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From the PRC's perspective, the yuan is a just a tool to stimulate productive activity in their population towards the goals expressed in state budgets. If the

From the PRC's perspective, the yuan is a just a tool to stimulate productive activity in their population towards the goals expressed in state budgets. If they can muster the political will, they can simply levy highly progressive taxes to reduce inflation and keep on spending. There is nothing stopping them, ideologically.

seanmcdirmid 9y ago
If growth is mostly currently debt fueled, that growth can easily stop and reverse when the debt is pulled back. Recession at best, depression at worst, definitely there will be a few crashes along the way. Do you think real estate can really be sustained at it's current levels? Much of it has been bought as a speculative asset (no property taxes makes that easy) with the idea that it can only keep going up because of urbanization. However, farmers are generally poor not rich, it is not clear where the "bigger idiots" are going to come from. China's tax burden is already high for those that pay them. Going after those that don't at the high end is difficult because they tend to be officials or highly connected to officials in the first place.
- AlexCoventry 9y ago
  The purpose of the growth, from a governance perspective, is to keep the population satisfied through a rising standard of living, and to continue to develop the country through sane budget allocations. They can continue to do that using debt, because the only risk from doing so is inflation, which they can keep low with taxes on the present debt holders. The housing market may crash: I was talking about the claim that economy in general crashing. But I think the PRC might see a housing market crash as desirable, as it would raise the standard of living for most citizens. They certainly seem bent on slowing it down. https://www.reuters.com/article/us-china-economy-property-investment/china-july-property-investment-sales-slow-as-curbs-continue-to-bite-idUSKCN1AU08E https://www.reuters.com/article/us-china-economy-property-in... China does have economic problems, but they are more problems of political will, not intractable from a strictly economic perspective. The solution involves the country's elite taking a haircut.
  - seanmcdirmid 9y ago
    It is difficult to see a case where housing crashes and the economy in general doesn't. They see a housing crash as desirable, for sure, but too much economic activity right now is tied up in real estate and infrastructure investment, they know how painful it will be. So they keep pumping up housing....

seanmcdirmid 9y ago

If growth is mostly currently debt fueled, that growth can easily stop and reverse when the debt is pulled back. Recession at best, depression at worst, definitely there will be a few crashes along the way. Do you think real estate can really be sustained at it's current levels? Much of it has been bought as a speculative asset (no property taxes makes that easy) with the idea that it can only keep going up because of urbanization. However, farmers are generally poor not rich, it is not clear where the "bigger idiots" are going to come from. China's tax burden is already high for those that pay them. Going after those that don't at the high end is difficult because they tend to be officials or highly connected to officials in the first place.

AlexCoventry 9y ago
The purpose of the growth, from a governance perspective, is to keep the population satisfied through a rising standard of living, and to continue to develop the country through sane budget allocations. They can continue to do that using debt, because the only risk from doing so is inflation, which they can keep low with taxes on the present debt holders. The housing market may crash: I was talking about the claim that economy in general crashing. But I think the PRC might see a housing market crash as desirable, as it would raise the standard of living for most citizens. They certainly seem bent on slowing it down. https://www.reuters.com/article/us-china-economy-property-investment/china-july-property-investment-sales-slow-as-curbs-continue-to-bite-idUSKCN1AU08E https://www.reuters.com/article/us-china-economy-property-in... China does have economic problems, but they are more problems of political will, not intractable from a strictly economic perspective. The solution involves the country's elite taking a haircut.
- seanmcdirmid 9y ago
  It is difficult to see a case where housing crashes and the economy in general doesn't. They see a housing crash as desirable, for sure, but too much economic activity right now is tied up in real estate and infrastructure investment, they know how painful it will be. So they keep pumping up housing....