China

[formthirteen]

 

 

https://research.gavekal.com/article/prejudice-and-china/

[nsx5200]

57 minutes ago, formthirteen said:

https://research.gavekal.com/article/prejudice-and-china/

Thanks for the article.  Here's the NotebookLM summary of it:

Quote

Briefing Doc: China's Industrial Rise and Western Blind Spots
Main Themes:

China's rapid industrial advancement: The document argues that China has significantly progressed across various industries, surpassing Western counterparts in efficiency, productivity, and cost-effectiveness.
Western underestimation of China's capabilities: The author posits several reasons for this blind spot, including COVID-related travel restrictions, preoccupation with internal issues (DEI, ESG), historical prejudice, and media bias.
Potential for China's continued growth: The author believes that despite challenges like the real estate bust and potential trade conflicts, China has strong potential for continued growth, particularly if domestic confidence is revitalized.
Most Important Ideas/Facts:

Chinese industrial dominance:
"The idea that China is suddenly setting the standards that others must now strive to meet is a sea-change compared with the world we lived in just five years ago."
China installs almost twice the number of industrial robots as the rest of the world combined.
China is the global leader in the nuclear industry.
China graduates more engineers each year than the entire OECD.
Western Blind Spots:
COVID and Ukraine: "The simplest, most obvious, and likeliest explanation why most CEOs and investors missed how China leapfrogged the West in industry after industry over the last five years: during that time, no one from the West bothered to visit China."
Prejudice: "To any self-respecting Western capitalist, the word 'communist' implies inefficiencies, poor products, and technological backwardness."
Media bias: "The simplest explanation is that the media is in the “bad news” game." and "In an equity-market-obsessed culture, the performance of the stock market index is quickly equated with the performance of the economy at large."
China's future prospects:
"The Chinese economy today is a coiled spring." Productivity gains are currently manifesting as trade surpluses and capital flight, potentially due to low domestic confidence in the government.
Stimulus and confidence: The success of recent stimulus measures in revitalizing domestic confidence is crucial for future growth.
US-China relations: Improved relations and potential easing of trade tensions could significantly boost China's economic prospects.
Quotes:

On Chinese competitiveness: "Today, we are seeing the results. [Chinese companies are] producing better products for less money—which is what capitalism should be about."
On media influence: "So yes, at a time of record debt and swelling budget deficits, the US government proposes to spend US$325mn a year paying “independent” media (the irony!) to push stories about the negative impact that China may be having around the world."
On the future of Chinese growth: "If [Chinese investors] do, the unfolding bull markets in Chinese equities and the renminbi could really have legs."
Investment Conclusions:

The document suggests a shift in the narrative surrounding China's investment potential. While many have deemed it "uninvestable", the author argues for a reassessment, emphasizing China's growing importance and potential for strong returns. The success of stimulus measures, domestic confidence, and US-China relations are key factors to watch.

The article hits many of the points that Luke's been saying.

 

The biggest criticism that I have with that article is that it's looking at mainly the Chinese advancements that was built on the past period where China was more free market based and ignore the systemic change with Xi, which changes the trend.  We do see some rollback of those changes, such as the tact that the Chinese government took recently to try to resolve the Chinese Indian border dispute (https://www.cnn.com/2024/10/22/asia/india-china-border-agreement-intl-hnk/index.html).

 

Like what the article quote from Munger: "show me the incentives, and I will tell you the outcome.”

 

If the Chinese people feel like they can not benefit from the labor of their hard work, they will simply be less productive, which we see from hard economic numbers, and not from simple news reporting or blog postings.  At the end of the day, the hard numbers speaks a lot more than word in articles...

[Spekulatius]

We can’t even believe the numbers coming from the Beijing as economic data for sure is massaged to meet the CVp’s goalposts,

I am in the China is important  but uninvestible (for the most part) camp.

[formthirteen]

14 hours ago, Spekulatius said:

I am in the China is important  but uninvestible (for the most part) camp.

 

You can invest in China, but you can't profit from China's success.

 

 

https://www.construction-physics.com/p/how-china-is-like-the-19th-century

 

Quote

China, similarly, has not necessarily been a leader in scientific progress, even as it has become an economic juggernaut. China has won just one Nobel Prize in science, and doesn’t seem to have done much better with other scientific prizes. China has just two Breakthrough Prizes (compared to several dozen for the U.S.), no Turing Awards, no Fields Medals, no Kavli Prizes, no Abel Prizes, and no Draper Prizes.2 As late as 2016, Xi Jinping stated that China’s science and technology foundation “remains weak.” Chinese students and scholars often study abroad at foreign institutions for their training, not unlike how U.S. scientists would often study in Germany 100 years ago.

 

Quote

One 1925 novel on immigrant life described how acquiring newly available goods inevitably resulted in a desire for more of them. An immigrant family replaces their rags with real towels, then gets dishes and tableware “so we could all sit down at the table at the same time and eat like people," and continues to want more and more:

“We no sooner got used to regular towels than we began to want toothbrushes… We got the toothbrushes and we began wanting tooth powder to brush our teeth with, instead of ashes. And the more and more we wanted more things, and really needed more things, the more we got them.” 

 

 

 

https://scholars-stage.org/everything-is-worse-in-china/

 

Quote

 

Are you sickened by crass materialism? Wealth chased, gained, and wasted for nothing more than vain display? Are you oppressed by the sight of children denied the joys of childhood, guided from one carefully structured resume-builder to the next by parents eternally hovering over their shoulders? Do you dread a hulking, bureaucratized leviathan, unaccountable to the people it serves, and so captured by special interests that even political leaders cannot control it? Are you worried by a despotic national government that plays king-maker in the economic sphere and crushes all opposition to its social programs into the dust? Do you fear a culture actively hostile to the free exercise of religion? Hostility that not only permeates through every layer of society, but is backed by the awesome power of the state?

 

These too are all worse in China.

 

 

[Luke]

22 hours ago, nsx5200 said:

Like what the article quote from Munger: "show me the incentives, and I will tell you the outcome.”

In diplomacy broadly, Xi himself is also leading from the front. He is the most traveled PRC leader ever, and he has welcomed the most foreign visitors to Beijing, at a greater frequency than any predecessor. He has invested more money in diplomatic outreach. The foreign affairs budget has increased; there are more Chinese embassies and consulates around the world than before. It flows from Xi’s core political agenda.

 

Xi probably wants to be remembered as someone who restored China to its rightful place in the world, whatever that might mean in terms of concrete achievements. The general vibe—and he has already delivered on this part—is a China that gets global attention, a China that is recognized by governments around the world as an important political and economic power, and that is dealt with as such. You could even spin the perceived negatives of “wolf warrior” diplomacy as positives, because if the West is taking China seriously, then you know China is strong, because China is seen as a threat.

 

There is a saying that Mao Zedong achieved jianguo [建国, founding the new Chinese republic], Deng Xiaoping fuguo [富国, enriching China], and Xi has presided over qiangguo [强国, strengthening China]. If we say Xi’s objectives are for China to be economically powerful, militarily powerful, internationally respected, you can argue he’s done much of these three elements, especially the last two.

 

From the article I linked one page ago. 

 

China's current trajectory, in my opinion, is a lot better than Europe or the US, from an economic perspective, an inner political perspective, from a foreign political perspective...just extrapolate the technological development the last 15 years another 15 years into the future, they are growing significantly more than G7 and they actually have competitive manufacturing which is non-existent elsewhere which is why nobody can survive without tariffs anymore. They also, as can be seen via BRICS, have a large part of the global south supportive of them. Where are all the important resources? Not in Europe...a little bit in the US...a lot in SA and Africa...who is heaving the strongest diplomatic outreach and investments over there...? Contrary to all the permanent FUD in western media, the bull train China chuggs along steadily...very very long. 

 

Edited Saturday at 04:10 PM by Luke

[Luke]

Now you can come up with the same soap opera of "can we trust their numbers" "can we trust the VIE" "wont Xi just steal the money of the companies" "but they have communism right?"...

 

Just have a walk through whats possible in that country: 

 

 

[Luke]

So while the west lives in total denial, politics live in total denial and try to find who is guilty for the misery of their economies (true for trump in the US, true for the right wingers in france, netherlands, germany etc), China is increasingly getting ahead while being safer, cleaner, cheaper...while having access to cheap energy and ressources...by regulating their markets so competition achieves the resulting development and superior products...just wait! 

[sfbm21]

7 hours ago, Luke said:

Now you can come up with the same soap opera of "can we trust their numbers" "can we trust the VIE" "wont Xi just steal the money of the companies" "but they have communism right?"...

 

Just have a walk through whats possible in that country: 

 

 

This puts new york to shame. what politics can do to any country. I wonder why chinese folks come to us?

[sfbm21]

I only watched it for few mins.

[sfbm21]

we will need to see to how investors fare overtime.

[Luke]

10 hours ago, sfbm21 said:

This puts new york to shame. what politics can do to any country. I wonder why chinese folks come to us?

They are mainly coming from lower tier cities and poor country side which the government actively tries to tackle to raise living standards there.

[Dinar]

3 hours ago, Luke said:

They are mainly coming from lower tier cities and poor country side which the government actively tries to tackle to raise living standards there.

You have clearly never lived in under communism or a place with no rule of law.  Any common peasant will tell you that rule of law is what matters.  Who gives a damn about a shiny subway if you can be jailed and your property confiscated at any time and for any reason?  Soviet metro was the best the world had ever seen, Soviet educational system was better than the one in US & UK, yet it was the Soviet Union that needed to have an Iron Curtain, lest 50% of the country depart.  

Rather than spout empty platitudes about the superiority of China, (and yes, I live in NYC and our government is insanely inefficient and corrupt), move to China for say five years and start by stating that Xi is an incompetent buffoon in a public square.  Let's see what tune you will sing when you return.  

[Luke]

 

9 minutes ago, Dinar said:

You have clearly never lived in under communism or a place with no rule of law.  Any common peasant will tell you that rule of law is what matters.  Who gives a damn about a shiny subway if you can be jailed and your property confiscated at any time and for any reason?  Soviet metro was the best the world had ever seen, Soviet educational system was better than the one in US & UK, yet it was the Soviet Union that needed to have an Iron Curtain, lest 50% of the country depart.  

Rather than spout empty platitudes about the superiority of China, (and yes, I live in NYC and our government is insanely inefficient and corrupt), move to China for say five years and start by stating that Xi is an incompetent buffoon in a public square.  Let's see what tune you will sing when you return.  

Investors like @Dinar  and their gross misrepresentations of China are the reason why the opportunity in China exists and I am glad for that because its nothing but a gross misrepresentation. 

[Hektor]

17 minutes ago, Dinar said:

move to China for say five years and start by stating that Xi is an incompetent buffoon in a public square.  Let's see what tune you will sing when you return.

One need not go and live in China for 5 years to understand this. Here is a real current example. The brilliant Elon Musk, who is very vocally taking on the POTUS and the VP of USA, is remarkably quiet when it comes to Xi. I wonder why 

[Dinar]

6 minutes ago, Luke said:

 

Investors like @Dinar  and their gross misrepresentations of China are the reason why the opportunity in China exists and I am glad for that because its nothing but a gross misrepresentation. 

You have no idea about China.  If are a Chinese national and China is so great, why do you live in Germany?  If you are a European, why don't you live in Chinese paradise with no rule of law?  If US opened its borders, 100MM+ Chinese would leave.  US universities are full of kids from Beijing, Shanghai, who will do whatever it takes to stay in the US.  If China is so great, why do millions of Chinese from Tier 1 cities flee it every year?  You remind me of talking heads on Soviet TV who reported from Vienna or Paris or London  and talked about how horrible life was in the West compared to Soviet Paradise.  

Investing in a country without a rule of law is gambling.  Exactly the same arguments as you are using were made 20+ years ago about investing in Russia.  I got one word for you - Yukos.  If I can get a pay-off of 50 to 1, I will buy Tencent.  But to make 3x my money in the best case scenario or lose 100% in the worst is idiotic.

Good luck with your Kool-Aid, just spare us the Soviet Propangda - China is great, West sucks.  Hundreds of millions of people in China disagree with you, but you of course know better, that's why you sit in Germany!

[Luke]

2 minutes ago, Dinar said:

You have no idea about China.  If are a Chinese national and China is so great, why do you live in Germany?  If you are a European, why don't you live in Chinese paradise with no rule of law?  If US opened its borders, 100MM+ Chinese would leave.  US universities are full of kids from Beijing, Shanghai, who will do whatever it takes to stay in the US.  If China is so great, why do millions of Chinese from Tier 1 cities flee it every year?  You remind me of talking heads on Soviet TV who reported from Vienna or Paris or London  and talked about how horrible life was in the West compared to Soviet Paradise.  

Investing in a country without a rule of law is gambling.  Exactly the same arguments as you are using were made 20+ years ago about investing in Russia.  I got one word for you - Yukos.  If I can get a pay-off of 50 to 1, I will buy Tencent.  But to make 3x my money in the best case scenario or lose 100% in the worst is idiotic.

Good luck with your Kool-Aid, just spare us the Soviet Propangda - China is great, West sucks.  Hundreds of millions of people in China disagree with you, but you of course know better, that's why you sit in Germany!

Thanks for sharing your limited view! 

[nsx5200]

Have you even been in China, Luke?  Even travelling to autocractic or places where the rule of law is weak can give you a sense of the forces at play, and lets you better understand the type of decisions common people make.  Combine that with economic data, and you would have a fairer presentation of those places.

 

"Don’t tell me how educated you are, tell me how much you have travelled"

- prophet Muhammed

[Luke]

1 hour ago, nsx5200 said:

Have you even been in China, Luke?  Even travelling to autocractic or places where the rule of law is weak can give you a sense of the forces at play, and lets you better understand the type of decisions common people make.  Combine that with economic data, and you would have a fairer presentation of those places.

 

"Don’t tell me how educated you are, tell me how much you have travelled"

- prophet Muhammed

This whole debate about "you can't say anything about China because you don't live in China" is ridiculous. But okay, if you want to go there and "invalidate" anything I say because I have not been there, feel free. I am looking forward to hearing only from people who have been in China on this thread! Have you been in China @nsx5200 and if no, can you stop posting and let people comment who have been in China the last 5 years? Thanks! 

[Luke]

The last time I was in the US was 10 years ago lol. Am I still allowed to say anything about the US from what I have read or not? lol  

 

The letters from Rob Vinall are quite refreshing to have some non-hostile news from the local ground! 

Edited Sunday at 05:50 PM by Luke

[Dinar]

3 hours ago, Luke said:

Thanks for sharing your limited view! 

My limited view is based on talking to dozens of kids from China who have received PhD degrees in math, physics, accounting, and operations in the US and who all have chosen to stay either in US or Western Europe.  Not a single one chose to go back to China, including a few that won gold metals at International Math and Physics Olympiads.  And your clearly well informed views are based on talking to millions of Europeans and Americans who have chosen to immigrate to China...  

[Luke]

41 minutes ago, Dinar said:

My limited view is based on talking to dozens of kids from China who have received PhD degrees in math, physics, accounting, and operations in the US and who all have chosen to stay either in US or Western Europe.  Not a single one chose to go back to China, including a few that won gold metals at International Math and Physics Olympiads.  And your clearly well informed views are based on talking to millions of Europeans and Americans who have chosen to immigrate to China...  

Okay! Then it's settled! China is shit and fucked and uninvestable! Cheers! 

[Dinar]

31 minutes ago, Luke said:

Okay! Then it's settled! China is shit and fucked and uninvestable! Cheers! 

No, at the right price, it is.  The right price is when you assume that shares are actually warrants, and you want a pay-off associated with warrants.  

[Luke]

17 minutes ago, Dinar said:

No, at the right price, it is.  The right price is when you assume that shares are actually warrants, and you want a pay-off associated with warrants.  

Okay, boss, you surely will have 50 to 1 pay-off prices in China for the highest quality megacaps at some point! I am just making a huge mistake buying these crap stocks in a communist regime with no rule of law at these relatively expensive prices compared to the immense risk...

[crs223]

I find it amusing. Anybody suggesting that the US is about to be surpassed by North Korea or Cuba would be ignored. Why?  Because it’s “obvious” that North Korea sucks.

 

Yet China garners so much passion.  Why?  My hypothesis: it is “not obvious” that China sucks.  The facts do not speak for themselves and require supplemental naysaying.

 

Disclaimer: I am not a psychologist and I do not know what I’m talking about.

 

[crs223]

Should outsiders be allowed to speak about BRK or FFH on this site?  Would be better if employees and customers were the only commenters.