5 ms·

> They’ll nationalize and inflate away any institutional debt or wipe it out This is just the reverse, actually, China isn’t afraid to go so far as to jail CEO

> They’ll nationalize and inflate away any institutional debt or wipe it out This is just the reverse, actually, China isn’t afraid to go so far as to jail CEOs. There is no such thing as too big to fail in China, and all the Chinese domestic companies know it. The bailout playbook is a western thing.

toomuchtodo 9mo ago
China has been performing debt swaps with local governments to clean up their balance sheets [1], so used as an example. Agree with all of your comment. People make the mistake that China plays by artificial US capital market rules around profit and debt; they do not. They optimize for physical world success, not line go up. [1] Why China Is Hoping $1.6 Trillion Can Fix Its Hidden Debt Problem - https://www.bloomberg.com/news/articles/2025-04-16/china-economy-can-1-6-trillion-help-solve-xi-s-hidden-debt-problem https://www.bloomberg.com/news/articles/2025-04-16/china-eco... | https://archive.today/HsaHV https://archive.today/HsaHV - April 16th, 2025
- faitswulff 9mo ago
  Ah, I think I get it. Are you saying that regardless of BYD’s continued existence, China will still have 1/3 of the world’s manufacturing capacity?
  - toomuchtodo 9mo ago
    Yes, exactly. Just as in the US, when an enterprise gets wiped out and recapitalized, all of the physical assets remain. In China’s case, they are the backstop of last resort, and will always recapitalize according to their nation state planning and target outcomes. They allow companies to operate the assets as long as the Chinese government is willing to allow it, but they remain assets of China.
    - truetraveller 9mo ago
      So, essentially, there is a root company called China, Inc. Correct?
      - tifan 9mo ago
        Exactly. Not strictly China Inc, but SASAC (https://en.wikipedia.org/wiki/State-owned_Assets_Supervision_and_Administration_Commission_of_the_State_Council https://en.wikipedia.org/wiki/State-owned_Assets_Supervision...)
- refurb 9mo ago
  There is no free lunch. Debt in China is still owed to someone. Printing money creates inflation. Oversupply leads to deflation. It’s why China’s real estate company debt is dragging down the economy as a whole. It’s all connected. China very much is held to the same rules as the US, especially as it engages with the global financial system. Which is why they are in so much trouble. The economy is anemic. The last stimulus package barely made a difference. Debt overhang remains.
  - amrocha 9mo ago
    There actually literally is a free lunch. Debt owed to the government by itself isn’t real. Assets and infrastructure are real. It doesn’t matter how much you think China is in trouble financially, at the end of the day they still manufacture a third of everything in the world.
    - refurb 9mo ago
      > There actually literally is a free lunch. Debt owed to the government by itself isn’t real. False. It may not be the same as debt owed to other parties, but not paying it still has consequences for things like money supply. Otherwise, why would the government not just lend endless amounts of money? Even the Chinese government knows they can't do that. > It doesn’t matter how much you think China is in trouble financially, at the end of the day they still manufacture a third of everything in the world. Their output doesn't really matter when it comes to their financial situation. You can produce a lot and still be in trouble. And it's not me that is calling out China's problems, China is talking about it as well.
      - amrocha 9mo ago
        I never said anything about lending infinite money, don’t straw man me. The constraint is on real resources, which China has plenty of, regardless of how much debt they have. The financial situation is an accounting detail. China could decide to write off all debt it owes to itself tomorrow, and literally nothing would change.
victorbjorklund 9mo ago
They only jail the people that upset the regime.
- ben_w 9mo ago
  From the outside, it appears that "upset the regime" includes "cheating your way into profits". That said, it's very difficult to be sure if what I see from the outside is propaganda. Or rather, it is always propaganda even when it's true, and I can't tell how much of it is China's own self-promotion vs. other people giving negative propaganda.
  - victorbjorklund 9mo ago
    You don’t think president Xi:s family and friends cheated? Of course they have. Yet they don’t go to prison.
    - ben_w 9mo ago
      I'm saying from the outside, it doesn't look like that. That's a much weaker statement, as should've been obvious from what I went on to say about propaganda. Example of cheating: https://en.wikipedia.org/wiki/Officials_implicated_by_the_anti-corruption_campaign_in_China_(2017–2022) https://en.wikipedia.org/wiki/Officials_implicated_by_the_an... And: https://en.wikipedia.org/wiki/2008_Chinese_milk_scandal#Arrests https://en.wikipedia.org/wiki/2008_Chinese_milk_scandal#Arre... Nevertheless, it would be interesting if someone could, you know, prove, and not merely allege, that Xi Jinping's family or friends cheated.
      - ctchocula 9mo ago
        https://panamapapers.org/case-study-china https://panamapapers.org/case-study-china
        ben_w 9mo ago
        Yup, that's the kind of thing I have in mind. Even with the sub-heading "It's legal, and that's the problem."*, and even though this kind of cheating is broader than this reply chain from "There is no such thing as too big to fail in China", this is absolutely within bounds for what I asked for :) * and the not-proof-read AI generated image, that never helps…

toomuchtodo 9mo ago

China has been performing debt swaps with local governments to clean up their balance sheets [1], so used as an example. Agree with all of your comment. People make the mistake that China plays by artificial US capital market rules around profit and debt; they do not. They optimize for physical world success, not line go up. [1] Why China Is Hoping $1.6 Trillion Can Fix Its Hidden Debt Problem - https://www.bloomberg.com/news/articles/2025-04-16/china-economy-can-1-6-trillion-help-solve-xi-s-hidden-debt-problem https://www.bloomberg.com/news/articles/2025-04-16/china-eco... | https://archive.today/HsaHV https://archive.today/HsaHV - April 16th, 2025

faitswulff 9mo ago
Ah, I think I get it. Are you saying that regardless of BYD’s continued existence, China will still have 1/3 of the world’s manufacturing capacity?
- toomuchtodo 9mo ago
  Yes, exactly. Just as in the US, when an enterprise gets wiped out and recapitalized, all of the physical assets remain. In China’s case, they are the backstop of last resort, and will always recapitalize according to their nation state planning and target outcomes. They allow companies to operate the assets as long as the Chinese government is willing to allow it, but they remain assets of China.
  - truetraveller 9mo ago
    So, essentially, there is a root company called China, Inc. Correct?
    - tifan 9mo ago
      Exactly. Not strictly China Inc, but SASAC (https://en.wikipedia.org/wiki/State-owned_Assets_Supervision_and_Administration_Commission_of_the_State_Council https://en.wikipedia.org/wiki/State-owned_Assets_Supervision...)
refurb 9mo ago
There is no free lunch. Debt in China is still owed to someone. Printing money creates inflation. Oversupply leads to deflation. It’s why China’s real estate company debt is dragging down the economy as a whole. It’s all connected. China very much is held to the same rules as the US, especially as it engages with the global financial system. Which is why they are in so much trouble. The economy is anemic. The last stimulus package barely made a difference. Debt overhang remains.
- amrocha 9mo ago
  There actually literally is a free lunch. Debt owed to the government by itself isn’t real. Assets and infrastructure are real. It doesn’t matter how much you think China is in trouble financially, at the end of the day they still manufacture a third of everything in the world.
  - refurb 9mo ago
    > There actually literally is a free lunch. Debt owed to the government by itself isn’t real. False. It may not be the same as debt owed to other parties, but not paying it still has consequences for things like money supply. Otherwise, why would the government not just lend endless amounts of money? Even the Chinese government knows they can't do that. > It doesn’t matter how much you think China is in trouble financially, at the end of the day they still manufacture a third of everything in the world. Their output doesn't really matter when it comes to their financial situation. You can produce a lot and still be in trouble. And it's not me that is calling out China's problems, China is talking about it as well.
    - amrocha 9mo ago
      I never said anything about lending infinite money, don’t straw man me. The constraint is on real resources, which China has plenty of, regardless of how much debt they have. The financial situation is an accounting detail. China could decide to write off all debt it owes to itself tomorrow, and literally nothing would change.

victorbjorklund 9mo ago

They only jail the people that upset the regime.

ben_w 9mo ago
From the outside, it appears that "upset the regime" includes "cheating your way into profits". That said, it's very difficult to be sure if what I see from the outside is propaganda. Or rather, it is always propaganda even when it's true, and I can't tell how much of it is China's own self-promotion vs. other people giving negative propaganda.
- victorbjorklund 9mo ago
  You don’t think president Xi:s family and friends cheated? Of course they have. Yet they don’t go to prison.
  - ben_w 9mo ago
    I'm saying from the outside, it doesn't look like that. That's a much weaker statement, as should've been obvious from what I went on to say about propaganda. Example of cheating: https://en.wikipedia.org/wiki/Officials_implicated_by_the_anti-corruption_campaign_in_China_(2017–2022) https://en.wikipedia.org/wiki/Officials_implicated_by_the_an... And: https://en.wikipedia.org/wiki/2008_Chinese_milk_scandal#Arrests https://en.wikipedia.org/wiki/2008_Chinese_milk_scandal#Arre... Nevertheless, it would be interesting if someone could, you know, prove, and not merely allege, that Xi Jinping's family or friends cheated.
    - ctchocula 9mo ago
      https://panamapapers.org/case-study-china https://panamapapers.org/case-study-china
      - ben_w 9mo ago
        Yup, that's the kind of thing I have in mind. Even with the sub-heading "It's legal, and that's the problem."*, and even though this kind of cheating is broader than this reply chain from "There is no such thing as too big to fail in China", this is absolutely within bounds for what I asked for :) * and the not-proof-read AI generated image, that never helps…