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> The Chinese economy is huge, and as a nation it is undervalued, but there is no way for these stocks to actually provide coverage to that portion of the Chine

> The Chinese economy is huge, and as a nation it is undervalued, but there is no way for these stocks to actually provide coverage to that portion of the Chinese economy. If the growth is outside official channels and unable to be reported on a scale of 50%, "bringing it into the light" would likely cause a major recession/depression all in of itself. It functions because its unregulated, untaxed and its margins are improved by hiding. Once you add those additional expenses, alot of that business will crash.

hodwik 11y ago
That is, if the Chinese government was short-sighted enough to tax it at their current rates. I can't imagine that they don't see the benefit to the laissez-faire economy. They just can't admit that there's a benefit, it goes against the party line. If they didn't see the benefit I'd have to believe they'd be doing more to capture those assets.
- fweespeech 11y ago
  > That is, if the Chinese government was short-sighted enough to tax it at their current rates. http://www.heritage.org/index/explore?view=by-variables http://www.heritage.org/index/explore?view=by-variables China's tax burden as a % of GDP is lower than the US. United States 24.3% of GDP China 19.4% of GDP Businesses that can't function in that environment aren't sustainable at any reasonable tax level.
  - elipsey 11y ago
    I must confess that when I saw a citation to the Heritage Foundation, I felt obliged to verify this through other sources; it seems about right. Also, it's an interesting exercise to view https://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP https://en.wikipedia.org/wiki/List_of_countries_by_tax_reven... which has a table is sortable by rate. You can see, for example, which states get revenue from oil, and have very low taxes but perhaps little incentive to diversify, and other interesting stuff. Looking at the extremes really makes me wonder how some societies operate.
  - hodwik 11y ago
    That does not measure how effective that spending is, or how burdensome for the individual. The US has higher taxes as a percentage of GDP, but we also have significantly more effective spending of said tax revenue. That lowers the 'effective burden' of that tax rate. Also, the comparative poverty of the Chinese populace makes that tax-rate significantly more painful to the people paying it. While China has lower taxes as percent of GDP, the 'effective burden' is higher as the government provides little value to the general populace, and takes a considerable amount of their purchasing power away.
    - fweespeech 11y ago
      > While China has lower taxes as percent of GDP, the 'effective burden' is higher as the government provides little value to the general populace, and takes a considerable amount of their purchasing power away. Given we have pretty thoroughly defunded things like the VA, IRS, highways, etc. I'm really not sure why you are convinced China is extremely terrible.
      - hodwik 11y ago
        The US spends about half ($1 Trillion) of our federal taxes directly on Healthcare programs, between Medicaid and Medicare. We can afford to do that because of broad private-industry spending in R&D, Universities, Telecom, and other forms of central infrastructure. The value that those programs provide to our population are measurable and direct. China, on the other hand, still having widespread government ownership of the economy, spends a significant portion of it's taxes on managing (mismanaging) their infrastructure and intellectual resources. That unfortunately only leaves about 6% of their $2.2 Trillion budget for healthcare, all the while, not having a private healthcare industry to fill the gaps. If you've been paying attention to China at all in the last few years, you would be well aware of their many literal bridges to nowhere, empty cities, and "san gong" spending. Zhu Lijia, a professor of clear governance at the Chinese Academy of Governance 国家行政学院, puts "san gong" spending (or spending on luxury yachts, private planes, lavish dinners, etc.) at 1 trillion yuan, or 30% of total government expenditure.
        11y ago

hodwik 11y ago

That is, if the Chinese government was short-sighted enough to tax it at their current rates. I can't imagine that they don't see the benefit to the laissez-faire economy. They just can't admit that there's a benefit, it goes against the party line. If they didn't see the benefit I'd have to believe they'd be doing more to capture those assets.

fweespeech 11y ago
> That is, if the Chinese government was short-sighted enough to tax it at their current rates. http://www.heritage.org/index/explore?view=by-variables http://www.heritage.org/index/explore?view=by-variables China's tax burden as a % of GDP is lower than the US. United States 24.3% of GDP China 19.4% of GDP Businesses that can't function in that environment aren't sustainable at any reasonable tax level.
- elipsey 11y ago
  I must confess that when I saw a citation to the Heritage Foundation, I felt obliged to verify this through other sources; it seems about right. Also, it's an interesting exercise to view https://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP https://en.wikipedia.org/wiki/List_of_countries_by_tax_reven... which has a table is sortable by rate. You can see, for example, which states get revenue from oil, and have very low taxes but perhaps little incentive to diversify, and other interesting stuff. Looking at the extremes really makes me wonder how some societies operate.
- hodwik 11y ago
  That does not measure how effective that spending is, or how burdensome for the individual. The US has higher taxes as a percentage of GDP, but we also have significantly more effective spending of said tax revenue. That lowers the 'effective burden' of that tax rate. Also, the comparative poverty of the Chinese populace makes that tax-rate significantly more painful to the people paying it. While China has lower taxes as percent of GDP, the 'effective burden' is higher as the government provides little value to the general populace, and takes a considerable amount of their purchasing power away.
  - fweespeech 11y ago
    > While China has lower taxes as percent of GDP, the 'effective burden' is higher as the government provides little value to the general populace, and takes a considerable amount of their purchasing power away. Given we have pretty thoroughly defunded things like the VA, IRS, highways, etc. I'm really not sure why you are convinced China is extremely terrible.
    - hodwik 11y ago
      The US spends about half ($1 Trillion) of our federal taxes directly on Healthcare programs, between Medicaid and Medicare. We can afford to do that because of broad private-industry spending in R&D, Universities, Telecom, and other forms of central infrastructure. The value that those programs provide to our population are measurable and direct. China, on the other hand, still having widespread government ownership of the economy, spends a significant portion of it's taxes on managing (mismanaging) their infrastructure and intellectual resources. That unfortunately only leaves about 6% of their $2.2 Trillion budget for healthcare, all the while, not having a private healthcare industry to fill the gaps. If you've been paying attention to China at all in the last few years, you would be well aware of their many literal bridges to nowhere, empty cities, and "san gong" spending. Zhu Lijia, a professor of clear governance at the Chinese Academy of Governance 国家行政学院, puts "san gong" spending (or spending on luxury yachts, private planes, lavish dinners, etc.) at 1 trillion yuan, or 30% of total government expenditure.
      - 11y ago