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What are the foolish maneuvers that China is making?
by kingnothing 4mo ago
What are the foolish maneuvers that China is making?
- Hikikomori 4mo agoAt this point they can use the Gaben strategy and easily win.
- MarkusQ 4mo agoThat would require making babies and not making mistakes. Humans are generally/historically better at the former, but these days both seem to be a challenge.
- handle584 4mo agoNot is but the obvious one was COVID policy during 2020-2022. It triggered the closest thing to a domestic unrest you can get in China after 1989, a large exodus of middle class, and an almost 50% crash in their real estate market. The last one is very deadly and still ongoing because that is how China financed its growth for decades.
- dirck-norman 4mo agoChina is undergoing a 2008 style financial crisis due to real estate speculation and deflation due to very weak domestic spending. They have drowned their municipalities in debt cumulatively equivalent to the US federal and state debt as a percentage of GDP. Localities aren’t allowed to tax but are responsible for local services and industry. Local governments borrowed heavily to hit GDP growth targets and compete with each other for investment and talent. There is now a backwards migration of the working class back to rural towns from the cities because the incentives China gives is towards technologies that only benefit their already upper-middle class workers. About 500 million Chinese live in rural areas and over 20% of their workforce toils in the fields. That’s not changing anytime soon. Youth unemployment has been 15-20+ percent for some time.
- smallmancontrov 4mo agoRefusing to bail out real estate speculators was bold and painful, but I'm not sure it was wrong.
- dirck-norman 4mo agoNot at all what’s happening. China’s government privatized real estate and was the engine of the bubble by disallowing localities from taxing and only allowing revenues via land sales. See above how central planning in the CCP has forced massive debt upon localities. State banks backed Evergrande’s with cheap credit and govt guarantees. Local officials were promoted for hitting GDP growth targets - see above how they put localities deep in debt by speculating on real estate. The CCP gave households social credit for moving to cities and buying real estate. The CCP is not protecting consumers in the aftermath. They won’t let consumers out of mortgages for unfinished condos because they don’t want the crisis to worsen - effectively bailing out developers. Not sure where you came up with the idea that China is acting in the interest of its citizens rather than the state. That’s not a fundamental characteristic of an autocratic socialist state.
- smallmancontrov 4mo agoThe citizens with real estate were the speculators. They gambled on being able to squeeze even more out of the next guy and they lost. In the US, we would just have taxed the kids (again) to bail out the homeowners (again). I have a hard time calling that more responsible.
- dirck-norman 3mo agoAgain, the govt was responsible for pushing this framework in the chase for gdp growth. They’ve paid for it now. They’re deep in a recession with signs it may be a 1990’s style Japanification.
- hbd-investor 3mo agoThey bailed out the little people and jailed the CEO's. What happened was these companies went into massive debt building buildings based on the belief that real estate prices would increase forever infinitely. The Chinese govt popped the bubble. These real estate companies went bankrupt, many of them took payments from retail for apartments that weren't built. They arrested the CEO's and upper management, siezed and sold their assets. But the people did get bailed out by the government, all the little folk who bought apartments were refunded or had the construction project finished by the government.
- ww520 4mo agoUp to 40% unemployment or very low employment.