China could metabolize every raw material on Earth into a manufactured good to export and their economy would still be fucked.
Nett and Juicy, can you elaborate on this? Why would their economy still be fucked? I'm curious what this means, and where this comes from.
I mean, there’s economists that devote their entire life’s work to figuring out how China has its economy propped up and still can’t really get all the information. In an extremely short summary, China is getting too old and too over-leveraged. They apply the equivalent of the Obama stimulus package to their economy regularly (2-3 times a month) and their bond market is the four state banks buying and selling each other’s bonds non-stop. It’s just an insane house of cards.
And that’s just what they report, it’s so much worse when you dive into it. Basically state-owned companies take a loan from a state-owned bank to finance something. They then have to take out another loan from another state-owned bank to pay off the loan to the first one. Then again, and then again, etc. Meanwhile the state ultimately owns all that debt. But they can’t stop issuing those corporate loans because it keeps people employed and those businesses from going tits-up, Enron-style.
People have been predicting this for 20+ years. If you had asked me in the mid 2000s if China was lurching towards a massive recession I would have agreed. At this point I don't think the bounce down will be anywhere near that bad. The only way that happens is if trade relations with the west completely collapse. A lot of the theory predicting an inevitable implosion doesn't fully acknowledge the benefits(yes, they really do exist, not that it would ever be worth the trade off for capitalism) to having an economy so dominated by the central government. I think the reality is going to be somewhat like what I've already seen while living there. You see people get fucked hard when the government suddenly decides to pull out from these losing investments. It will be like that, except on a larger scale. It will be a complete and utter fucking disaster for a fraction of the country, but the nation as a whole won't drop off the global stage as an economic powerhouse.
I would do some more reading into it. There’s more than a few reasons why China might not even be a unified country in 15-20 years.
That's helpful, thanks. I kind of assumed the whole house of cards was propped up by the steady stream of folks they could lure from farm to factory work, which had to run out someday. Boy, what a fun time to be alive.
They might lose a province, but believe me, the core of China, the east where 80%+ of the population lives represents the most ardent patriotism on the planet. A small piece of China, may at some point, and only then under massive western pressure be able to break off, but 'China' isn't going anywhere.
Yeah... ok. For the millennia that China has existed, its only been unified for about 300 years in total, half of which was under control of the Mongols. It’s not about patriotism at all. It’s about the governments ability to maintain economic stability, which in the long-term, it absolutely cannot. The math just isn’t there. And when you mention eastern China, are you referring to the autonomous islands and territories that constantly test their independence, the northeast where the population is ethnically Korean or the Han, who hate everyone else? See where this is going? Look at how they can’t even properly manage the outbreak of a disease.
The time period of mongol dominance has fuck all to do with China today. Support for the communist revolution is near ubiquitous at this point in the east. If you really doubt this I will pay you $10,000 to walk into any bar in the eastern provinces and shout "Cao Mao ze dong mama de bi". You will probably die. 100% serious. By the east, where the vast majority of population is, and support for the central government is strongest I mean this. The last time western economists were able to accurately forecast China's economy was prior to the great leap forward. They have been wrong for decades, primarily because the level of disguised unemployment coupled with massive loans would spell doom for an economy that at all resembles those they have built their theories upon. However, with a central government of the size and scope China has right now they can absorb an insane amount failures(and do right this moment). Consider this, because this is what they do when a project collapses: - they withdraw all resources they can salvage - they give the workers who lost in their oversight absolutely nothing - they can seize the assets of their more successful projects at will and apply them where needed - they can never lose a court battle over any of this A lot of loans they are under aren't as meaningful as you think. A projects tanks, they tell the investors that they lost and that they can go fuck themselves. That is how they operate. Edit: Forgot to mention. It's easy to wonder why anyone would invest in an entity with this kind of history. The thing is, the potential for rewards still remains high. You're talking about an economy that has had mostly double digit growth for a long time. Western investors complain ceaselessly about how they are treated by the Chinese court system, but how many have backed off? Very few, and foreigners get treated far better than the local populace because despite their kangaroo practices China still cares a great deal about appearances on the international stage.
Good point. Reminds me of that "raw water" trend. People with no brain and a lot of money were pretending to be poor as a fad. Yeah there's purified water for a reason.
So do you think that Trump being able to fully dictate 100% of the trade terms with China for the foreseeable future is because China thinks its economy is strong and secure? Or that China pegs its currency to the USD for stability, access to the US market and cheaper exports? Or the fact that within 20-25 years 1/3 of the population will be over the age of 65 with no equivalent labor replacement demographic? I’m not sure why you think an authoritarian central government will be the cure-all for economic instability. More than a handful of indicators are pointing in the other direction.
That's not what I'm saying. You remember my posts on this subject. China's bargaining power is no where near as strong as the hand they are trying to play at the moment, or as certain 'all Trump does is wrong' pundits would insinuate. I do expect a downturn from their massive growth. Probably within the next 5 years. I expect they will even hit a true recession where growth goes below zero. What I am saying is that the 'house of cards' model is wrong. It's going to kick out the ceiling, not the legs. China cannot sustain the weight of their own momentum, but they aren't going to collapse. ** We're getting well off coronavirus, but Trump's stance on China was probably the greatest benefit to his presidency.
This is just semantics at this point then and I don’t know what you mean by ”kick out the ceiling“, but whatever. You don’t have to wait 5 years either. Coronavirus is projected to wipe out 6% of their GDP if they don’t get their shit together by the end of Q3. All that has to happen in the short-term is foreign and capital investment getting spooked by the virus‘ spread and packing up shop. This is likely a primary driver for the Politburo downplaying it.
They just cleaned my cart with a Lysol wipe before walking into Costco. I feel like Tyler Durden should be chiming in. “....the illusion of safety.”
Not going to lie, this shit is a bit scary for me, especially since this outbreak is literally an hour's drive from my home. I'm not worried so much about myself. It's the other stuff, like my kids, one of whom had his first birthday a few days ago. Oh, and being Asian. Apparently a student from Singapore got the shit kicked out of him in London by a bunch of white people screaming about not wanting coronovirus in their country. https://www.straitstimes.com/singap...witnesses-after-coronavirus-related-taunt-and Oh, and just generally shit like this: https://www.npr.org/2020/03/02/811363404/when-xenophobia-spreads-like-a-virus
Yeah, dude... we're going to have to ban you from the forum until after all this shit blows over... don't want the Board to get a virus or something.