Chinese Economics Thread
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Pretty weak numbers really.
Already evident in all the export PMI numbers we saw, especially manufacturing.
Also shows why PBOC seems to be allowing RMB to fall without any intervention.
Also keep in mind that RMB is down, so in RMB terms, this may not be down YoY
Russian trade very good
$94B in 5 month, $20.6B in May. Let's just it will continue to increase throughout the year. $20B/month or $240B seems likely
Look at that, Russia not far off Japan & Korea
Another interesting one in there is just how much Brazil exports to China
Africa now is more than Japan & Korea
$94B in 5 month, $20.6B in May. Let's just it will continue to increase throughout the year. $20B/month or $240B seems likely
Look at that, Russia not far off Japan & Korea
Another interesting one in there is just how much Brazil exports to China
Africa now is more than Japan & Korea
I think what Huawei is doing on software side is impressive. Basically, they had to find alternatives to Western products. They already had in house products, but they developed them to the point where they can completely replace Western ones and now they have started replacing them in large banks & energy companies.
From the always angry HW before HR
And looks like Huawei is trying to get further into finance sector
Of course, all of this helps Huawei. But maybe Alibaba & Tencent need to work a little harder in these areas too if they don't want to loose cloud customers to Huawei because they haven't provided other software help
already some major players here that will no longer rely on oracle. Finance and energy sectors are major national security areas. You definitely don't want American firms to have the ability to disrupt day to day operations
PSBC completed migrate to new distributed bank system last year and uses GaussDB. Claims significantly improved performance
From the always angry HW before HR
Huawei now has GaussDB and UStore storage and MetaERP that it's promoting to domestic companies, I'm sure SOEs will be nudged to migrate to this. And aside from national security point of view, this will reduce the money they send to Western companies
And looks like Huawei is trying to get further into finance sector
Of course, all of this helps Huawei. But maybe Alibaba & Tencent need to work a little harder in these areas too if they don't want to loose cloud customers to Huawei because they haven't provided other software help
Huawei sees finance sectors as one of its 4 pillars I guess. It uses catchy terms to basically encourage finance sector to use its products. Of course, some domestic competitors will loose out, but a lot of Western tech firms will loose out. I think what we are seeing is that with all the sanctions, Huawei got forced to shift focus and develop product in many ways will counter sanction the west. Since domestic firms will move over to using Huawei products in areas like GPUs, AI, database, OS, ERP and other software. Even if there isn't a formal sanction retaliation, it will work in that direction
Look at this, these are major banks. The only major one missing is bank of China. And also Sinopec from the hydrocarbon companies. hopefully, this can extend to more sectors going forward
I do wonder if there are other Chinese database also entering major foreign banks and corporations. Looks like they are getting customers in Asia and South America. This to me seems like it would scare certain China hawks.
Aside from that, it would be a great thing if Chinese software industry can make a bigger dent elsewhere
of course, training talent is important, but 39k is minute compared to the 1.5 million developers on Ascend platform. To be fair, database is pretty common everywhere so picking up new databases isn't too difficult.
For folks who are gungho about GDP growth in 2023:
This is the data you need to understand.
TL;DR is that there is about 7.2trln of revenue hole in the government budget as a result of real estate deflation (assuming 2022 land sales/revenues are run-rate), which is ~5.9% of GDP. The net impact on GDP will be higher given multiplier effect of this government fiscal impulse drag. Keep in mind, this is a gross revenue figure and excludes reductions in demolition/compensation for the land acquisition. However, this is more important for local governments' fiscal balance and less so for GDP calculation (since demolition companies make money and add value to GDP).
Going back to what I was saying earlier this year, consumer spending is recovering, Chinese EVs are amazing, and advanced manufacturing is great, but none of that is sufficient to offset this big hole.
The only solution is a central government bailout - we've heard nothing on that. My expectation of 5.5% GDP growth for 2023 is probably at risk of negative revision unless the central government does something here. The irony here is that the central government has to do something like TARP.
Here is another article that outlines the issue with 2022 data.
This is the data you need to understand.
TL;DR is that there is about 7.2trln of revenue hole in the government budget as a result of real estate deflation (assuming 2022 land sales/revenues are run-rate), which is ~5.9% of GDP. The net impact on GDP will be higher given multiplier effect of this government fiscal impulse drag. Keep in mind, this is a gross revenue figure and excludes reductions in demolition/compensation for the land acquisition. However, this is more important for local governments' fiscal balance and less so for GDP calculation (since demolition companies make money and add value to GDP).
Going back to what I was saying earlier this year, consumer spending is recovering, Chinese EVs are amazing, and advanced manufacturing is great, but none of that is sufficient to offset this big hole.
The only solution is a central government bailout - we've heard nothing on that. My expectation of 5.5% GDP growth for 2023 is probably at risk of negative revision unless the central government does something here. The irony here is that the central government has to do something like TARP.
Here is another article that outlines the issue with 2022 data.
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Real estate needs to be corrected in China as it is a huge drag on the economy in general, similar to Japan during the lost decade. If everyone is putting their money into real estate, consumption will never go up and dependency on external markets will only grow, not to mention the knock on effects on family formation and demographics.
Property tax is the only viable solution, just need the political will to suffer a down turn as it is inevitable when real estate crashes.
Property tax is the only viable solution, just need the political will to suffer a down turn as it is inevitable when real estate crashes.
Real estate prices need to crash ~80% at a minimum. Look at the price-to-income ratios for T1 cities in China and compare them to expensive cities like London and Sydney. The latter look like bargain prices in comparison.
There are two major mistakes the CCP made during the last half-century. The first is real estate sector generally, allowing it to appreciate beyond reason and focusing land sales model to fund local governments by too large of an extent. The second is the 1 child policy. The latter is now a ship that has sailed but the former can still be corrected.
Better bite the bullet and accept a low-growth decade but make young Chinese people able to buy real estate without getting the whole extended family into debt. I wonder how much of weak consumption is just because of the insane amount of saving you need to do to buy your own real estate.
Trend has changing rapidly.
China continues to shift resources towards manufacturing and away from housing.
