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According to the article, China is winning because it has more unicorns than others in > 10 billion: 11 are Chinese vs 6 are American. This is just VC pumping

According to the article, China is winning because it has more unicorns than others in > 10 billion: 11 are Chinese vs 6 are American. This is just VC pumping its own game. Massively overvalued Chinese startups fueled by unsustainable shadow debt taking isn't a recipe for success. "China’s campaign against its US$10 trillion shadow banking industry has choked off refinancing for the weaker borrowers". let that sink in......10 Trillion debt that needs to be unwound in China, mostly corporate debt. "Chinese corporate debt to GDP ratio is already very high by international standards – at 168 per cent in 2017 – and is expected to start rising again as nominal GDP growth declines towards the 8 per cent from an unusually high rate of over 11 per cent in 2017, Fitch said. Further payment problems are likely in a market that has already seen at least 14 corporate bond defaults this year" http://www.scmp.com/news/china/economy/article/2149108/curbing-chinas-corporate-debt-could-hit-economic-growth-report http://www.scmp.com/news/china/economy/article/2149108/curbi... Also, this is happening in times of economic slowdown in China, due to trade wars, tariff from US, reshoring of manufacturing back to US, declining FDI, etc. "China's economic growth slows to multi-decade lows across industrial, infrastructure and retail" http://www.abc.net.au/news/2018-06-14/china-growth-stumbles-on-weaker-industrial-production-and-inves/9870214 http://www.abc.net.au/news/2018-06-14/china-growth-stumbles-... "Two-thirds of the 21 tech IPOs in the past year are below their issue price, with shares down an average of about 20 per cent through Friday. Leading the wipe out are online financing platforms Qudian Inc and PPDai Group Inc, which plummeted 55 per cent and 48 per cent respectively, while search engine Sogou Inc has tanked 27 per cent." http://www.scmp.com/tech/article/2146122/struggling-chinese-tech-debuts-dont-bode-well-unicorn-ipos http://www.scmp.com/tech/article/2146122/struggling-chinese-...

chii 8y ago
> unsustainable shadow debt i keep hearing this term, but what does shadow debt mean?
- rm_-rf_slash 8y ago
  Unregulated unofficial loans. They have played a major role in developing China’s economy outside of the rigidly regulated financial sector. However their total value and creditworthiness is not entirely known. The Chinese government doesn’t want to shut down the shadow debt markets wholesale, because of their outsize influence on the economy, but for the same reason they don’t want shadow lending to get too out of hand either. If there is a credit crunch or economic contraction, it will be harder to manage the consequences of unofficial debt than official debt.
Latteland 8y ago
There has been this little discussed massive debt overhang in China. But for comparison, I wish I could find something that compares the US debt overhang. What's the total corporate debt of the US, it must be massive. I guess "Shadow banking" debt is just a part of the debt China has, because cities and regions have large loans too. This article says for the US, $8.7 trillion, 45% of GDP https://www.cnbc.com/2017/11/20/the-debt-time-bomb-that-keeps-growing-and-now-equals-nearly-half-of-u-s-gdp.html https://www.cnbc.com/2017/11/20/the-debt-time-bomb-that-keep.... Compare to 168% in China above.
mistermann 8y ago
> Massively overvalued Chinese startups fueled by unsustainable shadow debt taking isn't a recipe for success. It may not be the cleanest or most efficient recipe for success, but whether it is or is not "a" recipe for success remains to be seen. There is more than one way to skin a cat as they say. As for their massive debt, again that could be a problem, maybe even completely derail China and throw them back into chaos, but there's little reason to think that it must be a problem. As long as sufficient confidence can be maintained in the system and everyone keeps showing up to work each day, and trade continues flowing, how the results are divvied up at the end of the day in the short run is secondary to the longer term functionality of the overall system.

chii 8y ago

> unsustainable shadow debt i keep hearing this term, but what does shadow debt mean?

rm_-rf_slash 8y ago
Unregulated unofficial loans. They have played a major role in developing China’s economy outside of the rigidly regulated financial sector. However their total value and creditworthiness is not entirely known. The Chinese government doesn’t want to shut down the shadow debt markets wholesale, because of their outsize influence on the economy, but for the same reason they don’t want shadow lending to get too out of hand either. If there is a credit crunch or economic contraction, it will be harder to manage the consequences of unofficial debt than official debt.

Latteland 8y ago

There has been this little discussed massive debt overhang in China. But for comparison, I wish I could find something that compares the US debt overhang. What's the total corporate debt of the US, it must be massive. I guess "Shadow banking" debt is just a part of the debt China has, because cities and regions have large loans too. This article says for the US, $8.7 trillion, 45% of GDP https://www.cnbc.com/2017/11/20/the-debt-time-bomb-that-keeps-growing-and-now-equals-nearly-half-of-u-s-gdp.html https://www.cnbc.com/2017/11/20/the-debt-time-bomb-that-keep.... Compare to 168% in China above.

mistermann 8y ago

> Massively overvalued Chinese startups fueled by unsustainable shadow debt taking isn't a recipe for success. It may not be the cleanest or most efficient recipe for success, but whether it is or is not "a" recipe for success remains to be seen. There is more than one way to skin a cat as they say. As for their massive debt, again that could be a problem, maybe even completely derail China and throw them back into chaos, but there's little reason to think that it must be a problem. As long as sufficient confidence can be maintained in the system and everyone keeps showing up to work each day, and trade continues flowing, how the results are divvied up at the end of the day in the short run is secondary to the longer term functionality of the overall system.