Chinese Economics Thread

[Eventine]

Well, China significantly increased the college enrollments in the late '90s precisely to counter the youth unemployment issue amid economic downtown after the Asian financial crisis. The idea was to postpone the youth from joining the job market. See the following college enrollment statistics:

View attachment 112813

From 1977, the first year Chinese colleges reopened to enroll students regularly after Culture Revolution, to 1996, the total college enrollments increased less than 3.6x. From 1997 to 2016, the increase in enrollments were 7x. The increase in enrollment rate was even more staggering: from 5% to 75%.

China is not going back to double digit growth rate, not even to the "bottom line" 8% growth rate that the then Chinese premier Zhu Rongji avowed to guarantee in late '90s. China's manufacturing industry is as strong as ever, but it is moving up the ladder and will not employ a lot of people marginally relative to the working age population. The other main growth drivers, real estate and infrastructure building, have diminishing returns, to put it mildly. You should not expect them to employ as many people. Therefore, the youth unemployment issue will persist.

Until China changes its growth model significantly, that is. That's not going to be easy, but it's another subject.

This.

Employment in mature economies is driven by services. Small and medium businesses employed 70 to 80% of youths before the pandemic crushed that sector of the economy. Talking about everything from tech. start ups to restaurants and hospitality. So it’s no wonder youth unemployment is so high.

You can’t employ everyone in manufacturing because it’s largely automated and more so every day. It’s also highly subject to the global economy. Since global demand is declining, and China already has excess capacity relative to local demand, you can’t expect the industry to create more jobs.

The answer has to be to free more money from sectors like property to improve domestic consumption, particularly services consumption. The government also needs to support small and medium businesses in services sectors more because they’re the key to youth employment.

Too much of domestic wealth is tied up in the property sector where it is doing nothing but rent collection.

 

[Chevalier]

“Europe’s largest asset manager Amundi is moving out of US assets in favour of China, attracted by the country’s brighter economic prospects, better valuations and a more benign outlook for inflation.”

Please, Log in or Register to view URLs content!

China really should be doing everything to make HK the new global capital and depose New York and London

 

[tokenanalyst]

Shandong Gold Mining, one of China’s biggest producers of the precious metal, said its controlling shareholder has discovered the country’s largest gold deposit.

A unit of Shandong Gold Group recently found a deposit containing 580 tons of gold in the northwestern region of Shandong province, Shanghai-based Shandong Gold Mining announced late yesterday.

Please, Log in or Register to view URLs content!

 

[Minm]

That's way too low, and going off Q1 at 4.5% something catastrophic would have to happen for China to not reach 6% growth this year.

If China is on track to achieve 6% or more growth, that will give the government more room for structural reform. If growth is strong, I expect further deflation of the property market, which is going to reduce growth again. So we'll end up at around 5-5.5%. The goal isn't to grow as much as possible this year but to build a sustainable growth model for the next decade.

So if growth is "too high" construction projects can be delayed to next year to rebalance the economy.

That's what they did in early 2021. Growth was so strong that the regulation of the tech and education sector became possible and then growth reduced significantly

 

[luminary]

The

Please, Log in or Register to view URLs content!

highlights China’s ascent to the top, as it now makes up more than half of the world’s steel production.




Global steel production in 2022 reached 1,878 million tonnes, barely surpassing the pre-pandemic production of 1,875 million tonnes in 2019. China, experienced a modest 2% decline, which due to the country’s large production amounted to a decline of 19.8 million tonnes, more than many other nations produce in a year.

China’s Meteoric Rise in Steel Production​

Although China dominates the world’s steel production with more than a 54% share today, this hasn’t always been the case.

In 1967, the World Steel Association’s first recorded year of

Please, Log in or Register to view URLs content!

figures, China only produced an estimated 14 million tonnes, making up barely 3% of global output. At that time, the U.S. and the USSR were competing as the world’s top steel producers at 115 and 102 million tonnes respectively, followed by Japan at 62 million tonnes.

Almost three decades later in 1996, China had successively overtaken Russia, the U.S., and Japan to become the top steel-producing nation with 101 million tonnes of steel produced that year.

The early 2000s marked a period of rapid growth for China, with consistent double-digit percentage increases in steel production each year.

The Recent Decline in China’s Steel Production​

Since the early 2000s, China’s average annual growth in steel production has slowed to 3.4% over the last decade (2013-2022), a considerable decline compared to the previous decade’s (2003-2012) 15.2% average annual growth rate.

The past couple of years have seen China’s steel production decline, with 2021 and 2022 marking the first time the country’s production fell for two consecutive years in a row.

 

[luminary]

Important reform for financial market!​

​

Please, Log in or Register to view URLs content!

Beijing regulators are leaning into a seven-week rally in China's sovereign bond market by widening access to onshore interest-rate swaps. Yet what sounds like a rather technical turn of the screw is a huge and timely reform win for institutional investors keen on trading Asia's biggest economy.

“Timely,” because it coincides with Group of Seven (G7) members heading to Hiroshima, Japan to contain any number of financial troubles. They include runaway inflation, failing Western banks, the specter of a US default and desperate attempts to woo global south countries .

In China, though, the vibe is more about
opening a recovering financial system to global investors hungry for growth and higher-yielding assets as the post-Covid-19 trade gains momentum.

Here, the new“Swap Connect” program between China and Hong Kong is wisely timed. It opens the way for overseas funds to access derivatives vital to hedging bets in China's bond market. The dearth of hedging tools has long turned off the biggest of the big money.

The swap scheme will enable punters to deal in key money-market rates tied closely to People's Bank of China (PBoC) policies. This will likely deepen institutional investors' involvement in China markets, building on the existing Bond Connect plan. The move dovetails with a powerful bond rally driven by expectations that the central bank will add more liquidity this year.

For Xi Jinping, Swap Connect helps fulfill a pledge to open mainland capital markets to international funds. It turns the page, to some extent, from the regulatory crackdowns of 2020 and 2021. It also reminds top investment banks that geopolitical turbulence between Beijing and Washington isn't getting in the way of market reforms.

The program “will be a huge leap forward in developing the domestic derivatives and bond markets,” says Rose Zhu, chief China country officer at Deutsche Bank, which Beijing named as a key market maker for Swap Connect.

“Leveraging our cross-border strengths, we look forward to playing an active role in helping international investors get a head start via Swap Connect” and “helping accelerate the opening up of China's financial markets and RMB internationalization.”

Monish Tahilramani, head of Asia Pacific markets at HSBC, says the hedging tool marks“an important complement to Bond Connect and a positive sign that onshore markets continue to open up.”

Article continues at

Please, Log in or Register to view URLs content!

 

[siegecrossbow]

“Europe’s largest asset manager Amundi is moving out of US assets in favour of China, attracted by the country’s brighter economic prospects, better valuations and a more benign outlook for inflation.”

Please, Log in or Register to view URLs content!

A real Wumao justifies his stance with not mere words, but action.

 

[Dolcevita]

“Europe’s largest asset manager Amundi is moving out of US assets in favour of China, attracted by the country’s brighter economic prospects, better valuations and a more benign outlook for inflation.”

Please, Log in or Register to view URLs content!

Checking out their fund offerings. Seems to be available to me.

 

[tphuang]

The

Please, Log in or Register to view URLs content!

highlights China’s ascent to the top, as it now makes up more than half of the world’s steel production.

View attachment 112986

Please, Log in or Register to view URLs content!

wrote more about this

以工业循环为利器，中国已经开启了整合亚欧大陆的伟大历程！
以钢铁为例，能大规模炼钢不是简单事情。中国钢铁产能50多年的历史巨大变化，已经从占全球3%到占全球54%。当年的赶英超美是指钢铁产量，没想到后续不费吹灰之力就超过，而且中国都超过全世界其他地方之和了。

要大量的产钢铁，要解决三大问题：第一是钢铁厂的建设，这个必须保证技术过关，工厂的质量、效能和成本都比较低，环保靠谱才能可持续。要大规模建设钢铁厂，中国当然必须有自己的钢铁厂设备产业，有自己的产业技术，才能让成本低，如果买外企设备来建设钢铁厂，那成本肯定高很多。
当然，有设备，还要有一支高中低搭配的技术队伍，如果没有技术队伍，那是不可能解决的。这些条件一圈起来，全球能比拟的，不超过五个国家。
第二是要有足够的原材料，包括焦煤和铁矿石。大量的铁矿石等贸易又要求有海港，一下子又把很多国家淘汰掉了。
第三是要有够大的市场空间。你生产出来找不到用户那产能也会慢慢消亡的。日韩美的钢铁后面上不去，就是有这个原因。

那么中国有这么巨大的产能，我们其实就是世界产业链的主流。而不仅仅是钢铁，背后支持的家电、汽车、机床、工程机械、日用品我们也是无可置疑的第一；这个产能的巨龙已经升空向全世界展示了我们巨大的工业力量。

从上海到巴黎，从北京到新加坡，从广州到莫斯科，这条路子跑起来一定随着巨大的工业产能优势走过去。历史上的驼队变成现在的钢铁长龙，可以说是横扫一切的。最明显的就是中亚要融入我们产业链了，中亚在历史上，也就是汉唐元时代有一定时期控制，总体上不是我们能控制的。现在他们的能源、农产品和矿产品出口到中国，中国工业品出口到他们过去，他们也收点铁路服务费，在不知不觉就会形成经济一体化了。中国和中亚再加上俄罗斯亚洲部分，加上东盟，这片亚洲核心区域会形成一个史上最强的工业循环体系，融合了资源能源与制造业，别说中小型国家都在这个巨大产业链的绝对力量前没有抵抗力，就是欧美日韩也难以抵挡住，这是他们全面贸易逆差的根源。

当然，海洋系的英美日一定会搞破坏，但是今日的中国不仅仅是历史的陆地中央帝国，我们还是海洋强国，造船的一半，乃至这几年全球军舰吨位的近半都是中国造的，他们想惹事还要悠着点。当我们这个产业链融合完成后，亚欧大陆、乃至部分非洲就重组一个新产业链，那么美洲就是旁支，中国就是未来产业链中心了

quite profound stuff. he used steel production as the basis argument here for industrialization.

You need steel to support on other industries that China has.

And the key is to silently incorporate surrounding Asian continent to China's industrial chain. That was agreed to more or less with central asian countries in Xian this week

 

[KYli]

Another China is doomed article from Bloomberg. This time is about Hegang and local debt. Hegang's problem is the depleted coal mines which they haven't found a new source of development except graphite but only at 1/6 of what coal brings for them.

One thing stands out is that many youngsters from other top cities move to Hegang and buy a few apartments with as little as 40,000 yuan. Not sure if it would be a trend for those online influencers that can live anywhere would start to move to lower tier cities in order to save cost of living.

Please, Log in or Register to view URLs content!

One potential draw for Hegang is cheap property prices, particularly among the “lie-flat” generation of young people disillusioned by the high stress and living costs in China’s mega-cities. Hegang boasts the lowest home prices among China’s cities, a side-effect of its shrinking population coupled with excessive supply.

Diya, a 33-year-old singer and music teacher who asked to be identified by his stage name, moved to Hegang two years ago from Shanghai — a place, he said, where “even if I try my best and work 24 hours a day, I won’t be able to make enough money to become rich or own a home.” He can now afford to own three properties in the city, including his current home, a 50-square-meter third-floor walk-up apartment for 40,000 yuan — about 1% of the cost of a similarly sized place in Shanghai.

“All of my colleagues, friends and relatives laughed at me when they heard I was moving to Hegang, because that’s considered going downward to a lower place,” he said. “But Hegang is a place where you don’t need a lot of money or ambition to live well. It’s like a shelter to me.”