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Doubtful about the top market; China has a 20 year deflationary depression ahead of them. 1-2% gdp growth http://www.barrons.com/articles/anne-stevenson-yang-w

• exelius 11y ago
  > Coupled with lack of global consumer brands, corruption, pollution, demographics issues, global slowdown, carry trade unwind, rising us interest rates... You don't need global consumer brands when your country is the size of China. They have 15% of the world's population and speak a language that few outside the country can speak and even fewer can read: nobody else is going to come in and take those customers except Chinese companies. Corruption is being cleaned up; but it's still a real problem at the local level. Again, pollution is a huge problem but China is betting the farm on "clean" energy tech and will be the energy leaders of the world in 20 years. If (or when) they figure it out, they're the only ones with the manufacturing skill and capacity to mass-produce. The truth is, we've never seen what happens when a large country "awakens" in the age of globalization. Macroeconomic theory is largely based on the import/export balance, which is increasingly less important as borders become less meaningful (and import/export controls become increasingly difficult to enforce). I have a feeling that China will surprise us - despite the fact that they will have negative population growth over the next few decades and an aging population, the fact that they are actively moving subsistence farmers to the cities may stall the effect of a shrinking population with the added consumption / demand from turning poor farmers into urban consumers. Their aging population is also accustomed to a lower standard of living than the up-and-coming generation. Population deflation has been especially damaging to Japan because it hit them after they had become a heavily industrialized country. Despite the huge progress China has made, hundreds of millions of people still live in poor farming villages. That's a source of potential growth that I expect the Chinese government to tap strategically.
  • theworstshill 11y ago
    This is my feeling too, if anything China is about to breakout and become wealthier and more powerful than it already is. Good work ethic + common sense is a wonderful combination. The "west" largely lacks the later, while the rest of the world (except for a few countries, including China) lacks the former.
    • coldpie 11y ago
      You are being downvoted because this is a really poor comment. "The West" lacks "common sense"? "The rest of the world except China" lacks "work ethic"? What?
  • sharetea 11y ago
    good points. let's see... - Chinese companies are the only ones that can serve Chinese customers: Yum brands (KFC, McDonald) 7000 restaurants. Starbucks 1600 stores in China. 7-eleven 2000 stores in China. H&M. BMW. Mercedez. Apple. Microsoft. etc. All top brands, and command a higher price point/margin than local competitors if any. Meanwhile, none of the Chinese brands can even get a foothold outside China. - Clean energy in 20 years: in 20 years, most of the Chinese rich will have already left - large migration from rural to urban: there's no jobs waiting for these rural farmers. Therefore they cannot generate value; they're merely drags on the system. In year 2016, with manual jobs being automated, a body is no longer an asset but a liability. The person would need to have the knowledge/skills to compete for global job scarcity. And Chinese citizens aren't trained in English to compete for global knowledge worker jobs.
    • exelius 11y ago
      > Chinese companies are the only ones that can serve Chinese customers I don't agree with this; but Chinese companies are in a much better position to do so, and China is where the growth is. > Clean energy in 20 years: in 20 years, most of the Chinese rich will have already left A bit hyperbolic; but we already have a global economy. Foreign companies will continue to invest in China (both in companies and in their own projects) regardless of what the Chinese wealthy do. There are 1.2 billion people in China. Most don't brush their teeth. Think how much more toothpaste P&G could sell there if people became even moderately wealthy and more concerned about dental hygiene. > large migration from rural to urban: there's no jobs waiting for these rural farmers. As long as the Chinese government is willing to sponsor public works projects, there will always be jobs. And China is not unique in the transition from a manual labor to a knowledge labor economy: they're actually probably in a better position than most because they can benefit from explosive growth whenever they choose to. And don't forget that the Chinese population is aging rapidly: there will be more people exiting the workforce through retirement and death than new entrants into the workforce. Ensuring need and training match up is a problem, but I don't think any government has solved that one; so I wouldn't call it a huge impediment to their growth.
• harmegido 11y ago
  That's interesting that you know this depression is going to happen. How much money have you placed on this certainty? There's a few different ways you can short the Chinese economy. You'd be crazy not to if this is as sure a thing as you say.
  • clock_tower 11y ago
    How would you recommend shorting China? It does sound like a pretty safe bet.
    • tinkerrr 11y ago
      ProShares provides a convenient way to get short exposure to large Chinese stocks that trade in Hong Kong (you buy the ETF to get short exposure): http://finance.yahoo.com/q?s=YXI http://finance.yahoo.com/q?s=YXI
      • clock_tower 11y ago
        Well... This particular form of shorting China sounds really dangerous. Big firms tend to be the last to fail, and ETFs have a lot of strange behaviors; I'm thinking more in terms of looking for companies that will become more prosperous as their Chinese competition falls.
    • imron 11y ago
      'The coming collapse of China' has been predicted for a couple of decades now. Don't forget, the market can stay irrational longer than you can stay solvent
      • ycombobreaker 11y ago
        Especially if one "shorts" the Chinese economy by buying and holding leveraged inverse ETFs! A sure way to lose your bet, no matter the outcome. (Background for non-investors: leveraged ETFs are intended to replicate intraday performance, and a long-term buy-and-hold strategy is always expected to trend toward 0)
• teawithcarl 11y ago
  "sharetea" has the right idea. I've studied China for 29 years, speak/read Chinese and Japanese well, and have lived there long stretches. All his statistics are correct. Most importantly is the capital flight - of both Chinese individuals and overseas investors.
  • seanmcdirmid 11y ago
    Not to mention the expats (though I guess we are small part of this). I have to do a bank run today because we aren't allowed to do forex on weekends anymore (the rules get weirder and weirder!).
    • seanmcdirmid 11y ago
      And all done. Took about 3 hours, but I had to run back home to get my old passport (my current one wasn't good enough). The bank was filled with people doing the same thing.
• crdoconnor 11y ago
  >Manufacturing moving out of China http://www.forbes.com/sites/kenrapoza/2015/10/11/is-the-made.. http://www.forbes.com/sites/kenrapoza/2015/10/11/is-the-made.... Clothing is the lowest point on the value chain. They never meant to become a clothing manufacturer perpetually, they were using it as a way to leapfrog up the value chain. They're pretty happy to let Bangladesh take over the manufacturing of clothes while they do electronics (and ultimately aerospace and CPUs).
  • sharetea 11y ago
    Manufacturers (Samsung, Foxconn, Panasonic) step up search for low cost alternative to China http://www.scmp.com/business/companies/article/1863709/manufacturers-step-search-low-cost-alternative-china http://www.scmp.com/business/companies/article/1863709/manuf... Japanese companies (Toshiba, Citizens) head for exits as China loses steam http://asia.nikkei.com/magazine/20150611-Something-in-the-air/Business/Japanese-companies-head-for-exits-as-China-loses-steam http://asia.nikkei.com/magazine/20150611-Something-in-the-ai...
• x2398dh1 11y ago
  To respond to your links, one by one... * 1-2% GDP Growth that you cited is the opinion of one woman who makes a living selling opinions on the Chinese economy, it is anecdotal. * The article you posted states that central government GDP/Debt ratio is 64%, whereas local debt is 280% - so relative to the United States, with a total debt ratio of 332% China is still "flush with cash," in a sense and could stimulate out the 280% ratio, as the very article you cited notes. * Regards to Banks/Commodity firms - they are state owned, they could be privatized and this would improve efficiency. * You need to read the articles you post - there are $1Trillion in Foreign Reserves left to help the Yuan glide down slowly against a foreign basket of currencies, out of a total $4Trillion in foreign reserves. The US has $0.4T by the way, far less (this includes gold). * Epoch times is not a reliable source. They are just 100% anti-China, that is their reason for existing. * Manufacturing moves in and out of countries all the time, the net value of production in China is going up. * China does not require global consumer brands, it has 1.5 Billion people. China is flush with cash and can spend its way out of all of those issues. * No, we don't get the idea. You posted a bunch of links with very brief headlines on each. You didn't read many of the links you posted. Your post is a non-coherent shotgun approach. The major issue facing China is the fact that it fundamentally a one-party controlled communist command-economy, and it has pegged its way into that political path, without a clear way to get its way out. They attempted to go the democracy route for a bit in the 80s, but things out out of hand and Tiananmen Square Massacre occurred, effectively erasing the Chinese political consciousness. Now they are kind of floating in this world where no one really cares about politics, they just care about making money and hope the government is nice to them. This is the defining challenge of China in the 21st Century. The economy will go up and down but overall continue to grow over the next 20-30 years because they can buy their way out of whatever depression they need to. Things will probably get less polluted over time. If you look at the Shanghai composite, this has always been unstable and volatile and has had much worse crashes in recent memory. So every time the China stock market crashes, people come online and think they can become instant Sinologists and Peking Toms by posting a flurry of links. It doesn't mean anything --- it's a sputtering of irreverent neckbeardiness which does not further hacker news' understanding of the situation and actually makes people dumber for having read it, a la Billy Madison.
• oneJob 11y ago
  The question, as relates to that, has always been, can you stay solvent longer than the market can stay irrational? Cause what you're really saying is that the market is not reflecting the pricing data it implicitly has available, and so is not currently rationally priced. Another problem with timing the market based on the implications of macro monetary policy is that (as you do a good job of pointing out) it is just one element of many that create the environment for the companies, and it is the companies which create the fundamental value for the market. The depression you're talking about is (as all depressions are) one caused by fundamentals. Governments have quite a few tricks in their bag to get around the deflationary issue you bring up. As for "China's lack of global consumer brands, ...", once their consumer class is up and running (which is exactly what all of China's government's spending is aiming to do) they will have more consumers than the US has citizens, and then (a lota) some. Basically, it's just not that simple.