Chinese Economics Thread

[antiterror13]

In deflation economy, you can save money while an inflated economy you cannot save money?

Isn't there is a report saying China has 22 trillion in savings while America only has 1.2+ trillion.

not true, China’s household savings are indeed massive, around $23 trillion in 2025, while U.S. household savings deposits are closer to $9.8 trillion

 

[madhusudan.tim]

But, in a deflationary environment you have all the incentive to save the money, rather than invest or spend, as the real value of the money would evaporate faster in inflationary environment. These savings are statics and do not have the multiplier effect and therefore hampering the economy.

 

[antiterror13]

But, in a deflationary environment you have all the incentive to save the money, rather than invest or spend, as the real value of the money would evaporate faster in inflationary environment. These savings are statics and do not have the multiplier effect and therefore hampering the economy.

not true at all, the deposit is in the banks, not under the mattress

Then the bank will invest the money somewhere else, including mortgage and corporate loan, etc, etc

 

[CMP]

not true at all, the deposit is in the banks, not under the mattress

Then the bank will invest the money somewhere else, including mortgage and corporate loan, etc, etc

Exactly. It's hilarious to see poorly educated people quote economic logic from the 1800s as if people still stored their net worth in cash. These days money not spent goes into investments. Stocks, bonds, gold, crypto, real estate, etc.

 

[tresriogrande]

But, in a deflationary environment you have all the incentive to save the money, rather than invest or spend, as the real value of the money would evaporate faster in inflationary environment. These savings are statics and do not have the multiplier effect and therefore hampering the economy.

This is nonsense from the 1% who are over leveraged to rob the rest. They hate it when they can't inflate their debts away and people keep their wealth

 

[zbb]

Exactly. It's hilarious to see poorly educated people quote economic logic from the 1800s as if people still stored their net worth in cash. These days money not spent goes into investments. Stocks, bonds, gold, crypto, real estate, etc.

Even in the 1800s, deflation was not necessarily bad for the economy.

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. This prolonged period of persistent deflation is exactly when the US grew from an relative economic backwater to become the most dominant industrial power in the world.

 

[Wrought]

Capital inflows were sharply up this year on the back of tech optimism.

Foreign purchases of Chinese equities have hit their highest level in four years, in a sign global investors are reassessing a market that until recently was considered “uninvestable”. Offshore inflows into China stocks from January to October this year totalled $50.6bn, up from $11.4bn in 2024, according to data from the Institute of International Finance, a trade body for the global banking industry.

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[Wrought]

Very technical paper on Chinese loan collateralization practices. The short version is that Chinese lenders don't seize infrastructure after default; they prefer cash from commodity exports.

This paper is the first comprehensive analysis of the secured lending practices of Chinese creditors in emerging market and developing economies (EMDEs). We present a new dataset and detailed case studies of collateralized public and publicly guaranteed (PPG) loans from Chinese state-owned institutions in EMDEs between 2000 and 2021. Almost half of China’s total PPG loan portfolio in EMDEs is effectively collateralized—amounting to $420 billion in collateralized debt across 57 countries. We document that Chinese lenders use techniques adapted from export and project finance to build multi-layered legal safety nets, which help ensure that risky EMDE loans will be repaid. As security, they use liquid, easily accessible assets, such as cash in bank accounts located in China. They rarely take infrastructure project assets as collateral, but often rely for repayment on established commodity revenue streams unrelated to the project.

Typically, EMDE governments and state-owned enterprises commit to route foreign currency proceeds from commodity sales through bank accounts controlled by the lender. The cash balances in these accounts can be very large; in low-income, commodity-exporting countries, they average more than 20 percent of annual PPG debt service to all external creditors. The same revenue source can secure multiple successive borrowings over many years. Our findings reveal a previously undocumented pattern of revenue ring-fencing, where a significant share of commodity export receipts never reaches the exporting countries. Revenues routed overseas secure priority repayment for the creditor; they remain out of public sight and largely beyond the borrower’s reach until the secured debts are repaid. These findings raise new concerns about debt transparency, fiscal management, fiscal autonomy, and the quality of macroeconomic surveillance, particularly in commodity-exporting EMDEs.

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