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It can be argued that Evergrande being allowed to take on so much debt is actually evidence of Chinese officials not taking a long view on things. Presumably th

by hnfong 5y ago

It can be argued that Evergrande being allowed to take on so much debt is actually evidence of Chinese officials not taking a long view on things. Presumably the pressure to pump up the GDP was so great in previous years (not unlike executives in capitalist America with their quarterly reports) that they allowed corporations to become what they currently are.

evgen 5y ago
Exactly. Evergrande is simply the tip of the iceberg. There is a huge amount of bad debt in the Chinese banking system that has been hidden for various reasons and while the most obvious examples are starting to explode the big fear (for Chinese leadership as well as foreign markets) is that once the first dominos start to fall the entire rotten edifice might collapse. China was an extremely bad example to pull and to be honest was just the sort of example I was hoping someone would bring up as a contrast to 'anglo-style democracies' because it is so easy to tear apart.
LatteLazy 5y ago
We can back and forth about whether Evergrande was well managed or well regulated. I mostly agree if that helps. But the point I was making is that when a big company goes bankrupt, at least in this case, the CCP let it happen and didn't just keep it alive on zero interest loans. That's the right decision in the long term but it's painful in the short term. That's a decision the US and UK have been unwilling to make since 2008.
- evgen 5y ago
  No, that is not what happened. Evergrande has been kept alive by the CCP and fed zero interest loans through lax banking regulations and massive property speculation by the public. The bubble it represents should have popped in 2008 but was protected and left to fester by the Chinese government because it was politically unpopular to do so. They can no longer hide the reality of these unsustainable bad debts and so the international market is turning on it, but the CCP can't afford to prop it up either and are desperately trying to figure out a way to soften the crash. This is a long-term failure of over-building and a massive property speculation bubble that is popping; it is not an indicator of a country that is doing the right thing because it is smart in the long term, this bubble is popping because they can no longer hide the problem and the short term pain will include wiping out a large chunk of the nascent middle-class.

by hnfong 5y ago

evgen 5y ago

Exactly. Evergrande is simply the tip of the iceberg. There is a huge amount of bad debt in the Chinese banking system that has been hidden for various reasons and while the most obvious examples are starting to explode the big fear (for Chinese leadership as well as foreign markets) is that once the first dominos start to fall the entire rotten edifice might collapse. China was an extremely bad example to pull and to be honest was just the sort of example I was hoping someone would bring up as a contrast to 'anglo-style democracies' because it is so easy to tear apart.

LatteLazy 5y ago

We can back and forth about whether Evergrande was well managed or well regulated. I mostly agree if that helps. But the point I was making is that when a big company goes bankrupt, at least in this case, the CCP let it happen and didn't just keep it alive on zero interest loans. That's the right decision in the long term but it's painful in the short term. That's a decision the US and UK have been unwilling to make since 2008.

evgen 5y ago
No, that is not what happened. Evergrande has been kept alive by the CCP and fed zero interest loans through lax banking regulations and massive property speculation by the public. The bubble it represents should have popped in 2008 but was protected and left to fester by the Chinese government because it was politically unpopular to do so. They can no longer hide the reality of these unsustainable bad debts and so the international market is turning on it, but the CCP can't afford to prop it up either and are desperately trying to figure out a way to soften the crash. This is a long-term failure of over-building and a massive property speculation bubble that is popping; it is not an indicator of a country that is doing the right thing because it is smart in the long term, this bubble is popping because they can no longer hide the problem and the short term pain will include wiping out a large chunk of the nascent middle-class.