Posted by IDQWE001 > 2023-04-05 15:09 | Report Abuse

who told u that CCP got no debt problem ?

Posted by IDQWE001 > 2023-04-05 15:15 | Report Abuse

ou just have to look at the stunning collapse in the iron ore price to realise how nervous investors have become about the outlook for China.

Of course, the ostensible reason for the steep slide in the iron ore price is Beijing’s move to impose production cuts on the country’s steel industry due to environmental concerns.

But Beijing is simultaneously trying to take some heat out of the torrid property market by forcing debt-addicted property developers to deleverage. This, of course, will translate into a slowdown in the country’s property construction industry, and lower demand for steel.

Evergrande – which owes more than $US300 billion ($415 billion) – is the poster child of Beijing’s crackdown on debt-addicted property developers.

And horrified investors are coming to the belated realisation that Beijing has decided to punish excessive risk-taking by allowing Evergrande’s holding company – which owes most of the debt – to collapse.

Chinese policymakers will, of course, be aware of the risks of allowing such a massive corporate collapse, and they will be anxious to avoid a repeat of the 2008 failure of US investment bank Lehman Brothers, which triggered a meltdown in global financial markets.

Posted by IDQWE001 > 2023-04-05 15:15 | Report Abuse

The Chinese central bank has already taken steps to alleviate liquidity strains, injecting 90 billion yuan ($19.2 billion) into the country’s banking system last week. And Beijing will probably encourage the state-owned banks to step up their lending to other sectors of the economy.

But it is far from clear Beijing will be able to prevent Evergrande’s problems from causing the country’s massive house price bubble to burst.

Posted by IDQWE001 > 2023-04-05 15:16 | Report Abuse

That is because although Beijing clearly appreciates there is some undesirable speculation in the housing market, the scale of this speculation is undoubtedly far greater than policymakers realise.

This means the country’s housing market – and the entire economy – is much more vulnerable than Chinese policymakers appreciate.

What’s more, Beijing has had little experience of the abrupt changes in market psychology and the devastating consequences of a collapse in confidence, which means it is probably underestimating the contagion effects of an Evergrande collapse.

Other debt-laden property developers are already feeling the fallout from Evergrande’s problems, as investors and bankers have become wary of lending to the troubled sector.

That means that to survive, highly geared property developers will have little choice but to dump apartments and undeveloped land onto the market, putting intense downward pressure on real estate prices.

Given average Chinese households typically plough their surplus savings into property, a sharp drop in housing prices would quickly cause consumer confidence to plummet.

Posted by IDQWE001 > 2023-04-05 15:16 | Report Abuse

The combination of an imploding housing market and a souring of consumer sentiment would deal a heavy blow to the Chinese economy and significantly reduce its appetite for raw materials, particularly iron ore.

In a paper titled “Peak China Housing” published in August 2020, Harvard Professor Kenneth Rogoff and Yuanchen Yang, from Beijing’s Tsinghua University, highlighted how central the real estate and construction sectors are to the Chinese economy, accounting for a staggering 29 per cent of Chinese GDP.

Not surprisingly, they argued that a slowdown in the real estate sector would act as a big brake on Chinese activity.

“We find that a 20 per cent fall in real estate activity could lead to a 5 to 10 per cent fall in GDP, even without amplification from a banking crisis or accounting for the importance of real estate as collateral,” they wrote.

The paper also highlighted the similarity between China’s housing boom with other housing bubbles.

House price surge
“Despite the repeated argument that China is different, we note that it shares striking similarities with other boom episodes in the run-up of housing prices, the scale of the construction sector, the debt accumulation etc.

“Indeed, given the severity of many economic indicators, China’s decades-long housing boom shows many signs of having hit a potentially precarious peak.”

One striking feature of China’s housing boom is the unprecedented surge in house prices.

Prices in China’s Tier 1 cities have risen more than six-fold since 2002, compared with the increase in Ireland of 100 per cent and Spain of 230 per cent in their respective housing booms.

“Currently, the home price to income ratios in Beijing, Shanghai, Shenzhen and Guangzhou are comparable to the world’s most expensive cities”, the paper says.

“In particular, the price to income ratios in Beijing, Shanghai and Shenzhen exceed a multiple of 40, compared to 22 in London and 12 in New York.”

The paper notes that these multiples could be justifiable on the assumption that China will continue to enjoy very fast income growth indefinitely.

But, it adds, “even aside from the COVID-19 pandemic, China’s rapidly ageing population, a shrinking technological gap with the West, and normal decreasing returns to investment all suggest that future growth will likely be trending downward.”

The paper also points out that the real estate and construction industries are intertwined in China because property developers basically make their profits by managing the construction process and turning raw land into saleable properties.

“In 2016, real estate and construction industries combined accounted for around 29 per cent of China’s GDP, comparable only by pre-crisis Spain and Ireland,” it says.

Posted by IDQWE001 > 2023-04-05 15:16 | Report Abuse

High vacancy rates
“Real estate and construction are also crucial for job creation, making up around 20 per cent of urban non-private employment.”

But there are worrying signs – such as high vacancy rates and the existence of “ghost cities” – that China could be grappling with an excess supply of housing.

“It is sobering to recall that US regulators never expected that housing prices would fall by 36 per cent from peak to trough ... even the very cautious pragmatic Chinese regulators may not yet be fully anticipating the depth of the possible fall in China’s housing prices.”

The paper notes that because Chinese local governments are heavily dependent on land sales to earn revenue, and because many companies rely on real estate as collateral for their borrowings, “even modestly declining prices ... could pose a considerable risk”.

Posted by IDQWE001 > 2023-04-05 15:17 | Report Abuse

But it adds that a sharp slowdown in home sales would place a huge strain on developers’ cash flows, forcing many out of business.

In turn, a surge in real estate insolvencies would result in people losing their jobs, or at least part of their income, which would reduce demand for housing.

What’s more, a fall in property prices will leave households and corporates with less capacity to borrow, which could reduce credit growth.

The paper warns that because real estate is so closely linked to other sectors of the economy, such as construction and demand for household appliances and furnishings, “a reduction in housing activities may contribute to a downward spiral in the economy, leading to further declines in employment, income, consumption and investment”.

Posted by Sslee > 2023-04-05 15:18 | Report Abuse

United States Total Debt: % of GDP
1951 - 2022 | QUARTERLY | % | CEIC DATA
Key information about United States Total Debt: % of GDP

United States Total Debt accounted for 764.7 % of the country's GDP in 2022, compared with the ratio of 772.1 % in the previous quarter.
US Total Debt: % of GDP data is updated quarterly, available from Dec 1951 to Dec 2022.
The data reached an all-time high of 848.9 % in Mar 2021 and a record low of 304.2 % in Jun 1953.

CEIC calculates quarterly Total Debt as % of Nominal GDP from quarterly Total Debt and quarterly de-annualized Nominal GDP. Total Debt is calculated as sum of Liabilities for NonFinancial Business, Federal Government, State and Local Government, Households & Nonprofit Organizations and Financial Business less Mutual Fund Shares. Federal Reserve Board provides Total Debt in local currency. Bureau of Economic Analysis provides Nominal GDP in local currency.

Posted by IDQWE001 > 2023-04-05 15:20 | Report Abuse

FOREIGN INTERESTS JAN. 24, 2023
China’s Economic Model Is in Crisis (and Xi Knows It)

The world’s second-largest economy is awakening from a yearslong stupor. Since the pandemic’s onset, China’s “Zero COVID” policy has imposed harsh side effects on its commerce. Now, the nation’s most stringent public-health regulations are over. But its economy’s worrisome symptoms persist.

China’s grotesquely overinflated property bubble is at perpetual risk of bursting. A youth-unemployment crisis plagues its major cities. A perennially underpaid labor force is struggling to prop up consumer demand. And the demographic collapse wrought by the one-child policy has just begun.

What happens in China does not stay there. The economic trajectory of the world’s most populous country has profound implications for its trade partners and geopolitical rivals. To get a better understanding of what’s ailing the Chinese economy — and what could plausibly heal it — I reached out to Michael Pettis, a senior fellow at the Carnegie Endowment for International Peace. A former Wall Street trader, Pettis is a longtime critic of China’s growth model. In his 2020 book Trade Wars Are Class Wars, co-authored with the journalist Matthew Klein, Pettis argued that China’s economic policies increase global inequality and reduce American prosperity.

Posted by Sslee > 2023-04-05 15:21 | Report Abuse

China’s 2023 debt-to-GDP ratio growth set to slow as economy recovers, Economic Daily says
The macro leverage ratio – or total debt as a percentage of gross domestic product – rose to 273.2 per cent as of the end of 2022, but could rise at a slower pace this year
The Economic Daily, which is affiliated with the State Council, added that China’s debt ratio is basically stable, and that financial risks are ‘generally under control’

Posted by IDQWE001 > 2023-04-05 15:21 | Report Abuse

We spoke last week about China’s obsolete economic strategy, the growing conflict between Beijing and local government elites, the nation’s declining population, and why Joe Biden’s most nationalistic economic policies are actually “trade-enhancing,” among other things.

What is the biggest headwind facing China’s economy in 2023?
In order to understand what China’s facing today, you really have to look beyond the past two years. COVID did not change the Chinese economy so much as it exacerbated its underlying problems, which are at least a decade old.

Those problems are most visible in the property sector. But they derive from China’s growth model. That model has two parts. First, through a variety of policies, you increase the share of national income that goes into savings and reduce the share that goes into consumption. In practice, this means restricting the amount of GDP that goes to households and increasing the amount that goes to businesses. Second, you channel those savings through the banking system into investment.

This model is not unique to China. Quite a number of countries have followed it. China has just followed it to a greater extent than any country in history.

Is it a good model or a bad model? Well, it depends on the underlying circumstances. When China started this, it was among the most underinvested economies in the world. After five decades of anti-Japanese war, civil war, and Maoism, it was hugely underinvested. So this model was exactly what it needed. Opportunities for productive investment were abundant.

But the trouble with a very successful development model is that, by definition, it resolves the problems it was created to address. A good development model renders itself obsolete. And yet, if such a model eliminates its animating purpose, it does not eliminate the interest groups who’ve come to benefit from it.

Posted by IDQWE001 > 2023-04-05 15:22 | Report Abuse

The economist Albert Hirschman wrote about this way back in the 1970s. A successful growth model will disproportionately benefit certain constituencies. And it will also make those constituencies disproportionately powerful. Which makes it politically difficult to shift away from the model after it’s become obsolete. So you end up following an outdated economic strategy. What happens is that you try to keep rapid, investment-driven growth going after you’ve exhausted every easy opportunity for productive investment. So you fund nonproductive investments. And then you see debt start to rise. This happened in China between 2006 and 2008.

And debt continues rising until either you decide to adjust or you’re forced by debt constraints into adjusting. And adjustment is always very, very difficult.

So the reason COVID matters is because, if you look at all of the indicators, the consumption share of GDP got even worse during the COVID period, while debt rose very rapidly. And the share of growth attributable to nonproductive investments in the property sector and infrastructure grew. So, COVID accelerated all of the problems China already had. This year, and for many years to come, what China really has to do is find a way to adjust.

Posted by IDQWE001 > 2023-04-05 15:22 | Report Abuse

So to be clear: China has a growth model that suppresses consumption in order to direct more money toward investment in infrastructure and capital-intensive projects. In the early stages of this model, when China was sorely lacking in infrastructure and housing, this was a very sound approach. But now they’ve reached a point where they’ve picked all the low-hanging fruit. And opportunities for productive investment are actually constrained by the fact that consumer demand is weak, since the household share of income is low. So the government starts investing in projects with little actual utility. And that produces a massive bubble in the property sector.
In the property sector and in infrastructure.

And the specific “adjustment” that they need to make is to redistribute income away from businesses and toward household consumption by promoting higher wages or social-welfare programs?
Exactly. Now, in most countries, almost all income is divided between households and businesses. In China, however, a substantial share of income actually goes to local governments. So technically, the way to solve the Chinese problem is not so much by redistributing from businesses to households but rather redistributing from local governments to the household sector. But, of course, the fact that local governments currently take in a lot of income makes them very powerful. And local elites are dependent on the growth of local government spending.

You’ve written that the Chinese Communist Party is aware of the problem and officially wants to increase consumption. To the lay American, it might seem strange that a one-party government would find it politically difficult to enact a policy that, effectively, makes the vast majority of the population richer. Why can’t a state that has authoritarian powers enact an agenda that has broad popular support?
If you redistribute income from local governments to the household sector, that’ll certainly make households very happy. But it will be very painful for local governments. Right now, you could argue that households retain roughly 60 percent of GDP while governments and businesses each retain roughly 20 percent. So one way of looking at it is that households retain about three times the income share that governments do.

In order for China to be — not even a normal country — but a normal low-consuming country, they would need to transfer at least 10 to 15 percentage points of GDP from governments to households. So, at the end of this transfer, households retain not 60 but 70 to 75 percent of GDP, and governments no longer retain 20 but rather 5 to 10 percent. That means the ratio of household income to government income goes up by seven, eight, nine, ten times.

Well, you cannot have such a massive redistribution in relative income without a massive redistribution in relative political power. And again, it is the very ability of local governments to fund enormous amounts of spending that has basically created a lot of local political, business, and financial elites.

There’s a stereotype that to be a millionaire in China, you have to write computer code. But that’s not true. The vast majority of rich Chinese are rich because they were in the property sector or in the construction sector or in other basic parts of the economy that receive lots of government spending. So adjustment requires a major transformation in all of the business, political, and financial institutions that have developed over the last 30 years.

You could argue that the centralization of power under Xi Jinping might be necessary in order to force through such transformations. But certainly those adjustments are not happening yet. We’ve been talking about them for 15 years, but they haven’t happened.

Posted by IDQWE001 > 2023-04-05 15:22 | Report Abuse

Xi’s government is also quite aware of the problems in China’s property sector. And it’s made some efforts to temper its growth by restricting credit. But in recent weeks, the CCP has walked back some of those restrictions. Why did they change course?
The first thing is to understand how out of control the property sector became. The direct and indirect share of GDP attributable to the property sector is estimated to be between 25 and 30 percent, which is twice the level in other countries. Real-estate prices are equal to between 300 and 350 percent of GDP, which is two and a half to three times what it is in other countries. When you look at household savings, the real-estate component of household savings is between 60 and 70 percent, which is more than twice what it is in other countries. Real estate is always important in any economy. But in China, it is far more important. And this has happened over 20 to 30 years of rapid property expansion and rapid increases in real-estate prices.

When a boom lasts that long, it changes behavior. Whether you’re a business or a household or a bank, you learn to bet on continued expansion in the property sector. If you don’t learn that, you get put out of business. Households that borrow too much and buy too many apartments, instead of getting punished, end up becoming incredibly successful. Property developers that find every way they can to borrow money — including ways that are technically illegal — and use it to buy land outperform the more prudent property developers.

Banks that lend too much to real estate, and even cut corners to do so, are the really successful banks. And those that don’t do that lose market share. So eventually, after so many years, much of the economy is implicitly betting on continued expansion in the property sector. This is not just a Chinese problem. We saw this in Japan and in the U.S. and Spain before the financial crisis.

So when you try to bring the property sector under control, you are reversing this entire process. And that means everybody — households, banks, businesses, local governments — suffer enormously from any attempt to bring the property sector under control. And the pain is so great at some point they try to back away.

This was not the first time that they went after the property sector, although it has been the most aggressive attempt. They’ve gone after it many times before in the last five to six years. But they always pull back when they see the pain.

Posted by IDQWE001 > 2023-04-05 15:22 | Report Abuse

And the pain is really brutal this time because they really clamped down on it. And it’s particularly brutal for local governments because they’ve depended heavily on land sales for their revenues to pay for everything. And they’re being so heavily squeezed that they’re cutting their expenses, reducing salaries, doing all the things that they shouldn’t be doing, but they don’t have a choice. So now Beijing is trying to “stabilize” the property bubble without reviving it. They want to slow down the contraction.

But we’ve never really seen that happen in a highly speculative market. It keeps going up until it starts to go down, and once it goes down, it’s very hard to get it to stabilize. Speculative markets go up or they go down; they don’t do stability. So there’s a real big question as to whether or not Beijing will indeed be able to stabilize them.

In addition to the problems in the property sector, China also faces really high youth unemployment with nearly one-fifth of young urban workers going jobless. Does that problem also trace back to China’s broken growth model, or is it a function of Xi’s crackdown on the tech sector or other issues?
It has to do with the original problems of the growth model. The private sector, and particularly the service sector, is starved of demand. If you go out and talk to local businesses and you ask them, “What’s your problem?” they’ll tell you the problem is that no one is buying anything and they haven’t been for years. COVID just made it worse. So what you really should be doing is demand-side policies like the U.S. and Europe did in response to COVID. But for ideological and institutional reasons, China just doesn’t seem able to do demand-side policies. So they respond with supply-side ones.

If you listen to the ministries of Commerce or Industry or Transportation, they’re all saying the same thing. The way to get out of this mess — the way to regain growth — is to keep spending more, supporting manufacturers, and building more infrastructure. Which is another way of saying we need to continue subsidizing the supply side of the economy. The problem with subsidies is that they’re just transfers. If you get subsidized, then I must pay for it. And so, effectively, these supply-side policies require implicit transfers from the household sector. For example, a weak currency hurts households, who are importers, in favor of manufacturers, who are exporters. Low interest rates hurt households who are net savers in favor of, again, manufacturers who are net borrowers, et cetera. So these types of policies end up supporting the wrong part of the economy.

Posted by IDQWE001 > 2023-04-05 15:23 | Report Abuse

The flip side, of course, is that reversing the direction of subsidies would really hurt manufacturers and exporters. So what’s good for China in the medium and long term may be quite painful in the short term. And again, this isn’t a Chinese problem. The Japanese have been saying the same thing for 30 years: “We have to boost consumption, but we must boost consumption without hurting the export sector.” And that’s a problem because boosting domestic demand will hurt the export sector in the beginning. So they never end up doing it.

Last week, the Chinese government revealed that its population contracted in 2022 for the first time in six decades. And that trend will only accelerate in the coming decades, as the pre-one-child policy generation gives way to its successors. Many analysts have suggested that this will have devastating consequences for the Chinese economy. But you’ve suggested that such talk is “overexcited” and that China could largely resolve its demographic problem by addressing income inequality.
I think people are confusing the geopolitics of economic growth with economic growth. Now, if the Chinese population declines, will it be a smaller economy relative to what it could have been? Yeah, of course. If you cut the United States in half, you’ll have two countries with half the population and half the GDP.

But what really matters for people is their income. People don’t care what national GDP is; they care about their income growth. Now, the population is contracting very slowly. There’s nothing special about this year. It doesn’t really matter that some people think that this year is the first year that the population actually went down. It could have been last year, it could be next year, we’re not really sure. But the population change year-to-year is very small.

In any case, a smaller population does not need to mean weaker demand. Demand is equal to the number of people times their income, minus their savings. So if the population drops slowly by half a percent, but you can increase household income by 2, or 3, or 4 percent, then demand will go up. It won’t go down.

So the key for China, in almost all of its problems, is this redistribution of income. And since Chinese households currently receive a historically low share of income, there’s a lot of room to grow the household share of GDP.

A falling population is a problem for China as a military power. But if you’re thinking about the Chinese economy, it’s much less of a problem.

Posted by IDQWE001 > 2023-04-05 15:24 | Report Abuse

Even though the country will eventually be faced with the challenge of supporting a very large retired population with a much smaller working one?
Don’t get me wrong, that is a problem. If you’ve got more retired people relative to the number of workers, then that means you need to transfer more income away from workers in order to keep the retired people alive. But that’s a problem many countries have. The U.S. is sort of lucky, but almost every rich country has that problem. Japan has that problem. Spain and Italy have that problem, and we don’t think of it as a collapse in those countries. So I don’t think we should think of it as a collapse in China. It will make China less of a geopolitical power. But it’s just not a big deal from an economic point of view.

Speaking of geopolitics: As tensions between China and the U.S. have risen, America and its allies have sought to reduce their reliance on Chinese commodities, inputs, and goods. For the moment, it’s unclear what the scale of this “decoupling” will actually be in practice. How big a threat does that pose to Chinese manufacturers?
Well, for all the talk of decoupling and tariffs on Chinese goods, the American trade deficit has widened to its greatest level since just before the 2008 crisis. And the Chinese trade surplus has also widened to its greatest amount in history as a share of GDP. So I think a lot of that is based on a real misunderstanding of trade patterns. People think that you have this discretionary ability to buy from wherever you want. But it doesn’t really work that way. Remember that Chinese exports are among the most competitive in the world. Why is that? It’s not because the Chinese are particularly hardworking or China has particular comparative advantages beyond size. The reason is that all of these transfers from the household sector to manufacturers, both implicit and explicit, to subsidize manufacturing and investment makes Chinese labor cheap relative to its productivity.

And that’s true not just of China but of Germany, the Netherlands, South Korea, and Japan. All of these countries that run persistent trade surpluses do so because of the very low household share of GDP; workers get paid less relative to their productivity than among their trading partners. So as long as that’s the case, it doesn’t matter whether you want to have operations in China or not. Whoever does have operations there will be more competitive and its market share will expand. So I’m very skeptical about this decoupling idea. I think it’s going to take a very different understanding of the way trade works in the modern environment before that can happen.

How do China’s economic difficulties impact American consumers and workers? And how will its current policy trajectory impact the U.S. economy this year?
It depends on whether or not China rebalances. I mean this whole issue of rebalancing is so extreme in China, the most extreme in world history, that almost everything, the answer to almost every question depends on how it rebalances.

But what’s your view for the most likely scenario in 2023?
I’m hoping that they are genuinely able to boost the consumption share of GDP. There will be a boost this year, a partial reversal of all the awful stuff that happened last year. But I’m hoping it’s a permanent increase in the consumption share of GDP, in which case Chinese growth will slow significantly as they move away from overspending on the investment side. But that will also mean that Chinese households will consume a larger share of what they produce. Which would be good for the global economy, since it would increase global demand.

Wouldn’t that be bad for inflation though? Given the global economy’s supply constraints, wouldn’t an increase in global demand lead to higher prices?
There’s a very complicated argument about the causes of inflation in the U.S. and in the rest of the world and how long this is going to persist. So it depends on all of those issues. But at the end of the day, the world suffers from more of a demand-side problem than a supply-side problem. COVID temporarily interrupted that because it had a significant supply-side impact. But assuming that we’re getting away from COVID and back to more normal conditions, we’ll soon be worrying more about demand than supply. And China has been a huge absorber of global demand. So as its trade surplus contracts, it will absorb less net-demand from abroad, which will be positive for growth.

Posted by IDQWE001 > 2023-04-05 15:24 | Report Abuse

I think there’s been a real shift in the conventional wisdom about whether the global economy’s long-term problem is one of insufficient demand or supply. Prior to the pandemic, there was a broad consensus among economists that the economy was suffering from a chronic lack of demand, or “secular stagnation.” But now, in the wake of inflation, analysts at BlackRock and Allianz have been suggesting the opposite: that we’re entering a new era of persistent supply constraints. They argue that aging populations in developed countries are shrinking the supply of labor more than they’re shrinking demand, that the green transition will demand lots of commodities and labor, and that deglobalization will make supply chains less efficient. And all this will make inflation a bigger problem than growth. I take it you reject that narrative?
It could happen in the short term. If you start to see a reduction in Chinese net-supply and an increase in infrastructure investment in the U.S. That could put some pressure on prices. But remember, the purpose of infrastructure spending is not to boost demand; it’s to boost supply. And if it’s done correctly, you boost demand at first and then later on you increase supply by more than the increase in demand. So thinking long term, whatever the short-term impacts of an adjustment in China are, what really matters is whether we get back to a period of more rapid growth. And one of the things we have to remember, including from our own history, is that productivity growth is often a function of wage growth. In the U.S. in the 19th century, when you had massive increases in labor productivity, that probably wasn’t unrelated to the fact that American wages were the highest in the world.

So investors had a strong incentive to invest in labor-saving technology. Right. And then, in the last 30 years, we’ve seen a simultaneous slowdown in productivity growth and wage growth. Labor is cheap in the U.S., relative to its productivity. And it’s even cheaper in places like Vietnam or China or Germany. As a result, the way to increase profits is to shift into lower-wage environments, rather than to invest in productivity-increasing technology.

So do we want a world where businesses increase profits by putting downward pressure on wages? Or do we want a world where businesses increase profits by putting upward pressure on labor productivity? I think clearly we want the latter. The transition isn’t going to be easy. But I think that’s the path we need to get back on. The path that we haven’t been following for the last three, four decades.

Posted by FortuneBull777 > 2023-04-05 15:25 | Report Abuse

the difference between China and US debts is, China invested heavily in infras! As for US, they invested in wars!

Posted by IDQWE001 > 2023-04-05 15:28 | Report Abuse

China debt is to build a lot of expensive and abadonned buidling project and weapons.

Posted by IDQWE001 > 2023-04-05 15:42 | Report Abuse

Changing China: Xi Jinping's effort to return to socialism

For decades life in China had evolved around its home-grown version of let-it-rip capitalism.

Despite being technically a "communist" country, the government had put its faith in trickle-down economics, believing that allowing some people to become extremely rich would benefit all of society by dragging it out of the disastrous quagmire of Chairman Mao's Cultural Revolution as quickly as possible.

To an extent it worked. A large middle class has emerged and people in virtually all strata of society now have better living standards as a result.

Wealth disparity
From the stagnation of the 1970s China has been thrust to the top of the pile, now challenging the United States for global economic dominance.

But it left a chasm of income disparity.

It is there to be seen in the children of those who were in the right place and the right time.

Parents who were able to take over factories in the 1980s made exorbitant profits which have paid for their progeny to now drive flashy sports cars around gleaming cities, zooming past the construction workers who wonder how they will ever be able to afford to buy a home.

The get-out-of jail card for the Party had always been the phrase "with Chinese characteristics".

The concept of socialism - "with Chinese characteristics" - allowed the government massive philosophical leeway to run a society which, in many ways, was not very socialist at all.

General Secretary Xi Jinping appears to have decided that this is no longer acceptable.

The Chinese government, under his leadership, has started putting the Communist back in the Communist Party, at least to some extent.

Posted by IDQWE001 > 2023-04-05 15:42 | Report Abuse

The new catchphrase is "common prosperity".

It hasn't really appeared yet on the street side propaganda posters but this can't be far off.

It is now the cornerstone of what China's leader is doing.

Crackdowns on daily life
Under this banner, targeting tax evasion by the wealthy makes more sense, as do moves to make education more equitable by banning private tutoring companies. The ongoing crackdown on the country's tech giants can also be seen as part of the plan.

So does Xi Jinping really believe in this idea of a communist project? It is hard to be 100% sure but some observers would say it certainly seems that way.

Posted by IDQWE001 > 2023-04-05 15:42 | Report Abuse

As a comparison, in the past it didn't feel like that with many other Party officials.

The thing is that - along with the wealth redistribution aspects of the communist path - Mr Xi also seems to believe that this means thrusting the Party back into most aspects of daily life, as the only realistic way of achieving what needs to be done.

Kids are being lazy, wasting away their youth playing video games? Party to the rescue: three-hour gaming limit.

Teenagers having their minds poisoned with silly, idol-worshipping television? Party to the rescue: "sissy looking" boys banned from programmes.

Demographic time bomb ticking: Again, the Party has the solution: Three-child policy for all!

Football, cinema, music, philosophy, babies, language, science… the Party has the answers.

At odds with his father's beliefs
To try to understand what has made Xi Jinping the leader he is today you have to take a look at his background.

His father, Xi Zhongxun, was a Communist Party war hero, known as a moderate, who was later purged and imprisoned in the Mao era.

At the time Mr Xi's mother was forced to denounce his father. After his father's official rehabilitation in 1978, he pushed for economic liberalisation in Guangdong Province and reportedly defended one of China's most progressive leaders Hu Yaobang.

Given the persecution of Mr Xi's father at the hands of Communist Party zealots, given his father's inclination towards reform, many have asked why Xi Jinping now seems to be taking the Party in a direction which would appear to be at odds with his father's beliefs?

There are various possible explanations.

Perhaps he simply disagrees with his father's line on certain political matters.

Or maybe China's leader intends to pursue a plan which, while different in emphasis to the priorities of his father, will not end up anywhere near the policies of the Mao era. At least not intentionally.

However, it does still seem quite remarkable.

Posted by IDQWE001 > 2023-04-05 15:43 | Report Abuse

When his father was sent to prison, Xi Jinping, at the age of 15, was made to go to work in the fields for years, living in a cave house.

These tumultuous times clearly toughened him up but could just have easily transformed into a hatred of politics, especially of a hard-line variety.

Some China watchers have speculated that he perhaps believes that only a strong leader can guarantee that China will not return to the chaos of the 1960s and 70s.

And remember the rules have now been changed so that he can remain in power for as long as he likes.

One reason for all this guess work is that we never hear him explain what he is doing in terms of his decisions. China's leaders do not give interviews even with the compliant Party-controlled media.

Mr Xi turns up in rural villages for television opportunities and is welcomed by orchestrated crowds of cheering locals who receive his wisdom on corn growing or other aspects of their work and then he leaves.

So it is hard to predict what new rules, restrictions or guidelines might be placed on economic activity in China or how far any of this will go.

In recent times, barely a week has gone by without a major change to the regulations governing one part of the Chinese system or another.

It has been, frankly, difficult to keep up with them. Many of these changes have come completely out of the blue.

It is not that there is an innate problem with the state controlling various levers of production here. That is for economists to debate in terms of what is most efficient. The problem has been the sudden uncertainty.

How can anybody reliably make investment decisions if they don't know what the ground rules will be in a month's time?

Posted by IDQWE001 > 2023-04-05 15:43 | Report Abuse

There are those here who see the whole process as a natural part of the country "growing up". In areas which had been unregulated there have needed to be regulations.

If this is the case, then this period of shock tactic transition may be only a temporary state which will eventually calm down as new rules become clear.

But it is by no means clear what the length or breadth of these moves will be.

One thing that is certain is that any shift should be seen through the prism of Xi's "common prosperity" drive at a time when the Party will not give up an inch of its power while implementing it and, in China, you can either get on board this truck or get run over by it.

Posted by foongsh > 2023-04-05 16:03 | Report Abuse

G7 proposes to implement export controls on cutting-edge technology. -- The Group of Seven (G7) trade ministers met virtually on Tuesday for the first time of the year to attack unfair practices in global trade, including a lack of transparency and economic coercion.

The United States, a member of the G7, introduced export restrictions in October last year aimed at curbing China's ability to buy and manufacture advanced chips, and hoped that allies would join the ranks.

A few days before the meeting, Japan, the rotating presidency of the G7, just announced plans to implement export controls on semiconductor manufacturing technology. The Netherlands also implemented such measures last month.

Posted by foongsh > 2023-04-05 16:04 | Report Abuse

According to the G7 trade ministers, export controls are "a fundamental policy tool to address the challenges posed by the transfer of critical technologies that threaten military applications, global and regional and national security activities." The ministers also pledged to "ensure a level playing field for workers and businesses, primarily through pervasive and harmful industrial subsidies, market-distorting practices by state-owned enterprises, and various forms of forced technology transfer." ”

At the G7 meeting last June, G7 leaders directly condemned "the harm caused by China's opaque, market-distorting industrial directives."

In addition, G7 trade ministers warned against "weaponizing economic interdependence for illicit political gain" and called for "transparency, diversification, security, sustainability and trustworthiness" in supply chains.

According to Kyodo News, in conjunction with the G7 summit (also known as the G7 Hiroshima summit) in May, a total of 15 ministerial meetings will be held in various places from April to December, the largest number of summits in Japan.

In the nine meetings leading up to the Hiroshima summit, the Japanese government will lead discussions on the situation in Ukraine and global issues such as energy, food crisis, and climate change, and plan to reflect them in the outcomes of the summit.

Posted by IDQWE001 > 2023-04-05 18:32 | Report Abuse

when everybody talks about CCP every year got trading surplus why debt to GDP ratio 300% ? build weapon, build white elephants, build abandoned building ?? when CCP laugh at people please look at the mirror.

Posted by DickyMe > 2023-04-05 18:39 | Report Abuse

Talk about abandoned buildings, they bombed several unsold condominiums, a couple of years back.

Posted by Sslee > 2023-04-05 19:28 | Report Abuse

The People’s Bank of China reports that the combined domestic debt of corporations, households and the public sector increased last year to a level equivalent to 280 % of GDP (285 trillion yuan or 36 trillion euros), up from 255 % of GDP in 2019. When China’s foreign debt (which the PBoC estimates to be 14.5 % of GDP at the end of June) is included, total debt rises to about 295 % of GDP.

Know what above mean compare to external foreign debts?

List of countries with respect to external debt
Country/Region: External debt (USD): Date: Per capital (USD): % of GDP
United States 31 trillion January 2023[1] 94,188 121.08
United Kingdom 8.73 trillion June 2022[1] 129,203 273.06
France 7.04 trillion June 2022[1] 107,245 253.35
Germany 6.46 trillion June 2022[1] 77,607 160.35
Japan 4.36 trillion June 2022[1] 34,841 101.41
China 2.64 trillion June 2022[1] 1,866 14.39
Italy 2.51 trillion 31 December 2017[2] 42,300 141.00
Spain 2.26 trillion 31 December 2017[3] 48,700 170.00
Canada 3.2 trillion 31 December 2017[4] 52,300 143.00
Australia 1.83 trillion 31 September 2020[5] 71,906 130.00

Posted by Sslee > 2023-04-05 19:37 | Report Abuse

So when everybody talks about US number 1 economy every year but with external debts of USD 31 trillion (121.08% GDP) so where the money gone and who fund the US wars and war weapons?

Posted by IDQWE001 > 2023-04-05 19:48 | Report Abuse

Chinese Developers’ Proposals are not Typical Debt Restructurings
Sun 02 Apr, 2023 - 11:39 pm ET

Fitch Ratings-Hong Kong-02 April 2023: Recent debt restructuring proposals of distressed Chinese developers are mostly debt extensions rather than sustainable and permanent restructurings, as the viability of many such developers’ underlying business operations and their ability to generate sufficient and sustainable free cash flow will remain in question even if their proposals are approved, says Fitch Ratings.

The arrangements primarily propose debt extensions and debt-for-equity swaps, which will be subject to untested investor appetite. This is because of the poor equity value of distressed developers and their associated listed entities, and upside potential challenged by the structural slowdown and consolidation in the industry.

However, the debt restructurings, as proposed, should buy developers more time to complete and deliver unfinished homes, a priority for the Chinese government. As outlined in the China Evergrande Group case, a significant amount of additional financing is required in the next three years to support the “core task” of ensuring delivery of properties, as the company put it. We do not expect restructurings to help developers’ access to unsecured financing, but could pave the way for some to obtain bank funding for project completion. We believe this reflects the significance of social factors in accelerating these proposals but will leave little excess cash for debt servicing in the near to medium term.

The market-based approach in all cases reiterates that the Chinese authorities have refrained from backstopping distressed developers but instead providing support to higher-rated developers that have not defaulted, aiming to restore investor confidence gradually. For example, the government has stepped up credit support for non-defaulted private developers since 2H22, including guarantees for several developers’ onshore bonds and encouraging commercial banks to underwrite property loans, among others.

We have long believed that issuers would prioritise onshore bondholders over offshore. This is partly because offshore bonds are often structurally subordinated to onshore bonds due to a lack of direct guarantee, securitisation, and recourse to onshore assets. The recent developments reinforce such a view. For example, Sunac China Holdings Limited’s onshore debt has been extended for three to four years and supported by pledging of additional assets, while the offshore creditors are likely to face an extension of up to nine years.

So far, several developers, such as Guangzhou R&F and Greenland, have completed or received creditors’ approval for offshore debt restructuring, while several others have announced proposals. Restructuring remains largely a bespoke process, while we believe the present arrangements indicate the limited level of protection that offshore bondholders could expect in the forthcoming proposals by other distressed developers.

A sustained recovery in the defaulted developers’ businesses could lead potentially to higher recovery rates for offshore bondholders, but this depends on a broad and meaningful improvement in the sector, which is not our baseline expectation.

Posted by Sslee > 2023-04-05 20:29 | Report Abuse

LONDON, March 24 (Reuters) - Financial markets have been thrown a fresh curve ball by the decision to write down 16 billion Swiss francs ($17.5 billion) of Credit Suisse bonds, known as Additional Tier 1 or AT1 debt, to zero as part of a forced rescue merger with UBS (UBSG. S).
24 Mar 2023

So should China government intervene and write down all the offshore bonds?
For example, Sunac China Holdings Limited’s onshore debt has been extended for three to four years and supported by pledging of additional assets, while the offshore creditors are likely to face an extension of up to nine years

Posted by IDQWE001 > 2023-04-05 20:52 | Report Abuse

Chinese property developer Sunac posts $2 billion core loss in 2022


Chinese property developer Sunac posts $2 billion core loss in 2022
Story by Reuters • Friday

HONG KONG (Reuters) - Major property developer Sunac China on Friday logged a net narrowing core loss of 13.86 billion yuan ($2.02 billion) in 2022, as the debt-laden firm slowed its project construction and incurred higher interest expenses.

Over the last two years, property firms in China have either struggled to sell new houses or have sold them at lower prices than expected, though a series of supportive policies from the government drove expectations of a faster recovery of the sector.

Last year's core net loss, which excludes the revaluation of assets and financial instruments and foreign exchange loss, compares to a 25.30 billion yuan loss reported in 2021.

Sunac also published its overdue 2022 interim results on Friday, posting a core loss of 11.06 billion yuan.


HONG KONG (Reuters) - Major property developer Sunac China on Friday logged a net narrowing core loss of 13.86 billion yuan ($2.02 billion) in 2022, as the debt-laden firm slowed its project construction and incurred higher interest expenses.

Over the last two years, property firms in China have either struggled to sell new houses or have sold them at lower prices than expected, though a series of supportive policies from the government drove expectations of a faster recovery of the sector.

Last year's core net loss, which excludes the revaluation of assets and financial instruments and foreign exchange loss, compares to a 25.30 billion yuan loss reported in 2021.

Sunac also published its overdue 2022 interim results on Friday, posting a core loss of 11.06 billion yuan.

The Beijing-based firm said its shares, which are under a year-long halt, are expected to resume trading in April this year. They had been suspended pending the release of its financial results.
unac is among the many Chinese developers that defaulted last year as the sector reeled under a debt crisis. It started recording losses in the second half of 2021.

The property developer said earlier this week it had reached agreements with a group of offshore creditors to convert its debt into new notes and convertible bonds backed by its Hong Kong-listed shares, and shares in its property management unit Sunac Services.

Its chairman Sun Hongbin told investors the developer has been actively working with asset managers and applying for official funding to ensure developments are completed.

"The Group will strive to complete the necessary legal procedures for the offshore debt restructuring within 2023," Hongbin said in a statement.

Posted by IDQWE001 > 2023-04-06 13:45 | Report Abuse

The euro and U.S. dollar together made up more than seven out of 10 SWIFT payments worldwide in January 2023, outperforming many other currencies. This is according to a monthly reporting which is originally meant to track the market share of China's yuan renminbi within international bank transfer system SWIFT. Despite that China ranks as one of the main economy's in the world, the yean ranked as only the eight-used currency for international SWIFT payments.

Posted by IDQWE001 > 2023-04-06 13:56 | Report Abuse

Jan 2023:
USD 45%
EURO 33%
Pound 4%
Japanese Yen 4%
Canada 2%

the rest negligible. Only Evil CCP will tell you US dollar will copllase in foreseen near future.

Posted by brightsmart > 2023-04-06 14:34 | Report Abuse

sted by Sslee > 18 hours ago | Report Abuse

LONDON, March 24 (Reuters) - Financial markets have been thrown a fresh curve ball by the decision to write down 16 billion Swiss francs ($17.5 billion) of Credit Suisse bonds, known as Additional Tier 1 or AT1 debt, to zero as part of a forced rescue merger with UBS (UBSG. S).
24 Mar 2023

====

magicians in suizze can rank equities higher than bonds.....a world first.

Posted by foongsh > 2023-04-06 14:40 | Report Abuse

Posted by IDQWE001 > 43 minutes ago | Report Abuse

Jan 2023:
USD 45%
EURO 33%
Pound 4%
Japanese Yen 4%
Canada 2%

the rest negligible. Only Evil CCP will tell you US dollar will copllase in foreseen near future.

Really cant see RMB woh.

Posted by nicholas99 > 2023-04-06 16:22 | Report Abuse

this thread by ID is pointless.. with his bias. he can't make a sentence without talking bad about China. Lmao. the hate is real.

Posted by IDQWE001 > 2023-04-06 16:40 | Report Abuse

You may check the above information is correct or not. However, it is up to you believe or not. Please differentiate between CCP and China. You are always welcome to write all the facts to debate with me. Facts with data and reasons, you may continue to believe what you choose to believe. Nobody will question that.

Posted by brightsmart > 2023-04-06 23:18 | Report Abuse

nothing to debate.....foreigners trying to drive a wedge between the government and its people not welcomed in China.

Posted by brightsmart > 2023-04-06 23:20 | Report Abuse

what I know is all 100 million CPC members are Chinese not from Mars ,not foreigners.

Posted by brightsmart > 2023-04-07 00:39 | Report Abuse

like this german lecturing the africans

https://www.youtube.com/watch?v=5QRi12ldhos

Posted by IDQWE001 > 2023-04-07 13:38 | Report Abuse

June 22, 2022
Which are the world’s major reserve currencies?

US Dollar: 58.81%

Euro: 20.64%

Japanese Yen: 5.57%

Pound Sterling: 4.78%

Renminbi (Chinese Yuan): 2.79%

Only joker will tell you that US dollar will become toilet paper in foreseen near future. No doubt due to almost the peak high of interest rate US dollar will depreciate.

Posted by stockraider > 2023-04-15 13:25 | Report Abuse

Most of China Debts are domestic Remimbi Debt loh!

Posted by qqq47660 > 2023-04-15 20:38 | Report Abuse

Media lies
Idq sucks it up

Posted by qqq47660 > 2023-04-15 20:40 | Report Abuse

Shanghai property prices shows recovery in march

Posted by qqq47660 > 2023-04-15 20:43 | Report Abuse

They , the mainstream media, lies they cheat they demonise they create wars

Posted by IDQWE001 > 2023-04-15 20:59 | Report Abuse

Fuelling debt increase

The United States and China – the world’s two biggest economies – are almost entirely fuelling the predicted debt increase, the IMF said.

The US ratio of debt to gross domestic product (GDP) is set to increase to 136.2% in 2028 from 121.7% in 2022.

China’s debt is forecast to soar to 104.9% of GDP in the next five years from 77.1% in 2022 as spending increases and the economy expands less than projected prior to the pandemic.

Posted by IDQWE001 > 2023-04-15 21:00 | Report Abuse

US VS China : 250 VS 80 years

when laughing at others please look at the mirror.