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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

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 11mo 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 11mo 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 11mo ago
    So, essentially, there is a root company called China, Inc. Correct?
    - tifan 11mo 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 11mo 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 11mo 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 11mo 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 11mo 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.

faitswulff 11mo 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 11mo 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 11mo ago
  So, essentially, there is a root company called China, Inc. Correct?
  - tifan 11mo 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 11mo 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 11mo 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 11mo 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 11mo 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.