China

[Parsad]

12 hours 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. 

 

It's actually not a gross misrepresentation at all.  We had a MRI business in conjunction with an army hospital in Beijing.  When they decided to shut the hospital down and move the patients to a larger hospital, they essentially cancelled our contract with them, told us to do what we want with our equipment and that they would not let us be part of a new MRI clinic in the new hospital.  On top of that, the cash we have in Beijing has been impossible to retrieve back to Canada after 7 years of fruitless efforts by us, lawyers, accountants and other representatives we hired to try and help.  We also had no legal recourse to enforce the binding contract we had, as we were told by several lawyers that the Chinese courts would simply side with Beijing.  

 

While this may not be everyone's experience, it certainly was ours.  I've also spoken to numerous other business people and Chinese expats who were in similar situations or have been harassed by various Chinese government groups/individuals in Hong Kong and Canada due to their vocalness regarding Chinese government policies, practices and a lack of property rights or enforcement of binding contracts.  

 

You can certainly invest and make money in China.  But it carries real risks and issues outside the realm of just market risk.  Cheers!

[Parsad]

8 hours ago, Luke said:

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! 

 

I have been in China!  It is a beautiful country that has done absolutely remarkable things historically and especially in the last 20 years.  There is an enormous amount to learn there, and the West would benefit from doing so and understanding the people and culture.  Anything you would want here, you can easily get in China.  For those that have money and bow to the autocracy, you can have a very good life!

 

That is very different than understanding the government which effectually eliminates property rights, enforcement of binding contracts, free speech, criticism of Beijing's policies, legal representation or independent rights endowed to Hong Kong or Taiwan.  It's why so many wealthy Chinese live abroad with dual citizenships, but maintain businesses in China.  They've moved as much capital as they can over time to other countries with true democratic principles and respect for the law and property rights.  Cheers!

[Hektor]

On 8/30/2024 at 10:09 AM, Spekulatius said:

The  banks are taking a bath here with lower interest income, possibly followed by cuts in principal later.

@Spekulatius Your forecast seems to be coming true

 

https://www.nytimes.com/2024/11/04/business/china-foreclosures-mortgages.html

 

Foreclosures in China Soar, Threatening to Choke Off Bank Profits

When the housing market was flying high, mortgage defaults were almost nonexistent. But now the legal system is struggling to keep up with evictions.

 

Banks in China are foreclosing on a growing number of apartments after homeowners could not pay their mortgages, as the country’s housing crash threatens the financial system. The roster of homes seized and listed for auction leaped 43 percent last year, according to official data. Numerous Chinese banks have disclosed increases in mortgage defaults during the first half of this year. The downward spiral in apartment prices has since accelerated.

 

The increase in evictions and foreclosures, although still modest by American standards, piles onto pressures on China’s banks. They face other losses related to the real estate meltdown, including on loans to local governments, property companies in default and buyers of unfinished apartments that developers never delivered.

To make matters worse, corporate borrowers in China have long posted real estate holdings as collateral. Bank managers are finding that the collateral is worth much less than when the loans were extended.

[nsx5200]

On 11/3/2024 at 12:46 PM, Luke said:

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?

Yes I have.

 

My minor criticism is not with you posting, but rather what you post has been posted in the past, with, IMHO, no real additional new viewpoints or ideas.  Every time new ideas/review/criticism is brought into this forum that might be somewhat critical of China, it bring about a boilerplate-storm that denigrate those posts without actually providing any constructive feedback.  I don't know about others, but that type of behavior lead me to be more hesitant to post anything that might seem critical of China, even though I'd be interested in gaining more perspective or feedback outside of the "that's all wrong, China is awesome".  Again, I value the freely given viewpoints given in the forums, and my minor ask is to reduce the boilerplate storms.  If not, that's okay with me too, as on the grand scheme of things, it's a nothing-burger.

 

Would it be more acceptable if I created a different thread outside of this thread that's titled something along the lines of "China Criticisms" to avoid the type of boilerplate posts?  Let me know.  TIA.

[nsx5200]

15 hours ago, Parsad said:

While this may not be everyone's experience, it certainly was ours.  I've also spoken to numerous other business people and Chinese expats who were in similar situations or have been harassed by various Chinese government groups/individuals in Hong Kong and Canada due to their vocalness regarding Chinese government policies, practices and a lack of property rights or enforcement of binding contracts.  

 

You can certainly invest and make money in China.  But it carries real risks and issues outside the realm of just market risk.  Cheers!

My limited understanding is that to do well in China, you must have buy-in from the people of power (government/party official).  This leads to well known secret to have to grease the wheel(bribes).  https://en.wikipedia.org/wiki/Guanxi matters a lot more in China than in other systems like in the U.S.  I was under the impression that non-Asians actually don't need grease the wheel as much since it would discourage FDI.  I guess based on your experience, that might not be the case anymore.  Thanks for your sharing your experience.

[Luke]

Just post here; you shouldn't be hesitant to discuss viewpoints. I should move on from this thread anyways and give more space to others

[nsx5200]

2 hours ago, Luke said:

Just post here; you shouldn't be hesitant to discuss viewpoints. I should move on from this thread anyways and give more space to others

My apologies if I sounded too harsh.  I still appreciated reading about new breakthroughs/changes from China, even if it might be at the detriment of Western world's interest.  Adding the brain power of 1.5b people to the world does, in the long-run, benefit humanity as a whole, and that's always a plus.  A little bit(or a lot) of competition also pushes the incumbents to evolve, and that is also a plus, whether in business or in governing style.

[Gamecock-YT]

On 11/3/2024 at 6:46 PM, Luke said:

\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! 

 

I have, November 2019 in fact so right at about 4 years and 50 weeks to the day, right before shit started hitting the fan and I have no interest in ever going back! I found people to be rude, unhelpful, and trying to rip you off at every opportunity. The surveillance apparatus was beyond the pale. We're talking 10-12 cameras on every street corner. You knew you were being watched at every opportunity. Nevermind the chinese firewall. Google maps doesn't work, the only western app that worked was Apple maps, which made me lose a lot of respect for the company. Especially when they like to flout their privacy bonafides. 

 

I've also been to Hong Kong post-covid and the city is a shell of its former self.

 

You're welcome.

[Spekulatius]

17 hours ago, nsx5200 said:

My limited understanding is that to do well in China, you must have buy-in from the people of power (government/party official).  This leads to well known secret to have to grease the wheel(bribes).  https://en.wikipedia.org/wiki/Guanxi matters a lot more in China than in other systems like in the U.S.  I was under the impression that non-Asians actually don't need grease the wheel as much since it would discourage FDI.  I guess based on your experience, that might not be the case anymore.  Thanks for your sharing your experience.

There is actually no free movement of money out of China. My understanding is thy If a local subsidy generates cash they have to get  government for permission to move cash out. The Yuan isn’t a freely convertible currency either.

 

Typically, I think the  government will allow transfer, but if they have to gripe with you for whatever reason, they may deny your transfer. This can happen for example if you have some beef with local government (didn’t bribe them enough) or could be some lawsuit with another Chinese company that has strong ties with the local government and can make your corporate life there miserable.

 

I am no expert on this and my experience is dated but i did talk to a finance colleague who handled the Chinese sub for a company I worked for quite a few years ago. I don’t think those things have changed.

[moneyball]

While I have a financial interest in what happens here - and just in general wish for a better future for US China relations and their citizens - I have to say that as a lover of history and psychology I am extremely interested to see how things develop. Will we get crazy tariffs? Will the threat, or implementation, of tariffs be what develops communication between two countries that are tied to each other economically? Or will everything just go off the rails?

[rogermunibond]

More Chinese factories in the US a la Japan in the 90s

[nsx5200]

8 minutes ago, moneyball said:

While I have a financial interest in what happens here - and just in general wish for a better future for US China relations and their citizens - I have to say that as a lover of history and psychology I am extremely interested to see how things develop. Will we get crazy tariffs? Will the threat, or implementation, of tariffs be what develops communication between two countries that are tied to each other economically? Or will everything just go off the rails?

Don't know about crazy tariff, but I would expect some increased tariff, and reduced trade.  Don't know how much it would impact Europe, but China will have to find new places for those exports.  This will challenge the Chinese government's policy of offsetting their reduced consumer demand by increasing export manufacturing capability.  It'll probably impact Xi's timeline to take over the world, just not sure if it speeds it up, or if it slows it down.

 

2 minutes ago, rogermunibond said:

More Chinese factories in the US a la Japan in the 90s

If the House goes to the GOP as well, then IMHO, we'll see a lot more challenge to Chinese-centric companies in the U.S. with a lot more questionable laws passed to restrict that.  Maybe if they grease the Trump world, they can get away with it, just like in an autocrat system.

[WFF]

With Trump winning and potential tariffs, my expectation is that the stimulus package will be bigger, perhaps 10T or more to boost domestic demand, to offset the largest consumer of exports.
 

[moneyball]

12 minutes ago, WFF said:

With Trump winning and potential tariffs, my expectation is that the stimulus package will be bigger, perhaps 10T or more to boost domestic demand, to offset the largest consumer of exports.
 

 

All depends on whether you subscribe to the belief that China sizes their stimulus with currency in mind. Timing on last announcement seemed to coincide with US rate cuts. If China's policy is to have a strong/stable (artificially weakened) currency then its puts them in a box with what they do on the fiscal side.

[WFF]

31 minutes ago, moneyball said:

 

All depends on whether you subscribe to the belief that China sizes their stimulus with currency in mind. Timing on last announcement seemed to coincide with US rate cuts. If China's policy is to have a strong/stable (artificially weakened) currency then its puts them in a box with what they do on the fiscal side.

Stable currency is in their mind, as they want to be alternative reserve currency.   That said, this objective is mooted if things stays the way they are.  Hence, in the short term, it is likely that they are putting currency in the back burner.   

[moneyball]

13 minutes ago, WFF said:

Stable currency is in their mind, as they want to be alternative reserve currency.   That said, this objective is mooted if things stays the way they are.  Hence, in the short term, it is likely that they are putting currency in the back burner.   

Do you have logic for how you get there or is that a view? This is the country that elected to keep their economy shut down way past when it was reasonable to ostensibly show the rest of the world how centralized their power over the country is/was.

[WFF]

5 minutes ago, moneyball said:

Do you have logic for how you get there or is that a view? This is the country that elected to keep their economy shut down way past when it was reasonable to ostensibly show the rest of the world how centralized their power over the country is/was.

You mean the objective of being an alternative reserve currency?  
 

This is somewhat what I have gathered from all the propaganda in the Chinese media.  They have been using phrases (my translation) like America’s dominance in currency is ending, as more trade is being settled in the RMB.  It is stroke as national pride and the rise of China.   
 

This propaganda has given way to: 

1.  Housing, in particular to the benefits of lower rates and removal of incentives and other positive news to boost home sales.  Essentially saying the government has put a floor on property so get on it now. 
 

2.  Stock Market related news, like buybacks also punishing those managers that sold stock during the run up (don’t remember the details).  

 

The above despite reading somewhere about China’s central bank entered into a RMB swapped with another nation and usually a precursor to some RMB settled trade deal. 

 

That said, propaganda on how great China is, has also been toned down.  For years, the Chinese media has promoted the rise of China’s tech, especially in hardware as shown in Huawei and that Apple is no longer innovating.  With iPhone 16, more voices are saying that Apple’s new features are not avaliable because it has been removed and if you want to better version buy the version in HK (though perhaps propaganda to get mainlanders to HK, which by the social feeds of my China counterparts seems to have work as I saw a lot of travels to HK during the golden week national holiday)

 

In a nutshell is me deducing random things and propaganda. It is by no means scientific.

 

[rogermunibond]

I don't think China wants to be a reserve currency.  They can't run trade surpluses if they are a reserve currency.

 

 

[Castanza]

42 minutes ago, rogermunibond said:

I don't think China wants to be a reserve currency.  They can't run trade surpluses if they are a reserve currency.

 

 

You also need a bond market 

[WFF]

7 hours ago, Castanza said:

You also need a bond market 

Which is why it is propaganda.  It is used to play up nationalism, and the rise of China.  They need major financial market reform.  This was brought up a couple of years back, but reforms has been on the back burner for the last 5-6 years?

[nsx5200]

https://www.scmp.com/economy/economic-indicators/article/3285238/chinas-stimulus-seems-be-trickling-through-it-too-early-tell

"Indices of sentiment in China’s manufacturing sector both returned to expansion in October, while non-manufacturing also improved"

"The Caixin/S&P Global manufacturing PMI echoed the official survey, beating projections with a rise to 50.3 in October from 49.3 the previous month."

 

Don't know how much to trust these numbers given that it's from SCMP.  Will need to keep an eye out for more independent reports to see if it's true.

 

https://www.australianmanufacturing.com.au/jp-morgan-global-manufacturing-decline-persists-as-new-orders-shrink-for-fourth-month/

"The moderation in the PMI score, however, suggested a slight easing in the rate of contraction. Notably, China showed signs of improved operating conditions, while declines in the US and the euro area slowed."

"Major manufacturing regions, including China, the US, the euro area, Japan, and the UK, all reported declining export volumes, pointing to faltering global trade dynamics."

"Employment levels declined across various regions, including China, the U.S., and the euro area, marking the steepest rate of job losses since August 2020"

 

Note that the PMI that JP Morgan appears the same as the PMI from Caixin/S&P Global manufacturing PMI.

 

So it looks like the decoupling is continuing, and the slow down in China might be moderating.  Trump will play the role of Chaos Monkey to stress both the U.S. and Chinese systems.

[Spekulatius]

8 hours ago, rogermunibond said:

I don't think China wants to be a reserve currency.  They can't run trade surpluses if they are a reserve currency.

 

 

This is exactly right. Becoming a reserve currency is detrimental to their mercantilist export economy. They can either have their currency become a true reserve currency and run trade deficits or continue their export mercantilism but they can’t have both.

 

Keep on mind that the first step to become a reserve currency is to have a freely convertible currency. With the currency controls on place and the yuan pegged to the USD, this point is moot.

Edited November 7 by Spekulatius

[zippy1]

Very interetsing ....  

Quote

Recently, university students in Zhengzhou, Henan, have popularized a "cheap travel" trend called "Night Ride to Kaifeng." This involves riding shared bicycles for over 50 kilometers, taking four to five hours to reach Kaifeng City to enjoy late-night snacks and visit parks. The trend reached its peak the night before last and early this morning, when the main roads were occupied by what some netizens called an "army of special forces cyclists," with many shared bikes parked all over Kaifeng. Netizens exclaimed, "Bianjing has fallen!" (Bianjing is the ancient name for Kaifeng). Local traffic authorities announced a ban on the activity yesterday, and the three major shared bike platforms also took steps to curb the trend.

"This niche passion track has actually been discovered by university students," some observed. The "Night Ride to Kaifeng" became so popular because in June of this year, four female university students from Zhengzhou decided on a whim to bike over 50 kilometers to Kaifeng just to try Kaifeng's famous soup dumplings. They documented the journey and shared it on short video platforms, sparking widespread discussion online. As a result, more and more young people from Zhengzhou have started to imitate the activity."

 

Quote

 

https://news.mingpao.com/pns/中國/article/20241110/s00013/1731173051576/鄭州大學生掀熱潮-特種兵萬車「陷汴京」塞道路-流量接不住-「夜騎開封」先開後封

[Spekulatius]

8 minutes ago, zippy1 said:

Very interetsing ....  

 

https://news.mingpao.com/pns/中國/article/20241110/s00013/1731173051576/鄭州大學生掀熱潮-特種兵萬車「陷汴京」塞道路-流量接不住-「夜騎開封」先開後封

I love soup dumplings. Might be worth the bike ride.

[UK]

https://www.investing.com/news/world-news/trump-taps-us-senator-marco-rubio-for-secretary-of-state-3715336

 

Rubio is a top China hawk in the Senate, and was sanctioned by Beijing in 2020 over his stance on Hong Kong following democracy protests.