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Fojar38 posted:So focusing on the macro for a moment all these news articles keep talking about how China is going to switch to a "consumption-based model." How is that going and how likely is it to succeed? They've been saying that since at least around 2010, but China's consumption to GDP ratio is low and continuing to fall so it's hard to see it being much more than hot air. The technical indicators suggest Shanghai still has a good long way to fall before it gets to where it 'should' be, and the recovery isn't big enough to be convincing yet and looks to be coming to a halt, so I would wager this is either a dead cat bounce or it's being propped up somehow.
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Aug 27, 2015 09:26
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Fojar38 posted:So focusing on the macro for a moment all these news articles keep talking about how China is going to switch to a "consumption-based model." How is that going and how likely is it to succeed? Badly, and unlikely without radical changes that aren't going to happen. China is still very much a saving-focused society since a) there's little to no real social support system outside of family, b) owning property is considered a must and house prices are frankly ridiculous when compared to income, c) loans are hard to come by unless through shadow banking systems, d) education is ultra-competitive leading to all sorts of expenses even with free schooling, and e) children are expected to support parents as they age and healthcare is relatively expensive. The goverment could mitigate a number of these factors by introducing an actual welfare state, but that would be very unlikely as if people had welfare they would get lazy and stop working (as heard from multiple Chinese Communist Party members).
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Aug 27, 2015 10:19
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I think China was also looking to their stock market as a key piece in transitioning to a post industrial economy in that it would properly appropriate capital where needed and generate wealth for citizens who would get a return on that investment. That obviously is going to take longer and a little more work than they thought.
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Aug 27, 2015 12:32
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China’s government resumed its intervention in the stock market on Thursday and has been cutting holdings of U.S. Treasuries this month to support the yuan, according to people familiar with the matter. Authorities want to stabilize equities before a Sept. 3 military parade celebrating the 70th anniversary of the World War II victory over Japan, said two of the people, who asked not to be identified because the move wasn’t publicly announced. Treasury sales allow the government to raise dollars needed to bolster the yuan after a shock devaluation two weeks ago, according to different people familiar with the matter. http://www.bloomberg.com/news/articles/2015-08-27/china-said-to-intervene-to-shore-up-stock-market-before-parade-idtyzfdu
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Aug 27, 2015 12:36
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Krispy Kareem posted:There are probably British goons in this thread, did the HSBC mess make a lot of news over there? I imagine the Queen's banking regulators were pressuring the U.S. against prosecuting if the ramifications were really that big. Not that they had to push too hard, since we really like bankers in the United States. It was covered, sure. There was a rash of banks getting fined for all sorts of illegal poo poo for a while, though (fixing LIBOR etc) so it kind of blended into that.
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Aug 27, 2015 12:44
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Jumpingmanjim posted:China’s government resumed its intervention in the stock market on Thursday and has been cutting holdings of U.S. Treasuries this month to support the yuan, according to people familiar with the matter. Well there we go.
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Aug 27, 2015 13:00
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I'm surprised they haven't just closed the market until the 4th. State holiday or some such. e: quote:Sales of dollar assets have contributed to a $315 billion drop in China’s foreign-exchange reserves over the last 12 months. The $3.65 trillion stockpile will fall by some $40 billion a month in the remainder of 2015 because of the intervention... quote:The PBOC has sold at least $106 billion of reserve assets in the last two weeks... Murgos fucked around with this message at 16:10 on Aug 27, 2015 |
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Aug 27, 2015 16:07
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If they're burning through their US treasury reserves right now then it really is the end of the line; that's their last resort before I would assume just having people who sell stocks shot.
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Aug 27, 2015 17:03
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Zohar posted:Well there we go. So how does this go? Sell treasuries, get dollars and then exchange dollars for yuan to buffer the yuan devaluation?
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Aug 27, 2015 17:54
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Zohar posted:Well there we go. "Authorities want to stabilize equities before a Sept. 3 military parade celebrating the 70th anniversary of the World War II victory over Japan." Funny how their market reforms have led to massive government intervention for purely political reasons. No, wait, not funny. What's that other word. Unfunny, that's the one. VVV ah, shouldn't have second-guessed myself
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Aug 27, 2015 18:07
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Mozi posted:"Authorities want to stabilize equities before a Sept. 3 military parade celebrating the 70th anniversary of the World War II victory over Japan." No, funny is right.
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Aug 27, 2015 18:08
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guys the free market will fix it
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Aug 27, 2015 18:31
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Vladimir Putin posted:So how does this go? Sell treasuries, get dollars and then exchange dollars for yuan to buffer the yuan devaluation?  Remember when China wanted to devalue the Yuan?
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Aug 27, 2015 18:49
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PerpetualSelf posted:guys the free market will fix it ... by any means necessary
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Aug 27, 2015 19:06
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Vladimir Putin posted:So how does this go? Sell treasuries, get dollars and then exchange dollars for yuan to buffer the yuan devaluation? P much.
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Aug 27, 2015 19:09
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Daduzi posted:Badly, and unlikely without radical changes that aren't going to happen. China is still very much a saving-focused society since a) there's little to no real social support system outside of family, b) owning property is considered a must and house prices are frankly ridiculous when compared to income, c) loans are hard to come by unless through shadow banking systems, d) education is ultra-competitive leading to all sorts of expenses even with free schooling, and e) children are expected to support parents as they age and healthcare is relatively expensive. The goverment could mitigate a number of these factors by introducing an actual welfare state, but that would be very unlikely as if people had welfare they would get lazy and stop working (as heard from multiple Chinese Communist Party members). And behind all of this is a massive, looming demographic crisis that would make a welfare state/consumption based economy hell.
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Aug 27, 2015 19:16
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Adventure Pigeon posted:And behind all of this is a massive, looming demographic crisis that would make a welfare state/consumption based economy hell. Oh! I forgot one child policy came into effect in 1980, already 35 years ago too, right. Yeah some hilarious shenanigans is ahead.
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Aug 27, 2015 19:47
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Jumpingmanjim posted:China’s government resumed its intervention in the stock market on Thursday and has been cutting holdings of U.S. Treasuries this month to support the yuan, according to people familiar with the matter. How long can China actually prop up their market on their currently held US bonds? Speaking of, if they need to liquidate their US bonds to do that, who exactly are they going to sell it to?
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Aug 27, 2015 19:51
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I think china has three trillion in treasuries. They've burned through 480 billion in the past two months I think. If someone can confirm I'm happy to be proven wrong.
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Aug 27, 2015 19:57
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DeathSandwich posted:How long can China actually prop up their market on their currently held US bonds? Until the bonds run out, which they're hoping is after their big parade to at least spare them the humiliation of having a big show in the midst of an economic meltdown. Expect another huge sundering in like 6 months when the CCP suddenly announces "oh btw we spent our $3.6 trillion of US bonds to prop up the market and are now effectively bankrupt oopsies"
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Aug 27, 2015 19:58
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Teal posted:Oh! I forgot one child policy came into effect in 1980, already 35 years ago too, right. Yeah some hilarious shenanigans is ahead. Yep, so the parents of the kids are hitting the late 50s/early 60s. Once they become unable to work, things're going to be very interesting (ugly).  This is about 5 years old. A little before 1980, when the one child policy went into effect, was the last big population spike of China. There's a smaller one around 1990. Afterwards, numbers drop off sharply. This is basically their last big chance to move to a consumption based economy/welfare state while there're still enough workers vs retirees to support it, but it doesn't look like that's happening because the government is garbage (even a decent, effective government would have a hell of a time). Once people start dropping out of the work force, they'll not only consume less, but they'll start drawing capital out of the economy to support themselves, and that's where the real fun begins. They have 1) Savings in banks 2) Real estate 3) Pensions 4) Children. I'm probably missing a few, but those're the basics. 1) China has been forcing the banks to loan out tons of money to support growth and keep employment/GDP up. A lot of that money has probably been sunk into crazy infrastructure projects, highly inefficient industry, or just disappeared. It's not to say there's no money at all in the banks, but if people panic and run on the banks, I wouldn't be confident in their survival. Anyways, bank savings in China tends to be garbage because the interest rates are extremely low (to encourage more spending on infrastructure and employment industry). 2) Real estate in China is probably the biggest bubble of them all. We've all heard how there're more empty investment apartments in China than apartments, occupied and unoccupied, in the US period. Drawing on real estate for capital would require renting or selling them, and at this point there's no one that's going to buy. Especially since the kids in the post-1980s generations are probably going to be trying to support their parents and grandparents with the majority of their money. Once the retirees try to draw on real estate investments, that's probably going to be the end of it. 3) Pensions are being tossed into the fire right now. The fact that, prior to this, they may have been the one stable source of capital that retirees could draw on shows just how crazy throwing them into the stock market is. That's probably why they're being thrown in, because they're real money that could be drawn on without causing another bubble to suddenly burst instead. The fact that pensions, one of the pillars of social stability, are being drawn on tells you just how few options there are. 4) There just aren't a lot of kids in the generations after 1980, and even after one child the demographics just aren't recovering. There's no space, social services, and the sense of social stability is going away too. People aren't having that many kids. It's unlikely they'll be spending enough to support a consumer economy when they're trying to support their parents. It's unlikely that they'll be able to fully support their parents. I'm probably wrong about this somewhere, but that's my read on the situation from a handful of books and a lot of articles. My guess is they probably have 5-10 years before they go past the point of no return. They might've already hit it. Adventure Pigeon fucked around with this message at 20:14 on Aug 27, 2015 |
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Aug 27, 2015 20:09
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So once China sells all their treasury bonds will people stop saying China owns the US?
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Aug 27, 2015 20:13
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Adventure Pigeon posted:4) There just aren't a lot of kids in the generations after 1980, and even after one child the demographics just aren't recovering. There's no space, social services, and the sense of social stability is going away too. People aren't having that many kids. It's unlikely they'll be spending enough to support a consumer economy when they're trying to support their parents. It's unlikely that they'll be able to fully support their parents. The birth rate didn't really drop to low levels until the 90's. http://www.stats.gov.cn/tjsj/ndsj/2011/html/D0302e.htm
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Aug 27, 2015 20:17
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cheesetriangles posted:So once China sells all their treasury bonds will people stop saying China owns the US? Well no, because the people who say that would think that means CHINA CALLED IN THE DEBT or whatever the gently caress.
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Aug 27, 2015 20:17
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kenner116 posted:The birth rate didn't really drop to low levels until the 90's. Yeah, the 1990s are when things get bad, but if you look at the demographics, there's still a lot more people that're 35-50 than there are under 35, aside from that small spike that probably happened around 1990? cheesetriangles posted:So once China sells all their treasury bonds will people stop saying China owns the US? My guess is at some point people in the US will just forget about China, like they did Japan, and we'll talk about how someone else owns us. The US is the property of Vietnam is the next big panic statement is my guess. Adventure Pigeon fucked around with this message at 20:24 on Aug 27, 2015 |
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Aug 27, 2015 20:22
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I saw a BBC article today about how India is going to take over the world.
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Aug 27, 2015 20:33
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cheesetriangles posted:I saw a BBC article today about how India is going to take over the world. Oh, guess that's been resolved. I'm glad the pundits are staying ahead of the game.
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Aug 27, 2015 20:39
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cheesetriangles posted:I saw a BBC article today about how India is going to take over the world. Yeah India is the next Eurasian superpower boogyman who is going to usher in a new world order At least India is a non-hostile democracy so it's actually got a better chance in the long term
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Aug 27, 2015 20:40
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They just need to solve their making GBS threads in the streets and gang rape problem and they are off to the races.
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Aug 27, 2015 20:41
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Fojar38 posted:
If you paid any attention to India you'll know why this is naive.
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Aug 27, 2015 20:41
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computer parts posted:If you paid any attention to India you'll know why this is naive. I've been too focused on the New Imperial China myth to pay attention to India as closely, what are India's major problems? I heard that they had good demographics and a better long-term political system.
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Aug 27, 2015 20:43
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Aside from overpopulation and a geographical position that's really easy to box in much like China's.
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Aug 27, 2015 20:44
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Fojar38 posted:I've been too focused on the New Imperial China myth to pay attention to India as closely, what are India's major problems? I heard that they had good demographics and a better long-term political system. Pollution, corruption, urban blight, highly uneven technological development. You know, the usual stuff.
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Aug 27, 2015 20:44
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Fojar38 posted:Yeah India is the next Eurasian superpower boogyman who is going to usher in a new world order Except for that issue of electing a mass murdering, literal fascist to run the country.
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Aug 27, 2015 20:46
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StandardVC10 posted:Pollution, corruption, urban blight, highly uneven technological development. You know, the usual stuff. Plus an impending water crisis and they're right next to the least stable nuclear power (which also hates them).
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Aug 27, 2015 20:48
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Isn't NK the least stable nuclear power?
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Aug 27, 2015 20:49
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cheesetriangles posted:Isn't NK the least stable nuclear power? Calling NK a nuclear power is pretty generous. Also NK is at least lead by a bunch of controlling strongmen, Pakistan is almost a failed state. One of the reasons the US has taken such an interest in the area is because of said near-failed state status plus nukes.
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Aug 27, 2015 20:52
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cheesetriangles posted:Isn't NK the least stable nuclear power? North Korea is a nuclear power in the same sense as the US pre-Trinity test, honestly.
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Aug 27, 2015 20:52
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Also it still has an active Maoist insurgency in part of the country they are having a difficult time stamping out. That said, I fully expect to hear more about "India's peaceful rise" in the future, if China isn't going to cut it, they are going to have to find someone else especially since India in the last year had pretty high growth. That said, their latest surge is because of considerable devaluation of the Rupee.
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Aug 27, 2015 20:53
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Relations between the US and India are sufficiently good that hopefully people won't have to sell a "peaceful rise" narrative, not that it matters because India is even more contained by geography than China is.
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Aug 27, 2015 20:55
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