China

[Spekulatius]

8 hours ago, hillfronter83 said:

Oops, did it again.

 

 

LOL, the infamous HK dump, from hero to zero in less than an hour. There are a couple of those every now and then.

Edited September 4 by Spekulatius

[UK]

https://www.ft.com/content/af04c395-393f-4acf-abe3-ea87bdad9260

[Luke]

which aim to cultivate the development and international expansion of high-quality games that resonate with Chinese culture and values.

 

https://asiatimes.com/2024/09/video-games-are-the-next-front-in-us-china-tech-war/

 

Has anyone played Black Myth Wukong already? Exceptional Game. 

 

 

Edited September 4 by Luke

[Luke]

https://www.scmp.com/news/china/politics/article/3277076/rock-n-roll-internet-are-potential-western-colour-revolution-traps-chinese-textbook?module=top_story&pgtype=homepage

 

Rock ’n’ roll, internet are potential Western ‘colour revolution’ traps: Chinese textbook

New college textbook draws on speeches of President Xi Jinping in Beijing’s latest move to tighten ideological control and national security

[Ulti]

This week, host Jason Bordoff talks with Dmitri Alperovitch about his new book “World on the Brink: How America Can Beat China in the Race for the 21st Century.” They discuss what the strategic challenges from China mean for American ….

 

excellent podcast covering many aspects of the”Cold War “ with China 

[nsx5200]

18 hours ago, Luke said:

I am personally just rooting for a more multipolar world where companies are not concentrated at 60% in the US. Would be great to see more from Asia but also Africa, have good human development and diversity. A world where its not "buy SP 500 and chill" but "buy world etf and chill". 

Whenever I travel, especially to different non-US locations, I pay attention to the economic activities, and general living standards.  The question I ask myself is, in a Jared Diamond-ish way, is why isn't this more like Europe/US/Korea/Taiwan/etc?  The answer is always that the structure is not set up to allow for the people to maximize their capability.  In most countries with high living standards, there are mechanisms for the people to feed back to influence the top-level decision making, so the people can essentially create the best environment for their own growth.

 

These structural advantages are present in pretty much all the high-living standard countries, so I think if you buy basket ETFs from these structural advantage countries, you'd probably do just as well as the S&P.  It's just that S&P500 gets so much attention is that a lot of innovations still comes from the US.  Just look at ETFs, a financial innovation from the US.  Think of it as a first-mover advantage that is across many industries.  China is no slouch either, their ability to initially clone and eventually innovate is force to be reckoned with, if the CCP can get out of its way.

[Luke]

8 minutes ago, nsx5200 said:

Whenever I travel, especially to different non-US locations, I pay attention to the economic activities, and general living standards.  The question I ask myself is, in a Jared Diamond-ish way, is why isn't this more like Europe/US/Korea/Taiwan/etc?  The answer is always that the structure is not set up to allow for the people to maximize their capability.  In most countries with high living standards, there are mechanisms for the people to feed back to influence the top-level decision making, so the people can essentially create the best environment for their own growth.

I disagree. China produces more same level engineers, doctors etc as western countries do and they are at least of same quality if not even more higher work ethic and smarter (looking at PISA). If you are smart in China and have a good degree from a target uni, your chances to do well are high, you have plenty of billionaires there too and many millionaires too just like the US does. 

 

Where it is different is at the political level but are you seriously saying the US does well here? Kamala? Trump? Your "best" people are at the top? How about CEOs? Are they the hardest working best educated guys or are they there due to influence and networks? If you look at Chinas tech CEOs, I see a lot to like, as much or even more than in the US. 

 

Regarding the highest political level in China, its hard to say much because its shielded off but I dont think that they are worse than political leadership in the west IMHO. 

8 minutes ago, nsx5200 said:

These structural advantages are present in pretty much all the high-living standard countries, so I think if you buy basket ETFs from these structural advantage countries, you'd probably do just as well as the S&P.  It's just that S&P500 gets so much attention is that a lot of innovations still comes from the US.  Just look at ETFs, a financial innovation from the US.  Think of it as a first-mover advantage that is across many industries.  China is no slouch either, their ability to initially clone and eventually innovate is force to be reckoned with, if the CCP can get out of its way.

Well, a lot of innovation came from the US and they are still riding that wave but IMO there is a lot more competition coming in from elsewhere and technology can change fast and is a disruptive sector. Literally everything can change in 10-15years and the wind can turn eastwards. At least I see a reasonable case for that. At the same time I am getting paid way more handsomely to wait for a changing wind and I like to be in that place. 

[nsx5200]

12 minutes ago, Luke said:

I disagree. China produces more same level engineers, doctors etc as western countries do and they are at least of same quality if not even more higher work ethic and smarter (looking at PISA). If you are smart in China and have a good degree from a target uni, your chances to do well are high, you have plenty of billionaires there too and many millionaires too just like the US does. 

I have no doubt China has a lot of fine engineers and doctors, and believe their living standards have increased significantly over the decades, albeit a bit more unevenly than even in the US.  There are structural issues in China that are concerning, and are solvable, just like similar issues everywhere else in the world, including the US.  Before Xi, a lot of people in the States went to China for better opportunities, but from what I can tell, that is no longer the case.  So I will let that evidence speak for itself in terms of why people prefer to continue putting money in S&P500 w/ PE or almost 30 vs single digit in China.

 

We can debate all we want (I don't), and just wanted to bring up an article that theorize the underlying mechanisms and causes behind the bundle of issues that China is currently facing.  The purpose is really not to make China look bad, but to see if there are valid criticisms that can poke holes in the theory.

 

At the end of the day, it's irrelevant whether we 'win' debates in forums or not, but whether we're right in our thinking that guides our investment decisions.  I welcome new data and theories that can add to the knowledge pool, but will refrain from participating in debates that are subjective in nature.

[UK]

https://www.bloomberg.com/news/articles/2024-09-04/jpmorgan-abandons-bullish-china-call-as-us-election-stirs-angst?srnd=homepage-europe

 

But:

 

https://www.bloomberg.com/news/articles/2024-09-04/china-stocks-listed-in-us-near-cheapest-ever-versus-nasdaq-peers?srnd=homepage-europe

 

But:

 

https://www.bloomberg.com/news/articles/2024-09-04/china-s-earnings-setback-sows-fresh-doubts-about-stock-rebound?srnd=homepage-europe

 

Edited September 5 by UK

[UK]

On 8/30/2024 at 5:09 PM, Spekulatius said:

The  banks are taking a bath here with lower interest income, possibly followed by cuts in principal later. I think China going to japanize their financial system.

 

https://www.bloomberg.com/news/features/2024-09-05/china-s-banks-build-100-billion-short-on-us-dollar-to-prop-up-yuan-cny-usd?srnd=homepage-europe

[Luke]

https://www.scmp.com/news/china/science/article/3277436/china-sets-historic-mars-mission-2028-us-plan-remains-limbo?share=CkGpJ5jQeEwhiRT%2FR26%2Fm5aokKeDG6Q5%2F7pctL1xV3gmEznYiPyXF7HerbHsvdeF4TjgwizOuXTHglzSeC1mVE36JpcLpM8XQC%2FkFPn%2FeAoilx6F8H%2BmX0%2Frh%2FxY32a5RDlcR4hP2HdfGZmeVZ%2B5rg%3D%3D&utm_campaign=social_share

 

China sets historic Mars mission for 2028 as US plan remains in limbo

In the race for the red planet, China has taken the lead, with its Tianwen-3 mission launch date brought forward two years

Edited September 6 by Luke

[Luke]

On 9/4/2024 at 6:20 PM, nsx5200 said:

I have no doubt China has a lot of fine engineers and doctors, and believe their living standards have increased significantly over the decades, albeit a bit more unevenly than even in the US.  There are structural issues in China that are concerning, and are solvable, just like similar issues everywhere else in the world, including the US.  Before Xi, a lot of people in the States went to China for better opportunities, but from what I can tell, that is no longer the case.

There are multiple reasons, crackdown on monopolies, very heightened hostility from US to China and reversed. Their talent pool is big enough for further excellence so I am not concerned here. 

On 9/4/2024 at 6:20 PM, nsx5200 said:

So I will let that evidence speak for itself in terms of why people prefer to continue putting money in S&P500 w/ PE or almost 30 vs single digit in China.

The valuation is not what matters, it's the fact that the Chinese government is willing to regulate companies for the good of the overall economy while the US is stalling and will have increasingly more and more monopolies that will harm overall growth and development. Especially if China products are taken off the table, who is there to compete with them? What will drive innovation and capex? Apple already sends almost all the cash back to shareholders instead of innovating so I guess that's what will happen further, also with historically low taxes for corporations and HUGE infrastructure backlog the US could spend on. 

On 9/4/2024 at 6:20 PM, nsx5200 said:

We can debate all we want (I don't), and just wanted to bring up an article that theorize the underlying mechanisms and causes behind the bundle of issues that China is currently facing.  The purpose is really not to make China look bad, but to see if there are valid criticisms that can poke holes in the theory.

Absolutely. 

On 9/4/2024 at 6:20 PM, nsx5200 said:

At the end of the day, it's irrelevant whether we 'win' debates in forums or not, but whether we're right in our thinking that guides our investment decisions.  I welcome new data and theories that can add to the knowledge pool, but will refrain from participating in debates that are subjective in nature.

My point is that we buy companies at similar if not higher quality than in the US at half or third of the multiple, better balance sheets and better investments even. China is the most hated market out there for no understandable reason other than ignorance and conspiracy. Taiwan conflict is here since 70 years, Xi is here since more than a decade, him grabbing control already happened a long time ago when multiples were a lot higher. The problem is the US position and media output that makes investors worry. If you have a really long time horizon and can ignore the noise I think this still is a generational opportunity. 

Edited September 6 by Luke

[Spekulatius]

You can sent cash back to shareholders and innovate at the same time, those two things are not mutually exclusive. Apple always run a tight ship on R&D expenses and in any case, those are already deducted in the income statement.

When PDD supposedly makes huge cash flows while also have a mountain of cash it has nothing to do with innovation either. Quite frankly the only expiation for the cash hording is as an sort of insurance that in case the CCP destroys the business model,  they have cash to lay the fines and also to take a second shot at new business model to resurrect their fortunes.

 

It’s not a very capital efficient model to run the economy, thats  for sure.

 

I talked with a manager who works in robots and he told me that the Chinese are massively pushing into this field with backing from the CCP. The way the CCP does this is that they pay subsidies based on revenues and market share in robotics. This lead to growth at all costs because the more revenue they generate, the more subsidies they get. Profits for these players are nonexistent but at this point, it doesn’t matter because it’s a growth race and the goal is to be the biggest here, since the expansion is pretty much paid by the government subsidies.

 

Clearly, the CCP does not believe in Adam Smith invisible hand, at least not for strategic sectors like Solar, EV’s, semiconductors , rare earth minerals, AI etc.

 

I guess you can say that the Chinese way to boost certain strategic sectors could be more deficient than the US, since thy tend to feed the biggest sharks that have already shown some success.

 

 

 

 

Edited September 7 by Spekulatius

[Luke]

9 hours ago, Spekulatius said:

You can sent cash back to shareholders and innovate at the same time, those two things are not mutually exclusive. Apple always run a tight ship on R&D expenses and in any case, those are already deducted in the income statement.

When PDD supposedly makes huge cash flows while also have a mountain of cash it has nothing to do with innovation either. Quite frankly the only expiation for the cash hording is as an sort of insurance that in case the CCP destroys the business model,  they have cash to lay the fines and also to take a second shot at new business model to resurrect their fortunes.

China has spawned a tremendous amount of industries in many fields where they got quite competitive or are even ahead. 

Apple has so much money that they don't use to innovate in new fields but rather ship a only slightly revamped version every year and do the bare minimum to sustain the business, shows that they don't have enough competition yet to be allowed to make that much cash without reinvesting...

 

PDD is a completely different business and I don't think I need to tell you that its the Nr.1 downloaded App in the US, do you see the scale they took in this short amount of time? Do you think keeping a cash pile to defend the business against rich competitors is not smart?  

 

Look at Alphabet fines, Meta fines, etc it's in the same size as Chinese businesses and just part of the industry. 

9 hours ago, Spekulatius said:

Its not a very capital efficient model to run the economy, they for sure.

It's a developing market, I frankly don't understand how you can expect them to run everything like the most developed western country. Still, the progress is marvelous. Can you say one positive thing about China? Is there anything good happening? You are posting a constant stream of negative outlook/statements only, same as most western media. Do you really think that's the full picture here? Dont you see how much development is happening there on all fronts and how their businesses are reaching far beyond many developed western countries? Which other country got that competitive in the car industry the last decade? Or smart technology? 

9 hours ago, Spekulatius said:

I talked with a manager who works in robots and he told me that the Chinese are massively pushing into this field with backing from the CCP. The way the CCP does this is that they pay subsidies based on revenues and market share in robotics. This lead to growth at all costs because the more revenue they generate, the more subsidies they get. Profits for these players are nonexistent but at this point, it doesn’t matter because it’s a growth race and the goal is to be the biggest here, since the expansion is pretty much paid by the government subsidies.

Yeah, this is one aspect that needs more fine-tuning. 

9 hours ago, Spekulatius said:

Clearly, the CCP does not believe in Adam Smith invisible hand, at least not for strategic sectors like Solar, EV’s, semiconductors , rare earth minerals, AI etc.

Clearly the US doesn't believe in it either, otherwise, they wouldn't subsidize foreign companies to come and build factories here, etc 

 

The myth of the free market is just that, a myth. You always had governments that worked closely together with capital elites which organized production privately. Stealing trade secrets and having that much state intervention is important if you are behind which the US is starting to get into which is why I expect them to do a lot more trade shenanigans against China in the coming years, EVs are only one example. China is the only emerging market that made it up there precisely because of its disregard for Adam Smith. You need to artificially create demand until it's there if you want to enter a new level of technology. 

9 hours ago, Spekulatius said:

I guess you can say that the Chinese way to boost certain strategic sectors could be more deficient than the US, since thy tend to feed the biggest sharks that have already shown some success.

Well, monopolies are ruining the economy in many ways, anti-union, underpaying workers, underinvesting in their business, and sending too much cash home to shareholders while bribing governments to not regulate them so they can continue making their investors rich. 

Edited September 7 by Luke

[Luke]

I have posted this before: https://asiatimes.com/2024/04/the-myth-of-chinese-overcapacity/

 

The Global South cannot accumulate capital through imperialism and it should not accumulate capital through the backbreaking East Asian export model. They are in luck because China’s “overcapacity” is exactly how development should work under classical economics.

Excess capital in China should flow to developing economies in the form of loans and investments along with capital goods – 5G base stations, railroad equipment, electrical systems, commercial trucks and, yes, cars. This is the entire theoretical basis of President Xi Jinping’s Belt and Road Initiative (BRI).

Without “overcapacity” in China, the Global South would have access to neither capital nor capital goods. Given its current account deficit and capital account surplus, it is mathematically impossible for the West to provide development assistance to the Global South on an appreciable scale.

Long-forgotten initiatives like Build Back Better World (B3W) and the Blue Dot Network die on the vine because the US does not suffer from “overcapacity.” 

 

Sanctimonious concern over China inundating developing markets with manufactured goods is confused thinking. A development model based on capital inflows requires developing countries to run trade deficits by definition. The inflow will be used to purchase capital goods required for industrialization. This is the Lucas paradox resolved.

The Communist Party of China appears to have embraced its Industrial Party faction. The Industrial Party is an ambitious political identity that dispenses with the hoary left-right divide and believes that industry, science and technology will determine China’s future.

While not necessarily an economic ideology, Industrial Party precepts have an intuitive understanding of the necessity of China’s “overcapacity” and that it is up to China to reverse the Lucas paradox.

Wang Xiaodong, a vocal Industrial Party champion recognized the trends as far back as 2011, exhorting China to globalize its industrialization:    

We must go out to meet the world. Not only do we want our products to “go global,” we also want our industrialization to go global, and our high-quality talent to go global. We can spread industrialization to every corner of the world. Many of our scientists and technicians will travel around the world to work, bringing with them civilization, a dignified existence, and relief from poverty. This is one thing that Westerners have been unwilling or powerless to accomplish.

China’s Commerce Minister Wang Wentao has dismissed Secretary Yellen’s accusations of overcapacity as groundless, insisting that China’s industries are just more competitive. Both the US and EU are likely to erect trade barriers as China appears unlikely to compromise.

When all is said and done, the squabble between China and developed economies is ultimately a sideshow. The real action will be the flow of Chinese capital and goods to the Global South.

[Luke]

And "the global south" will not put up to paying these expensive US margins when Chinese produce is available at much better prices and overall a much better deal. It will only be a matter of time till other countries will take the bullet, as much as the US tries to coerce them into not taking non-US-produce. You cant run an empire when so much manufacturing was outsourced and is a lot cheaper than in your homecountry! 

[Luke]

Whats more realistic is that Trump withdrawals from the geopolitical scene and focusses on America first, getting the country in order, getting manufacturing back on track etc. But I really worry that the US would prefer to go into a war with China to destroy their manufacturing base and window of opportunity to emerge on the worlds stage than fix their own economical issues. Current developments show that they'd rather go into war than accept the problematic situation of winding influence...

 

But then, we are in a new world with new weapons. Trump said that WW3 is more and more likely and I agree, though I think that when that happens humanity will not emerge out of that again and it could be peak homo sapiens this decade. That's why IMO, the US is the most dangerous country in the world. 

Edited September 7 by Luke

[Blake Hampton]

China needs us just as much as we need them. A war would be disastrous for us both, as well as for the rest of the world.

 

I kinda agree with Xi on some of his thinking. He thinks that an economy driven on consumption is frivolous, and drives China towards a position of manufacturing and production. Ironically, the problem with this is still consumption. If your own people won’t buy the goods, you must then export them, which China does to a HUGE extent. Any impact on their consumers could have a similar ripple effect on their own economy.

[Luke]

5 hours ago, Blake Hampton said:

China needs us just as much as we need them. A war would be disastrous for us both, as well as for the rest of the world.

 

5 hours ago, Blake Hampton said:

I kinda agree with Xi on some of his thinking. He thinks that an economy driven on consumption is frivolous, and drives China towards a position of manufacturing and production.

I don't think that they think that. There should be a healthy balance. 

 

But also important top remember, China is pretty evil too regarding inner political control, stepping out of line, detainment camps of minorities and regarding taiwan. I do understand some positions especially inner stability but it also comes with problems, wonder how the trajectory over the longterm will be in this regard, if they open up a bit again after some time. Remains to be seen. Fundamentally at current prices China is bullish. 

Edited September 7 by Luke

[Luke]

 

[UK]

https://www.bloomberg.com/news/articles/2024-09-09/china-s-deflationary-spiral-is-now-entering-dangerous-new-stage?srnd=homepage-europe

[nsx5200]

I think I ran across that The myth of Chinese overcapacity article, but didn't quite grasp the Lucas paradox, so I dug into it a bit more, and these are my criticisms:

- The author of the article has a heavy anti-American, pro-mainland China slant as seen in another one of his article, China’s rise and the Great American Novel:

"Chinese Americans understand best how post-9/11 America’s zeitgeist has moved from heartbreak to anxiety to anger to manically unhinged".  [Not just any "Chinese", but Mainland Chinese, in particular]: "The interpretive powers of Taiwanese, Hong Kongers, ABCs or some other extraction of the diaspora in America will be refracted at less consequential angles. Only mainlanders can hold a looking glass above America, backlit by the white-hot ambition of 1.4 billion people on the make."

- The Lucas paradox is very interesting, but I'm not sure if its validity has withstood the test of time yet, as seen in a more seemingly unbiased analysis of the theory by the IMF, The Paradox of Capital: "Perhaps the Lucas paradox isn't such a paradox if one digs deeper. After all, many developing countries are beset by a variety of problems—inadequate infrastructure, a poorly educated labor force, corruption, and a tendency to default on debt from abroad, among other factors—that reduce the risk-adjusted returns to investment."

"An implication of our analysis is that the seemingly perverse flows of capital from poor to rich countries today are not necessarily a sign of inefficiencies in global financial markets. Rather, they may indicate financial and other structural impediments that limit a poor country's ability to absorb foreign capital."

 

Nevertheless, it is an interesting take on the very pro-Mainland China viewpoints that are commonly seen in the reddit forums: https://www.reddit.com/r/Sino/.

[Dalal.Holdings]

3 hours ago, UK said:

https://www.bloomberg.com/news/articles/2024-09-09/china-s-deflationary-spiral-is-now-entering-dangerous-new-stage?srnd=homepage-europe

 

Witnessing Marxism-Leninism reach its natural conclusion

[Luke]

1 hour ago, nsx5200 said:

I think I ran across that The myth of Chinese overcapacity article, but didn't quite grasp the Lucas paradox, so I dug into it a bit more, and these are my criticisms:

- The author of the article has a heavy anti-American, pro-mainland China slant as seen in another one of his article, China’s rise and the Great American Novel:

"Chinese Americans understand best how post-9/11 America’s zeitgeist has moved from heartbreak to anxiety to anger to manically unhinged".  [Not just any "Chinese", but Mainland Chinese, in particular]: "The interpretive powers of Taiwanese, Hong Kongers, ABCs or some other extraction of the diaspora in America will be refracted at less consequential angles. Only mainlanders can hold a looking glass above America, backlit by the white-hot ambition of 1.4 billion people on the make."

- The Lucas paradox is very interesting, but I'm not sure if its validity has withstood the test of time yet, as seen in a more seemingly unbiased analysis of the theory by the IMF, The Paradox of Capital: "Perhaps the Lucas paradox isn't such a paradox if one digs deeper. After all, many developing countries are beset by a variety of problems—inadequate infrastructure, a poorly educated labor force, corruption, and a tendency to default on debt from abroad, among other factors—that reduce the risk-adjusted returns to investment."

"An implication of our analysis is that the seemingly perverse flows of capital from poor to rich countries today are not necessarily a sign of inefficiencies in global financial markets. Rather, they may indicate financial and other structural impediments that limit a poor country's ability to absorb foreign capital."

 

Nevertheless, it is an interesting take on the very pro-Mainland China viewpoints that are commonly seen in the reddit forums: https://www.reddit.com/r/Sino/.

Thanks for sharing, China IMO most interesting Country to follow right now

[Hektor]

https://www.nytimes.com/2024/09/13/world/asia/china-retirement-age.html

 

China Raises Retirement Age for the First Time Since the 1950s

The move, made in the hope of addressing an aging population, was decidedly unpopular.

 

This is the first time China has raised its retirement age since the 1950s. It will be phased in gradually, starting on Jan. 1, 2025. The retirement age for men, previously 60, will increase in increments of several months before finally reaching 63 by 2040. The retirement age for women in white-collar jobs, previously 55, will rise to 58. Women in blue-collar jobs, who previously could retire at 50, will have to work until 55.