tnp20 Posted July 20, 2023 Share Posted July 20, 2023 (edited) 26 minutes ago, SharperDingaan said: Fixable, but not without repeated doses of short-term pain, and very carefully administered! More about reliable, competent execution, versus who is charge at the time. I see it more clearly as Xi failure. Why on "god's earth" would you try and create multiple battle grounds in the middle of gigantic covid crisis ? That is a strategic blunder of magnanimous proportions..... Multiple battles started by Xi during covid... (i) Geopolitical war (ii) Tech war (iii) Education war (iv) National security drive (v) Pop housing (vi) Consequences of covid war (that no one else in the world adopted):- - Load up local governments with huge debts fighting endless covid lockdowns - Scare foreigners - both from an investment perspective and from a tourist and resident perspective - many have left and are not coming back and few are going there now Should you not do a controlled burn in small areas one at a time making it more manageable and less severe ? Sounds like he is an hurry ...but for what and at what risk? Edited July 20, 2023 by tnp20 Link to comment Share on other sites More sharing options...
Spekulatius Posted July 20, 2023 Share Posted July 20, 2023 (edited) 1 hour ago, tnp20 said: Continuation from BABA thread as I think it belongs here... You can boil the whole China investment thesis into Pragmatism versus Rigid orthodoxy of Xi (what ever crazy idea Xi has in his head ...taking on geopolitical war, tech war, education war, housing war at the same time in the middle of a freaking once in 100 year extreme economic and social event - the covid pandemic). Xi likes to create an alternate model to the West that he thinks will be better model both for China and others. He sees himself in the Moaist mold (which any smart person would tell you is utterly stupid and has nothing to offer). He begrudgingly accepts the free market capitalism because it catches mice. He fundamentally fails to understand the Western model and this has a lot to do with his key advisor Wang Huning who thinks West is failing utterly and this is their chance to come up with the "China model" as an alternative. The problem with Xi is his model based on new made up ideas is untested and lot of the factors that go into it are interlinked and not well balanced at all. Wang takes the western model's failure and adopts the opposite but the opposite is not the answer as it breaks other things in a delicate fine balance of the Western model of freedom, property rights, free market etc. Yes USA model is failing but it needs tweaking not an overhaul (and probably same with lot of other Western systems). My Chinese friends decades ago expected China to open up and become more liberal and democratic as well as capitalistic. Under Xi, the first two has been reversed and there is a question mark on the third. The chances of a new model working for China that is better than the West is low (as its untested and there is no history of it) and the odds are even lower of it being adopted by others even if it works for China simply because people are not willing to give up there freedoms for long. Rich Chinese are leaving or at least have one foot outside just in case. My recent conversations with those who know China and have lived in China and are China native falls into two camps. (i) China will get prosperous because they want to be to prove model superiority. (ii) You can't trust the CCP long term because leadership has no checks and balances. Yes, that's a good one page summary of the situation. Now how to handicap the risk that is the question here and where we differ. I was of the opinion that China continues to open up and the CCP through internal reform over time become more democratic. Whether that leads to some western style democracy or stays a benevolent a one party state run by committee that balances different fractions was unclear but either state would be fine, at least from an investing POV. Having this moving towards a personality cult with all the negative ramifications was not something I considered likely until about 2020 but here we are. Hopefully the pendulum swings back at some point but that's a different judgement to make and will only happen post XJP reign. Edited July 20, 2023 by Spekulatius Link to comment Share on other sites More sharing options...
SharperDingaan Posted July 20, 2023 Share Posted July 20, 2023 (edited) On 7/20/2023 at 11:53 AM, tnp20 said: Should you not do a controlled burn in small areas one at a time making it more manageable and less severe ? Sounds like he is an hurry ...but for what and at what risk? Each burn will turnover some supporters, he needs to demonstrate that supporters can be changed, and he needs to keep the circle of supporters as small as possible; The Dictator's Handbook. One burn at a time, and another 'to follow' ... to keep everyone in line. The 2018 term limit abolishment probably had strings; performance review every X years or so. He was 65 when the limit was abolished (a young man!); but if there is a rolling 10 year review, he only has another 4+ years over which to deliver. Most would also not expect a 10 year renewal, when you are already 75! Different cultures, different strokes. SD Edited July 23, 2023 by SharperDingaan Link to comment Share on other sites More sharing options...
tnp20 Posted July 24, 2023 Share Posted July 24, 2023 http://www.aastocks.com/en/stocks/news/aafn-news/NOW.1280596/2 " Xi said the capital market should be enlivened to boost investor confidence." Lots of words...need actions and follow through.... 1 Link to comment Share on other sites More sharing options...
rogermunibond Posted July 24, 2023 Share Posted July 24, 2023 Crackdown and tough talk prior to the Party Congress. Now that a third term has been secured, ease up and let the good times roll again. We'll see a repeat of this in five years prior to the next Party Congress. Link to comment Share on other sites More sharing options...
rogermunibond Posted July 24, 2023 Share Posted July 24, 2023 Adam Tooze has a very good post on the problems with young adult unemployment in China. Definitely bears watching. https://adamtooze.substack.com/p/chartbook-228-polarization-the-bigger?utm_source=post-email-title&publication_id=192845&post_id=135351585&isFreemail=true&utm_medium=email Link to comment Share on other sites More sharing options...
rogermunibond Posted July 24, 2023 Share Posted July 24, 2023 https://www.ft.com/content/f7922fdb-01bf-4ffd-9c5c-79f15468aa71 PLA strategy of winning without fighting. Link to comment Share on other sites More sharing options...
tnp20 Posted July 24, 2023 Share Posted July 24, 2023 https://archive.ph/rtLxo Good piece Link to comment Share on other sites More sharing options...
tnp20 Posted July 28, 2023 Share Posted July 28, 2023 (edited) Is it a coincidence that China gets a property bubble top coincident with a stock market bottom ? Makes the money flow from one to another perfect for a multi-decade boom in the stock market. If we just look at the money flow aspect of the Chinese market, there are several tail winds:- (i) CHina has created IRA like accounts for pension savings - annual tail wind long term (ii) More non-IRA pension funds also being invested in stocks - annual tail wind long term (iii) EM index managers are underweight china - they will have to get correctly weighted - one off (iv) Sovereign wealth funds are diversifying some of their holding to CHina as it a number 1 or 2 economy some 20-30 years out. A balance between US, Europe, China, India (and possibly Indonesia and Brazil) makes most sense. - continuous tail wind (v) Now that property market is not where the money goes, the suitable alternatives are stocks, gold, commodities, antiques. - long term flows (vi) Chinese animal spirits are at rock bottom and once those get ignited with stock prices moving up, it will have a mo-mo/confidence effect. Chinese by nature are big gamblers judging by the Casinos I have seen. - medium term flows in and out (vi) Short covering - short term flows (vii) Yuan appreciation and lower dollar drives wealth creation and margin buying power. HKD stability and strength will drive further foreign inflows. - medium/long term flows (viii) Chinese Insurance companies will allocate more to chinese stocks. - long term flows (xi) Revenue expansion, margin expansion, profit expansion, multiple expansion - long term flows Xi is the risk. Xi can also light a fire to move the market in the right direction. Apparently national team is buying right now. You can either take the approach that this will result in Sugar Rush or that this is a long term decades long bull market. Both cases results in favorable outcome from here. 10-15% of Chinese own stocks. Figure in Europe/US is 35-55%. Edited July 28, 2023 by tnp20 Link to comment Share on other sites More sharing options...
sleepydragon Posted July 28, 2023 Share Posted July 28, 2023 1 hour ago, tnp20 said: Is it a coincidence that China gets a property bubble top coincident with a stock market bottom ? Makes the money flow from one to another perfect for a multi-decade boom in the stock market. If we just look at the money flow aspect of the Chinese market, there are several tail winds:- (i) CHina has created IRA like accounts for pension savings - annual tail wind long term (ii) More non-IRA pension funds also being invested in stocks - annual tail wind long term (iii) EM index managers are underweight china - they will have to get correctly weighted - one off (iv) Sovereign wealth funds are diversifying some of their holding to CHina as it a number 1 or 2 economy some 20-30 years out. A balance between US, Europe, China, India (and possibly Indonesia and Brazil) makes most sense. - continuous tail wind (v) Now that property market is not where the money goes, the suitable alternatives are stocks, gold, commodities, antiques. - long term flows (vi) Chinese animal spirits are at rock bottom and once those get ignited with stock prices moving up, it will have a mo-mo/confidence effect. Chinese by nature are big gamblers judging by the Casinos I have seen. - medium term flows in and out (vi) Short covering - short term flows (vii) Yuan appreciation and lower dollar drives wealth creation and margin buying power. HKD stability and strength will drive further foreign inflows. - medium/long term flows (viii) Chinese Insurance companies will allocate more to chinese stocks. - long term flows (xi) Revenue expansion, margin expansion, profit expansion, multiple expansion - long term flows Xi is the risk. Xi can also light a fire to move the market in the right direction. Apparently national team is buying right now. You can either take the approach that this will result in Sugar Rush or that this is a long term decades long bull market. Both cases results in favorable outcome from here. 10-15% of Chinese own stocks. Figure in Europe/US is 35-55%. agree. I think westerners underestimated the influence of the Chinese leadership has on the stock markets. The leadership is like the emperor. When they want to give some breathing rooms to the people, just a little bit of air the ball can bounce up very aggressive. People are eager to make money. And now is the time that they are releasing some fresh airs to the market. Link to comment Share on other sites More sharing options...
UK Posted July 29, 2023 Share Posted July 29, 2023 https://www.economist.com/united-states/2023/07/28/joe-biden-donates-weapons-to-taiwan-as-he-does-to-ukraine On July 28th it took that reasoning a leap forward by announcing it would for the first time start to arm Taiwan from America’s own military stocks, as it has done repeatedly for Ukraine. The main difference is that it has not invoked an “emergency” to justify the move. Instead, it believes the arms supplies will help forestall a war across the Taiwan Strait. The military move may instead provoke a new crisis. China will not accept American claims that it is nothing out of the ordinary, and represents “no change” in America’s Taiwan policy. After all, America is shifting from selling weapons to Taiwan to subsidising its armed forces. Link to comment Share on other sites More sharing options...
cubsfan Posted July 31, 2023 Share Posted July 31, 2023 (edited) ^^ well , that move is in response to the continued intimidation and aggression by China. We seem to forget that a sovereign nation has a right to defend themselves from invasion by China. China tests Taiwan- and the US shows solidarity by shipping defensive weapons. Better to do it know before it blows up in a full blown “crisis”. Edited July 31, 2023 by cubsfan Link to comment Share on other sites More sharing options...
tnp20 Posted July 31, 2023 Share Posted July 31, 2023 https://archive.ph/4PZfS This is related but an older piece... https://archive.ph/2bRkI This article implies more boom bust type style - so called sugar rush of government intervention and stimulus... Link to comment Share on other sites More sharing options...
UK Posted August 1, 2023 Share Posted August 1, 2023 https://www.wsj.com/articles/while-everyone-else-fights-inflation-chinas-deflation-fears-deepen-4045cabf Link to comment Share on other sites More sharing options...
Ulti Posted August 6, 2023 Share Posted August 6, 2023 https://www.foreignaffairs.com/china/end-china-economic-miracle-beijing-washington Link to comment Share on other sites More sharing options...
Luca Posted August 8, 2023 Share Posted August 8, 2023 Great Watch, highly recommended! Brutal and with good commentary. Link to comment Share on other sites More sharing options...
Luca Posted August 8, 2023 Share Posted August 8, 2023 (edited) *Posted into the Taiwan thread Edited August 8, 2023 by Luca Link to comment Share on other sites More sharing options...
UK Posted August 9, 2023 Share Posted August 9, 2023 https://www.reuters.com/world/china/china-require-all-apps-share-business-details-new-oversight-push-2023-08-09/ A lot of "regulations are over" promises recently, yet almost every week there is some kind of new announcement. Link to comment Share on other sites More sharing options...
Luca Posted August 9, 2023 Share Posted August 9, 2023 The new rule is primarily aimed at combating online fraud but it will impact on all apps in China, he said. I don't think regulations will ever be over, will just continue to be monitored and interfered with. China is now tight on track with their regulation of tech etc. Link to comment Share on other sites More sharing options...
Parsad Posted August 9, 2023 Share Posted August 9, 2023 https://finance.yahoo.com/news/chinas-consumer-prices-swing-decline-014520524.html https://www.barrons.com/articles/china-deflation-beijing-private-sector-ba37b49b?siteid=yhoof2 We're starting to see what was supposed to happen years ago. Governments can't manipulate fiscal/monetary policy limitlessly and debt accumulation will have some consequence. And not just for China! Cheers! Link to comment Share on other sites More sharing options...
maplevalue Posted August 10, 2023 Share Posted August 10, 2023 1 hour ago, Parsad said: https://finance.yahoo.com/news/chinas-consumer-prices-swing-decline-014520524.html https://www.barrons.com/articles/china-deflation-beijing-private-sector-ba37b49b?siteid=yhoof2 We're starting to see what was supposed to happen years ago. Governments can't manipulate fiscal/monetary policy limitlessly and debt accumulation will have some consequence. And not just for China! Cheers! I think the more recent lesson is that deflation is a very solvable problem (see what the experience of the US was printing money and giving it directly to people). China knows the playbook of deflation gets entrenched. I think it’s reasonable to expect they do helicopter money soon. Link to comment Share on other sites More sharing options...
Parsad Posted August 10, 2023 Share Posted August 10, 2023 1 hour ago, maplevalue said: I think the more recent lesson is that deflation is a very solvable problem (see what the experience of the US was printing money and giving it directly to people). China knows the playbook of deflation gets entrenched. I think it’s reasonable to expect they do helicopter money soon. Is it solvable or is it a delay tactic? Look at Japan...250%+ debt to GDP. In an environment were rates are rising and the Bank of Japan owns 43% of that debt! It's a ponzi! A very long-play ponzi. When the dam busts, it ain't going to be pretty! Cheers! Link to comment Share on other sites More sharing options...
Cigarbutt Posted August 10, 2023 Share Posted August 10, 2023 21 hours ago, Parsad said: Is it solvable or is it a delay tactic? Look at Japan...250%+ debt to GDP. In an environment were rates are rising and the Bank of Japan owns 43% of that debt! It's a ponzi! A very long-play ponzi. When the dam busts, it ain't going to be pretty! Cheers! 1-Factual aspect for Japan (Japan's course of monetary events is fascinating) From Flow of Funds data released by BOJ, end Q4 2022): Not that it terribly matters (43% vs 52%) and an interim report (end Q1 2023) mentions north of 53% but then it's become hard to guess when non-linear changes will occur (recent trend in exchange rates?) 2-Link to China? The debt intensity concept (more and more debt necessary to 'produce' a unit of GDP) has been developing in developed and developing nations for some time, including in China, in a big way, and, more recently, some sources suggest that progressively higher levels of capital are necessary to 'produce' a unit of GDP: Link to comment Share on other sites More sharing options...
Parsad Posted August 11, 2023 Share Posted August 11, 2023 https://finance.yahoo.com/news/asias-once-richest-woman-lost-115702519.html And I thought Elon lost a bundle with the Twitter purchase! Cheers! Link to comment Share on other sites More sharing options...
Parsad Posted August 11, 2023 Share Posted August 11, 2023 All these Chinese hedge funds are going to have to liquidate their portfolios where possible as they shutter! Cheers! https://finance.yahoo.com/news/thousands-tiny-hedge-funds-face-000000949.html Link to comment Share on other sites More sharing options...
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