What is China doing about it?

[Bluemarlin]

14 hours ago, Boomer54 said:

Let me point something out. Badly managed debt taken onto the public books is not a way to lower interest rates. The fact is that debt then impacts the rates you have to offer to attract investment. It doesn't stop there indeed an outflow of investment peessures your currency which in turn is pressure on your rates. The key determinant is exactly what balance of your debt is domestic and what is held by external creditors.

You want to understand the economic implications of this situation deep dive into Japanese economics starting about 30 years ago is a very good starting point.  China's boom and bust is very much a clone of a forerunner that started in Japan post WW2.

Sorry if I wasn't clear, I was referring to interest rates in the US and West, which have been relatively high, making investment in China less attractive. To some extent that will change as US rates fall.

I'm not up to speed on Japan's economics, but prior to the period you refer to weren't they subject to pressure from the US to increase their currency value, and the threat of tariffs, to reduce exports. I also seem to remember the US devaluing it's currency around then, thus enabling them to buy out a lot of Japanese investment cheaply.  I'm not disagreeing with you, but it will be interesting to see how China plays things as they appear to be more tolerant towards a long game.

All that said, neither us nor the US seem to be handling our economies brilliantly either.

[Boomer54]

1 hour ago, Bluemarlin said:

Sorry if I wasn't clear, I was referring to interest rates in the US and West, which have been relatively high, making investment in China less attractive. To some extent that will change as US rates fall.

I'm not up to speed on Japan's economics, but prior to the period you refer to weren't they subject to pressure from the US to increase their currency value, and the threat of tariffs, to reduce exports. I also seem to remember the US devaluing it's currency around then, thus enabling them to buy out a lot of Japanese investment cheaply.  I'm not disagreeing with you, but it will be interesting to see how China plays things as they appear to be more tolerant towards a long game.

All that said, neither us nor the US seem to be handling our economies brilliantly either.

"US to increase their currency value, and the threat of tariffs, to reduce exports", yes, eactly, and where have you seen that in play relatively recently? Cluesy, he is probably coming back for a repeat performance this year.

Of course there is merit in what you say about Western rates leading to a drop in investment generally, including new company floats etc, but the China situation predates that issue actually. A withdrawal of investment had been underway for some time due to Chinese policies and the risk level they pose. That isn't going away when rates normalise in the West.

[Malc1]

49 minutes ago, Boomer54 said:

That isn't going away when rates normalise in the West.

not sure what that means really ?  rates normalise at .............  what level, or level of fluctuation, or ????

China Long Game, long term thoughts, often extend out 100's or 1000's of years .........  way beyond anything the USA could even dream of having only just, in a flash comparatively, come into being a couple of hundred years ago  !  😇

Malc

[Boomer54]

48 minutes ago, Malc1 said:

not sure what that means really ?  rates normalise at .............  what level, or level of fluctuation, or ????

China Long Game, long term thoughts, often extend out 100's or 1000's of years .........  way beyond anything the USA could even dream of having only just, in a flash comparatively, come into being a couple of hundred years ago  !  😇

Malc

Normalise in this sense means the rate that is required to keep the inflation rate within the rate remit of the BOE.

[Malc1]

1 hour ago, Boomer54 said:

Normalise in this sense means the rate that is required to keep the inflation rate within the rate remit of the BOE.

Can’t imagine for one moment the Chinese Govt care a hoot about the BofE rate remit ……. isn’t it a bit of a fiction anyway 🤔

Malc 

[Boomer54]

10 minutes ago, Malc1 said:

Can’t imagine for one moment the Chinese Govt care a hoot about the BofE rate remit ……. isn’t it a bit of a fiction anyway 🤔

Malc 

Going into reverse for the moment, the normalisation comment came in response to a post discussing the effect of Western rates upon the rate of inward investment in China. I am sure as you say the Chinese govt couldn't careless at this point. However, lest we forget China went nowhere for a millenia when they stopped caring about external influences and decided to 'shutup shop'. It is a relative new phenomena for them to open up and basically forge a place as the worlds factory. However, before them Japan did very much the same thing post WW2 ,but it was all done by massive inward  investment. China might think they have this game nailed down, but they don't and just to begin with if he is of a mind to Trump should he get the chance can hurt them badly economically. Xi might be on top of a centrally controlled govt, but the minute he starts looking down the barrel of an economy that is shrinking then he won't be so comfortable with the internal  response from people who have not endured that for what is now close on a couple of generations. Long games are all well and good, but they want to remind themselves that economic wars are still wars and plans hardlly ever survive first contact nevermind go according to a long term plan. Attribution Clauswitz and the Prussians knew a bit about a war.

[Malc1]

Remembering my visit to Hong Kong and China perhaps some 40 years ago …….. very rural and rustic and seemingly happy ordinary people living their normal lives and families all in very simple basic living mode …….. didn’t see any high rise blocks nor much of anything similar to what we see today in the Press  TV whatever …….. China has come on leaps and bounds in an amazingly short time span 

I also remember our well educated youngish Guide who told us that he was off to study in the USA ……. his education benefitting his People and nation when he returned …… there was zero doubt of his purpose in life to get well educated and bring it ALL back for the benefit of his Nation, ……. his pride 

I felt his Life’s Rationale was more focussed and personal for the long term benefit of his Society ….. it all seemed very refreshing 👏

The chunk of the Great Wall  I trod was blo-dy hard work for sure 😂

Malc 

[Boomer54]

FT today 

Financial Times (ft.com)

China needs to learn lessons from 1990s Japan

Should I cite them for plagiarism, or am I some unpaid research intern for them?

[Malc1]

Merhinks the world is taking it's time to wake up to the simple fact that China is enormous in all respects and will wield whatever economic actions it deems appropriate whenever and wherever ( within it capabilities ) it wishes ........  anywhere in the World more or less

Someone at the World Bank was it quoted me using the term Vassal for Russia being likely soon " under the thumb " of Xi and coy .................

China like India is just a great chunk of the world population but India is a democratic powerful Nation but with holiness and peace at it's core .......  thankfully 😉

A lesson it would be good and wise for the China State to embrace

Malc

[Boomer54]

2 hours ago, Malc1 said:

Merhinks the world is taking it's time to wake up to the simple fact that China is enormous in all respects and will wield whatever economic actions it deems appropriate whenever and wherever ( within it capabilities ) it wishes ........  anywhere in the World more or less

Someone at the World Bank was it quoted me using the term Vassal for Russia being likely soon " under the thumb " of Xi and coy .................

China like India is just a great chunk of the world population but India is a democratic powerful Nation but with holiness and peace at it's core .......  thankfully 😉

A lesson it would be good and wise for the China State to embrace

Malc

I think the part of the world that matters is well up to speed as what China are to the rest of the world in terms of friend, foe, and parts that don't fall into either category. Perhaps there are a few people living in

InbredRUs, Backwater, USA for whom the message has been lost.

It's over 20 years ago since I first heard the bugles sound that before you know it China will be the economic giant overtaking the USA. I am still waiting to see it.

The reality is China got this far so fast, because it was beneficial to the West economically and investment flowed from that viewpoint. The West is no longer that convinced it's interests and China's are mutually beneficial and we have in the last 5 years or so seen China's economic growth fall out of bed rapidly. If Trump is re elected it could become a great deal tougher.

[Malc1]

23 minutes ago, Boomer54 said:

If Trump is re elected it could become a great deal tougher.

for whom ?

Malc

[Bluemarlin]

4 minutes ago, Malc1 said:

for whom ?

Malc

Good question. Trump is unpredictable, disloyal, volatile and bears grudges. Who knows how much time he'll have to focus on things as he'll be trying to jail the Bidens as well as Hilary.

[Malc1]

3 minutes ago, Bluemarlin said:

Good question. Trump is unpredictable, disloyal, volatile and bears grudges. Who knows how much time he'll have to focus on things as he'll be trying to jail the Bidens as well as Hilary.

Trump volatile ... who'd have guessed .  trying to jail others .. from his own cell incarceration no doubt !  🤣

Who knows ....... maybe China will find some rare minerals in that part of northern Russia it wants to mine .  Oh, that part bang next door to Alaska maybe  😇

Malc

[Bluemarlin]

6 minutes ago, Malc1 said:

Trump volatile ... who'd have guessed .  trying to jail others .. from his own cell incarceration no doubt !  🤣

Who knows ....... maybe China will find some rare minerals in that part of northern Russia it wants to mine .  Oh, that part bang next door to Alaska maybe  😇

Malc

They'll be fine, as I'm not sure if Trump knows that Alaska is part of the USA. He'd probably blame Canada for letting it happen.

[GMB]

1 hour ago, Bluemarlin said:

Alaska is part of the USA

Bit of a bargain at 7.2 million dollars.

[Boomer54]

1 hour ago, Malc1 said:

for whom ?

Malc

Decent question, with a two part answer. The most direct primary impact is to the Chinese economy as the USA with 330 m population and still one of the higher GDP per capita  head is not a market you want shutting out of and thats before you factor in that they are still a major source of investment. However, the secondary part of that answer is that of course there always counterparties so US companies in a trading relation with China de facto are in the firing line. Still  though to Joe public in Rustville USA it's a popular policy for Billy Bob and Mary Joe whose Granddaddies job got exported to China 30 years ago.

[Malc1]

But those jobs 30 years ago, when USA could seriously influence the way China was developing were simply for China to create its own modern way of living …… modern being to bring things into line with American modes …… remember I was saying that about that time China sent it’s youth to study in USA and bring back to the China homeland the modern way ( in USA terms ) of research, education and wealth creation ….. and massive increases in manufacturing capacity with “ modern “ technology at tiny ( to USA ) comparative cost 

Trump and Biden will whinge and whine whatever over everything and anything Chinese BUT, like India, that won’t stop or significantly curtail the inexorable rise and rise of the next two great World economies  …… with approaching 40% of world population in their homelands and massive population shifts into every other country in the world …….. even western countries and “ economies “ 

That ship  has long gone, sailed away,  and one just has to accept that’s the way it’s more or less really going to be 

I think 🤔

Malc 

[Boomer54]

6 minutes ago, Malc1 said:

But those jobs 30 years ago, when USA could seriously influence the way China was developing were simply for China to create its own modern way of living …… modern being to bring things into line with American modes …… remember I was saying that about that time China sent it’s youth to study in USA and bring back to the China homeland the modern way ( in USA terms ) of research, education and wealth creation ….. and massive increases in manufacturing capacity with “ modern “ technology at tiny ( to USA ) comparative cost 

Trump and Biden will whinge and whine whatever over everything and anything Chinese BUT, like India, that won’t stop or significantly curtail the inexorable rise and rise of the next two great World economies  …… with approaching 40% of world population in their homelands and massive population shifts into every other country in the world …….. even western countries and “ economies “ 

That ship  has long gone, sailed away,  and one just has to accept that’s the way it’s more or less really going to be 

I think 🤔

Malc 

 I am of the view this economic nirvana situation is overstated. What I know about financial markets is they prefer political certainty and regulated activity. Neither China nor India qualify YET. Indeed re your previous remark about India and peaceful etc it does not escape my notice that the latter does not seem to have applied to the Muslim population of India under Modi !

Yes, they both have large populations ,one growing ,one shrinking, but both still have low GDP per capita head which is the true test of prosperity and wealth distribution. Afterall 85% of your population barely subsisting is hardly in a position to be this years candidates for consumers of the year. They both have a long way to go that will for sure extend beyond both of our life times. We shall compare notes in the hereafter me from up there and you from down there.😉

[Malc1]

Maybe from my “Office “ in Delhi too 😂

Who knows what on earth will be happening in 2 years let alone 32 years time ….. my forecast lifespan to about 106 👏……. not sure I’ll be driving, let alone my then 60 and 65 years young Ls400s 😇

ps. I don’t have Crystal  Balls 🤣

Malc 

[Bluemarlin]

Mt guess over the longer term willl be that nation states become less and less important in terms of the global economy, and it will be corporations running the show.

[Malc1]

40 minutes ago, Bluemarlin said:

Mt guess over the longer term willl be that nation states become less and less important in terms of the global economy, and it will be corporations running the show.

Just so long as those corporations aren’t Russian Oligarchical style controlling absolutely everything for the absolute benefit of the Few 

Google is or has got that way to date with online advertising total control ……. Govts globally have little or zero say in how the internet is run by Google ( for Google’s benefit ) 

just my present experience at “ the face” of running an internet business 

Malc 

[Bluemarlin]

32 minutes ago, Malc1 said:

Just so long as those corporations aren’t Russian Oligarchical style controlling absolutely everything for the absolute benefit of the Few.

Malc 

That's the nature of large corporations. The only diifference being that the Russians seem less shy about admitting it.

[Boomer54]

Sunday Times

‘Uninvestable’: China’s $2tn stock rout leaves investors scarred

Of course you already knew that, because you have the Lancashire Oracle giving you the back channel view. Although by implication that view may on occasion be a little anally retarded.

[Malc1]

4 minutes ago, Boomer54 said:

Sunday Times

‘Uninvestable’: China’s $2tn stock rout leaves investors scarred

Of course you already knew that, because you have the Lancashire Oracle giving you the back channel view. Although by implication that view may on occasion be a little anally retarded.

I dont doubt for one minute that this  " rout  " will turn into that amazing buying opportunity  ...........  perhaps by different investors and the newly found oil rich countries emerging ...  such as Brazil maybe 

Is that scarred or scared or both maybe 😉  you have to laugh .....  China will soon become fully investable again, probably within the next 6 / 18  months .........  let's try to see and watch who's actually buying all this bombed out " rout " $2tn for maybe that  .................. $1tn

wonder if Black Rock might have a " go at it "   ?  would I vote for them to, well, probably YES  🤣

Malc

[Boomer54]

3 minutes ago, Malc1 said:

I dont doubt for one minute that this  " rout  " will turn into that amazing buying opportunity  ...........  perhaps by different investors and the newly found oil rich countries emerging ...  such as Brazil maybe 

Is that scarred or scared or both maybe 😉  you have to laugh .....  China will soon become fully investable again, probably within the next 6 / 18  months .........  let's try to see and watch who's actually buying all this bombed out " rout " $2tn for maybe that  .................. $1tn

wonder if Black Rock might have a " go at it "   ?  would I vote for them to, well, probably YES  🤣

Malc

 I have one word for you Monte Carlo and I don't mean the place.

"The Monte Carlo Analysis is a risk management technique,"

Not every dip is a buying opportunity indeed if you don't utiliise some form of the above the chance is decent it will be "wipe out". Sometimes dips just keep getting deeper and without some strong signal giving a political change of direction that about sums up China.