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China has a pretty big layer of fictitious economics overlaying their real economy. So the number of defaults is whatever they want them to be, at least in any

China has a pretty big layer of fictitious economics overlaying their real economy. So the number of defaults is whatever they want them to be, at least in any particular sector. They can control this with the stroke of a few keys and tweaks of policies concerning lending etc.. As long as the real economy reaps real material gains ... and there are no shocks ... then the fiction can continue relatively unabated. A lot of empty real estate is just fine in a county where more than 300M people still live in the doldrums, meaning, there's some market clearing availability/viability intrinsic to the situation (i.e. 'somebody' will buy the stuff in a panic, even rational speculators, meaning theirs a 'floor' to any panic in that sector, it's not a black hole) Now if foreign orders for goods falter, that could definitely be a problem. A real geopolitical calamity ... or something causing disruption to their new infrastructure projects etc. ... could be a problem. But sans existential crisis there's no reason to panic there's a lot of room for adjustment. Something to keep an eye on. EDIT fyi here are countries with whom China has the biggest deficits, i.e. they buy more than import, granted this would exclude major US imports etc. but gives a hint of who is more dependant on China than otherwise: Taiwan: -US$110.9 billion (country-specific trade deficit in 2017) South Korea: -$74.7 billion Australia: -$53.1 billion Switzerland: -$29.8 billion Brazil: -$29.4 billion Japan: -$28.1 billion Germany: -$25.7 billion Angola: -$18.1 billion Saudi Arabia: -$13.4 billion Malaysia: -$12 billion So while fewer Chinese buyers of iPhones might not be good, at least the US gets even cheaper stuff of the tons they already buy. Whereas the Taiwanese will just be bloodied.

doctorpangloss 8y ago
I’m pretty sure the fiction of their economy is all the coercion required to make people work for shit. Like the Uigher slave labor camps are but one end of a very deep spectrum of abuse, of millions of Chinese. Accounting debt in that respect is a red herring. What do you owe those people’s families? Their future children? That won’t ever show up on a balance sheet, and no economist has calculated that. Why you’re splitting hairs over the numbers in a fundamentally unfree country? I guess we’re conditioned, by our relatively free place, to find benefits-of-doubts. Trust me, “foreign orders for goods” going one way or another isn’t going to do anything except affect overinflated equity markets. The slave labor is a bigger deal. Did we really think an unfree place could have a fair market, let alone an ethical one?
- time-domain0 8y ago
  And they even monetize the disappeared by harvesting their organs.
- sonnyblarney 8y ago
  The Chinese are very hard workers, and they have become rapacious consumers of 'stuff' once they have the opportunity - there is no need for coercion - in fact it was not until liberalization in the 1980's did stuff tak off. The Uigher camps have nothing to do with the situation, economically, that said, they and the Falun Gong among others face real struggles we should not avoid. "“foreign orders for goods” going one way or another isn’t going to do anything " Yes - it definitely will - on both sides. Those are very material aspects of the economy and China, with a basis in manufacturing would actually be hit hard if orders dropped hard. There are zillions of real factories, running on difficult credit, making stuff cheap. But yes, one major part of the success story is 'very cheap labour' ultimately facilitated by an authoritarian regime. This is a very real thing. "Did we really think an unfree place could have a fair market" - whatever China is, it's very capitalist and a hugely competitive market. In many ways it actually is 'very free'. Makin' stuff ... it's open season there.
  - iliketosleep 8y ago
    The "very cheap labor" is nowhere near as cheap as it once was, which is one of several reasons why international companies have been shifting their manufacturing elsewhere. The "very free" kind of capitalist market is also nowhere near as free as it once was. Chinese capitalism (or the previous version of "socialism with chinese characteristics") was based on the implicit understanding that you have freedom to do business and make money so long as you stay out of politics. This is no longer the case. Many companies must have Party Committee Members from whom they take guidance, ensuring that they follow Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era. Since Xi Jinping became leader, China has been shifting emphasis from economic pragmatism to ideological purity. If China continues down this path, we'll continue to see a steady stream of stories like the one posted. Having said that, the Chinese leadership are not stupid and will likely make adjustments if they're suffering too much economically. My main point is that the China of 2018 is a very different beast to that of 2012, therefore previous assumptions about China that were valid for decades now need to be reviewed.
erikb 8y ago
This reads like putting 2010 knowledge about China and Trump propaganda in a shaker and then really go at it for 10 minutes. Dude, get an update. We are in 2018. Both Western and Chinese "fictitious overlay" to real market is so big that each can lose their current leadership position through that fantasy blowing up. In some regards the trade war is like this party game where you need to step on other people's balloon with your foot that has also a balloon attached. The good news is, once one of the bubbles burst the other one can be exchanged step by step with real markets that are overtaken from the other.
- sonnyblarney 8y ago
  My comments are valid in 2018, more so than ever. China has a politically controlled economy, a politically controlled currency, no real or objective accounting standards, a politicized legal system, very high degrees of corruption, capital controls, massive state intervention in financial and other sectors, and a centrally planned economic orientation wherein especially banks take their marching orders from a single source. So 'dude' , this is a fiction that does not exist even in 'Trump's America'. American economic figures are open enough that they can be externally validated, and if you 'don't believe them' - you can happily bet against the 'fiction' on the open markets. Yes - the Fed's action does amount to a kind of intervention, but even then we know mostly what they are doing. It's not a fiction, more than it is a calculation.

doctorpangloss 8y ago

I’m pretty sure the fiction of their economy is all the coercion required to make people work for shit. Like the Uigher slave labor camps are but one end of a very deep spectrum of abuse, of millions of Chinese. Accounting debt in that respect is a red herring. What do you owe those people’s families? Their future children? That won’t ever show up on a balance sheet, and no economist has calculated that. Why you’re splitting hairs over the numbers in a fundamentally unfree country? I guess we’re conditioned, by our relatively free place, to find benefits-of-doubts. Trust me, “foreign orders for goods” going one way or another isn’t going to do anything except affect overinflated equity markets. The slave labor is a bigger deal. Did we really think an unfree place could have a fair market, let alone an ethical one?

time-domain0 8y ago
And they even monetize the disappeared by harvesting their organs.
sonnyblarney 8y ago
The Chinese are very hard workers, and they have become rapacious consumers of 'stuff' once they have the opportunity - there is no need for coercion - in fact it was not until liberalization in the 1980's did stuff tak off. The Uigher camps have nothing to do with the situation, economically, that said, they and the Falun Gong among others face real struggles we should not avoid. "“foreign orders for goods” going one way or another isn’t going to do anything " Yes - it definitely will - on both sides. Those are very material aspects of the economy and China, with a basis in manufacturing would actually be hit hard if orders dropped hard. There are zillions of real factories, running on difficult credit, making stuff cheap. But yes, one major part of the success story is 'very cheap labour' ultimately facilitated by an authoritarian regime. This is a very real thing. "Did we really think an unfree place could have a fair market" - whatever China is, it's very capitalist and a hugely competitive market. In many ways it actually is 'very free'. Makin' stuff ... it's open season there.
- iliketosleep 8y ago
  The "very cheap labor" is nowhere near as cheap as it once was, which is one of several reasons why international companies have been shifting their manufacturing elsewhere. The "very free" kind of capitalist market is also nowhere near as free as it once was. Chinese capitalism (or the previous version of "socialism with chinese characteristics") was based on the implicit understanding that you have freedom to do business and make money so long as you stay out of politics. This is no longer the case. Many companies must have Party Committee Members from whom they take guidance, ensuring that they follow Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era. Since Xi Jinping became leader, China has been shifting emphasis from economic pragmatism to ideological purity. If China continues down this path, we'll continue to see a steady stream of stories like the one posted. Having said that, the Chinese leadership are not stupid and will likely make adjustments if they're suffering too much economically. My main point is that the China of 2018 is a very different beast to that of 2012, therefore previous assumptions about China that were valid for decades now need to be reviewed.

erikb 8y ago

This reads like putting 2010 knowledge about China and Trump propaganda in a shaker and then really go at it for 10 minutes. Dude, get an update. We are in 2018. Both Western and Chinese "fictitious overlay" to real market is so big that each can lose their current leadership position through that fantasy blowing up. In some regards the trade war is like this party game where you need to step on other people's balloon with your foot that has also a balloon attached. The good news is, once one of the bubbles burst the other one can be exchanged step by step with real markets that are overtaken from the other.

sonnyblarney 8y ago
My comments are valid in 2018, more so than ever. China has a politically controlled economy, a politically controlled currency, no real or objective accounting standards, a politicized legal system, very high degrees of corruption, capital controls, massive state intervention in financial and other sectors, and a centrally planned economic orientation wherein especially banks take their marching orders from a single source. So 'dude' , this is a fiction that does not exist even in 'Trump's America'. American economic figures are open enough that they can be externally validated, and if you 'don't believe them' - you can happily bet against the 'fiction' on the open markets. Yes - the Fed's action does amount to a kind of intervention, but even then we know mostly what they are doing. It's not a fiction, more than it is a calculation.