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© Thomson Reuters 2023.China invites global investors for rare meeting as economy sputters
By Xie Yu and Julie Zhu HONG KONG©2023 GPlusMedia Inc.
38 Comments
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TaiwanIsNotChina
Yes it is totally not the case that the US weathered the inflation crisis and the banking crisis and is now set to reach all time highs again. China is welcome to disinvest as they are one giant national security violation anyways.
Strangerland
This is the line that the CCP is pushing to try to create misinformation in a 'fog of war' attempt.
Are you intentionally pushing the same line that the CCP is pushing, or is it unintentional?
sakurasuki
China trying attracting wealth from overseas, while Japan struggling inviting businesses using Japanese investor visa while keeping death tax to foreigners that moved to Japan.
https://englishlawyersjapan.com/inheritance-tax-in-japan/
Sh1mon M4sada
China has to pay its debt first as a first step.
https://thehill.com/opinion/international/4075341-china-is-in-default-on-a-trillion-dollars-in-debt-to-us-bondholders-will-the-us-force-repayment/
Boris Yarovoy
But what if a person's opinion coincides with CCP, is that bad? CCP has many different problems, but this does not mean that there are only fools and liars sitting there. The person gave his opinion, if you do not like it - give your counterarguments. And it doesn't matter how much your counterarguments will coincide with the opinion of the reptilians of the planet Mars. It is important that it coincides with the facts of the current reality.
kwatt
It seems to me most people try not to invest to China because what if China started to make a war there in East China Sea. Investors would lose a lot of money for sure.
Strangerland
It is when it's supporting the CCP in their attempts to achieve dictatorship over the rest of the planet.
Strangerland
I'm not allowed to ask if they knew that they were pushing the same line as the CCP? Why not?
1glenn
Investing in a country with a totalitarian regime that seems to become less friendly by the day. What could go wrong?
Desert Tortoise
It will be interesting to see how many of the invitees attend and how many decline to attend. I hope J-T follows up on this event.
quercetum
China’s decision to cut key lending benchmark rates will shore up economic activity.
China could have chosen the safe way which would be exports and real estate. China could have complied with US orders, done what the US told them to do and by this time Russia would have been in dire straits but China has a backbone, unlike Japan. To be fair there are no military bases in China or in the Republic of China so we’ll be sympathetic.
China then would have been free from Western propaganda and would have been hiding all those skeletons in their real estate market.
However Xi Jingping chose the far more complicated path of ending dependence on US and cleaning the gutter that was Real Estate Regulations.
Thus China's biggest earners Real Estate and Exports have been throttled as opposed to the U.S. way of kicking the can down the road.
China wants to replace them with domestic consumption and domestic industry. China has a middle class of 800 million.
This means more credit and cheaper loans. And this means lower rates while the US raises rates. Thus also means lesser investments into China and lesser demand for the Yuan. This will help with the yuan exchange rate and exports.
The Chinese are looking 20 years ahead. They may face small bumps on the road, and each bump will be interpreted as the sign of China’s collapse by the uneducated, but they will soon manage to catch up and accelerate and dominate.
quercetum
The bank rout happened because China's real estate sector is shrinking. The Chinese reforms were intended to ensure that the bubble doesn't burst but actually slowly subsides over the next few years. The Global slowdown is an added blow. As a result Chinese Banks face 658 Billion yuan of shortfall deficits on real estate investments, loans and finance.
Of course China predicted this even before the reforms were floated. China anticipated around 3.6 trillion yuan ($600 billion) to be the total cost of their reforms and the total cost of subsiding the bubble.
That's why this is not likely to affect the Chinese Economic Growth, because the Chinese were ready with the potential backup plan. They have a plan. In the US, it's about appearances, Tough on China, and elections. Administrations are ill equipped to handle such crises as seen in the global financial crisis a decade and a half ago.
In reality, China will see this deficit rise upto 3.6 trillion yuan over the next two years (today it's 658 billion). If despite this China hits say 4.5% growth or 5%°growth, this shows the true strength of China's economy.
That's equivalent to approximately 8.25% to 8.5% growth had China allowed their real estate horrors to go unchecked unti around 2030 when China would have been hit with maybe a 50–60 trillion hit.
Elections forces administrations to kick the can down the road. China instead responds. It's a very strong move by the CPC to risk four to five years of economic sluggishness to absorb all these deficits into their economy.
They will ensure that the bubble recedes naturally and all the extra deficit is absorbed by the profitable portions of China's economy. Had exports been strong and the world had not been in recession, China could have seen around 6.5% growth.
However the global recession means China would hit around 4.75–5.25% in a deflating economy. That is actually quite laudable and shows you how strong the Chinese domestic economy is.
It’s knowing how to read data and the interpretation of data. Otherwise you just believe what the articles want you to believe. The CPC is really irrelevant to Houdini’s opinion.
quercetum
The war part is to just to justify selling more weapons. There isn’t actually going to be a war.
There are US companies doing very well in China. Some are not GM has had its time. They are losing out to German cars and Chinese EV. Starbucks is steaming ahead. China is not for every company.
opheliajadefeldt
Thousands of western companies and Chinese ones have fled China for India and Vietnam and many other countries because of the new laws in the country. Added to this is the crumbling real estate market, where all the major players are in billions of yuan in debt.
quercetum
True but Apple is having problems in India. What the Chinese is good at is the commoditization of goods. Supply side never fails to come in in China.
There are over one million foreign companies mostly Western companies in China and so the “thousands fleeing” isn’t saying much. The strong ones aren’t leaving.
What Xi is doing in the real estate market is what Japan should have done (30 years of no real growth after the bubble burst) and what the US should have done to avoid the sub-prime mortgage crisis.)
They could have waited until 2030 to take a 30 trillion hit but instead of a 3 trillion yuan hit (it’s about 680 billion now.)
Discipline. Martial Arts Economics is what I call it.
quercetum
Good observation. I can tell you a major US company wanting to trade in yuan instead of the dollar as well.
China’s trade with the US fell by 8.2%. yet it rose by 33.39% with Non Russian Nations and 51% with Russia alone.
Together that meant that China's exports rose by 5.9% and Trade by 4.4%
The Good news is even if trade with the U.S. falls by 15%, China's Trade and Exports won't fall from the previous YoY and will remain at the same level.
This shows that China is quickly moving away from US and on to the Global South.
quercetum
That debt was the debt of the Republic of China who who lost the war, fled to Taiwan so China inherits that debt under international law.
What this shows is that the US has not had the courage to collect. Otherwise they could have restricted access to capital markets.
Yes, since Taiwan ROC is a part of China and the US recognizes One China, China has to pay this back,
quercetum
In today's world, the competition is high and nations are forced to expose their vulnerabilities. Several nations are under a debt crisis. The US was and is close to being in default. Pakistan obviously but with a new lease on life of several billion dollars in loans. There is Egypt, El Salvador, Ukraine, Sri Lanka and ...yes Japan.
Japan has the highest debt to gdp ration, some 263%. These cracks stem from the bad decisions taken three decades ago during and at the end of the bubble era. Large scale public works and tax cuts. This is why Xi's handling of the real estate crisis is textbook nip it in the bud. Only an authoritarian state can stop the kicking of the can down the road. Who is going to help Japan though? Not the US though, and consumption tax increases are not going to be enough.
We know the US is not in good condition. The US actually needs Japan's help in trade and defense. The US is one of the main causes of Japan's woes. Japan is the largest holder of US debt yet the US can't afford Japan to sell that debt and will not allow Japan to sell that debt. Isn't that sad? You need money but you can't get the money you lent? Diversity is needed. Japan needs to increase its sources of financing to reduce its debt. Japan is starting to consider seeking the help of other nations who have the resources to help. Will it be brave enough to ask for help?
TaiwanIsNotChina
The geniuses in the CCP created the real estate bubble and now are trying to pass arbitrary rules to deflate it. Since people don't take this abuse sitting down, there will be more capital flight from China. I hope China likes the Global South as it looks like it will be lumped in with it in terms of prosperity for the foreseeable future.
kaimycahl
Lol investors the CCP ran them all out they bit the hands that free Ed them
TaiwanIsNotChina
US Treasuries are at 4%. How looooow can it go?
Peter14
China is the last place I would invest in, and I would hope my country is likewise averse to wasting money propping up the CCP. There are many other places to invest in that are not hostile or belligerent like China is.
Profit is nice but always better when it does not turn around and bite you later.
Invest in China? No thank you!
yoshisan88
quercetum
China's youth (16 and 24 years old) unemployment rate in May 2023 is 20.8%. A record all time high.
Below is from the internet:
Youth unemployment has stayed elevated since early 2022 as Covid disruptions and a property slump added to already existing structural problems in the labor market. Many companies are reluctant to hire in the face of a lackluster recovery, while cash-strapped local governments are also trying to reduce costs.
Do not waste your time writing thousands of words trying to spin the truth. Things are not as rosy as before in China.
The whole world is facing a tough economic future. No country can escape it.
kibousha
"Helppp!! We thought we're the stuffs! but we can't live without you guys lao wai (Chinese version of gaijin), pls come back!"
quercetum
True yet China's exports for the second quarter was 11.36 Trillion Yuan rising by 4.4% YoY.
China’s 5% is more than that of the US, UK, and Germany combined and that’s with the real estate reforms.
You can’t paint figures and stats. They are what they are.
kaimycahl
China cooked the financial books for so long just as they had the one child rule. Everything they have done everyone knew would happen. China continues to think irrationally do things and deny and blame their neighbors and the world for their own failures.
quercetum
JP Morgan 6.4%.
World Bank 5.6%
OECD 5.4%
Barclays 5.6%
PWC 4.7%
Which one of these is the CCP?
As stated China 5% is greater than that of the US, UK, Germany combined and that’s with the real estate reforms.
Xavier, these are according to your sources.
quercetum
Vietnam does not have the economy of scale or the manufacturing capacity. It doesn’t have China’s sheer size.
Like having only 500 hotdogs for a sold out stadium of 50,000. Labor is cheaper but “We need more time.” By the time your next 500 hot dogs arrive, 5 games will have been played.”
Foxconn is trying to return to China after facing setbacks in India. It just withdrew the $19.5 billion joint venture in India. Canceled. India is not the answer.
Strangerland
So you came up with an agenda identical to the CPP all on your own.
Impressive!
Desert Tortoise
What queercetum doesn't mention is that year to year GDP growth for 2023 compared to same quarter in 2022 is comparing to a low base. 2022 was a lousy year for China which was in a recession. Quarter to quarter GDP growth in China for 2023 has stalled out. Q2 GDP growth as a mere 0.5% The CCP, cough cough, "leadership" set a goal of 5% GDP. That is a goal, not an outcome.
As for easing lending, a few things work against that. Number one is a widespread reluctance to borrow. Many banks are already up against a wall battling margin pressures. Further reductions in lending rates could bankrupt them. Moreover lowing lending rates could drive money abroad seeking higher returns that would be available in China.
Desert Tortoise
Btw queercetum, the US doesn't have a problem financing its debt. The US has a political problem in the lower house of Congress among some members who seek to leverage the artificial debt ceiling to push social legislation that would never see the light of day otherwise. This is very different than having a capital shortfall that prevents a nation from servicing their debt.
Sh1mon M4sada
IMHO this^^ is the problem with US debt. Just because you can pay your debtors, doesn't mean it's healthy. The problem with US debt is it's mostly serviced by the middle class instead of the Uber rich corporations.
China on the other hand has debt because of wanton speculations that's pervasive from top to bottom.
lachance
WHO IS THE ENEMY?
China needs advanced semi-conductors to become the global hegemon. And the traitorous CEOs of Intel, Qualcomm and Nvidia are lobbying against American restrictions on the sale of these chips to China.
As captains of industry, these assholes are not only shortsighted (looking only for immediate gains to their bottom lines) but traitors to our national interests as well. They know practically nothing of foreign policy and should keep their long noses out of it, before our kids in school are taught in Chinese.
Why does it matter? The Chinese can't produce these chips themselves. But they need them for advanced quantum computers which they intend to marry to artificial intelligence, thus increasing the capabilities of their war machine. Taiwan falls then Japan.
Who is the enemy who intends to aid and abet China? Know them by name, and call for their ouster. They aren't scientists who matter. They're only Money-Men, who need to be replaced by patriots.
1) Jensen Huang of Nvidea, who obviously may split his loyalties based on family origin or who can succumb to CCP blackmail
2) Patrick Gelsinger of Intel, who just got back from China three days ago with a sweetheart deal
3) Cristiano Amon of San Diego-based Qualcomm, a Brazilian who doesn't care a whit about the US, just more money on this Scrooge’s bottom line.