Chinese Economics Thread

[AndrewS]

Good idea China (and all other nations) should diversify from the USD into other currencies and assets. Gold and silver are my personal favorites. What is happening in the US now is insane. Not just with COVID but also in terms of fiscal and monetary policies.

Personally, I think best to keep it as liquid cash, because there will be a lot of low-priced assets for sale in the next year.

Have a look at what Warren Buffet and the Private Equity companies are doing.

 

[Petrolicious88]

It is more long term to hasten to get rid of gas vehicles all together. The technology is already there, the ecosystem is already there.
If China can get rid of all gas vehicles in 3 or 4 years time, its going to be a revolution. It will hit multiple birds with one stone. Less pollution, less dependency of foreign oil, therefore less demand for US dollar or what ever currency they will use later.

If China can demonstrate that this can be done, others will follow. It will be the collapse of oil based economy. And collapse of the US dollar demand too. This is the only thing why US dollar still reigns supreme. Everybody still needs needs because of oil.

Is that even possible? Does the world have enough minerals and metals to produce all these batteries?
Also, how will China recycle all these dead batteries given that lithium battery recycling is one most difficult.

 

[Derpy]

I don't see how the US can contract just 7% for the year. Mathematically, that means a combined -28% all 4 quarters added up. Q1 was -5%. Q2 is something like -35% so that's about -40% right there. To get to -28%, that means Q3 and Q4 have to be average positive 6% each, and that's compared to 2019 Q3/Q4, not the disastrous quarters that just followed. When was the last time the US posted 6% for a quarter even in the healthiest economy? That's not to mention that it would be a massive achievement for the US to even begin to recover (>0%) in Q3 (or even Q4), which is very much in the air and looking worse as the pandemic in the US rages on. I don't see how they can confine all 4 quarters total to just -28%.

They measure against the same quarter last year, the -28% q2 is measured against q2 2019, thats the quarter were everyone was in lockdown so no suprise there, most of that have/will bounce back when people go back to work and start shopping again, the more permanent damage are the companys that went bankrupt during this time.

 

[SimaQian]

Is that even possible? Does the world have enough minerals and metals to produce all these batteries?
Also, how will China recycle all these dead batteries given that lithium battery recycling is one most difficult.

Well nobody knows until it is tried. One thing is for sure. In Shenzhen, just accross Hong Kong, a city of 12M, they were able to completely get rid of taxi and bus gas vehicles in 2019. And major cities in China is trying to replicate this success. They even started to make garbage trucks electrified.

And battery recycling is a mature technology already.

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What is needed is how to sustain this momentum or accelerate this transition, to get past of oil based economy. I am hoping in my lifetime I can see this transition.

 

[siegecrossbow]

They still need some $US to buy oil. But Russia and Turkey are decoupling from the $US already. More currency swaps agreement need to be done with their main trading partners.

Turkey has no choice. They exhausted their dollar reserves through foreign wars.

 

[manqiangrexue]

They measure against the same quarter last year, the -28% q2 is measured against q2 2019, thats the quarter were everyone was in lockdown so no suprise there, most of that have/will bounce back when people go back to work and start shopping again...

I know that; that's not what I'm saying at all. I'm saying that against last year, if Q1 contracted 5%, Q2 contracted 35% (tentative), Q3 and Q4 would have to expand by average 6% each (compared to last year) for the US to recess just 7% in 2020 compared to 2019. And with the current virus curve, and even without it, 6% quarterly expansion, especially back-to-back, does not look probable (which is very much an understatement). Even if we do 8% 2020 vs 2019 whole year drop, Q3 and Q4 would have to come in at average 4% growth, which is also a very very rare thing for America even in a very healthy economy, not to mention back-to-back. Now if we look at 10% year-on-year decline between 2019 and 2020, we see Q3 and Q4 averaging 0%, which works out to a mild contraction in Q3 and an equally mild recovery in Q4 and that looks much more possible... unless the US further screws things up and the economy takes a second wave hit...

...the more permanent damage are the companys that went bankrupt during this time.

I don't know about permanent, but up to medium term, certainly. There are businesses around me that have just remained closed. Should have tried that pizza place while I still had the chance...

 

[Tam]

Hi Tam,

Since oil is up, Do you think China will resell it for a profit?

No. They will keep it for their own consumption and reserve. A huge buffer of oil reserve can keep energy prices down and stable in China and control inflation.

 

[getready]

Realistically, we are only looking at a 5-10% drop in US GDP this year, as per the IMF and other estimates.

Appreciating the Yuan actually means Chinese consumers buying more foreign-made products rather than Chinese-made products.
What needs to happen is the disposable incomes of Chinese consumers needs to increase.
Higher wages AND lower property costs for lower-income earners would be ideal.

Yes higher wages is the key. keeping unemployment rate down to a manageabke level is also important

 

[Gatekeeper]

Just love this rebuff from none other than our spokes person Hua Chung Ying. Polite but firm.

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[AndrewS]

I know that; that's not what I'm saying at all. I'm saying that against last year, if Q1 contracted 5%, Q2 contracted 35% (tentative), Q3 and Q4 would have to expand by average 6% each (compared to last year) for the US to recess just 7% in 2020 compared to 2019. And with the current virus curve, and even without it, 6% quarterly expansion, especially back-to-back, does not look probable (which is very much an understatement). Even if we do 8% 2020 vs 2019 whole year drop, Q3 and Q4 would have to come in at average 4% growth, which is also a very very rare thing for America even in a very healthy economy, not to mention back-to-back. Now if we look at 10% year-on-year decline between 2019 and 2020, we see Q3 and Q4 averaging 0%, which works out to a mild contraction in Q3 and an equally mild recovery in Q4 and that looks much more possible... unless the US further screws things up and the economy takes a second wave hit...

Not necessarily.

Remember that there is seasonality to the different quarters.

For example, US retailers make most of their annual profits (and presumably sales) in the month of December.