China

[crs223]

19 hours ago, Luca said:

 

Interesting Graph from Bridgewater associates.

 

Id like to know what went into computing “relative standing”.  that china curve is hard to take seriously… “relative standing” will be off the scale in 20 years

 

 

Edited June 23, 2023 by crs223

[Luca]

23 minutes ago, crs223 said:

 

Id like to know what went into computing “relative standing”.  that china curve is hard to take seriously… “relative standing” will be off the scale in 20 years

 

 

If i find more i will let you know. Chinas massive growth since 1980 is represented quite well in the graph, same is true for the dutch global trade dominance in 1600-1800. 

 

Id personally assume Chinas growth to decrease a bit but steadily increase still.

[james22]

Last year India surpassed China as the world’s most populous nation. That might be a marginal consideration until specifics are examined. The fact is, China’s population fell for the first time in 60 years, and China is now the fastest-aging nation in human history.

 

As most know, the population replacement rate is 2.1 children per woman. China’s 2011-2020 census (as far as CCP numbers can be trusted) shows their replacement rate is 1.3 at best. Peter Zeihan has reported the replacement rate of women in highly populated urban areas like Shanghai is 0.7!

 

Replacement rates, and these charts, tell us that China’s demographic collapse will occur within one generation – within a human lifetime! China’s worker-age population peaked in the last decade, and by 2050 will be less than half of what it was in 2020. The population collapse of China is not just starting, it is happening right now!

 

https://andmagazine.substack.com/p/china-is-a-dying-paper-dragon

[hillfronter83]

https://themarket.ch/interview/george-magnus-china-will-not-be-able-to-de-dollarize-under-xi-ld.9180

[kimoser22]

https://www.youtube.com/watch?v=0xlq4WSpUH8

 

Corporate espionage Chinese Style 

 

Edited June 27, 2023 by kimoser22

[Luca]

On 6/22/2023 at 4:21 PM, Castanza said:

 

China likes to control the resources and the shovels needed to extract the resources. Both literally and figuratively. Take a look at the Congo and who owns the majority of those mines. Who moved into Afghanistan right after the US pulled out (likely for the lithium). Who's buying up shipping ports in distressed countries? It's a real problem for the Western world. The leadership of 80% of the Western World has been straight dogshit US, UK, Germany, France, Australia, NZ, Canada, EU countries. Utter garage. There is not a single leader I can look at and be like "Yeah, that's a person who instills confidence and is inspiring or making moves that will benefit the US down the line." 

 

When I look at Xi I see a guy who is laser focused on getting his country on the same page. A guy who has initiative and direction. Both in scope of high level and granular level stuff. I might not agree with the approach or methods used; but nobody can deny it. He might not be successful there are certainly a lot of negatives to deal with in China. But I can tell you this......He isn't spending his press conferences discussing his favorite ice cream flavor, inviting smooth brain celebrities to the Zhonghai, or discussing his childhood adventures or taking credit for job creation coming out of a global lockdown.....

 

There are a few niche areas the West still has the advantage in. Fortunately they are key areas, but they are under constant onslaught. 

 

________________________

 

Discussing investing in China is one thing. I don't do it personally. 

 

Discussing the changing world order is another. On this front, China is playing 4-D chess while the West is on their heels. 

Just to add it here too, just posted it in the india thread.

 

https://www.cambridge.org/core/journals/perspectives-on-politics/article/testing-theories-of-american-politics-elites-interest-groups-and-average-citizens/62327F513959D0A304D4893B382B992B#

 

 

Clearly, when one holds constant net interest-group alignments and the preferences of affluent Americans, it makes very little difference what the general public thinks. The probability of policy change is nearly the same (around 0.3) whether a tiny minority or a large majority of average citizens favor a proposed policy change (refer to the top panel of figure 1).

 

Furthermore, the preferences of economic elites (as measured by our proxy, the preferences of “affluent” citizens) have far more independent impact upon policy change than the preferences of average citizens do. To be sure, this does not mean that ordinary citizens always lose out; they fairly often get the policies they favor, but only because those policies happen also to be preferred by the economically-elite citizens who wield the actual influence.

 

What do our findings say about democracy in America? They certainly constitute troubling news for advocates of “populistic” democracy, who want governments to respond primarily or exclusively to the policy preferences of their citizens. In the United States, our findings indicate, the majority does not rule—at least not in the causal sense of actually determining policy outcomes. When a majority of citizens disagrees with economic elites or with organized interests, they generally lose. Moreover, because of the strong status quo bias built into the U.S. political system, even when fairly large majorities of Americans favor policy change, they generally do not get it.

 

 

[Luca]

China knows this, in order to become economically stronger than the US, opening up their country to western ,,democracies,, would just lead to disadvantages and US control, like it is the case with Japan, Germany, Britain etc. 

 

 

[Luca]

Recently our Minister President of Bavaria met with De Santis, obviously the most popular german parties are also more or less controlled by elite capital, to a less degree than the US though. The left party completely collapsed as is the case in the US, right wing parties on the rise (AFD, alternative for germany, bought and paid for>https://www.spiegel.de/politik/deutschland/afd-unterstuetzung-die-spur-zu-milliardaer-august-von-finck-a-1240069.html)

 

 

Edited June 27, 2023 by Luca

[Luca]

From that point of view, the skepticism against the US and the tight control of authoritarian governments on their countries gets more understandable. 

[Luca]

Talking about these problems.

 

https://www.politico.com/news/2023/05/02/leonard-leo-federalist-society-00094761

 

Leonard Leo, who helped to choose judicial nominees for former President Donald Trump, obtained a historic $1.6 billion gift for his conservative legal network via an introduction through the Federalist Society, whose tax status forbids political activism.

 

Leo’s dual roles have served to attract one key backer — Trump. As a presidential candidate in 2016, Trump promised that his nominees would “all [be] picked by the Federalist Society.” Yet, according to a person with direct knowledge of the situation, the list of Supreme Court nominees that Trump drew from in creating a conservative supermajority was devised by Leo alone. Neither the organization’s top brass nor its board directors had any official role in crafting it.

 

Judges for life, handpicked by someone receiving lots of money.

[Luca]

Quoting from one of the great tencent write ups posted by a while back @Spekulatius

 

 

 

This is the approach of the CCP. Leaders are groomed, sometimes from late teens, to climb the ladder within the party. Looking through their resumes, these are well-educated technocrats from China’s elite families, much like the way a CEO might climb the ranks from engineer to executive.

These top families within China own or exert control over most all companies and strategic assets. The executive leadership of most companies are tightly interwoven with the CCP. Importantly, this is not a trend “to-come”. This is how business has been run for the last decade.

 

http://www.chinadaily.com.cn/china/cpc/centralcommittee/index7.html

 

All of them with University degrees, multiple with MBAs, Doctor of economics, Enginnering degrees etc. Cant be that stupid...

 

Why i think China will prosper better with their societies<

 

The fundamental difference between “socialism with Chinese characteristics” and Western-style democratic capitalism lies in the origins of their worldviews: Confucianism, Daoism, Buddhism and Judeo-Christianity 

Edited June 27, 2023 by Luca

[Luca]

And if the aristocrats that control the economy get lazy and decadent. Nothing good will follow:

 

(Roman Empire)

 

Official cruelty, supporting extortion and corruption, may also have become more commonplace.^[54] While the scale, complexity, and violence of government were unmatched,^[55] the emperors lost control over their whole realm insofar as that control came increasingly to be wielded by anyone who paid for it.^[56] Meanwhile, the richest senatorial families, immune from most taxation, engrossed more and more of the available wealth and income^[57][58] while also becoming divorced from any tradition of military excellence. One scholar identifies a great increase in the purchasing power of gold, two and a half fold from 274 to the later fourth century. This may be an index of growing economic inequality between a gold-rich elite and a cash-poor peasantry.^[59]

 

 

Moral crisis

"Formerly, says Ammianus, Rome was saved by her austerity, by solidarity between rich and poor, by contempt for death; now she is undone by her luxury and greed (6 Amm. xxxi. 5. 14 and). Innumerable are the statements of Church Fathers that stigmatize the immorality of both the nobles and the poor. Salvianus backs up Ammianus by affirming that greed (avaritia) is a vice common to nearly all Romans".^[62]

[Spekulatius]

@Luca If you like the Chinese system so much, you really should take your money and move there.

Won't be the same thing if you keep your passport though.

[rogermunibond]

The reply equivalent of if you like xxx so much why don't you marry him/her.

[tnp20]

I am a china Bull short to medium term but not long term and not because of demographics in particular....well sort of....

 

https://themarket.ch/interview/george-magnus-china-will-not-be-able-to-de-dollarize-under-xi-ld.9180

 

https://themarket.ch/english/china-is-in-danger-of-growing-far-below-its-potential-ld.9068

 

https://www.pekingnology.com/p/tourism-industry-official-deplores

 

After China's covid policy - many ex-pats have left never to return again. Tourists are not going to China anymore and is a crisis situation....many folks who move to China lament the fact that they can't stay in touch with family and information flows as easily as China sensors internet/social media heavily. This basic freedom or lack thereof means that the world's best minds and tech entrepreneurs will not find China and appealing destination to settle for themselves and their family. The covid experience probably fades after a while but those who stayed in china during COVID universally had a very bad experience and many left. The issue is level of freedom and lack there of.

With their demographic issue, with number of people declining and number of smart capable people decline in proportion  they will have ever decreasing number of people who can drive the engine of growth and innovation unless they can attract smart talent from elsewhere but who wants to go to China when you can go somewhere else thats free-er and better.

 

Many rich Chinese themselves have a second passport - just in case. No one trusts the regime - yes there is CCP propaganda for the masses but the smart folks are all keeping an insurance policy as they are not drinking the cool aid.

 

Xi is all about Control, Stability and Strength. Xi's thinking/policies/principles are in direct conflict with whats needed for China to be a long term success. Free markets need some level of basic openness and freedoms to succeed long term. Anyone who says XI is smart doesnt know what they are talking about!!!! I have had number of discussions with people who know and understand China intimately. There are smart Chinese in the upper echelon trying to do their best to tame Xi's worst tendencies but what Xi wants and what is truly needed for China to succeed are in direct conflict. Xi is too stupid to realize this dilemma. (as opposed to dont care what color the cat is as long as it catches mice thinking)...so the answer is China's success will be either limited/plateaued or worse fades fast after a peak in a the next decade or so. Of course another leader could take over and course corrects but thats a different matter. I had several Chinese friends who thought a decade or so ago that China would slowly liberalize/open up not just its markets but in terms of some form of semi-democracy - yes probably with chinese characteristics with CCP still playing a central role but more open/liberal political scene. Li Lu and Tianamin square student movement was crushed by the previous regime so they knew population is yearning for more freedoms. Super fast (and unscientific ) Pivot of covid policy was a affirmation that Xi's stupid policies  were about to cause major unrest and to prevent that they had to pivot to maintain control. China may do well despite Xi's policies but its super power status that replaces the USA is highly unlikely because of these structural issues.

 

Xi's failure are many but include:- (i) Highly damaging Covid policy - left many people and companies and local governments indebted (ii) Value destroying Tech/Education/private company crack down (iii) wolf warrior policy. The latter has delivered numerous countries right into US's lap and now are actively in part of some alliance against China.  Many of the same countries were neutral before their wolf warrior policy. Why did they need to make so many enemies needlessly ? The countries that matter in Asia over the next 30 years are India, Indonesia and Japan - they have the population growth, economic growth or GDP weight to matter. They are direct economic and military competitors to China.

 

 

Edited June 27, 2023 by tnp20

[tnp20]

Why am I bullish short medium term.....

 

This guys is one of their top economic advisors...

 

https://www.gingerriver.com/p/prof-liu-yuanchun-on-chinas-q1-economic

 

They really want to repair the balance sheet of (i) lower and middle class and (ii) Large, Medium and Small enterprises......after the balance sheet damage done by covid....so that implies they will continue the policy support (both fiscal and monetary) until the trickle down effects have gone all the way down to repairing the balance sheet of all of these entities/people...so it may be a multi-year affair for the sugar rush peak so leaning towards 3+ years this bull market continues ....and it takes substantial profit recovery for these business to (a) improve balance sheet (b) raise pay/income to boost confidence further and (c) reduce youth unemployment .....so once they step on the gas pedal with the stimulus, I think they keep going (with some minor throttling) until they achieve the goal to repair the lowest balance sheets...only then they are back to normal pre-pandemic.

 

This chart is interesting ..M2/Liquidity correlation with the SHanghai CSI 300 china stocks.....it was a screen grab from Bloomberg TV so I dont have a way to play with it...

 

Note the peaks of the "sugar rush" and the timing from the bottom knee curve...

 

 

Just eyeballing says that the peaks occur roughly 18-30 months from the bottom ....

 

And given the disparity between M2 and the stock market and how much above M2 it goes....we can expect at least a double from here....

 

 

Edited June 27, 2023 by tnp20

[zippy1]

4 hours ago, rogermunibond said:

The reply equivalent of if you like xxx so much why don't you marry him/her.

Superficially, that may sound like that. 

However, I think Spek used to live and work in China. I think we should view this as an invitation to gain the first hand experience.

I also have many friends who had lived in China before.  They had moved there in the 2000s, but moved out again in the last 3-4 years. They all felt the political winds have changed dramatically.  

Edited June 27, 2023 by zippy1

[sleepydragon]

If the zero Covid had lasted longer, it might be better for Chinese people — because Xi might have been removed by now. CCP was losing country due to widespread riots.

if Xi invade Taiwan, it would have done the same to CCP’s ruling.

[crs223]

38 minutes ago, sleepydragon said:

CCP was losing country due to widespread riots.

if Xi invade Taiwan, it would have done the same to CCP’s ruling.

 

1. Xi ended Zero COVID when the people rioted

2. Xi did not invade Taiwan

 

Are these the decisions of a madman?

[sleepydragon]

26 minutes ago, crs223 said:

 

1. Xi ended Zero COVID when the people rioted

2. Xi did not invade Taiwan

 

Are these the decisions of a madman?

He’s not mad, but he’s not smart and he’s arrogant.

if he’s smart he won’t push the zero Covid policy.  He will either invade Taiwan or not but it’s dumb to making threats if he plans to invade Taiwan (even more dumb if he doesn’t want to)

[Spekulatius]

1 hour ago, zippy1 said:

Superficially, that may sound like that. 

However, I think Spek used to live and work in China. I think we should view this as an invitation to gain the first hand experience.

I also have many friends who had lived in China before.  They had moved there in the 2000s, but moved out again in the last 3-4 years. They all felt the political winds have changed dramatically.  

I never lived in China. I have family from my wife’s side who lived in Hongkong and some of her friends and extended family still liver there but most have left. my wife speaks Cantonese.

I have worked in China for a couple of weeks at a time with a few tours from 2010 to 2015. I love Chinese food - Szechuan, Hunan and Cantonese (favorite is Dim Sum).

 

I am hardly an expert but sort of tied in through my wife’s family who are ethnically Chinese. It doesn’t make me an expert but more an interested person. Most Chinese are pretty dismayed by what’s going on in China and even more so in HK.

 

It is not widely know, but Xi Jinping wants to normalize the multicultural China into one culture (Han / Mandarin), so they try to eradicate  other cultures like Uyghurs or even Cantonese (Cantonese use is discouraged now in Guangdong and even Hongkong) to make it all the same and more homogenous.

 

So I am not the typical China hater, but I hate to see what’s happening there. I think @tnp20 in his first post captures the situation fairly well, I am much more skeptical in terms of investing then he is and would only for into Chinese equities for a trade.

[sleepydragon]

I know a lot Chinese. They might disagree with each other on topics like Taiwan, Russia or if China has better systems than US. But i have yet to meet one Chinese think Xi is not stupid. 

[zippy1]

31 minutes ago, Spekulatius said:

I never lived in China. I have family from my wife’s side who lived in Hongkong and some of her friends and extended family still liver there but most have left. my wife speaks Cantonese.

I have worked in China for a couple of weeks at a time with a few tours from 2010 to 2015. I love Chinese food - Szechuan, Hunan and Cantonese (favorite is Dim Sum).

 

Sorry about that, Spek!

[Luca]

13 hours ago, tnp20 said:

I am a china Bull short to medium term but not long term and not because of demographics in particular....well sort of....

 

https://themarket.ch/interview/george-magnus-china-will-not-be-able-to-de-dollarize-under-xi-ld.9180

 

https://themarket.ch/english/china-is-in-danger-of-growing-far-below-its-potential-ld.9068

 

https://www.pekingnology.com/p/tourism-industry-official-deplores

 

After China's covid policy - many ex-pats have left never to return again. Tourists are not going to China anymore and is a crisis situation....many folks who move to China lament the fact that they can't stay in touch with family and information flows as easily as China sensors internet/social media heavily. This basic freedom or lack thereof means that the world's best minds and tech entrepreneurs will not find China and appealing destination to settle for themselves and their family. The covid experience probably fades after a while but those who stayed in china during COVID universally had a very bad experience and many left. The issue is level of freedom and lack there of.

With their demographic issue, with number of people declining and number of smart capable people decline in proportion  they will have ever decreasing number of people who can drive the engine of growth and innovation unless they can attract smart talent from elsewhere but who wants to go to China when you can go somewhere else thats free-er and better.

 

Many rich Chinese themselves have a second passport - just in case. No one trusts the regime - yes there is CCP propaganda for the masses but the smart folks are all keeping an insurance policy as they are not drinking the cool aid.

 

Xi is all about Control, Stability and Strength. Xi's thinking/policies/principles are in direct conflict with whats needed for China to be a long term success. Free markets need some level of basic openness and freedoms to succeed long term. Anyone who says XI is smart doesnt know what they are talking about!!!! I have had number of discussions with people who know and understand China intimately. There are smart Chinese in the upper echelon trying to do their best to tame Xi's worst tendencies but what Xi wants and what is truly needed for China to succeed are in direct conflict. Xi is too stupid to realize this dilemma. (as opposed to dont care what color the cat is as long as it catches mice thinking)...so the answer is China's success will be either limited/plateaued or worse fades fast after a peak in a the next decade or so. Of course another leader could take over and course corrects but thats a different matter. I had several Chinese friends who thought a decade or so ago that China would slowly liberalize/open up not just its markets but in terms of some form of semi-democracy - yes probably with chinese characteristics with CCP still playing a central role but more open/liberal political scene. Li Lu and Tianamin square student movement was crushed by the previous regime so they knew population is yearning for more freedoms. Super fast (and unscientific ) Pivot of covid policy was a affirmation that Xi's stupid policies  were about to cause major unrest and to prevent that they had to pivot to maintain control. China may do well despite Xi's policies but its super power status that replaces the USA is highly unlikely because of these structural issues.

 

Xi's failure are many but include:- (i) Highly damaging Covid policy - left many people and companies and local governments indebted (ii) Value destroying Tech/Education/private company crack down (iii) wolf warrior policy. The latter has delivered numerous countries right into US's lap and now are actively in part of some alliance against China.  Many of the same countries were neutral before their wolf warrior policy. Why did they need to make so many enemies needlessly ? The countries that matter in Asia over the next 30 years are India, Indonesia and Japan - they have the population growth, economic growth or GDP weight to matter. They are direct economic and military competitors to China.

 

 

To me this seems to be just macro noise, we like to point out the flaws and problems with chinas system, but problems with the US are not likely to be discussed. And if they are discussed its foreign propaganda. Talking about chinas structural issures as if the US has none. Talking about china making enemies and the US none? What about crime rates in the US? Extreme gatekeeping for education, gatekeeping to leave an inefficient market system where people live paycheck to paycheck, are more and more burned out, more and more on psychiatric drugs. Corrupt political leadership, sleepy leadership. What about the people leaving the US for Europe?

 

The biggest problem are the birthrates, and I am confident that if a country can bring them up, it's china. They also won't light their economy on fire by getting back to a completely state planned economy and I also dont think that Xi is will fail as a leader.

 

Edited June 28, 2023 by Luca

[Spekulatius]

Fixing the birth rates problem in China is very hard and with the economy in the doldrums and youth unemployment exceeding 20% is not going to happen in the near future either.

 

The young generation is screwed by XI Jinping policies (suppressing and controlling tech industry, high housing costs, public school system requiring expensive tutoring to get a good education etc). Not all of it can be blamed on Ci Jinping, but his policies certainly have not been helping.

 

Japan has a better chance at fixing their demographics than China, because they can boost emigration (which is slowly happening already). China is too large and not many want to move there anyways and more people are going to move out of China than emigrate.