China

[zippy1]

9 hours ago, Luca said:

Since China had one of the most severe lockdown policies and came out of lockdowns the latest of all countries i dont find the results unexpected. Look at US unemployement in young people during lockdowns: 

 

The April number that came out a few days ago is also greater than 20%, months after the reopening. 
not sure whether this April number can just be attributed to the COVID policy. 
CCP appears to be making the case for the youth to go to the "countryside."  If youth unemployment is just caused by its COVID policy, I wonder why this is necessary.   
CCP probably is doing so knowing something that most don't know.
https://www.dw.com/zh/德语媒体新时代的上山下乡运动/a-65661636

Edited May 20, 2023 by zippy1

[Spooky]

22 hours ago, crs223 said:

Unfathomable that non-american-behavior could succeed, yet here we are.  Each decade china getting stronger while US scratches its head.

 

I'm not saying that China can't succeed - their economy will likely continue to expand and society get wealthier (hopefully). My point is that this could still happen but the shareholders won't be the ones reaping the rewards.

[adesigar]

https://fortune.com/2023/05/18/china-belt-road-loans-pakistan-sri-lanka-africa-collapse-economic-instability/amp/
 

Don’t know what those countries expected.

[Spekulatius]

23 minutes ago, adesigar said:

https://fortune.com/2023/05/18/china-belt-road-loans-pakistan-sri-lanka-africa-collapse-economic-instability/amp/
 

Don’t know what those countries expected.

The Chinese as debtors seem to be very hard to deal with. In cases where both the IMF and the Chinese are debtors the Chinese don’t pool and try to cut favorable side deals for themselves on the back of IMF easing debt terms. It’s clear that the belt and road initiate is another one of  Xi Jinpings failures and seem to amount to little more than neo colonism.

[crs223]

15 hours ago, adesigar said:

https://fortune.com/2023/05/18/china-belt-road-loans-pakistan-sri-lanka-africa-collapse-economic-instability/amp/
 

Don’t know what those countries expected.

 

That was an excellent article, thank you for sharing.  Might be the best news article i’ve ever read — packed with information — i never knew how all this worked.

 

Sounds like China sent a message to all their banks: make loans to these countries.  Now that the loans are going bad, the banks don’t want to, and perhaps cannot stand to, take losses.  Perhaps the CCP will help with a bailout… or perhaps BABA-style just order the banks to pay up.  Also interesting how this plays into the international community with the secret “first in line” manipulations.

 

Wow… are all fortune articles like this?

[Spekulatius]

I had a conversation with a fellow who manages people for an US company in the semi space. They have dramatically reduced their business there and let people go and moved operations to the Philippines.

 

He said one thing - there are a lot of underemployed people in tech in China, especially younger ones and in tech/engineering. When you read some articles, the unemployment rate is almost 20% there. He think there is a lot discontent with the CCP party and Xi Jinping there amongst the younger generation that might at some point bubble up and cause unrest. He thinks it’s just a matter of time.

[crs223]

3 hours ago, Spekulatius said:

I had a conversation with a fellow who manages people for an US company in the semi space. They have dramatically reduced their business there and let people go and moved operations to the Philippines.

 

He said one thing - there are a lot of underemployed people in tech in China, especially younger ones and in tech/engineering. When you read some articles, the unemployment rate is almost 20% there. He think there is a lot discontent with the CCP party and Xi Jinping there amongst the younger generation that might at some point bubble up and cause unrest. He thinks it’s just a matter of time.

 

question i would ask your friend: “what mistake would these unemployed attribute to CCP?  Punishing BABA and shareholders?  COVID lockdowns? losing american customers?”

 

I would ask that to get a sense of what the CCP  might improve to stave off more protests.

[Spekulatius]

I have no idea who they blame but the problem is that those technical people (think EE's, software engineers) can't find decent jobs in China. There is a lot of underemployment and it seems that the 20% unemployed/underemployed number for young graduates starting out is about correct. No common prosperity for these folks, I guess.

 

My friends assumption is that there is a lot of unrest in the younger generation, but he does not know how it will manifest itself.

[Castanza]

11 hours ago, Spekulatius said:

moved operations to the Philippines

 

We have seen this in our company as well. But instead of the Philippines, Cyberjaya Malaysia. 

[Luca]

 So they diversify away from China because of which reasons? Possible tensions/regulations? @Castanza

Edited May 22, 2023 by Luca

[Castanza]

27 minutes ago, Luca said:

 So they diversify away from China because of which reasons? Possible tensions/regulations? @Castanza

 

Well that discussion takes place well above my paygrade. But I do know post China taking over Hong Kong we have moved out pretty much most of our support. Coincidence? Maybe. In general, Malaysia and Chile have been growing tech sectors the last few years as they fit the bill for "follow the sun" support, offer cheaper labor, have good connectivity, and a growing talent pool. 

 

Maybe the question to ask is: Why are companies not moving IT, development, engineering etc. to China if they have such a large available talent pool? The reality of the risk (CCP to business) might not matter; but instead the perception of that risk by businesses. 

[Luca]

48 minutes ago, Castanza said:

 

Well that discussion takes place well above my paygrade. But I do know post China taking over Hong Kong we have moved out pretty much most of our support. Coincidence? Maybe. In general, Malaysia and Chile have been growing tech sectors the last few years as they fit the bill for "follow the sun" support, offer cheaper labor, have good connectivity, and a growing talent pool. 

 

Maybe the question to ask is: Why are companies not moving IT, development, engineering etc. to China if they have such a large available talent pool? The reality of the risk (CCP to business) might not matter; but instead the perception of that risk by businesses. 

Very good points

[Luca]

https://www.nationalgeographic.co.uk/history-and-civilisation/2023/03/chinas-population-is-shrinking-it-faces-a-perilous-future

 

 And how will Beijing encourage births after suppressing them for more than three and a half decades? “This is an unprecedented, historical decline,” says Wang Feng, a sociologist at the University of California, Irvine. “By the end of the century, China will be quite unrecognisable in terms of what we know about China’s history and position in the world.”

 

This time, the drop has been triggered not by famine, war, or catastrophe but by rapid social and economic changes, the rising costs of getting married and raising children, and the restrictive one-child policy. As if to mark the moment, China’s centuries-long reign as the world’s most populous nation will come to an end this year, with India surging past it into the top position.

 

The brutal mathematics threatened to squeeze Ding out of the marriage market. When he proposed to his first girlfriend, her parents balked because he couldn’t afford a new house. Ding’s parents scrounged for loans to buy a car and renovate an apartment in a nearby city—for the sole purpose of attracting a wife. The bride-price, a dowry paid to the wife’s family, would cost roughly $29,000 (£23,000). Even meeting a prospect’s parents can run $2,500 (£2,033). Over the years, a matchmaker was able to coax only a handful of women to go on blind dates with Ding. Humiliated by his failure, Ding began avoiding family gatherings. “They were unbearable,” he says. His relatives fixated on one topic: his lamentable status as a “bare branch,” the Chinese expression for a man who adds no fruit to the family tree.

 

Xi Jinping, has vowed to “improve the population development strategy” and “establish a policy system to boost birth rates.” Dealing with a demographic implosion will require more than another bout of social engineering. In China it could even force a reckoning on such thorny issues as gender equality, immigration, eldercare, and the limits of high technology. “No country has ever solved this problem,” says Yong Cai, a demographer at the University of North Carolina at Chapel Hill. “This is a new chapter yet to be written for the human race.”

 

Shasha Yu’s parents, both farmers, cursed her for being a girl. “I never should have given birth to you,” she says her mother told her. Yu’s only happy memory from growing up in rural Shandong Province was the time she fell off a horse cart and woke up in the hospital to find her mother gently fanning her. So rare was that moment of tenderness, she says, “I was reluctant to open my eyes.”

 

Moving to Shanghai, she joined one of the fastest urbanisations in human history. (Sixty-five percent of Chinese now live in cities, up from 20 percent in 1980.) She split up with her boyfriend, rented and renovated an apartment, and began living on her own. The idea of marriage and children no longer seemed inevitable but rather a potential barrier to freedom and success. “I look at my parents’ and friends’ marriages,” Yu says dryly, “and I see nothing to envy.”

 

Shasha Yu and Ding Qingzi are on opposite ends of China’s socioeconomic spectrum. Together, though, they help reveal why China’s marriage and birth rates have tumbled to their lowest levels in decades. In 2021 China registered 7.6 million marriages, a 43 percent drop from its 2013 peak—and the eighth consecutive year of decline. The change is driven partly by the gender imbalance and soaring marriage costs that thwarted Ding. But social scientists say it also reflects China’s fast-rising levels of education, wealth, and urbanisation—along with, as in Yu’s case, the assertion of women’s rights and autonomy. 

 

In late 2021 China’s Communist Youth League conducted a survey of 18- to 26-year-olds and found that 44 percent of women and 25 percent of men were unsure if they would marry. The percentages were highest for young women who, like Yu, live in China’s most modern cities. So disconcerting were the numbers to China’s leaders that the youth league has taken on the role of Cupid, staging ice-breakers and “love train” journeys to help single comrades find a spouse.

 

In 2021, just weeks after new census figures revealed another steep drop in the birth rate, Beijing unveiled a new approach. “The Three-Child Policy Is Here!” trumpeted a state-media headline. “Would You Like to Give Birth?” An online poll conducted by the state-run Xinhua news service did not bode well. Of the first 30,500 respondents, 28,000 reportedly said they would “never consider” having three children. The poll quickly disappeared from the website, but the scepticism that greeted the patriotic campaign could no longer be hidden. “If people can’t afford one or two children,” asks demographer Xiujian Peng of Australia’s Victoria University, “how could they afford to have three?”

 

Still, the couple have weighed the pros and cons. Spiralling costs are one obstacle in a competitive environment where parents feel pressure to spend lavishly on their children. An estimate from 2019 put the average price tag for raising a child at £61,000, seven times China’s GDP per capita. In Shanghai the cost was twice that. The expense doesn’t trouble Cai as much as the investment of time and energy—and the invasion of privacy. “I can’t adapt to a living space with an extra person,” she says.

[Luca]

 

[Luca]

The hardest task will be to raise the birth rate. Making China “a fertility-friendly society,” as the state-run Global Times puts it, would be a long-term solution. Local governments have been pushing new incentives for the three-child policy: tax cuts, housing subsidies, longer maternity leave, expanded childcare services, even, in some provinces, cash bonuses. So far, none of it seems to have worked. The birth rate fell further last year as the pandemic and economic downturn made planning for the future more fraught. Conditioned by the one-child policy—and confronted by ever rising costs—families seem unwilling to have more than one child, if they want any at all. “The financial pressure is too big,” says Dong, the retiree taking care of her granddaughter. “To raise one child well is enough.”

 

Absolutely brutal treatment of Ding and Shasha...:

 

 

When they met, Ding—normally shy and taciturn—found himself conversing easily. His date was open and kind, he says, and she seemed honest. It didn’t take him long to ask her to “settle down.” “I made up my mind that this was going to be my last blind date,” he says. “If it didn’t work out this time, I’d drop the marriage issue.” The woman felt rushed, but her family figured it would be hard for a divorced mother to find a reliable man. And besides, Ding’s family had gone into debt to pay the full bride-price.

When the couple got married last year, Ding says he couldn’t stop thinking, I finally have this big life thing figured out! The introvert made a long speech at the reception, and his parents, he says, “cried their eyes out.” Since then, Ding’s life has been transformed. He has gained weight, and he has started attending family gatherings again, now accompanied by his wife and stepdaughter. And he is proud he will no longer be a bare branch subject to gossip and ridicule: Ding and his wife are preparing to have a child of their own—a tiny heartbeat of hope in a land of missing children.

 

 

Edited May 23, 2023 by Luca

[Luca]

What stands out to me that the more a society becomes industrial and highly technologized, birth rates take a deep dive down below replacement levels. I wrote in the birth rate thread as well that i think that specialization of Jobs and more and more investments necessary for children to be successful create this trend and that is very interesting to me. The mega city economies are not an environment for small scale families/communities. What also surprises me is that there is just no interest in kids for some women. A trend towards individual unfolding, more freedom, time for oneself, more consumption, traveling etc. 

Edited May 23, 2023 by Luca

[Ulti]

https://www.noahpinion.blog/p/decoupling-is-just-going-to-happen

 

excellent article on the world wide decoupling going on with China by both

governments and multinational corporations

[Luca]

Li Lu wrote this in 2019 November about China btw, i just read through his website: 

 

家为这一阶段的经济政策，尤其是货币政策留下了丰富的参照经验。只要政策制定者能够
认清目前自身所处的阶段，做出适当的调整，就有可能充分释放黄金发展期巨大的经济增
长潜力。中国未来前途依然可期

 

Experts have left a wealth of reference experience for economic policy at this stage, especially monetary policy. As long as policymakers can recognize the current stage of the economy and make appropriate adjustments, it is possible to fully release the huge economic growth during the golden development period.

 

China's future is still promising

 

Sad he doesnt publish more!

 

 

[Luca]

Also from his talk in 2015, good reminder: 

 

I believe China is at interim stage between Civilization 2.0 and Civilization 3.0. Let’s call it Civilization 2.5. China has come a long way but still has a long road ahead. Therefore, I think there is a high probability that China will continue on the main track of Civilization 3.0, as the cost of deviation is very high. If you have a good understanding of China’s culture, people and history, you will agree that China will forge forward. This is particularly the case now that you have a better understanding of the essence of modern civilization. There is almost no chance of China leaving the common market, and the probability of China changing its market rules is also very small. Thus, it is highly probable that, in the next 2 to 3 decades, China will remain in the global market system, and adhere to free market principles, in addition to promoting science & technology development. There is a high probability that China’s economy will be on the main track of Civilization 3.0. Besides, we know the course of Civilization 3.0 has little to do with political and cultural factors, and a lot to do with science & technology, as well as the free market. This is its true essence. This is also the biggest misunderstanding about China many investors have, particularly those from the West. If China is to stay the course of Civilization 3.0, and adhere to the free market economy + modern science & technology, her returns on main classes of assets (stocks, cash etc.) will track the trends of the mature market economies in the past 300 years. Her economy will continue to grow cumulatively accompanied by inflation. Stocks will continue to outperform other classes of assets. The philosophy of value investing is the right way and main path in China as it is in the US. Value investing will provide sustained, stable, safer and more reliable returns for her investors. This is why I believe value investing can be realized in China.

[formthirteen]

45 minutes ago, Luca said:

If China is to stay the course of Civilization 3.0, and adhere to the free market economy + modern science & technology, her returns on main classes of assets (stocks, cash etc.) will track the trends of the mature market economies in the past 300 years. Her economy will continue to grow cumulatively accompanied by inflation. Stocks will continue to outperform other classes of assets.

 

That's a big IF and the world has changed: https://www.afrugaldoctor.com/home/market-zero

 

Quote

Have any stock markets gone to zero before?

 

The answer is yes, although under extraordinary circumstances. Globally, only a few markets have suffered total market loss. The largest and most well known markets that went to zero are Russia in 1917 and China in 1949.

 

Quote

The stock exchange finally stopped trading for good in 1949, when the Chinese Communist Party gained total control of mainland China. The Republic of China ceased to exist (on the mainland) and all existing assets were seized by the new communist government. Pre-war investors suffered total loss.

 

What's the value of Russian ADRs right now?

Edited May 26, 2023 by formthirteen

[Luca]

Just now, formthirteen said:

 

That's a big if and the world has changed: https://www.afrugaldoctor.com/home/market-zero

 

 

What's the value of Russian ADRs right now?

China in 1949 is worlds apart from China in 2023. If Chinas economy goes to 0 that means 1/5 of the population gone including the second biggest economy on the planet...

[Luca]

What has changed? Nothin that wasnt there 4 years ago. Same party, same rules. Xi still there. China has not left the market system, just look at some of the last earnings calls. Tencent still doing very fine, demand is strong.

[crs223]

3 hours ago, Luca said:

If Chinas economy goes to 0 that means

 

The US thinks China is not just a threat, but a growing threat.

 

if there were any evidence China is in decline, the US would not be waging economic/tech war.

 

US actions send a clear message:  “China is getting more powerful and the US is scared.”

[Luca]

2 hours ago, crs223 said:

 

The US thinks China is not just a threat, but a growing threat.

 

if there were any evidence China is in decline, the US would not be waging economic/tech war.

 

US actions send a clear message:  “China is getting more powerful and the US is scared.”

+1 well said!

[Spekulatius]

10 hours ago, crs223 said:

 

The US thinks China is not just a threat, but a growing threat.

 

if there were any evidence China is in decline, the US would not be waging economic/tech war.

 

US actions send a clear message:  “China is getting more powerful and the US is scared.”

Being scared is better than being ignorant of a real threat.

 

My thesis is that China has been in war with the west since at least  Xi Jinping came to power, maybe even before that. The Chinese leaders before Xi Jinping may have been more careful or covert about their intentions  but Xi Jinping is quite open about his intentions, you just have listen about what he says or read what he writes.

I think the west just didn’t realize this until a few years ago. Maybe Trump actually was it who started to push back, even though not in smart way, Imo. In any case Biden/Trump, Democrat or Republican it doesn’t matter, in terms of China they are actually more or less on the same page - they have realized that China is an adversary and they need to do something about it.

 

So now we are in phase, that we are in some sort of a war with China, not openly with military yet , but covertly. Call it a Cold War, because it mimics the war against the USSR since 1950 (Korea was the moment that everyone in the US realized that a Cold War era has started). This was 5 years after George Orwell coined the term I believe in 1945. he also called it peace which is no peace, which is rather fitting.  We are now in 1950 in Cold War I terms.

 

The Cold War is predominately not fought with military power, it’s more of an economic and technological race. That’s why semis are key here. The Chinese knew this a few years ago and now the US/ West knows it too. Now the west tries to kneecap the Chinese semi land grab as they should and the Chinese have no choice but do develop their own tech.

There will be other battlefields in other tech areas as well as those with economic dimensions (rare earth metals anyone?). China’s belt and road is one way China tries to get control of trade and US does this via bilateral trade agreements. We will see which one works better, but I think belt and road has been a bust so far.

 

In any case, the important thing is that the US and increasingly Europe as well has realized that we are in a new kind of Cold War with China and it’s a long term game, not some thing that is over in a few years - we are talking likely many decades here. It’s important to realize this because you can’t win a war unless you realize you actually in a war and you need to fight. We just got to that point recently.

 

The winner will be the side who has is going to be most economically and technologically advanced and a military that can project lower around the globe.

 

My guess is that the next 25-35 years won’t look like 1990-2025 but more like 1950-1985. Now most predictions of the future are wrong, but the good news is that you can update them as you go along.
 

Edited May 27, 2023 by Spekulatius