Chinese Economics Thread

[KYli]

The real situation is very simple. Guizhou historically has been one of the poorest provinces in China. It is surrounding by mountain with no flatland. In an attempt to alleviate extreme poverty and develop, Guizhou in the last decade has been aggressively pursued many radical projects and developments.

Guizhou has been successfully in becoming a data center for many major IT companies and hydropower exports. Guizhou most important exports are white alcohol with tea, lighters and guitar round up the rest. Other than these, Guizhou also aggressively tried to develop tourism and infrastructure such as bridges, high speed railway, and highway. For the last decade or so, Guizhou has enjoyed a period of rapid economic growth.

However, in the process of rapid developments, Guizhou has become over reliance on land sales. Unlike Xinjiang and Tibet, the central government didn't pour in unlimited resources or willing to foot all the bills. Financial aids and poverty alleviation funding are generous but not unlimited. Therefore, Guizhou has accumulated too much debts in the process of pursuing rapid growth.

Such debts wouldn't be a problem if the economy didn't slow down more rapidly than expected during the pandemics. Consequently, Guizhou is in a very bad shape at the moment.

In addition, there are a lot of white elephant projects especially for the tourism industry. Guizhou has spent too much resources on many tourism projects that would never break even. Poverty alleviation projects also misused funding for areas that no prospect of attracting or retaining population. Of course, corruption play an important role of such white elephant and wasteful projects.

Guizhou's debt isn't a problem for the central government. The central government can easily fix the problem with more funding but it has moral hazard issue that the central government doesn't want to bailout Guizhou until Guizhou has tried and exhausted all channels and cut back all fats and endured some pain.

 

[ZeEa5KPul]

So what's the big deal with Guizhou debt?

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China bad, China collapsing.

 

[HighGround]

The real situation is very simple. Guizhou historically has been one of the poorest provinces in China. It is surrounding by mountain with no flatland. In an attempt to alleviate extreme poverty and develop, Guizhou in the last decade has been aggressively pursued many radical projects and developments.

Guizhou has been successfully in becoming a data center for many major IT companies and hydropower exports. Guizhou most important exports are white alcohol with tea, lighters and guitar round up the rest. Other than these, Guizhou also aggressively tried to develop tourism and infrastructure such as bridges, high speed railway, and highway. For the last decade or so, Guizhou has enjoyed a period of rapid economic growth.

However, in the process of rapid developments, Guizhou has become over reliance on land sales. Unlike Xinjiang and Tibet, the central government didn't pour in unlimited resources or willing to foot all the bills. Financial aids and poverty alleviation funding are generous but not unlimited. Therefore, Guizhou has accumulated too much debts in the process of pursuing rapid growth.

Such debts wouldn't be a problem if the economy didn't slow down more rapidly than expected during the pandemics. Consequently, Guizhou is in a very bad shape at the moment.

In addition, there are a lot of white elephant projects especially for the tourism industry. Guizhou has spent too much resources on many tourism projects that would never break even. Poverty alleviation projects also misused funding for areas that no prospect of attracting or retaining population. Of course, corruption play an important role of such white elephant and wasteful projects.

Guizhou's debt isn't a problem for the central government. The central government can easily fix the problem with more funding but it has moral hazard issue that the central government doesn't want to bailout Guizhou until Guizhou has tried and exhausted all channels and cut back all fats and endured some pain.

What is the plan for dealing with the debt? Is the central government pressuring Guizhou's administration to do something? Is Guizhou's administration asleep at the wheel or are they going to let the region default and let the central government deal with it?

 

[KYli]

What is the plan for dealing with the debt? Is the central government pressuring Guizhou's administration to do something? Is Guizhou's administration asleep at the wheel or are they going to let the region default and let the central government deal with it?

The central government doesn't step in to manage local affairs unless under extreme circumstance. Guizhou government needs to fix its problems with the central government assistance.

SASAC has already asked all national and local state owned companies to cooperate in order to avoid any defaults in local government or local government investment vehicles. Cinda asset management has been sent to assess and help Guizhou government to defuse any risks and find resolution and reform local state owned companies.

In the end of the day, Guizhou owed money to state owned banks with local banks taking a big hit and might need some sort of bailout. LGFVs might or might not get bailout depending upon if the risk of defaults outweigh moral hazard or not. National banks might need to write off some debts or sell some debt to Cinda at discount or postpone the repayment terms. Some of Guizhou's assets would be used for repayment.

Secondary debts that are owed to state owned companies or private companies might be forced to write off or accept new terms of repayment or sell to Cinda at extreme discount. After cleaning up off balance sheet LGFVs that are explicit or implicit guarantee by Guizhou government, then Guizhou government's debt would be manageable but cost cuttings and belt tightening would be painful and prolong and Guizhou's economy would take years to get back on its feet.

 

[horse]

What is the plan for dealing with the debt? Is the central government pressuring Guizhou's administration to do something? Is Guizhou's administration asleep at the wheel or are they going to let the region default and let the central government deal with it?

The answer is straight out of the ECO-101 textbook from any American university, and that term is moral hazard.

Sure, the central government can bail out everybody. But that is not how the system works. It is still a meritocracy. Do a good job, and get promoted the deserving cadre. Screw it up, and do not expect a bailout, due to moral hazard.

The communist Chinese, when it opened up, went around the world learning the best practices from everybody, and the CCP learned a lot from the Americans.

That is the why the CCP is convinced the Americans are in an absolute decline that they will not pull themselves out of, for at least 2 or 3 generations.

During the 2008 financial crisis, the term moral hazard was still used in the press. Today, with the QE and the money printing, moral what?

As for the indebted in China, they will do what all people who hold too much debt and facing some difficulty, they will slow pay it.

 

[HighGround]

The central government doesn't step in to manage local affairs unless under extreme circumstance. Guizhou government needs to fix its problems with the central government assistance.

SASAC has already asked all national and local state owned companies to cooperate in order to avoid any defaults in local government or local government investment vehicles. Cinda asset management has been sent to assess and help Guizhou government to defuse any risks and find resolution and reform local state owned companies.

In the end of the day, Guizhou owed money to state owned banks with local banks taking a big hit and might need some sort of bailout. LGFVs might or might not get bailout depending upon if the risk of defaults outweigh moral hazard or not. National banks might need to write off some debts or sell some debt to Cinda at discount or postpone the repayment terms. Some of Guizhou's assets would be used for repayment.

Secondary debts that are owed to state owned companies or private companies might be forced to write off or accept new terms of repayment or sell to Cinda at extreme discount. After cleaning up off balance sheet LGFVs that are explicit or implicit guarantee by Guizhou government, then Guizhou government's debt would be manageable but cost cuttings and belt tightening would be painful and prolong and Guizhou's economy would take years to get back on its feet.

The prospect of a large bailout is enticing to me if things are as bad as you describe.

You can avoid moral hazard by investigating the people involved for corruption, and jailing the corrupt.

Also, it may be useful to allow some loans to default, and allow investors to either repossess or foreclose on some of these White Elephant assets. While guaranteeing the capital that's involved in actual productive assets tied to the local economy. Minimizing damage to employment, but also allowing for market correction in sectors that either have no future, massively propped up by bad/corrupt loans, or both.

Anyway, I hope for the best. Normal people are always hurt the most by the decisions of the corrupt few. I hope the central government crafts a response that minimizes damage to the common folk, and maximizes damage to the bureaucrats who cause this mess to begin with.

People must understand that nobody is beyond the law or can escape accountability.

 

[Overbom]

The real situation is very simple. Guizhou historically has been one of the poorest provinces in China. It is surrounding by mountain with no flatland. In an attempt to alleviate extreme poverty and develop, Guizhou in the last decade has been aggressively pursued many radical projects and developments.

Guizhou has been successfully in becoming a data center for many major IT companies and hydropower exports. Guizhou most important exports are white alcohol with tea, lighters and guitar round up the rest. Other than these, Guizhou also aggressively tried to develop tourism and infrastructure such as bridges, high speed railway, and highway. For the last decade or so, Guizhou has enjoyed a period of rapid economic growth.

However, in the process of rapid developments, Guizhou has become over reliance on land sales. Unlike Xinjiang and Tibet, the central government didn't pour in unlimited resources or willing to foot all the bills. Financial aids and poverty alleviation funding are generous but not unlimited. Therefore, Guizhou has accumulated too much debts in the process of pursuing rapid growth.

Such debts wouldn't be a problem if the economy didn't slow down more rapidly than expected during the pandemics. Consequently, Guizhou is in a very bad shape at the moment.

In addition, there are a lot of white elephant projects especially for the tourism industry. Guizhou has spent too much resources on many tourism projects that would never break even. Poverty alleviation projects also misused funding for areas that no prospect of attracting or retaining population. Of course, corruption play an important role of such white elephant and wasteful projects.

Guizhou's debt isn't a problem for the central government. The central government can easily fix the problem with more funding but it has moral hazard issue that the central government doesn't want to bailout Guizhou until Guizhou has tried and exhausted all channels and cut back all fats and endured some pain.

No bailouts. Guizhou invested the money, if it invested it wrong and can't get a decent ROI, it should default.

Central Government pouring money to all at-risk provinces would be a huge moral hazard which would let these provincial governments start thinking that its no big deal to fail, central government would just bail them out.

 

[luminary]

Who are the Biggest Uranium Miners in the World?​

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Rank	Company	2021 Uranium Production (tonnes)	Percent of Total
1	Kazatomprom	11,858	25%
2	Orano	4,541	9%
3	Uranium One	4,514	9%
4	Cameco	4,397	9%
5	CGN (China)	4,112	9%
6	Navoi Mining	3,500	7%
7	CNNC (China)	3,562	7%

The World’s Top 25 Websites in 2023​

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Most of the websites on this list are based in the U.S., but a few such as Baidu (China) and Yandex (Russia), also make the cut. Interestingly, the three adult websites on this list–XVideos, PornHub, and XNXX–are based outside the U.S.

 

[Strangelove]

Chinese consumer power and the growing use of non-western payment systems.

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UnionPay Topples Visa to Become World’s Most Used Debit Card in 2022, Nielsen Says

Liao Shumin DATE: 4 hours ago

UnionPay Topples Visa to Become World’s Most Used Debit Card in 2022, Nielsen Says

(Yicai Global) May 29 -- China UnionPay overtook the US’ Visa for the first time last year to claim its place as the world’s most popular debit card provider, according to the latest research.

UnionPay seized 40.03 percent of the world’s debit card market in 2022, an increase of 1.39 percentage point, while Visa held 38.78 percent of the market, a dip of 0.82 percentage point, according to a recent report by US market research company Nielsen Holdings.

There were a combined 624.86 billion transactions made last year using credit, debit and prepaid cards from Visa, UnionPay, Mastercard, American Express and other major bank card providers, an increase of 7.5 percent from the year before, New York-based Nielsen said. Debit cards accounted for 63.8 percent of these transactions.

In terms of both credit and debit cards, Visa topped the world’s market with a 38.7 percent share, UnionPay came in second with 34 percent and Mastercard was third at 24 percent.

 

[tphuang]

Chinese consumer power and the growing use of non-western payment systems.

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UnionPay Topples Visa to Become World’s Most Used Debit Card in 2022, Nielsen Says

Liao Shumin DATE: 4 hours ago

UnionPay Topples Visa to Become World’s Most Used Debit Card in 2022, Nielsen Says

(Yicai Global) May 29 -- China UnionPay overtook the US’ Visa for the first time last year to claim its place as the world’s most popular debit card provider, according to the latest research.

UnionPay seized 40.03 percent of the world’s debit card market in 2022, an increase of 1.39 percentage point, while Visa held 38.78 percent of the market, a dip of 0.82 percentage point, according to a recent report by US market research company Nielsen Holdings.

There were a combined 624.86 billion transactions made last year using credit, debit and prepaid cards from Visa, UnionPay, Mastercard, American Express and other major bank card providers, an increase of 7.5 percent from the year before, New York-based Nielsen said. Debit cards accounted for 63.8 percent of these transactions.

In terms of both credit and debit cards, Visa topped the world’s market with a 38.7 percent share, UnionPay came in second with 34 percent and Mastercard was third at 24 percent.

Still trails in credit card usage but this seems like a pretty big development. Especially considering that Chinese customers typically use Alipay and Wechat pay to pay for stuff