Chinese Economics Thread

[Yvrch]

Exactly. Caixin and PMI dropped a whisker and that quickly become a headline - oh look, China shrunk! There was a New Year FFS.
China is working for next generation and generations to come, not for the next quarter report, or the next election, to put it mildly into perspectives. So she can afford to manage things that would have more longer term benefits than short-term quick fixes.

 

[plawolf]

As a rule of thumb that has yet to let me down, anyone drawing fanciful conclusions from data that simply does not support such leaps are not neutral observers looking to extrapolate the best answer based on the information available, but rather are biased actors hunting for evidence to support their deeply held, pre determined positions.

The opinions of such people are not convincing to me.

 

[Franklin]

That is because the majority of Western media types only want to see China crash and burn and will present any event or fact in the most negative light.

The trouble with any indicator is that it is limited and can misrepresent a situation. The weakness with PMI is that it measures its factors in financial terms and works best when measuring constants.
Recently, we have seen the price of Fuel and Raw Materials slump - the PMI will record this as a retraction in overall financial terms, even if volumes purchased have increased.
Likewise Inventories are deemed bad if high, but do not differentiate between finished products (unsold) or raw materials stockpiled while prices are low.
Another key benchmark is staff recruitment, but even here, if a company is modernising and investing in modern machinery and automation, (not recruiting large quantities of labour) it will show as a retraction.

Like everything else, all measures need reading in conjunction with other indicators and actual company results.

You are right the way that the media and others analyse China's economy doesn't take into account the profound changes that have already taken place. And is still taking place in the Chinese economy.

 

[siegecrossbow]

On a positive note, Gordon Chang can probably ride the current media hysteria till retirement.

 

[AssassinsMace]

There was an article a while ago that said the US recovery from the 2008 financial crisis took longer than previous recessions because the world had other choices to invest their money other than concentrated in the US/Western markets. Some will argue the US still hasn't recovered. Wage increase has been stagnant for a long time. While in China they try to spin how wage increase is a bad thing because the cost of outsourcing becomes more expensive. Yeah that's if you believe China's economy is totally dependent on foreign corporations outsourcing. If that were the case why would wages increase when it would be a race to the bottom where all Chinese would take anything because there's little choice? Consumer spending in China has not stopped. In the US that would be a sign of confidence in the economy.

Western economic institutions are as political as everything else. Of course they have to paint China's economy as failing in contrast to how wonderful they say how the US going great. It goes hand-in-hand. It's all about confidence and how they have to promote how their system is superior. They don't want money going to China or anywhere else. When emerging markets were booming other countries dared to dabble in their own foreign policy choices. That's what happens when you make a lot of money. You become independent. And that's a bad thing for you if you want everyone to do it your way. When you read negative stories on China, it isn't about solving a problem. It isn't aimed at Chinese to read. It's solely for American consumption. A significant number of Americans thought before that China's economy was number one. If you believe that, then you might want to change the system. This is the same story about the popularity of Trump and Sanders. They're not establishment choices. Those guys don't follow their way of doing things and they might change the system that they benefit from the most and they'll lose it all if Trump and Sanders are successful. Of course they're going to publish all negative stories on China because China is a threat to the system they've established in the world that benefits them the most. It isn't human rights or any sort of aggression that makes them publish negative stories because I can point out worse cases that are ignored or made less by them. This is the primary reason where China acts independently and does not serve as just a cog in their machine that serves them first. That's not a crime. That's why they'll spin it to be everything else. If you want to take it further... Trump and Sanders are not saying anything different from what their parties have made as their platforms of what they're about. What they're afraid of is losing their own power in this establishment. You can have a China that embraced democracy and human rights but if China was still independent it will be no different.

 

[montyp165]

There was an article a while ago that said the US recovery from the 2008 financial crisis took longer than previous recessions because the world had other choices to invest their money other than concentrated in the US/Western markets. Some will argue the US still hasn't recovered. Wage increase has been stagnant for a long time. While in China they try to spin how wage increase is a bad thing because the cost of outsourcing becomes more expensive. Yeah that's if you believe China's economy is totally dependent on foreign corporations outsourcing. If that were the case why would wages increase when it would be a race to the bottom where all Chinese would take anything because there's little choice? Consumer spending in China has not stopped. In the US that would be a sign of confidence in the economy.

Western economic institutions are as political as everything else. Of course they have to paint China's economy as failing in contrast to how wonderful they say how the US going great. It goes hand-in-hand. It's all about confidence and how they have to promote how their system is superior. They don't want money going to China or anywhere else. When emerging markets were booming other countries dared to dabble in their own foreign policy choices. That's what happens when you make a lot of money. You become independent. And that's a bad thing for you if you want everyone to do it your way. When you read negative stories on China, it isn't about solving a problem. It isn't aimed at Chinese to read. It's solely for American consumption. A significant number of Americans thought before that China's economy was number one. If you believe that, then you might want to change the system. This is the same story about the popularity of Trump and Sanders. They're not establishment choices. Those guys don't follow their way of doing things and they might change the system that they benefit from the most and they'll lose it all if Trump and Sanders are successful. Of course they're going to publish all negative stories on China because China is a threat to the system they've established in the world that benefits them the most. It isn't human rights or any sort of aggression that makes them publish negative stories because I can point out worse cases that are ignored or made less by them. This is the primary reason where China acts independently and does not serve as just a cog in their machine that serves them first. That's not a crime. That's why they'll spin it to be everything else. If you want to take it further... Trump and Sanders are not saying anything different from what their parties have made as their platforms of what they're about. What they're afraid of is losing their own power in this establishment. You can have a China that embraced democracy and human rights but if China was still independent it will be no different.

Indeed, one can see the same sorts of media stories ragging on Russia or India (or even Iran for that matter) whenever any of them go against what those US political-economic cliques want.

 

[Engineer]

Articles about China's economy from western lame stream media should be interpreted as reflection of Western economies. I remember in the run up to 2008, there were weekly reports about massive non-performing loans in China and how China's banking sector was about to go under. In the end, the banks that went under with massive non-performing loans weren't from China, and it wasn't China's banking sector that required bail-out. Now, keep in mind that part of China's output is export. When that export shrinks, it actually means the west isn't consuming as much, which in turns tell us growth in western economy is slowing down.

 

[Equation]

Hmmm....all that China "woes" and yet still NO tax payers bail out for any of it's under performing banks and no $18 TRILLION debt like here in the US.

 

[Blackstone]

Hmmm....all that China "woes" and yet still NO tax payers bail out for any of it's under performing banks and no $18 TRILLION debt like here in the US.

Most loans were to SOEs and local governments, so if they go bad and need resolution, Beijing has the option to pull an Alexander Hamilton and nationalize the debt in exchange for greater central government control.

 

[Qi_1528]

As a rule of thumb that has yet to let me down, anyone drawing fanciful conclusions from data that simply does not support such leaps are not neutral observers looking to extrapolate the best answer based on the information available, but rather are biased actors hunting for evidence to support their deeply held, pre determined positions.

The opinions of such people are not convincing to me.

That's true, but there another side to the equation. The biases you hold yourself. We all have to fight our own just as hard as those we see in other people. Harder actually.

The best we can hope for in my opinion is to minimise bias. Neuroscientists and psychologists have shown we are are not fully rational beings. That still puts us far ahead of chimps, which don't seem able to control their impulses and emotions at all, but the animal part of our brains still has the capacity to rule us. I'd like to think another 50,000 or so years of evolution will have changed this if our species can survive that long.

Articles about China's economy from western lame stream media should be interpreted as reflection of Western economies. I remember in the run up to 2008, there were weekly reports about massive non-performing loans in China and how China's banking sector was about to go under. In the end, the banks that went under with massive non-performing loans weren't from China, and it wasn't China's banking sector that required bail-out. Now, keep in mind that part of China's output is export. When that export shrinks, it actually means the west isn't consuming as much, which in turns tell us growth in western economy is slowing down.

Agreed. It should be obvious China is affected by the state of the Western (and increasingly, world) economy just as much as the state of China's affects the rest of the world. It's a reciprocal relationship.

I've mentioned before in this thread the argument that private debt is much more of a problem for economic stability than public debt, so long as the state issues its own currency. Greece ran into problems because it can't run the emergency level deficit it needs to get its economy growing again. Anyway, private debt is a much bigger problem in the West than it is in China. I expect that if there's a debt crisis this year, it will start in the US or Europe, and then spread to China and other nations. And when or if it hits China, Beijing has all the tools available to deal with this debt. It's just a matter of having the political will to use them.