Chinese Economics Thread


KWT

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Not all new laws will worry investors as much as the ones used to clobber Didi. Some deal with problems that affect the West, too. One forthcoming set of regulations published in draft on August 27th by the Cyberspace Administration of China (CAC) looks to set the rules for the use of recommendation algorithms. This is the sort of software that companies like Amazon and Alibaba use to recommend products based on a customer’s shopping history, or that short-video apps like TikTok use to work out what viewers like in order to give them more of it.

The draft regulations require, for instance, that companies expose the keywords with which they have labelled their users, and allow users to delete them. This, in principle, will mean that internet users in China will no longer be dogged by advertisements for the refrigerator that a recommendation algorithm has decided they might like to buy. Writing algorithms which lead users to “addiction or high-value consumption” would also be banned. Algorithms which dispatch workers, such as Didi’s driver-management system, must “ensure workers’ rights and interests”. The regulations read like an attempt to fix the problems griped about by consumers everywhere.

They also require firms that deploy recommendation algorithms to “uphold mainstream values” and to “vigorously disseminate positive energy”. Such algorithms must not be used to “engage in activities harming national security” or to upset the economic or social order. As such, their aim seems to be to withhold algorithmic juice from any content that does not make the government look good.
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Kaeshmiri

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So does anyone know what the deal is with Evergrande? Seeing a ton of articles in Western dailies and elsewhere how this property giant is about to fall and cause a ripple effect in the Chinese economy.
China watchers meanwhile are having orgasms and calling it Chinas 2008 moment . I think the major issue is the thousands of families who've invested their money and now the housing projects have stalled.


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ansy1968

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So does anyone know what the deal is with Evergrande? Seeing a ton of articles in Western dailies and elsewhere how this property giant is about to fall and cause a ripple effect in the Chinese economy.
China watchers meanwhile are having orgasms and calling it Chinas 2008 moment . I think the major issue is the thousands of families who've invested their money and now the housing projects have stalled.


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@Kaeshmiri bro I don't have much of a detail but looking in with Xi clamped down on property speculation those investment will be return but not on the speculated price. Chinese regulators will restructured the company and everybody will have a hair cut especially the institutional investor. Bro the reason why BlackRock withdrew its bid in buying SHOHO another trouble firm. And I think its better to have the property bubble burst now rather than having a bigger problem in the future while the economy is strong and able to absorb the pain.
 

Overbom

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So does anyone know what the deal is with Evergrande? Seeing a ton of articles in Western dailies and elsewhere how this property giant is about to fall and cause a ripple effect in the Chinese economy.
China watchers meanwhile are having orgasms and calling it Chinas 2008 moment . I think the major issue is the thousands of families who've invested their money and now the housing projects have stalled.


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AFAIK Evergrande problem is liquidity. It has assets to covers its debts, but it takes time to transform these assets to hard cash.

As such, in my opinion the Gov will restructure (with a haircut on the bonds) the business and give it more time to gather funds
 

ansy1968

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AFAIK Evergrande problem is liquidity. It has assets to covers its debts, but it takes time to transform these assets to hard cash.

As such, in my opinion the Gov will restructure (with a haircut on the bonds) the business and give it more time to gather funds
@Overbom bro western MSM is highlighting it but not mentioning the full story, by not allowing institutional investor especially foreigners to invest and owned those properties, the 2008 Lehman style crisis that they're parroting will never happen, by allowing it to file for bankruptcy it will be able to restructured rather than sold the assets for peanuts if its bought by those foreign vulture capitalist leaving those small investor to dry.
 

ChongqingHotPot92

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Ryan Hass did a great job covering the "common prosperity" topic. There will indeed by wealth distribution in various forms, as well as anti-monopolies. Still I wonder when Beijing would implement policies like property, inheritance, and progressive incomes taxes. Property and inheritance taxes would be key in redistributing wealth.
 

Overbom

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Ryan Hass did a great job covering the "common prosperity" topic. There will indeed by wealth distribution in various forms, as well as anti-monopolies. Still I wonder when Beijing would implement policies like property, inheritance, and progressive incomes taxes. Property and inheritance taxes would be key in redistributing wealth.
I have written before about the (many) difficulties of implementing such taxes.

However it seems that the development of property taxes is getting accelerated.

By the start of 2022 pilot programs of property taxes will be implemented in many cities. It seems that some sort of consensus has been reached and things are moving forward now
 

Andy1974

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I have written before about the (many) difficulties of implementing such taxes.

However it seems that the development of property taxes is getting accelerated.

By the start of 2022 pilot programs of property taxes will be implemented in many cities. It seems that some sort of consensus has been reached and things are moving forward now
Do you mind going over why isn’t there a progressive income tax, and what’s the issues with it?

I was very surprised to learn this isn’t implemented.
 

Bellum_Romanum

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China's industrial revolution, which started 35 years ago, is perhaps one of the most important economic and geopolitical phenomena since the original Industrial Revolution 250 years ago. The reason is simple: Less than 10 percent of the world's population is fully industrialized; if China can successfully finish its industrialization, an additional 20 percent of the world's population will be entering modern times. Along the way, China is igniting new growth across Asia, Latin America, Africa and even the industrial West, thanks to the country's colossal demand for raw materials, energy, trade and capital flows.

China's rapid growth has puzzled many people, including economists.

How could a nation with 1.4 billion people transform itself relatively suddenly from a vastly impoverished agricultural land into a formidable industrial powerhouse when so many tiny nations have been unable to do so despite their more favorable social-economic conditions? Among the many conflicting views that have emerged to interpret China's rise, two stand out as the most popular and provocative. The first sees China's hypergrowth as a gigantic government-engineered bubble. It is not sustainable and will collapse because China has no democracy, no human rights, no freedom of speech, no rule of law, no Western-style legal system, no well-functioning markets, no private banking sector, no protection of intellectual properties, no ability to innovate (other than copying and stealing Western technologies and business secrets), nor a host of many other things that the West has possessed for centuries and have proved essential for Western prosperity and technological dominance.1 According to this view, the bubble will burst at the expense of China's people and environment.

The second view sees China's dramatic rise simply as destiny. It is returning to its historical position: China had been one of the richest nations and greatest civilizations (alongside India) from at least 200 B.C. to 1800, the dawn of the Industrial Revolution in England. (See Figure 1.) It was only a matter of time for China to reclaim its historical glory and dominate the world once again. (As Napoleon once said, "Let China sleep, for when the dragon awakes, she will shake the world."2)

But neither view is backed by serious economic analysis, instead being based either on prejudice or naïve extrapolation of human history. How could a nation with all those adverse elements for business and innovation be able to grow at a double-digit annual rate for several decades and transform itself in such a short time from an impoverished agricultural economy into a formidable manufacturing powerhouse? If culture or ancient civilization is the explanation, then why aren't Egyptian, Greek or Ottoman empires bursting onto the world stage?

This article provides a different view of China's rise, one based on fundamental economic analysis. It hopefully will lead to a better understanding of China's miracle growth but also will shed light on the failures and successes of many other nations' attempts at industrialization, including the original Industrial Revolution itself.

Admittedly, many people think China's economic miracle has come to an end. The growth of its economy has declined sharply from the double digits to 7 percent or lower. Its stock market is in turmoil, and its currency is under attack. But keep in mind that the United States experienced 15 financial crises and a four-year civil war as it rose to global prominence. It was on the verge of collapse in 1907 after taking on the mantle of the world's superpower from the United Kingdom. The U.S. also weathered the Great Depression in the 1930s and the global financial crisis in 2007. Does all of this mean it is no longer an economic star?

Some Facts about China's Rise

Thirty-five years ago, China's per capita income was only one-third of that of sub-Sahara Africa. Today, China is the world's largest manufacturing powerhouse: It produces nearly 50 percent of the world's major industrial goods, including crude steel (800 percent of the U.S. level and 50 percent of global supply), cement (60 percent of the world's production), coal (50 percent of the world's production), vehicles (more than 25 percent of global supply) and industrial patent applications (about 150 percent of the U.S. level). China is also the world's largest producer of ships, high-speed trains, robots, tunnels, bridges, highways, chemical fibers, machine tools, computers, cellphones, etc.



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Overbom

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Do you mind going over why isn’t there a progressive income tax, and what’s the issues with it?

I was very surprised to learn this isn’t implemented.
Local Gov financing is dependent on ever increasing land value. Some other accounting tricks used by the Local Govs to raise funds for projects were taken under the assumption that the underwritten land/asset would have a guaranteed yearly appreciation of x%.

Also Local Govs get taxes depending on a x% of land/real estate sales. So they wanted high prices because they wanted to get more tax for each sale.

In addition, a lot of middle class people have used real estate as an investment in order to store their wealth there. Thus, a hefty yearly increase in real estate value was also very beneficial for these people.

There are a lot of politics involved where some local gov want such taxes and others dont. And lets not forget that nobody wants to get new taxes..

A reduced property value will cause issues which is why China was always very hesitant to implement them, and it is doing a lot of pilots in order to get it right from the start.

Of course this is just a simple list, there are a lot of other issues. Maybe some other members can come in and post their own thoughts on this

Anyway this doesn't matter, it seems that a consensus has been reached and property taxes will get implemented
 

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