Chinese Economics Thread


ansy1968

Brigadier
Registered Member
And next year the exchange rate is going to reverse again when the US goes into recession and they start printing money again.

Rather than looking at the gap in dollar terms, look at how many years China is behind the US. In 2021, China's GDP was 17.5 trillion, about the same as the US in 2014, so 7 years behind. In 2022, China's GDP was last projected to be 19.9 trilllion, about the same as the US in 2017, so only 5 years behind. The recent depreciation of the RMB against the dollar will only affect the fourth quarter GDP. So China's nominal GDP might be lower, but the gap in terms of years will most likely narrow
So bro 2025 will be the inflection point? I'm thinking near parity with US? and IF Trump do win will he do a Nixon redux. ;)
 

Minm

Junior Member
Registered Member
So bro 2025 will be the inflection point? I'm thinking near parity with US? and IF Trump do win will he do a Nixon redux. ;)
2025 is a bit optimistic, but let's hope there's a big recession in the US and significant relaxations of zero covid in China in 2023. The purchasing power of the RMB is still much higher than what's implied by the nominal exchange rate and China has a big trade surplus, so in the long term the RMB should appreciate until it reaches its real purchasing power.
 

vincent

Grumpy Old Man
Staff member
Moderator - World Affairs

abenomics12345

New Member
Registered Member

AndrewS

Brigadier
Registered Member
No.

Look at the monthly NBS data releases on property sales - they are down some 40% YoY. The MoM has stabilized somewhat but for all the discussion on technology improvement/industrial upgrade in this forum, the deleterious impact of real estate on the Chinese economy is not appreciated enough.

The property industry in China does actually have to shrink in half to better reflect demand.
The government have been trying to engineer this for the past 2 years.
 

abenomics12345

New Member
Registered Member
The property industry in China does actually have to shrink in half to better reflect demand.
The government have been trying to engineer this for the past 2 years.
Yes, it has to shrink, but it happens to be 25-30% of GDP. So that is a painful process. Anyone who believes Chinese GDP will grow at 7-8% over the next 5 years are smoking crack. I do not believe IMF/World Bank estimates even incorporate the new reality tbh. I would think if the economy can squeeze out 4-5% over the next few years the transition would be quite successful, but 2022E FY GDP will be 2-4% at best.
 

Overbom

Brigadier
Registered Member
Yes, it has to shrink, but it happens to be 25-30% of GDP. So that is a painful process. Anyone who believes Chinese GDP will grow at 7-8% over the next 5 years are smoking crack. I do not believe IMF/World Bank estimates even incorporate the new reality tbh. I would think if the economy can squeeze out 4-5% over the next few years the transition would be quite successful, but 2022E FY GDP will be 2-4% at best.
GDP "growth" (fake growth) will decline but thats ok because the Chinese economy is transitioning.

This transition has been in Xi's plans for a long long time but he didn't have the power to start that process which would fundamentally touch too many interests. However because Xi has demonstrated his leadership qualities and competency in dealing with various issues, he has the political power to do this transition.

So anyone hoping that China will suddenly retreat from this transition is gravely mistaken. At most, some slight adjustments will be made in order to not crush the real estate sector too fast, but the overall end goal remains the same.

Go away from real estate and instead focus on the real economy.
 
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abenomics12345

New Member
Registered Member
GDP "growth" (fake growth) will decline but thats ok because the Chinese economy is transitioning.

This transition has been in Xi's plans for a long long time but he didn't have the power so start that process which would fundamentally touch too many interests. However because Xi has demonstrated his leadership qualities and competency in dealing with various issues, he has the political power to do this transition.

So anyone hoping that China will suddenly retreat from this transition is gravely mistaken. At most, some slight adjustments will be made in order to not crush the real estate sector too fast, but the overall end goal remains the same.

Go away from real estate and instead focus on the real economy.

I don't disagree with you from the 35k ft view level, but you should be clear eyed in understanding the cost of said transition is born by average people. Most importantly, not disregard the immense economic cost of transition in terms of how it impacts everything else.

Just because building empty apartment complexes that will never be filled is 'fake growth' doesn't mean that the migrant workers mixing concrete don't have families to feed.

Whether you like it or not, more people are interested in their own livelihoods than they are for nation building at their expense, and there is a significant political cost Xi has to bear for engineering this necessary transition.
 

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