[late]

A quick run by Zeihan of why China is in deep doo doo:

His take on the Chinese economy can be found elsewhere. Basically, it's a weird system. Individuals have little choice in what they can invest in. Most of that is in real estate. Which is why they have empty cities, and shoddy construction. It's a massive bubble that burst, and China is trying to hide how bad things got.

The state is deeply involved in the economy, and they see investment as a way to create jobs, not profit. The result of that is overinvestment in infrastructure. So they have as much in high speed trains as the rest of the world combined. But some of the routes won't attract enough riders to keep the business going. Meaning it will siphon money off the state. Infrastructure investment is supposed to help the economy, not be a drag on it.

Let me close with this, the USSR was also a top down system. But when there was a crisis, they couldn't adapt fast enough, and it all came apart. The same thing is happening in China. They are in a crisis, and they are having trouble dealing with it.

[Fasces]

Zeihan and Chang make a killing reposting the same blog post every month.

January 2023: https://zeihan.com/demographics-part-5- ... -collapse/

June 2023: https://zeihan.com/new-chinese-demograp ... -collapse/

September 2023: https://zeihan.com/dont-be-surprised-by ... -collapse/ and https://zeihan.com/the-chinese-collapse ... overbuild/

Meanwhile, China's economic growth forecast was improved from 3% to 5% by the World Bank, and they overtook Germany and Japan in the 2024 Global Soft Power Index. Foreign exports in January and February are up more than 8%. They built more solar panels in 2023 than the US has... ever...

But gotta respect the grift - Zeihan's net worth and speaking fees are higher than ever despite him saying nothing new.

[AFAIK]

Zeihan: I can't tell you anything about the workings of China because Xi has centralised all decision making into his office and everyone else is too scared to do anything for fear of losing their jobs.

Viewer translation: Corrupt and disloyal members of CPP have been purged and prosecuted and Zeihan no longer has any active sources and is clueless about what's happening.
___________

I don't get why people expect trains to be built primarily for profit and only serve the needs of society and the country as an afterthought. Why don't you criticise the USA for failing to put profit first on it's road network? Why isn't it a travesty when the interstate system doesn't even try to profiteer from it's users instead of allowing people to drive on them for free?

[Loe Diben]

A quick run by Zeihan of why China is in deep doo doo:

His take on the Chinese economy can be found elsewhere. Basically, it's a weird system. Individuals have little choice in what they can invest in. Most of that is in real estate. Which is why they have empty cities, and shoddy construction. It's a massive bubble that burst, and China is trying to hide how bad things got.

@late The state is deeply involved in the economy, and they see investment as a way to create jobs, not profit. The result of that is overinvestment in infrastructure. So they have as much in high speed trains as the rest of the world combined. But some of the routes won't attract enough riders to keep the business going. Meaning it will siphon money off the state. Infrastructure investment is supposed to help the economy, not be a drag on it.

Let me close with this, the USSR was also a top down system. But when there was a crisis, they couldn't adapt fast enough, and it all came apart. The same thing is happening in China. They are in a crisis, and they are having trouble dealing with it.

I don't know why the phenomenon that people like to invest in real estate leads to the conclusion that there are no people in the city and the quality of the construction is poor. Classic Western absurd logic and smear without evidence.

China created a large number of jobs and tax revenue through the real estate bubble, and used these dividends to vigorously promote infrastructure construction. On this point, the classic Western perspective may differ depending on the national system and the professional level of leaders. China is a socialist country, and leaders of all generations have taken "serving the people" as their code of conduct. Western countries are just the opposite. They serve capital, serve democracy, and are committed to suppressing and eliminating "enemies of democracy" instead of serving the people. This can well explain why China loses money to maintain some unprofitable infrastructure. With its huge domestic and foreign markets and complete supply chain advantages, China also has the ability to maintain those infrastructures for a small number of people without affecting development.

Let me close with this, China is a market economy, not a planned economy, and it is too stupid to say that it "cannot adapt to crises quickly." China pursued a closed-door policy in the 19th century and was unable to quickly adapt to scientific and technological progress and trade systems outside its own territory. But in the 21st century, I see this again in Western public opinion controlled by Western media.

[Puffer Fish]

The state is deeply involved in the economy, and they see investment as a way to create jobs, not profit. The result of that is overinvestment in infrastructure. So they have as much in high speed trains as the rest of the world combined.

Very ironically, China has too much investment in infrastructure, while the United States has too little investment in infrastructure. Both are big problems.

[Loe Diben]

@Puffer Fish Where does too much investment in infrastructure reflect? Investment in infrastructure improves the quality of life for citizens. Does dismantling these investments constitute a disregard for human rights? Infrastructure in remote and desolate places does cost money, but it can benefit the residents of those places.

[Fasces]

China kicks off the year on strong note as retail, industrial data tops expectations

Retail sales rose 5.5%, better than the 5.2% increase forecast in a Reuters’ poll, while industrial production increased 7%, compared with estimates of 5% growth.

Fixed asset investment rose by 4.2%, more than the forecast of 3.2%.

Online retail sales of physical goods rose by 14.4% from a year ago during the first two months of the year.

-------------------

BEIJING — China’s economic data for the first two months of the year beat analysts’ expectations across the board on Monday.

Retail sales rose 5.5%, better than the 5.2% increase forecast in a Reuters poll, while industrial production climbed 7%, compared with estimates of 5% growth.

Fixed asset investment rose by 4.2%, more than the 3.2% estimated by analysts.

The unemployment rate in February for cities came in at 5.3%.

Online retail sales of physical goods rose 14.4% from a year earlier during the first two months of the year.

Investment into real estate fell 9% in the first two months of the year from a year ago. Investment in infrastructure rose by 6.3% while those in manufacturing increased by 9.4% during that time.

“We believe China’s sequential growth momentum remained solid in Q1 despite notable divergence across sectors,” Goldman Sachs analysts said in a report Monday following the data release.

“However, to secure the ambitious “around 5%” growth target this year, more policy easing is still necessary, especially on the demand-side (e.g., fiscal, housing and consumption).”

Despite the upbeat results, National Bureau of Statistics Spokesperson Liu Aihua cautioned that domestic demand remains insufficient.

She told reporters that real estate remains in a period of “adjustment,” and that the overall economy is “in a critical period of recovery, transformation and upgrading,” according to a CNBC translation of her comments in Mandarin.

When asked about the unemployment rate for people aged 16 to 24, Liu said the figures would be released a few days after the monthly press conference on economic data.

https://www.cnbc.com/2024/03/18/china-r ... tions.html

[JohnRawls]

A quick run by Zeihan of why China is in deep doo doo:

His take on the Chinese economy can be found elsewhere. Basically, it's a weird system. Individuals have little choice in what they can invest in. Most of that is in real estate. Which is why they have empty cities, and shoddy construction. It's a massive bubble that burst, and China is trying to hide how bad things got.

The state is deeply involved in the economy, and they see investment as a way to create jobs, not profit. The result of that is overinvestment in infrastructure. So they have as much in high speed trains as the rest of the world combined. But some of the routes won't attract enough riders to keep the business going. Meaning it will siphon money off the state. Infrastructure investment is supposed to help the economy, not be a drag on it.

Let me close with this, the USSR was also a top down system. But when there was a crisis, they couldn't adapt fast enough, and it all came apart. The same thing is happening in China. They are in a crisis, and they are having trouble dealing with it.

Zeihan overhypes things usually but overall his okay. So he is not wrong on this one. China just hit the middle income trap adjusted for modern inflation I suppose. So it is a combination of great many downwards factors including that he mentions but also ones that he doesn't. The main problem though is that the wall is hit and they need to develop high income jobs/industries that have long ROI times that usually heavily relies on rule of law, democratic continuity, understandable and stable economic and foreign policy etc etc. European and US investors are okay investing in CHina when ROI is like couple of years or 5 to get the money and escape if needed. A whole another beast is to invest in to high grade research or complicated manufacturing that takes 5-10 years to set up and build up and only then it will start making a profit and creating investions to make a profit. Nobody is going to do that in China because they lack a lot of things that US or Europe already has for relatively the same price then. So why build it in China? And with manufacturing jobs becoming less competitive compared to Vietnam or Philipenes then there is no point in building those also in China because it is cheaper elsewhere now.

In essence, this is what Russia faced circa 2006-7-8. But never managed to reform. This seems like a easy process right? Well in reality it isn't so because it requires to break down the monopolies, privatize businesses, basically remove dictatorial cronies from power and let the power brokers of the past be replaced by sort of free thinking power brokers that are not aligned with the party.

The government monopolies that allow of concentration of wealth in the hands of the few controlled by the CCP or loyal to the CCP will not take kindly to this. The Oligarchs in Russia are not that different compared to large state monopoly handlers or loyal pro-CCP businesses in China. It is the same system of patronage for loyalty. It is inherently ineffective and the people in charge of those companies are not going to just give their power away simply because the country wants/needs a better life. They will fight for it and they will never surrender since without that patronage for loyalty they are really useless people. They don't have any real skills besides loyalty.

It doesn't mean that all of them are but a vast majority definitely is. And if you try to rebel against the way of things then you get put down and your share gets redistributed to the loyalists.

[late]

I don't know why the phenomenon that people like to invest in real estate

leads to the conclusion that there are no people in the city

and the quality of the construction is poor.

Classic Western absurd logic and smear without evidence.

It's state policy, not individual choice..

There was a speculative bubble, entire cities were built, and are largely empty.

There is a lot of crappy construction:
"According to Chinese architect Li Hu, tofu-dreg projects in China are vastly outnumbered by buildings without construction flaws. Li said that in most cases, ill-constructed buildings don't collapse but merely have a reduced lifespan or leakages."

https://en.wikipedia.org/wiki/Tofu-dreg_project

There is plenty of evidence, if one pays attention...

[late]

@Puffer Fish Where does too much investment in infrastructure reflect? Investment in infrastructure improves the quality of life for citizens. Does dismantling these investments constitute a disregard for human rights? Infrastructure in remote and desolate places does cost money, but it can benefit the residents of those places.

[Wellsy]

@JohnRawls
Could you point be summarized that those with capital don’t trust that they can make such long term investments because those at the head of Chinese businesses are unreliable or more subject to intervention by the CCP?
And added to this I'd that labor is already cheaper elsewhere.

[JohnRawls]

@JohnRawls
Could you point be summarized that those with capital don’t trust that they can make such long term investments because those at the head of Chinese businesses are unreliable or more subject to intervention by the CCP?
And added to this I'd that labor is already cheaper elsewhere.

Its a bit more complicated then that. The thing that you wrote is basically correct if you talk about investment from EU or US but it is not just intervention. Intervention by itself really doesn't matter to business and since we are talking about high tech or high creativity industries than it doesn't matter even more. How are you going to regulate the most precise machinery equipment or the most advanced CPU design? What matters is uncertainty legally, that your business can be arbitrarily given away or taken by the state because the party thinks that it is important. Or it can be given to a private individual who is loyal to the party. Or that your research can be undermined by a government institution to propagate Chinese influence for example through bugs in software to spy on people etc. Outsiders won't invest in to high tech/high yield industries because it takes decades to build them up and then get a profit, the ROI is too long and the uncertainty both political or government structure wise or foreign policy wise is impossible to predict and too risky.

But that is just one part of it. You can grow the economy yourself albeit slowly because investment just speeds up the process folds. You can invest yourself like China is doing now but once again you run in to the same problem that now people are unwilling to start business for the same reason even your own. So China is left with manufacturing that it got for export and infrastructure construction and investment in to both categories. But at some point you can't grow it anymore because there is a limited need in infrastructure and manufacturing. This example might have been brought before but digging a hole is creating GDP, it is useless GDP but its GDP. This is in essence that China has been doing for now, there is too much bloat in useless projects that don't really serve any purpose. You don't need 20 bridges or 20 railroads if people can use realistically only 2 and the other 18 are not that used. Since you pay for those holes or bridges or railroads then you accumulate debt or loose money if you used money. Debt will then pile on like a brick holding you down.

And then we come to just pure inefficiency of Chinese economy. Their economy, sort of like Russias economy, is based around large enterprise which is often controlled by the CCP in one way or the other. You can be a private business but you are a private business that is either loyal to the CCP or you are out of business. Then there are the state run monopolies so to speak in their categories. There are many forms of how the central governing body controls those enterprises be it loyalists or outright coersion and permitting stealing of those businesses or subsidies without which that business won't survive but the bottom line to all that is the businesses themselves are not very efficient and are run by pretty much men whos main quality is loyalty and not really business prowess or invention so to speak. These kind of things might be a good start if you have 0 gdp but over a long period of time something needs to be done about them because if your salaries are no longer 0.1 cent then this inefficiency starts to become a bigger and bigger problem overall for the economy. They are basically an anchor for everything else within the economy.

These models are essentially good for starting from 0 or copying existing technology. The model did serve its purpose for a time but now you have to reform to move on.You are not inventing or producing cutting edge stuff here and that is the main problem.

[Rich]

A fantastic new Blockbuster movie from the Liberal brothers.

From the people who brought you

Sanctions will disarm Saddam
Venezuela will see the neo liberal light
The Russian army has six months till complete collapse.

The Liberal brothers bring you

The collapse of China The Next Generation 5

[JohnRawls]

A fantastic new Blockbuster movie from the Liberal brothers.

From the people who brought you

Sanctions will disarm Saddam
Venezuela will see the neo liberal light
The Russian army has six months till complete collapse.

The Liberal brothers bring you

The collapse of China The Next Generation 5

How are we collapsing China? What now Rich? Did we invest all the money in to useless infrastructure projects and housing that has no use right now because there is not enough people or money to buy it in the hands of the people?

Did we increase the salary of workers in China? Is that a bad thing actually?

[Rich]

How are we collapsing China?

If the China economy and regime goes into free fall collapse tomorrow, I'll be very happy to look silly. If its downhill for China from here on in, I'll be very happy for the Zeihan fans to come on the forum and remind me of how wrong I was. Its just I've been hearing about Chinese economic collapse since forever. I'm like one of those ex Christians who really wanted to believe in Jesus, but just gave up on him ever actually returning.

I want us to do more to stop the rise of the domination of National Socialist Han China. That's why we need peace with Putin and to try and pull Russia away (not literally obviously) from China, North Korea and Iran.

[late]

If the China economy and regime goes into free fall collapse tomorrow, I'll be very happy to l0ok silly. If its downhill for China from here on in, I'll be very happy for the Zeihan fans to come on the forum and remind me of how wrong I was. Its just I've been hearing about Chinese economic collapse since forever.

I'm like one of those ex Christians who really wanted to believe in Jesus, but just gave up on him ever actually returning.

I want us to do more to stop the rise of the domination of National Socialist Han China. That's why we need peace with Putin and to try and pull Russia away (not literally obviously) from China, North Korea and Iran.

What I've been hearing "forever" was how strong the Chinese economy was, and that we should all be learning Mandarin. And when I say "forever" that became a recurring theme in scifi in the 1980s...

Putin has plans that include roughly 5 NATO countries, and he's real bad at taking no for an answer...

[JohnRawls]

If the China economy and regime goes into free fall collapse tomorrow, I'll be very happy to look silly. If its downhill for China from here on in, I'll be very happy for the Zeihan fans to come on the forum and remind me of how wrong I was. Its just I've been hearing about Chinese economic collapse since forever. I'm like one of those ex Christians who really wanted to believe in Jesus, but just gave up on him ever actually returning.

I want us to do more to stop the rise of the domination of National Socialist Han China. That's why we need peace with Putin and to try and pull Russia away (not literally obviously) from China, North Korea and Iran.

God Damnit, why do you take everything so extremely. China ain't gonna collapse but it will have significant economic difficulty. Russia was fine for 15 years after 2007-2008 more or less and nobody talked about "collapse" well until they invaded Ukraine and made things much worse for themselves. Same here, there is no reason for CCP collapse unless they choose to reform but that isn't a collapse isn't it?

[Loe Diben]

It's state policy, not individual choice..

There was a speculative bubble, entire cities were built, and are largely empty.

There is a lot of crappy construction:
"According to Chinese architect Li Hu, tofu-dreg projects in China are vastly outnumbered by buildings without construction flaws. Li said that in most cases, ill-constructed buildings don't collapse but merely have a reduced lifespan or leakages."

https://en.wikipedia.org/wiki/Tofu-dreg_project

There is plenty of evidence, if one pays attention...

@late If anyone cares, then they will find that the sources of these so-called "evidences" are not reliable. Has any mainstream media reported on this? In fact, this problem has far-reaching consequences. In 2024, you believed that the real estate bubble burst because of quality problems, and cited an unknown story. But you don’t seem to have taken into account what happened between 2019 and 2023 that caused millions of deaths in the United States.

"There was a speculative bubble, entire cities were built, and are largely empty." It is correct that entire cities were built in a speculative bubble, but what does "largely empty" mean? What is the subject of this description? All buildings? New buildings? On what base are you basing your percentages on? What proportion of this base are these vacant homes? Your wording is very imprecise and highly misleading.

The West has spared no effort to discredit China on all major and minor issues, and has funded public propaganda at home and abroad that "China is going to be finished" for 30 years. So will they succeed this time? You can talk about your attitude and why your attack on China this time is more effective than previous ones.

China does not just have real estate, but in your opinion, China, "a planned economy country stuck in the last century", only has real estate advantages to rely on. Learn Chinese or use translation software to discover information for yourself that has not been tampered with by Western media, and you will find a different world.

[MistyTiger]

I have a financial planner and he wanted me to invest with BlackRock. Well in 2023, they were under investigation for doing business with over 50 Chinese companies that posed a national security threat to the US. So I refused to choose any BlackRock products.

BlackRock is the biggest investment firm in the US. I don't care. I don't want to be involved with them since I know about that investigation.

[Loe Diben]

I have a financial planner and he wanted me to invest with BlackRock. Well in 2023, they were under investigation for doing business with over 50 Chinese companies that posed a national security threat to the US. So I refused to choose any BlackRock products.

BlackRock is the biggest investment firm in the US. I don't care. I don't want to be involved with them since I know about that investigation.

@MistyTiger Capital always flows to a more stable party, and American capital will naturally not invest in Chinese companies sanctioned by the United States in the US market. However, given that the United States abuses national security to promote trade protection policies, capital may choose to invest directly in the Chinese market for the sake of cost and a stable environment.