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The pullback of outflows capital to foreign locations is the most telling to me. Chinese companies are starting to be net sellers instead of net acquirers of f
by mrkstu 8y ago
The pullback of outflows capital to foreign locations is the most telling to me.
Chinese companies are starting to be net sellers instead of net acquirers of foreign assets.
That would be fine if it was just because they were getting better return on their capital inside China, but in reality it is to pay back runaway debt and inability to complete asset purchases due to government capital controls. Those controls would be unnecessary if the Chinese economy was in a healthy state.
The question isn't whether a contraction is in the offing, but how deep and large it is and what kind of knock on effects it has globally.
- CoolGuySteve 8y agoWhat happened in the early 90s recession when Japan pulled back on foreign investment? Did they cause the recession or were they wiped out by it? The only thing I remember as a teenager then was the Japanese briefly gaining and losing control of the NBC/GE conglomerate.
- jandrese 8y agoIIRC overall the Japanese lost their shirt on those deals and it lead to an entire lost decade economically. I would not be surprised at all to learn that the Chinese government was inflating figures for political purposes and are in trouble now that the chickens are coming home to roost. It's super tempting for authoritarian regimes to cook the books to look better internationally. There was also seemingly a belief in the government that if they could maximize the trade surplus with the world they could somehow "win" at the economy.
- antt 8y agoFunnily enough the 90s saw better growth for median incomes in Japan than the 10s have so far for the US. If anything Japan looks like they managed their crisis much better by pushing the losses up rather than down.
- munificent 8y agoAdding context to your comment: https://en.wikipedia.org/wiki/Lost_Decade_(Japan) https://en.wikipedia.org/wiki/Lost_Decade_(Japan)
- adventured 8y ago> the Japanese briefly gaining and losing control of the NBC/GE conglomerate. Japan never owned GE or NBC. They bought a 51% interest in Rockefeller Center (where NBC was/is based) in 1989 [1], which is just real-estate. The high prices the Japanese often paid for trophy real-estate and businesses during the bubble years, is often held up as a reference point to the end of the run. China began doing something similar just before Xi came to power, then Xi put a hard stop to it. [1] https://www.nytimes.com/1989/10/31/business/japanese-buy-new-york-cachet-with-deal-for-rockefeller-center.html https://www.nytimes.com/1989/10/31/business/japanese-buy-new...