the economic reforms they had set for themselves. China knows that they to reform, but for political reasons, they have delayed the reforms.
So on trade, my bet is that China will negotiate with things they would have done anyway. Trump will claim a win, but China will win more. Win-win for sure.

https://www.youtube.com/watch?v=GLRCb_DC...

Kevin Rudd is too diplomatic, but he's said before that the US should try to beat China at it's own game. But the US doesn't do grand strategies.

This was not addressed in the talk but an interesting thing about TPP. It did not die when Trump pulled out. 11 countries are still sticking with it and the irony would be if China joined TPP. We will see...

Submitted by phaster on December 16, 2018 - 2:41pm.

FlyerInHi wrote:
phaster wrote:
FlyerInHi wrote:
The-Shoveler wrote:

3D printing and AI will overcome any manufacturing capacity advantage china has over USA in the next 20 years.

I don’t know about the future. But 3D is shit plastic.

FWIW 3D will also be "metals" and its happening now,... GE Will Laser Print Turboprop Engines (for new cessna certification 2020??)

https://www.youtube.com/watch?v=DaldjP0VDNM

https://www.youtube.com/watch?v=pBmLHDANDKM

https://www.youtube.com/watch?v=SxrWoIPZdkg

Very cool. Do you think GE shares are undervalued?

GE has interesting technology in aerospace and other areas,... unfortunately it comes w/ baggage,... too much emphasis on financial engineering to boost stock prices (in the past) along w/ ignoring unsecured senior debt, a giant liability for long term care insurance, pensions, etc. (i.e. off balance sheet stuff)

so to answer your question about GE being "undervalued???" looking at the overall investor climate, personally have been watching it as a target but unwilling to pull the trigger because I'm keeping my powder dry in the current turbulence

my specific thinking WRT GE aviation, is in an economic downturn travel is put on the back burner, and looking back to the 2007/08 period noticed used aviation business assets flooded the market,... AND so can't yet justify buying GE (for its aviation products because the "new" turboprop engine is still in the FAA testing phase as far as I can tell), but as I read the tea leaves its still pretty early in the growth game as to where "printed" manufacturing is going to go

https://www.engineering.com/AdvancedManu...

FYI the WSJ just wrote an article about GE

Quote:

GE Powered the American Century—Then It Burned Out

...General Electric Co. helped invent the world as we know it: wired up, plugged in and switched on. Born of Thomas Alva Edison’s ingenuity and John Pierpont Morgan’s audacity, GE built the dynamos that generated the electricity, the wires that carried it and the lightbulbs that burned it.

To keep the power and profits flowing day and night, GE connected neighborhoods with streetcars and cities with locomotives. It soon filled kitchens with ovens and toasters, living rooms with radios and TVs, bathrooms with curling irons and toothbrushes, and laundry rooms with washers and dryers.

The modern GE was built by Jack Welch, the youngest CEO and chairman in company history when he took over in 1981.

... “Fix it, close it or sell it’’ was a favorite slogan. Welch wanted to get out of any businesses where GE wasn’t a market leader.

...The catalyst for GE’s success during Welch’s reign was that it worked more like a collection of businesses under the protection of a giant bank. As the financial sector came to drive more of the U.S. economy, GE Capital, the company’s finance arm, powered more of the company’s growth.

...GE Capital sucked in debt and spat out money. Created in the first half of the last century to help people buy home appliances, it now financed fast-food franchises, power plants and suburban McMansions, and leased out railroad tank cars, office buildings and airliners.

https://www.wsj.com/articles/ge-powered-...

Submitted by FlyerInHi on December 23, 2018 - 11:35pm.

Another great talk by Kevin Rudd.
The gravest danger for China is the middle income trap and the non-implementation of market reforms they had identified for themselves.
The trade war may cause China to implement their own reforms, ironically benefit them.

https://youtu.be/AUx2AYAVwGc

Submitted by ocrenter on December 26, 2018 - 4:36pm.

FlyerInHi wrote:
Another great talk by Kevin Rudd.
The gravest danger for China is the middle income trap and the non-implementation of market reforms they had identified for themselves.
The trade war may cause China to implement their own reforms, ironically benefit them.

https://youtu.be/AUx2AYAVwGc

I finally got around to watching this. The guy's got some decent viewpoints. I will say the West's assumption on China's eventual liberalization is based on an apple to orange comparison. The West looked at S.Korea and Taiwan and assumed China would go that way as well, but forgot China is essentially Europe unified by the Nazi. One will not be assuming an unified Europe under the Nazi regime to liberalize, will they?

China's got too many excuses to not liberalize, country is too big, development too unequal, regional differences too great, so on and so forth. The bottom-line as Kevin Rudd pointed out, it is an authoritarian regime aimed at preservation of that authoritarian order.

Honestly, for the good of China, all Chinese people, and the world at large, BREAK IT UP!

Submitted by ocrenter on December 26, 2018 - 4:37pm.

btw, a great youtube on the chinese housing bubble:

https://youtu.be/f5SE47Xjx2Q

Submitted by FlyerInHi on December 27, 2018 - 2:50pm.

ocrenter wrote:

I don’t think the trade war will end with Trump, President Pence will be equally if not harder on China. The Dems will not go the other way either come 2020.

Btw, news out of Taiwan is China is facing real GDP growth of 1.6% this year and likely negative GDP next year along with 10 million new unemployed. Things are going from bad to worse over there.

I am replying to this from the other thread.

I agree on the anti China sentiment in Washington. It shows how our policy makers are talking from both sides is their mouths. On the one hand, China is a threat; and on the other hand, China cannot succeed because their system is corrupt, inefficient or whatever.

The real fear is that China will succeed and develop an alternative model to the western order, in which case Francis Fukuyama’s end of history will be proven wrong.

A German minister (forgot which one) denounced China’s growing influence but said it’s up to the West to give a more attractive option to any country that wants to do business with China

Do you really think China will go into recession? I know the narrative is that china’s statistics are fake and political. But you can’t lie about growth rates more than 1 year, else the math no longer works and the deception becomes self-evident.

My take on China is that their political model is worse for individual freedom. But their censorship system prevents fake news and irrational populism. Also, at critical stages of economic development (now the 4th industrial revolution) you need large amounts of capital for puclic insfrastructure. Think of what the interstate highway system has done for America, not all good and lots of bad, but it has driven economic growth. The private sector could not have done it.

Submitted by ocrenter on December 27, 2018 - 9:03pm.

FlyerInHi wrote:
ocrenter wrote:

I don’t think the trade war will end with Trump, President Pence will be equally if not harder on China. The Dems will not go the other way either come 2020.

Btw, news out of Taiwan is China is facing real GDP growth of 1.6% this year and likely negative GDP next year along with 10 million new unemployed. Things are going from bad to worse over there.

I am replying to this from the other thread.

I agree on the anti China sentiment in Washington. It shows how our policy makers are talking from both sides is their mouths. On the one hand, China is a threat; and on the other hand, China cannot succeed because their system is corrupt, inefficient or whatever.

The real fear is that China will succeed and develop an alternative model to the western order, in which case Francis Fukuyama’s end of history will be proven wrong.

A German minister (forgot which one) denounced China’s growing influence but said it’s up to the West to give a more attractive option to any country that wants to do business with China

Do you really think China will go into recession? I know the narrative is that china’s statistics are fake and political. But you can’t lie about growth rates more than 1 year, else the math no longer works and the deception becomes self-evident.

My take on China is that their political model is worse for individual freedom. But their censorship system prevents fake news and irrational populism. Also, at critical stages of economic development (now the 4th industrial revolution) you need large amounts of capital for puclic insfrastructure. Think of what the interstate highway system has done for America, not all good and lots of bad, but it has driven economic growth. The private sector could not have done it.

Kevin Rudd in November of this year: “we actually don’t know at the moment what the real growth rate is, when things get really bad on the growth rate, the Chinese statistical claim on the growth rate can border on the creative.”

Also remember why 45 millions of Chinese peasants died during the Great Leap Forward. Starting at the collective farm level there was over-estimate of grain production and granary storage. Moving up to township level, the numbers get padded some more, at the county level, some more padding, at provincial level a bit more padding, so at the end the central government received grain storage and production data that was wildly out of line with reality. Everything was based on central planning, and because central planners planned using hugely inflated data, they didn’t see the shortage coming, the famine happened and people died.

The structural system that was in place then is still in place now. People are promoted based on GDP growth rate. So it pays to cook up the numbers at every level of government. Once the data gets to the central government, it then does the creative statistical game Kevin Rudd describes, the end result is the claim of 6.5% growth rate but actual growth rate of 1.6%.

As for fake news, the People’s Daily and Global Times are the grand daddy of fake news, Fox’s got nothing on them!

Submitted by FlyerInHi on December 28, 2018 - 2:32am.

Lets say you start at 100 at the beginning of year. End of year, at 6.5%, you will have 106.5, or 101.6 at 1.6%. The lies must get bigger and bigger over time to keep up the prior lies.

If China has been lying about economic data for decades, then it really is a paper tiger and will collapse anytime. You must have read Gordon Chang’s book. He’s a frequent commentator on Fox. Everytime i watch a Fox segment on China, I want to ask them how a corrupt, inefficient and collapsing state be a threat to the USA?

Martin Jacques says that after 40 years, we are only at the beginning of China’s transformation; and that the idea of modernity will increasingly be China.
Sometimes I meet people visiting the USA for the first time. There are surprised at how low tech we are especially in our infrastructure and urban architecture.

Submitted by ocrenter on December 28, 2018 - 6:30am.

FlyerInHi wrote:
Lets say you start at 100 at the beginning of year. End of year, at 6.5%, you will have 106.5, or 101.6 at 1.6%. The lies must get bigger and bigger over time to keep up the prior lies.

If China has been lying about economic data for decades, then it really is a paper tiger and will collapse anytime. You must have read Gordon Chang’s book. He’s a frequent commentator on Fox. Everytime i watch a Fox segment on China, I want to ask them how a corrupt, inefficient and collapsing state be a threat to the USA?

Martin Jacques says that after 40 years, we are only at the beginning of China’s transformation; and that the idea of modernity will increasingly be China.
Sometimes I meet people visiting the USA for the first time. There are surprised at how low tech we are especially in our infrastructure and urban architecture.

You are falling back to typical talking points by just blaming Opinions opposed to you as Faux News based, or based on commentators that’s Fox News based.

The person that mentioned creative messaging of gdp figures is Kevin Rudd, is he a Fox News contributor? Btw, Rudd also mentioned China itself identified 10 major vital economic reform measures several years ago, 2/10 is the report card on that one...

The source of Taiwanese news report of 1.6% growth and likely negative growth is from an prominent economic professor from the Chinese People’s University. The guy’s lecture online got pulled by China within a day, but went viral in Taiwan.

You were right about China, it was moving in the right direction, then Xi took over and everything started going in the other direction.

Like I said before, when a government bring a country to the lowest of the low, a fast rebound for a few decades is easy. But then if there is no standardized rule of law and general corruption at all level of government, growth can not continue on pace. Was there an attempt to keep the growth going? Of course, that’s why the massive debt driven growth over the last several years. That’s the making of a bubble.

Is China a paper tiger? China is essentially 5 new Asian Tigers standing on top of each other in a Dinosaur custom scaring everyone in sight. The prior Asian Tigers all liberalized at the same growth point, but the 5 new Asian Tigers are trapped in the dinosaur custom and glued to each other and managed by an all powerful Winnie the Pooh. That’s the problem.

Submitted by FlyerInHi on December 28, 2018 - 1:01pm.

ocrenter wrote:

The person that mentioned creative messaging of gdp figures is Kevin Rudd, is he a Fox News contributor? Btw, Rudd also mentioned China itself identified 10 major vital economic reform measures several years ago, 2/10 is the report card on that one...

The source of Taiwanese news report of 1.6% growth and likely negative growth is from an prominent economic professor from the Chinese People’s University. The guy’s lecture online got pulled by China within a day, but went viral in Taiwan.

You were right about China, it was moving in the right direction, then Xi took over and everything started going in the other direction.

Like I said before, when a government bring a country to the lowest of the low, a fast rebound for a few decades is easy. But then if there is no standardized rule of law and general corruption at all level of government, growth can not continue on pace. Was there an attempt to keep the growth going? Of course, that’s why the massive debt driven growth over the last several years. That’s the making of a bubble.

I am sure china lies about many things such as crime stats or other socio economic performance data. But lying about GDP is much harder because having to issue adjusted figures later on would be too embarrassing.

If you look at the growth chart, you will see that Taiwan and korea's growth slowed down markedly when they became democracies. Then corruption scandals have been common features.

The Philippines is plagued with corruption. The best performing countries in east Asia now are Vietnam, China, Singapore, Myanmar. So democracy is no assurance of good economic performance. Thailand however was doing better under a democratic government.

China has only really challenged the USA since 2008. The success of its high speed rail network, it's prowess in infrastructure and its tech industry are what worry us. Plus you have military buildup, Belt and Road and assertive foreign policy. We in USA get heartburn over the Chinese base in Djibouti and China taking over the port of Haifa. But Djibouti and Israel, as small countries, are playing their cards very well.
So when you say Xi Jinping's China is bad for the world, the small countries disagree because they can now use China to negotiate with the USA better.

Yes, China is only 2/10 done with self identified economic reform. China will open up more as a deal with Trump (not a deal because it was going to it anyway). That will benefit China and Europe more than us because the China-Europe trade is more diverse and balanced with exchange of manufactured goods. We sell China mostly agricultural commodities and airplanes.

As Trump likes to say, we will see ...

Submitted by FlyerInHi on December 28, 2018 - 2:42pm.

Global Economy in 2030Global Economy in 2030

This what Martin Jacques is forecasting for 2030. We will see if he’s right.
I hope to live in Asia part of the year in retirement so I can experience the changes first hand. Should be very interesting.

Submitted by ocrenter on December 30, 2018 - 7:43am.

FlyerInHi wrote:
Global Economy in 2030Global Economy in 2030

This what Martin Jacques is forecasting for 2030. We will see if he’s right.
I hope to live in Asia part of the year in retirement so I can experience the changes first hand. Should be very interesting.

Brian, when one engage in conversation on China, we need to determine whether we are discussing near-term or future expectations.

Future expectation is for China to become the biggest economy of the world, eclipsing the US. This is basic math based on population size and potential economic growth.

The question is is this future expectation going to come about via a straight line at 6-7% growth rate per year, or will there be significant dips in between caused by policy mistakes and simple systemic incompatibility as the economy evolves.

The CCP needs a straight 6-7% growth trend to justify its existence. It has borrowed heavily at all levels of government as well as some very creative math to maintain that over the last decade. Do you really believe there will be no dips ahead?

Submitted by FlyerInHi on December 30, 2018 - 11:47am.

I think the smooth straight line growth is definitely a lie by China. But growth over 5 years or 10 years is accurate because you cannot lie very long about math.
Multinational corporations do their research and they want to invest in China. They would lose confidence quickly if there were negative growth.

What China has done well is keeping on investing in infrastructure which has improved productivity. We are not investing much in the West so our infrastructure is crumbling.

Submitted by FlyerInHi on January 18, 2019 - 2:24pm.

Wow, China completes the dredging for a new city in Sri Lanka. The western media keep mentioning the port that China took over in lieu of debt, but people of Sri Lanka are grateful for the investment.

Imagine a modern city on a beautiful island in the middle of the Indian Ocean, in the middle of the busiest trade route. So much potential for trade, tourism, entropot, banking, etc....

As someone who loves development and tech, I salute China for the projects they are bringing to the world. Don’t like China? Do better than China and show how much better. Otherwise, it’s all empty talk.
https://www.scmp.com/news/asia/south-asi...

Submitted by gzz on January 20, 2019 - 1:32pm.

OCRenter, Bloomberg's front page has a long article by a China bear. It is the same stuff from 5-10 years ago, which the author admits he was wrong about.

The basic problem for China is the after effect of 1 child. Two generations of that means one kid can have 4 grandparents and two parents to support with no siblings or cousins. The result is a massive savings rate that isn't allowed to be invested abroad, so negative real interest rates. Despite being "socialist" they don't have anything like Medicare or Social Security for the elderly.

When you have negative real rates, you get investments that are profitable for the borrower even though it doesn't produce positive real returns. Some of that investment has positive social returns. But a lot of it is just pollution and cheap exports of pastic Wal Mart junk.

Despite these issues, they still have plenty of growth ahead due to low wages and a skilled workforce.

Northern EU and Japan have had negative real rates (even negative nominal rates) for a while too. However, it is only slightly negative and only on AAA assets. And they can enjoy much higher rates abroad. China's "financial repression" puts the average Chinese in the position of saving at 3 or 5%, often in risky assets, with 6-10% inflation. Some goes to impressive and needed infrastructure, but a lot goes to white elephant projects and propping up corrupt state owned enterprises. Or real estate speculators. Or hyperpolluting bitcoin farms.

Submitted by FlyerInHi on January 24, 2019 - 8:24pm.

I used to be a China Bear because I read too much of the Western press. I was disabused of my misplaced beliefs when my friend who was an executive in Shanghai bought a luxury apartment in the early 2000s. He moved back to HK around the same time and bought in most every new real estate development. He flipped many of his contracts for mucho dinero. Needless to say he’s sitting pretty now. No crash whatsoever.

If people are going to predict a China crash, they need to identify a reasonable timing, otherwise what they say is totally meaningless.

These are promo material of Colombo port city that China is building. Can’t help but be awed by the technology and audacity.

I believe that in 30 years, there will be hundred of billions of new wealth. It’s a Buddhist country in the middle of the indo pacific trade route. Buddhists are peaceful people and they don’t have the baggage of Muslims.
I don’t see any debt trap at all. It’s going to be all win-win for Sri Lanka, China and the world. Might be a wonderful tropical island for tourism, finance, tech, trade retirement, with easy access to all the modern amenities. A new Singapore and Thailand combined.

https://youtu.be/cFt8W2Wrjlw
https://youtu.be/IDWwk024fHE

Mini documentary from the Economist from 2016.
https://youtu.be/4COeTrjB6hA

Submitted by Myriad on January 25, 2019 - 4:29pm.

Well, China isn't really going to collapse like some of the bears say, but there will be many people who will be negatively impacted by the changes in the next decade. I think a bigger issue for China is the demographic changes and the dominance of the SOE - which economically will be negative.
As for the US-China, some type of trade deal will get done. But as long as China continues with it's technology vision (2025) and challenging the tradition status quo of open ocean and air commons, the US/Japan and allies will be in a semi-Cold War. Unless something materially changes, I suspect we'll see the creation of parallel banking system, technologies, and sphere of influence.
China can keep dumping money in places where there's no economic benefit - primarily geo-strategic, that's their prerogative. But the a shift in capital (& manufacturing) to SE Asia and India instead of China will definitely impact China's growth rate. It'll start looking like US growth rates in the 90's (3-4%). We'll see if China can get past the middle income trap.

**Based on what's happening in Germany and Japan, the real growth rate in China is probably close to 0% at the moment. Orders all falling off a cliff in those countries.

Submitted by FlyerInHi on January 25, 2019 - 6:14pm.

Myriad wrote:
Well, China isn't really going to collapse like some of the bears say, but there will be many people who will be negatively impacted by the changes in the next decade. I think a bigger issue for China is the demographic changes and the dominance of the SOE - which economically will be negative.
As for the US-China, some type of trade deal will get done. But as long as China continues with it's technology vision (2025) and challenging the tradition status quo of open ocean and air commons, the US/Japan and allies will be in a semi-Cold War. Unless something materially changes, I suspect we'll see the creation of parallel banking system, technologies, and sphere of influence.
China can keep dumping money in places where there's no economic benefit - primarily geo-strategic, that's their prerogative. But the a shift in capital (& manufacturing) to SE Asia and India instead of China will definitely impact China's growth rate. It'll start looking like US growth rates in the 90's (3-4%). We'll see if China can get past the middle income trap.

**Based on what's happening in Germany and Japan, the real growth rate in China is probably close to 0% at the moment. Orders all falling off a cliff in those countries.

That says it all.

SOEs are bad for China. Real growth rate is 0%. Capital is fleeing China.

China is failing so bad that instead of letting them fail, we are complaining how unfair they are. Their management sucks so bad that we are worried about state directed industrial policies such as Made in China 2025.

Remember, our fundamental belief is that State planning never works. If our ideas are so good, why don’t we implement our superior ideas and show the world how we can outdo China in contributing to world growth. People want to see roads, bridges, phone networks, schools for their kids, products they can enjoy.

I’m willing to take a bet. In 20 years housing in Columbo Port City will be more valuable than real estate in American cities such as Tampa. If you take a look at old pictures of Dubai, or Doha in the 1990s you can see that “build it and they will come” does really come true. That is plenty economically beneficial and it takes vison to build and bring to fruition.

Submitted by Myriad on January 25, 2019 - 7:59pm.

SOEs are bad for China - they're a very inefficient use of capital and resources. Other Chinese companies could do the work better.
0% growth - well maybe on this quarter, but at least there's data behind it. http://si.wsj.net/public/resources/image...

Didn't say capital was fleeing China, just that more investment is looking at places other than China. Plenty of news from HK, Taiwan, etc, where companies are expanding or moving manufacturing out of China as quickly as they can.

Sri Lanka, they have debt @ 77% of GDP - it's all ok until you currency drops and your debt is in another currency.
https://www.channelnewsasia.com/news/asi...
Their PM says they have problems paying.
Will China be ok - sure. But India is unhappy with what's going on. Just proves that there will be competing spheres of influence in Sri Lanka too (Colombo vs Trincomalee)
Hopefully with everyone playing around there, another civil war isn't started again - it's only been 10 years.

Submitted by ocrenter on January 26, 2019 - 9:44am.

gzz wrote:
OCRenter, Bloomberg's front page has a long article by a China bear. It is the same stuff from 5-10 years ago, which the author admits he was wrong about.

The basic problem for China is the after effect of 1 child. Two generations of that means one kid can have 4 grandparents and two parents to support with no siblings or cousins. The result is a massive savings rate that isn't allowed to be invested abroad, so negative real interest rates. Despite being "socialist" they don't have anything like Medicare or Social Security for the elderly.

When you have negative real rates, you get investments that are profitable for the borrower even though it doesn't produce positive real returns. Some of that investment has positive social returns. But a lot of it is just pollution and cheap exports of pastic Wal Mart junk.

Despite these issues, they still have plenty of growth ahead due to low wages and a skilled workforce.

Northern EU and Japan have had negative real rates (even negative nominal rates) for a while too. However, it is only slightly negative and only on AAA assets. And they can enjoy much higher rates abroad. China's "financial repression" puts the average Chinese in the position of saving at 3 or 5%, often in risky assets, with 6-10% inflation. Some goes to impressive and needed infrastructure, but a lot goes to white elephant projects and propping up corrupt state owned enterprises. Or real estate speculators. Or hyperpolluting bitcoin farms.

https://www.bloomberg.com/news/articles/...

Thanks for the tip, I believe this is the article you mentioned. I don’t think the author is really saying he was wrong, but merely all signs pointed to a bust but that was delayed by creation of an even bigger bubble.

Lots of points the article mentioned. You touched on it as well, which is the amount of real estate speculation is absolutely unprecedented. I think I read somewhere around 60% of Chinese wealth is locked into real estate, so a real estate crash there would doom maybe even the PRC itself as an entity.

Bottom line is there has to be a reason why such draconian tightening of controls on all aspects of daily life started over the last few years, those in the know understood the country is on very shaky grounds financially and that’s a recipe for revolutions if they didn’t firm up their grip on the populace.

Submitted by ocrenter on January 26, 2019 - 9:52am.

Myriad wrote:

**Based on what's happening in Germany and Japan, the real growth rate in China is probably close to 0% at the moment. Orders all falling off a cliff in those countries.

That I believe. Late last year there was a lot of talk about 1.6% growth rate. If that was real, then things moving to 0% is not surprising at all.

Submitted by FlyerInHi on January 26, 2019 - 1:03pm.

Myriad, investments other than China is great for China. It’s Chinese companies going out onto the world as one Chinese leader (forgot which one) advocated. Whole industrial zones in SEA are being developed by Chinese companies.

About Sri Lanka and debt. If history is guide, China, unlike western lenders, never demanded loan repayments that trigger currency crisis. They will convert debt to equity and double down on their assets, or generously write off the debt (like they will do in Venezuela).

About SOEs, they are tools of stability and sort of a public good. China is worried about unemployment and how automation and AI may disrupt the labor market at internet speed. They are slowing down reforms to wait and see.
Incidentally, we are not equipped to handle 4th industrial revolution disruptions in the West. In a period of unprecedented prosperity, we have Trump and Brexit and xenophobia all over Europe. Imagine the polical upheaval mass unemployment will create.

More fundamental question, if SOEs and central planning are so inefficient, why are we losing sleep over Made in China 2025? China is entitled to make their own mistakes.

Don’t get me wrong, I’m not in love with all things chinese. But I love the development China has offered the world. For example, China and Japan are competing to build subway systems in Vietnam. They are competing to build insfrastructure in the Philippines, etc.... remember, competition is good and may the best win.

As a tech enthusiast, I love Chinese innovation. For example they are building a high speed rail from Beijing to the winter Olympic village. Where in the world can you take high speed rail directly from a capital city center to the central plaza of a world class ski resort, and walk to your hotel? Amazing! They will democratize an expensive sport and build a new business model in recreation.

I still remember my economics professor who was a very smart guy. He said ideology does not matter. Look at the real output in goods and services that create wealth and make people’s lives better.

Submitted by FlyerInHi on January 26, 2019 - 12:42pm.

ocrenter wrote:
Myriad wrote:

**Based on what's happening in Germany and Japan, the real growth rate in China is probably close to 0% at the moment. Orders all falling off a cliff in those countries.

That I believe. Late last year there was a lot of talk about 1.6% growth rate. If that was real, then things moving to 0% is not surprising at all.

I think China reported 6.8% for 2018.

Like I said before, they cannot lie by much more than 1% or 2% otherwise it’s too hard do make up and the math will not add up.

Anybody who understands revenue knows that... if you lie about your revenue this quarter, you need to make it up in following quarters. With double entry accounting, if you report higher sales, you also have to report higher cash or accounts receivables.

Submitted by FlyerInHi on January 26, 2019 - 1:25pm.

ocrenter wrote:

https://www.bloomberg.com/news/articles/...

Thanks for the tip, I believe this is the article you mentioned. I don’t think the author is really saying he was wrong, but merely all signs pointed to a bust but that was delayed by creation of an even bigger bubble.

Lots of points the article mentioned. You touched on it as well, which is the amount of real estate speculation is absolutely unprecedented. I think I read somewhere around 60% of Chinese wealth is locked into real estate, so a real estate crash there would doom maybe even the PRC itself as an entity.

Bottom line is there has to be a reason why such draconian tightening of controls on all aspects of daily life started over the last few years, those in the know understood the country is on very shaky grounds financially and that’s a recipe for revolutions if they didn’t firm up their grip on the populace.

I just read the article. Of course the author was wrong. It’s like predicting the financial crisis of 2008 and nothing happens until 2025.

The author then goes on to say that the China crisis he’s predicting won’t be like 2008 or the Asian crisis of 1997. How is that going to result in revolution?

But I agree with the author on one point. Why the trade war if China is already in crisis? They can’t possibly be a worthy competitor, can they?

On trade, Trump will lose.... China will agree to some reforms they already identified for themselves but delayed. China will agree to buy US agricultural commodities — Such an irony because, in free markets, commodities should be freely traded regardless of provenance. Government to government agreements are as anti-market as can be; George Will wrote an interesting article about that.

Submitted by Myriad on January 28, 2019 - 4:14pm.

FlyerInHi wrote:
But I agree with the author on one point. Why the trade war if China is already in crisis? They can’t possibly be a worthy competitor, can they?

On trade, Trump will lose.... China will agree to some reforms they already identified for themselves but delayed. China will agree to buy US agricultural commodities — Such an irony because, in free markets, commodities should be freely traded regardless of provenance. Government to government agreements are as anti-market as can be; George Will wrote an interesting article about that.

Yeah, we 'll see how crappy a deal Trump negotiates. Though if it's just buying commodities, why even bother doing a deal. There's almost no realistic way for China to close the trade gap using state purchases.
http://si.wsj.net/public/resources/image...

Better off to have the 25% tariff - why give money to your rival to arm their military against your own - it just doesn't make any sense. The trade war is just a facade, as long as the technology and geopolitical issues exist, it's really a partial cold war.
Free trade and free markets only work if no one is planning a major regional contingency against each other. Even then, there are almost no true free markets among the G7/G20.

Submitted by FlyerInHi on January 29, 2019 - 1:09am.

I so agree, it’s not about free market or ideology, but about geopolitics. We only worry about China now because they are threatening our dominance.

From a competition standpoint, China is good for the world because they are providing an alternative to the American model. If American ideas were sure to create greater wealth, nobody would follow the Chinese model. The thing is that the world is not so certain that the American way is the best way.

I had lunch with a friend from NYC and we were talking economics. Like China, we have a lot of SOEs also, for example transport authorities around the country. Imagine Caltrans as a massive construction company that can innovate and bid for jobs all over the world. Would we not be better off?
My friend was saying how NYC has large autonomous authorities that are make-work organizations but are insular and backward. They do not innovate and still use tech from the 1970s. So the buses and subways are shithole dirty.

On trade, the USA is so hopelessly hooked on cheap products that even a 25% tariff will not affect the trade deficit which will keep on rising. Things we don’t buy from China, we will by from Vietnam. And Vietnam will turn around and buy Huawei and other Chinese products.

Submitted by The-Shoveler on January 29, 2019 - 10:17am.

Sarcasm on
Yes anyone who oppose the central gov should be made to disappear.
Death penalty used for most crimes keeps the riff raff out as well.

Submitted by Myriad on January 29, 2019 - 12:29pm.

FlyerInHi wrote:
We only worry about China now because they are threatening our dominance.
From a competition standpoint, China is good for the world because they are providing an alternative to the American model. If American ideas were sure to create greater wealth, nobody would follow the Chinese model. The thing is that the world is not so certain that the American way is the best way.

I would certainly agree that China's public development model has been successful so far. I question whether other countries would be able to replicate due to factors such as demographics, education, geography, etc. But it's not China threatening dominance that we are worried about China. It a change in the status quo of international commons, a return to mercantilism/state competition, and impact to democracy/personal rights.

FlyerInHi wrote:

for example transport authorities around the country. Imagine Caltrans as a massive construction company that can innovate and bid for jobs all over the world. Would we not be better off?

The problem with SOEs (US, China, wherever) is that the prevent private companies from doing the job more efficiently. Because they are backed by the state, they can get favorable financial terms, which can cause distortions in the funding market (you see that in China now when the SOEs are too big relative to the private market). We accept the existence of SOE where it's not easy for multiple private companies to compete - but we really would be better off if Amtrak had competition.
Outside the country is different - yes, countries can back certain businesses to work projects. The US does that too, just not companies like Caltrans. We have Bechtel and others that did that in the past - Or Boeing, Google, MSFT, Intel, etc now. The US economy has long moved away from large public works, while China's economy is in this phase.

Public transit in the US is often funded by via government and run like a government department. NYC's system has been underfunded for 40+ years - it'll take a long time to fix. But transit by itself is unable to pay for major capital projects without other sources of funds. You could wait for the government, but you could also follow the HK model
https://www.theatlantic.com/china/archiv...

FlyerInHi wrote:
On trade, the USA is so hopelessly hooked on cheap products that even a 25% tariff will not affect the trade deficit which will keep on rising. Things we don’t buy from China, we will by from Vietnam. And Vietnam will turn around and buy Huawei and other Chinese products.

I have no problem with that and understand probably won't materially change the trade deficit. However, it'll create a vast inefficiency to trade with China directly.
The problem I have with China is that they had a chance to just work with the existing global trade/commons system to increase economic benefit. But now we have to deal with the BS territorial ambitions in SE and East Asia. If you go back 10 years, we didn't have the military buildup going on in Asia. There wasn't even an aircraft carrier assigned to the Pacific for a while. Now we have every country in Asia increasing their military.

Also all the crap that China does in HK, Australia, and here - but I guess we've been allowing that to happen in our society.

But what is China's end goal here? Do they really want global great power competition?
We can make life a lot more difficult for China. We could also steal technology from China and hand it to our designated state champions. We can spend significant % of GDP on international development too. We could call BS on the one country, two systems and recognize Taiwan independence. Spheres of influence in Africa - that can happen too. But heh this time, I doubt the Belgians will go back to the Congo and Italy to Ethiopia ;)

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