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Interesting perspective on China (bears, take note)


Liberty
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http://www.economist.com/news/china/21599806-our-asia-economics-editor-takes-his-leave-less-worried-many-his-peers-about-frailties

 

I thought this article by the economist's China correspondent (his last article from there) made a few points that we see too rarely in all this talk of empty cities and bubbles.

 

I'm not saying he's right or not (who really knows about macro, right? I certainly don't use it to make investing decisions, but it can still be fun to learn about), but I think it's an interesting point of view.

china-The_economy__On_cloud_nine_trillion___The_Economist.pdf

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Isnt the average gdp higher in the cities?

 

Of course.

 

Dont they have a problem that their rural population is pretty large and cannot move to the city as most cities are a big huge mess already?

 

That hasn't stopped hundreds of millions of them from moving to cities in the past decade, and the government has recently started to loosen the hukou registration rules iirc.

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Next week when the the monthly macro economic numbers are released we will have another opportunity to open the debate over whether China will collapse or not.  After terrible Jan-Feb macro numbers and a terrible trade report yesterday once again China is at the brink.  Previously in this situation they have put up good numbers. 

 

This time though  the leadership has ruled out large scale stimulus.  So a bad set of numbers could send them into a hard landing.  The numbers going into next weeks report also look a little worse than before.  Not sure a collapse is imminent but growth could slow sharply.  It could create a good buying opportunity.

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Isnt the average gdp higher in the cities?

 

Of course.

 

Dont they have a problem that their rural population is pretty large and cannot move to the city as most cities are a big huge mess already?

 

That hasn't stopped hundreds of millions of them from moving to cities in the past decade, and the government has recently started to loosen the hukou registration rules iirc.

 

There are still massive movements going to work in the cities, and then sending portions of their income back to the country.  I found this video well balanced.

 

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http://www.economist.com/news/china/21599806-our-asia-economics-editor-takes-his-leave-less-worried-many-his-peers-about-frailties

 

I thought this article by the economist's China correspondent (his last article from there) made a few points that we see too rarely in all this talk of empty cities and bubbles.

 

I'm not saying he's right or not (who really knows about macro, right? I certainly don't use it to make investing decisions, but it can still be fun to learn about), but I think it's an interesting point of view.

 

+1

 

thanks!

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