China Post Pandemic Economy - Not Good
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https://www.cnn.com/2024/02/06/investing/china-stocks-rally-government-stimulus/index.html
Chinese stocks staged their biggest rally in years Tuesday, after the country’s sovereign wealth fund said it would step up buying shares as officials scramble to draw a line under a three-year market rout.
Not surprised that the CCP intervened, it's a matter of time and intensity.
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Deflation in China
China Deflation Alarms Raised by Falling Prices for Food and Cars
In addition to consumer price declines in January, wholesale prices fell last month, and have been down in every month since October 2022. -
Deflation in China
China Deflation Alarms Raised by Falling Prices for Food and Cars
In addition to consumer price declines in January, wholesale prices fell last month, and have been down in every month since October 2022.@Axtremus said in China Post Pandemic Economy - Not Good:
Deflation in China
China Deflation Alarms Raised by Falling Prices for Food and Cars
In addition to consumer price declines in January, wholesale prices fell last month, and have been down in every month since October 2022.Isn't that good? When talking about Bidenomics there have been constant complaints that lower inflation rates don't equate to lower prices (because apparently that isn't really obvious)
Maybe if we were Communist, we'd get lower prices, and we'd all be happy!
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https://www.barrons.com/articles/china-property-bubble-popped-these-cities-taking-the-brunt-906d51b2
But nowhere are things worse than the property market in lower-tier cities—places with relatively modest GDPs and no more than a few million people. Their biggest problem is glut—too many units with few prospective buyers.
Inventory clearing time is the most striking indicator of how much worse things have gotten for lower-tier cities. The metric is the area of already-built houses divided by the total area of units where a contract has been signed. In essence, how many units does a developer have versus how many buyers have agreed to purchase them.
In December 2020, clearing in all tiers was eight to nine months. Then unsold units in lower-tier cities skyrocketed, tripling by December 2023, nearly double that of higher-tier cities.
As of the most recent data, the time to clear housing inventories in lower-tier cities is now about 30 months, compared with eight months three years earlier, according to data provider Wind. The rate remains roughly half of that for higher-tier cities.
The southern city of Shaoguan—on the cusp of the third and fourth tier with 2.8 million residents—has an inventory clearing time of 131 months, or 10 years, according to a survey by think tank E-House China Research and Development Institute.
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https://www.cnn.com/2024/03/12/business/china-moodys-downgrade-vanke-junk-intl-hnk/index.html
Chinese banks are reportedly scrambling to bail out one of the country’s biggest property developers after its credit rating was downgraded to “junk” status by Moody’s on Monday.
Beijing has been struggling to restore confidence in the country’s ailing real estate industry and appears to be working flat out to prevent China Vanke going the way of Evergrande and Country Garden, which both defaulted on their debts and are at risk of being liquidated.
Chinese state media reported Tuesday that 12 major banks, including the six largest state-owned lenders, were in talks to provide a syndicated loan for Vanke worth as much as 80 billion yuan ($11.2 billion) to enable the company to meet upcoming repayment deadlines.
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China's securities watchdog has accused a core unit of China Evergrande Group of inflating revenue by nearly $80 billion over two years before the developer defaulted on its debt.
The China Securities Regulatory Commission has imposed a fine of 4.2 billion yuan ($580 million) on core Evergrande unit Hengda Real Estate for inflating revenue in 2019 and 2020 by a total of 564.1 billion yuan, Hengda said in an exchange filing late Monday.
Hengda cited the inflated revenue figure in its attempts to sell 20.8 billion yuan worth of bonds in 2020 and 2021, an act the regulator said constituted financial fraud. The inflated revenue made up over 60% of its stated profit in 2019 and over 86% in 2020.
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https://asia.nikkei.com/Business/Automobiles
As China grapples with manufacturing overproduction, some workers at one of China's auto plants face a difficult choice about their jobs.
Newlywed Lisa told Nikkei on Tuesday that in her brand-new factory for Li Auto, more than 1,000 employees like her were given the choice of either quitting or receiving minimum wage until business improves.
"We were told that our pure electric vehicle sales are weak due to the bad conditions, so the company has to cut production," said 27-year-old Lisa, who spoke on the condition of anonymity to Nikkei. "I will try to find a job. Otherwise, I will be starving to death."
Local media reported last month that Li Auto was planning to cut 18% of its workforce.
Li Auto delivered 80,400 cars in the first three months of the year, up 53% from the same period last year — but down 39% from the last quarter of 2023, per its financial results. The company did not respond to a request for comment from Business Insider.
Li Auto's financials are emblematic of the arc of China's electric vehicle industry. Car makers scaled up production quickly but have struggled to drum up enough demand for all their cars, especially as domestic consumers face a real estate crisis and volatile stock market.
Some of those automakers are looking to other countries as bigger markets, but politicians seeking to protect local manufacturers are cutting China off. Last month, the White House said it would impose a 100% tax on Chinese-made EVs.
Yao Xiaodong, an official for a Chinese EV group, said at a recent meeting that manufacturers could "either go overseas or go bust," Nikkei reported.
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Does China need a war to prop up its economy?
“Cry havoc and let slip the DOGE of war!”
Those who cheered as J-6 American prisoners were locked in solitary for 18 months without trial, now suddenly fight tooth and nail for foreign terrorists’ "due process". — Buck Sexton
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@Jolly said in China Post Pandemic Economy - Not Good:
Does China need a war to prop up its economy?
Hopefully not, but it definitely could initially help the economy as well as draw the local's attention away from domestic problems.
But I do think (believe?) that there would be so much "backlash" against China that it would very quickly tank the Chinese economy.
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When China lost even Ray Dalio, you know Asia’s biggest economy has got some serious troubles ahead.
For the record, the billionaire Bridgewater founder, one of the biggest China bulls anywhere, hasn’t given up on the place. But as Dalio told Bloomberg in Singapore this week, “there are real issues” with China’s $17 trillion economy amid a deepening slowdown.
and
Again, Dalio hasn’t fled China. But the fact that the founder of the globe’s biggest hedge fund is raising warning flags matters.
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https://www.forbes.com/sites/miltonezrati/2024/10/03/chinese-ev-firms-are-suffering-losses/
Beijing had made a big bet on electric vehicles (EV). But like so many other efforts of China’s centrally planned economy, things have not gone well. Intense price competition among China’s many EV producers as well as waning demand—both in China and abroad—have put manufacturers into financial trouble, with some reporting losses despite still considerable public support. Beijing has begun to step away from the effort, leaving local governments to pick up the subsidy slack. It is not a sustainable situation.
This now failing effort began more than five years ago. According to the MIT Technology Review, the raft of subsidies, tax breaks, procurement contracts, and other more oblique incentives to ramp up production and make China dominant has cost Beijing the equivalent of some $230 billion. The push eventually created a market for 13.1 million vehicles that accounted for 60% of EV ownership globally. Beijing also pushed for global sales of Chinese-made EVs. That effort made little headway in the United States even before Washington began to show increased levels of hostility toward China and Chinese products. The effort did, however, have considerable success in Europe.
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https://www.forbes.com/sites/drewbernstein/2024/10/22/have-we-reached-peak-china/
Interesting article and kind of follows my thinking also.
Logan firmly believes that China’s growth has already peaked when defined as the country’s share of nominal global GDP, which he thinks is the most precise metric of its impact on the world’s economy. He also believes the deceleration was underway much earlier than most experts think.
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China unveils $1.4 trillion stimulus in effort to boost flailing economy
https://www.washingtonpost.com/world/2024/11/08/china-economy-stimulus-package/
China on Friday announced a $1.4 trillion stimulus program to help local governments deal with debt, as Beijing grapples with a struggling economy and the possibility of a new trade war with the United States after Donald Trump’s election victory this week.
The highly anticipated announcement — the second stimulus package in six weeks — is an effort to bolster cash-strapped local governments, including those of cities and towns, but economists say the initiative will not be enough to address underlying issues and inject real momentum.
At the end of the week-long National People’s Congress on Friday, Chinese Finance Minister Lan Fo’an unveiled a program to raise local government debt limits by $838 billion over three years, with an additional $559 billion available for local governments to tap over five years.
