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> in a country with a bias towards savings that's a myth that keeps being persisted, much like their consistent 6-7% gdp growth every year. if you read the ar
by varsitywork 8y ago
> in a country with a bias towards savings
that's a myth that keeps being persisted, much like their consistent 6-7% gdp growth every year.
if you read the article, it mentions that 'He and his family had invested 7 million yuan - their life savings'.
"The Myth Of China's 'Excess Savings' Is Weighed Down By Excessive Debt. Bank balances offset against enormous, rapidly rising, bad debts, a property bubble out of all contact with reality, a closed capital account to prevent money draining overseas while it still can, and an unregulated shadow banking sector where vast pools of notional value endlessly gyrate on air currents of uncertain origin"
https://www.forbes.com/sites/douglasbulloch/2017/04/26/the-myth-of-chinas-excess-savings-is-weighed-down-by-excessive-debt/ https://www.forbes.com/sites/douglasbulloch/2017/04/26/the-m...
The average Chinese citizens savings have now been engulfed in bitcoin crash, stock market crash, real estate bubble, p2p lending, and gold crash. When money can't leave China because of capital controls for average citizens, money goes into a risky bubble (otherwise it gets eaten away by inflation).
The biggest bubble, China's real estate, which has "$202 per square foot. That's 38 percent higher than the median price per square foot in the U.S., where per-capita income is more than 700 percent higher than in China." https://www.bloomberg.com/view/articles/2018-06-24/why-china-can-t-fix-its-housing-bubble https://www.bloomberg.com/view/articles/2018-06-24/why-china..., is at a dangerous size. And it could be bursted by any external factors: Trump's threat to tax $500B Chinese imports, manufacturers hastened exist from China, Fed raises the interest rate a few more times, faster capital outflow from China, one of the emerging market's collapse, one of the more indebted private firm collapses, triggering a wave of collection, etc.
- naveen99 8y agoThose property prices aren’t unreasonable given lack of property tax and higher population density. It’s the same in india. https://www.bloomberg.com/gadfly/articles/2018-03-08/don-t-bet-your-house-on-china-s-property-tax-just-yet https://www.bloomberg.com/gadfly/articles/2018-03-08/don-t-b...
- ericd 8y agoIIRC there's also no such thing as property ownership in the US sense - it's just a 70 year lease, which can be renewed.
- naveen99 8y agoin 70 years, i will have paid for my property 3 times over in texas property taxes. So the US sense is more like a 20-40 year lease depending on the tax rate.
- ericd 8y agoFair point. I guess Nevada is the only place I've heard of where you can buy out of property taxes for a one-time fee.
- naveen99 8y agoI'm having a hard time finding details on nevada. is it in here ? not finding it with a few quick keywords or under exemptions. https://nevadataxpayers.org/wp-content/uploads/2016/10/property-tax-2015.pdf https://nevadataxpayers.org/wp-content/uploads/2016/10/prope...
- ummonk 8y agoHow does anything you said indicate that Chinese having a bias towards savings is a myth? Investing money in bitcoin, stocks, real estate bubbles, etc. is still saving (not consumption). Might be bad savings, but it's still savings.
- reaperducer 8y agoPerhaps he sees a distinction between "saving" and "investing." Before the bank deregulation in the 90's this was a more vividly defined line. To my parents generation, saying, "I keep my retirement savings in a 401(k)" is an oxymoron.