Topic: China’s Debt-to-GDP Ratio Rises a Record of 286.1% (Read 401 times)

also important to know evergrande headquarter operated in hongkong.. thus different rules applied compared to mainland china's rules set by beijing

Obviously with Evergrande the Chinese gov sidestepped its own foundational principles as a supposedly socialist government.
There's an important asterisk here however. Ever since Deng Xiaoping, the liberalization of policies has allowed for many free market elements to start affecting the daily life of Chinese people.

There are many voices in China, but mostly also abroad, that highlight how China is straying too far from the benefits of planning parts of an economy for the greater good.
So while Evergrande at least to some extent might have been working in cooperation with the Chinese government, it was still acting as a private for profit corporation and there was not even the possibility of enough oversight from the state to prevent them.

It's important to understand that profit and growth driven investment are the only factors that create incentives to build homes where no one wants to live in.
In countries where state subsidies exist for housing quite the opposite actually happens, there's more demand than supply and the state gets overwhelmed with reviewing requests unless they dedicate more resources to this effort.

show the whole quote, its a stat of market share of SHIPMENTS

just so you know CHINA make over a billion phones a year...
just so you know CHINA only import 271.3 million in 2023
just so you know of the 271.3 million imports only 45m were of the apple variety

learn why a shipment, shipping, shipped is related to transporting products not sales of products.. and yes i said sales not sails

but it was fun to watch you yet again mention a quote but snipped off the word shipment even when you quote me calling you out on it

Lol, no central planning?
https://www.fujian.gov.cn/english/news/202108/t20210809_5665713.htm



A lot of people mistake the fact that private companies build something it automatically means there is no government control.
So let's clear a bit of those:
- no company can build how much it wants, every local authority and every regional government has pre-approved quotas
- local governments can force final prices on specific projects and can enforce a minimum price
- the central government can make quotas on new buildings, denying building in big cities and enforcing building in smaller ones (mainly to prevent migration), even without demand there, even if in the past 10 years only 10% of the buildings have been sold, the quota must be met!
- the main government and province governs issue permits and quotas outside the real market on new real estate building, you don't buy land and seek approval for you project like in the west, you first register, your company gets approved and you can build a x where y meets z on predesign land
- the whole hukou thing, basically treating migrant workers as second class citizens, denying the right to buy or sell a house without permit

Does this look like a free market?

It's interesting that while China is an economy that still follows central planing to a large extent, they do allow many free-market aspects into their economy.
Evergrande for instance, was a firm very much based on free market competition and received a lot of funding originating from western big money firms.

Evegrande and the entire Chinese real estate boom was a very large deviation from what a centrally planned economy would look like. For sure it created many jobs and kind of a gold rush for home manufacturing firms and investors, but it also created a bubble. For one, the government was either unable or unwilling to monitor what the portfolio of real estate assets by a company as large as Evergrande consisted of. It's true that many of these housing estates will remain unfinished and uninhabited.

But we have to think about some fundamentals before judging what to criticize here. What drove Evergrande to project infinite growth even past the point where people weren't moving in to their newly constructed apartments (and TOWNS!)? Wasn't it profit and chasing growth-oriented investors? If China had proper central planing for housing there would be no need for a market-based approach to this issue, which is essentially the root cause to tis issue.

Yeah:
https://www.bbc.com/news/business-67562522

Perfect central planning

Oh Franky, I always forget English is your sixth language you never learned
https://www.idc.com/getdoc.jsp?containerId=prAP51817224




Yeah Franky, top smartphone brand by SALES in CHINA is APPLE! Deal with reality!

Are we arguing about which nation is actually producing more?
Because china sure does surpass the US and probably most other nations when it comes to total amount of things produced. Just check the US trade deficit and you will see that the US has been slowly but surely decreasing it's manufacturing and just keeps relying more and more on imports.

Ofc this happens for a reason, the relative cost to produce most stuff is usually lower abroad, often due to lower labor costs. But the net benefit of having jobs in your country is always going to be greated due to the multiplier on GSP contribution.
The free market doesn't care about a nation's prosperity though. China is doing better in some economic aspects due to the very fact that they have central planning and can plan big parts of the economy bssed on national interests instead of short term profits of individuals.

Maersk can't be the loser as long as the money printer in the US keeps printing papers and pays for the containers.


Oh they exactly know what's going on. I don't doubt it. The thing is, they can't do anything to reverse it. It is all going downhill since Nixon removed the gold standard. More printing and more debt, less manufacturing in the US.


Nike ain't paying shit. The consumers in the US, the tax payers do. The money printer creates inflation by inflating the money supply and it becomes everybody's problem. Every middle class and working class citizen pays for the empty container.

The equation for being wealthy is very simple. If you have lots of stuff (not cash), you are a wealthy person. Not only China has more stuff, they make more stuff.

Simplification is good.

A bit simple as the empty container gets someplace else before returning to china. The handler Maersk https://www.maersk.com/tracking/ would be the loser if not. Simplification is not good when forming an opinion about the course of a country.

I doubt the finance ministers or secretaries of this planet know how the balance sheet of their respective state look like. 

Take nike, their shoes cost between 4 and 15 US$ to make and are sold between 80 and 600 US$ in the US. Nike pays for the container, are you aware how many empty containers Nike could afford? 
 

heres the thing about stompix. he ADORES trying to find the most slimmest and most muffelled stat he can find to make america look great
. when he sees "apple takes top spot in chinas smart market" what he misses out is the statistic is not about china's population consumer market.. but a statistic about which phone is imported most BY SHIPMENT

for instance
there are 1.4billion cell phones manufactured in china. china domestically manufacture billions but lets say only imports 285m
of the IMPORTS iphones is within the 285m but not all 285m, just the most compared to others imported
(only 45m iphones were sold in china last year)
do not confuse SHIPMENTS with sales

meaning although chinas population market are buying WAY MORE THEN 285m only a fraction actually are iphones(45m)

yep stompix purposefully ignored "in shipments" to pretend to then say his stat proves iphones are #1 ranking of all chinese bought phones

iphones are not the #1 rank phone amongst chinese consumers.. though stompix will now want to post 10 racially bias posts to try to make china look bad and make america look great again

..
stompix always has a "confirmation bias" where instead of finding all available statistics. running the math to get better/more accurate results. he instead just quick searches one statistic that sounds like a narrative he already set for himself.

They certainly produce more papers than the real stuff. The numbers don't lie. China on the other hand, they make more real stuff than papers.


And?

For every iphone the US send out, they buy 1.65 Huawei from China and the other countries...


For every 2 ship containers come from China to US, one of them returns empty. China is winning this game no matter how you spin it.  

Oh, it is! It's like the teacher asking you why you didn't do your homework and you point at the other guy saying he didn't eat all his carrots! Why?
Is it that impossible to have a conversation on a country alone and not go full crazy on but what about the US, but the US, what about the US, look at the US,
Although now that I think, yeah, it might not be low effort propaganda, it might be a sign of a meltdown because of a rejected green card!

Imagine how discussions on Bitcoin would be if at every pace someone would say but what about ethereum but what about solana!


Yeah, and we have heard of Japan collapsing because of this for 3 decades yet, remember how the UE was supposed to crash because of PIGS? It all depends who owns that debt and what it was used to prop, in China it's spiraling out of control and its used to prop a sector of the economy that makes 30% of their GDP and it's unable to prop up even by enforcing minimal prices on houses and apartments so their value can't go down.


I remember how Iranians were chatting death to America at Soleimani burial while his coffin was in a Chevy truck and his daughter was taking pictures with an Iphone, speaking of
Apple takes top spot in China’s smartphone market for the first time
Who's buying who?  

when you realise the formula for GDP is essentially.. yesterdays(figuratively) debt is tomorrows(figurative) GDP. you then learn that GDP is not a real number people actually care or should get emotional over..
its just a silly stat that world leaders abuse to rank each country, but that stat doesnt represent real money economics of cash flow/asset flow of a country domestically nor internationally

just remember all modern money is basically debt generated

If China's debt is unsustainable, the whole world will suffer. It won't be an isolated crisis if the Chinese economy experiences a financial crisis.
First of all China is the single largest bonds buyer in many foreign nations. If they start focusing on their domestic economy it'll be hard to find a replacement bonds buyer so many countries will have to wind down their spending so they also can avoid getting into a debt spiral.

Chinese state owned companies are also some of the top bidders on global infrastructure projects. They provide affordable and reliable large scale infrastructure development services to many developing nations, often at favorable terms. A domestic financial crisis would likely mean that they would have to increase their prices due to their domestic disruptions. So development in much of the developing world would also slow.

Let alone the fact that China still lifts big part of the world's responsibilities when it comes to manufacturing.
Cheap labor in china is still utilized so we can get cheap phones, plastic products, raw materials, parts for production and many things.

The real question isn't if this debt to GDP ratio is meaningful, but what will be the consequences in the event of a Chinese financial crisis.
My speculation is that the whole world is so dependent on China that our leaders (regardless of how undemocratic that would be) would not let china enter into a spiraling crisis and would rather help it to contain any potential consequences of a financial crisis.
Personally, I would rather see our economies become more isolated from China and start producing more of our own stuff, but that doesn't seem to be happening soon sadly.

The nuance is that the USA can print DOLLARS that the whole world needs. China can't print dollars. Dollars in which he has more than half of his external debt. Dollars for which technologies are bought in China, and DOLLARS in which investments used to come to China.
Yes, not everything is so positive in the US, but the US economy has been and remains stable (relative to most others), as well as other characteristics that ensure the stability of the dollar. But the same cannot be said about China. China has overestimated its strength, its importance, its potential. Plus, and this is perhaps one of the main problems, he chose the path to a totalitarian or close to this vector of power. This happens, we are watching the situation develop. And the biggest problem is that such regimes, often, in order to “smooth out” their inept rule, start wars that can turn from local to global. This is an old concept, when the local population can soon no longer be restrained from an internal “explosion”, they create a “global external problem”, where supposedly there are “external enemies”, the security of the country, “let’s save the homeland”...

There is more to come as China has messed up big time and it has so many policies which goes against humanity it won't require any other nation to topple China but it's own domestic issues, China has created so much of discontent amongst it's citizens and it's surrounded by issues like inhumane treatment of Uyghur (Occupied East Turkestan), Declining population (ageing population) due to it's strict one child policy which seems to be relaxed now, it's frequent stand off with India and controversies surrounding Taiwan. These issues are just waiting to burst and it would be bad for China.

Each government tries to devalue its currency to match the others as Ive read it, if USA had been the only country to devalue in 2008 or more recently 2020 then we'd have a very different outcome.   The trade balance would be altered, I presume the bias would have swung to domestic production for USA as imports become more expensive.  Its not quite clear as many countries are using USD as a proxy for world trade despite it mostly being tied to that country and especially the Americas or large trading partners.  Its seen as a disadvantage to have a strong currency now which is not the way it should be yet thats how it's turned out.
   Part of that currency weakness is this ongoing debt situation, I see the real losers as the common populations of each country.    The very largest entities in a country often use up large amounts of debt they have issued themselves, able to utilize the cash and gain a great return then inflation.   Most of us plain workers are just trying to save enough to buy a house or deposit so we lose value.


I wont ignore, I think China has the greater problem somehow.  They lack population growth now, in fact their working population has been falling for some time.  USA continues to have base line growth from decade to decade and quite often justified in its housing demand which is of higher quality.  I presume these factors matter but its not always clear, both countries sometimes end up with a ghost town effect from housing built but of no real usage at that time.

Talking about the US debt isn't "low effort propaganda". The USA and China have the same problems, when it comes to big government debt. Other countries like Japan and the UK also have ridiculous levels of government debt. At this point, the global economy might be heading to a "who will stop paying it's debts first" race. The anti-west propaganda is praising China for it's high economic growth and big technological progress. The anti-west people are ignoring the fact that the Chinese economy is built upon the same real estate bubble as the US economy. Every capitalist economy is building a financial/real estate bubble more or less. The capitalist economy of communist China is no exception of this rule.

While every country tries to massage and sooth their numbers, more developed countries understand that creating independent statistics which accurately diagnose problems in the economy is more important than trying to appease the dictator in charge. The problem with communist and authoritarian countries is that creating a problem, even something as innocuous looking like compiling figures, may often annoy the wrong political person which can make your life a lot harder. Then you start to end up in an echo chamber, where figures are tailored to what looks good and makes the country look better, rather than helping to identify a problem. The more Xi Jinping sticks around, the worse this is going to get.

The US produces much more than paper.
Did China research and develop most of the products they are selling?
Still 90% of all financial transactions are done through SWIFT.
They have all those buyers China needs to have a positive balance.

An I'm not a fan of the US System. neither of socialism and other isms

todays debt becomes tomorrows GDP. and thats how governments grow their rank in "super power"
when another country threatens replaceing the #1 spot, the number one ranker then overblows the bank to raise the GDP to strengthen retaining the #1 status

GDP is a misleading number that literally and figuratively inflates itself

..
when these numbers become a pissing contest of each side fluffing the numbers to find each others negative statistic to point fingers at "ha ha this shows your negative" just becomes tomorrows "oh crap now their positive"

..
when people then read mainstream media and then form racial/cognitive bias to certain nations. they end up showing their racial profile not their economics points of view

https://en.wikipedia.org/wiki/List_of_countries_by_net_exports

I listed the countries who have the most positive trade balance. China is #1, guess where USA is. At the bottom of the list. This is the data from 2022 but 2023 won't be miraculously different.

All the US producing is worthless papers. China is manufacturing the real stuff. This can't continue forever like this. Sooner or later China will want to buy something from the US and that will be the start of the next world war because the US don't have "something" to give China for their dollars just like they didn't have the gold back in the 70's.

Reading here makes me wonder why people believe that a government is a homogeneous body?

How often a lower governmental clerk runs haywire in any government no one knows. It happens in all governments that people being part of the government brew their own stew.

When you start to ignore the red flags for the sake of growth, you will outgrow your own income level. Just because you have some money, doesn't mean that you will have money forever, and that is why it is not going to be easy to not crash. Chian grew way faster than they could afford to, and that is their issue, and they had some insane amount of income that was coming to them, which made them think that it will continue forever, and growth will not stop.

With pandemic and global economical crisis all around the world, income staggered and they already had some cracks in the ceiling, which resulted with them not having anything that would be profitable ever again, that resulted with them having even worse afterwards and crash.

Upon reading it, I decided to compare it with the US debt-to-GDP ratio, and yeah, it's a huge difference. People have been saying that the US debt is catastrophic, when there's clearly a #2 economy that has a much worse situation, and apparently has had it worse for over a decade if we consider this specific factor. But, while it's steadily growing, it's harder to estimate the impact of it, just like in the case of the US. Some keep saying it'll crash the economy, but years go by without that happening. It's not good, for sure, but whether it will make a huge negative impact on China's economy short-term remains to be seen.

There's also that, a competition against China for cheap labor. But it is projected that India will slowly start taking over China's place as the world's dominant manufacturing factory/production hub. That's because of India's increasing population, increasing abundance of skilled labor, and their growing economy.

Plus China's population is getting older, and therefore the number if skilled workers get old too and decrease. ¯\_(ツ)_/¯

China might also start mobilizing a stabilization fund/rescue package to provide liquidity and save its stock market from crashing. It's either they will turn on the Yuan-Money-Printer, or get it from state-owned companies.

https://www.businesstimes.com.sg/international/global/china-weighs-stock-market-rescue-package-backed-two-trillion-yuan

Yeah Franky, do you have something intelligible to say?


The usual, US debt grows everyone screams, disaster, famine, bankruptcies, run to the hills..
China debts grows, this is actually good!



China real-estate sector is heavy controlled, basically if the city/region/province doesn't want for prices to go down it can issue limits on price per sqm, so you won't be allowed to sell below that, that's why some investors sell you the house with a gift such as a car for 200 000 instead of asking for a house at 150 000! 
In theory this would control the prices as it prevent people from selling , they can go further and not allow you to sell at all, it's controlled market so again in theory easier to prop, till the serious cracks appear and then there is no way out of it, goes down like a house of cards worse than if it had fallen the first time!


We're getting closer to the point of finding out this, I'm living in Europe so the experience might be different from the US but lately a ton of cheap stuff in the chain stores no longer comes from China, it's mostly South East Asia, the trend is pretty obvious with clothes, I don't think I've ever seen so few chinese products,  just India, Bangladesh, Indonesia even Egypt and weirder than everything Mexico! Same for all that cheap plastics stuff, till last year I don't think I've ever seen something made in Philippines in a store for all my life!

Double that. Haha.


Actually, if the United States' economy is under a worse condition than China's economy, then those people who debate that China will become the next dominant economic super power should be no stranger to the fact that what's bad for the U.S. economy will absolutely be bad for the Chinese economy. Why? Because the U.S. is China's biggest customer for Chinese exported/manufactured goods.

It's a fact that China's domestic demand alone can't support the whole manufacturing sector.

Not looking good & we all know that the West has big exposure to Chinese markets & vice versa. It’s like a game of dominoes, when one falls they all will. I still hope the world economy can stay resolute, we really do not want to witness another Great Depression.

I think it already has begun given that the Chinese president himself on his speech admitted about the challenges of it's economy, he stated that
Source: https://www.businessinsider.com/china-economy-gdp-xi-jinping-admits-tough-time-enterprises-jobs-2024-1?amp

And I also got this:

Source: https://www.imf.org/en/Publications/fandd/issues/2023/12/China-bumpy-path-Eswar-Prasad

I am not anti China but since the CCP is known to be doing something like a propaganda game, so do you think this is really happening on it's economy? Isn't this a kind of diversional tactics? I mean this could be related to the famous quote from Sun Tzu that says "Appear weak when you are strong, and strong when you are weak."
😁

China is eventually, maybe soon, going to get their bearish side of a market cycle, because their past economic growth could not be indefinitely sustained, and they will have to endure the losses of all the bad investments that were made during the boom period. It's not necessarily going to be a huge economic collapse which usually happens when there's a total mismanagement coming from the government, and CCP are not completely stupid, but China will have to endure some years of close to zero or even small negative growth.

Could be the sign of China's weakening powers as it collapses under its own weight just like what happened during Mao's reign. You would think that after killing hundreds of millions of chinese people to starvation and forced labor China's going to realize what they are lacking and yet here we are.

China's not in the best state economically from the get-go. Their economy's a massive bubble that they tried their hardest to keep within themselves. Elites of the elites there can't take their money out of China without risking their riches being seized by the government to be "repossessed" cause they basically hold the economy and social standing of China together. Their housing bubble collapsed before the rest of the world did as firms default on their loans. Education is going to the shitbox as kids who are very reliant on their boarding school setup are left to be homeschooled during the Pandemic. Factory workers aren't getting paid and if you put up a strike you're immediately silenced in one way or another. It's a massive shitshow out there but this is not gonna be enough to allow other countries to be complacent. They still have their nukes which are very much paid for by the by, and if a country ever tried to pick a fight with them they'd realize why China's going ham on military over the past few decades.

stompix seems to be on a wide tirade of "china bad, america great"
he has previously made topics to guestimate energy use of network and then claim china uses more fossil(but lets slip his favourite US miner uses fossil)
he then screamed repeatedly about how his favourite american mining farm uses cheaper fossil then china's mix of fossil/renewable
he then compares US real estate issues to china real estate using muffled stats
he then compares US population decline vs chinese population using muffled stats

heck im not even chinese and have no chinese ancestry, but even i can look passed the mainstream media assertions to see the more factual stats from better sources that dont show the same story stompix wants to recite

seems stompix wants to show off american patriotism using twisted stats rather than discuss real economics of topics

but look at his personal disclaimer, he doesnt want people talking about america negatively, nor mention american issues as a true comparison

maybe stompix has a side hustle working as a writer for fox news

also

I saw this thread yesterday and, again, it seems that this section gives more play to doom and gloom news, especially if it is about USA and EU. I had to rescue the thread from almost the second page.


When the 2008 crisis broke out, which started in the real estate sector, although it affected the rest of the sectors, China was not greatly affected, as it continued to grow at close to double-digit rates during those years. They have not yet seen a crisis in the sector and it will come sooner or later. In the UK and Spain it was very noticeable. First the real estate sector collapses and then the rest of the sectors are affected. Let's see how this one goes.

yesterdays debt. becomes tomorrows GDP bump

GDP = private consumption + gross private investment + government investment + government spending + (exports – imports)

note where yesterdays debt becomes tomorrows "investment/spending"

There is an old saying that says "he who digs a hole under someone else will fall into it himself" - and if we take into account that the theory is that the Chinese deliberately (or accidentally) released the virus from the laboratory in order to shake the world economy (or something worse), it seems that they have created huge problems for themselves.

I personally not surprised that they are doing so badly, considering that I lived in a communist creation that first collapsed economically, and then a bloody war was directed in which robbers looted "social property" while ordinary people died in the war - some to save their lives, others to conquer other people's territory and kill as many people as possible.

I always wonder if I will see the Chinese rebel against the CP and become some kind of democracy, or if a lot of water will flow through the Yangtze before that happens.

Now we just have to wait for those who think that the Chinese would be much better off (economically) if they didn't ban Bitcoin, and hope that they learned the difference between a billion and a trillion

I read somewhere last year that a huge part of the problem China had with growing debts was poor allocation of resources to revenue sources like infrastructure and property. So it makes sense that they are easing up on hat as the debt problem only continues to grow.

I think this warning will only invite the argument more that discouraging it. 

Note!!! that this is from data published by the CCP, so probably 386% might be more accurate

https://www.bloomberg.com/news/articles/2024-01-17/china-s-debt-to-gdp-ratio-rises-to-fresh-record-of-286-1
Archived is paywalled:
https://archive.ph/bYIYM


What does it mean?
It means simply that right now China's total debt is higher then the USA in debt/gdp ratio!
https://www.ft.com/content/630f828c-ce4b-4f41-a867-9593bfaf0528

How bad is it?
Exclusive: China orders indebted local governments to halt some infrastructure projects-sources

Pretty bad since the CCP is asking local government to stop infrastructure project, might not sound that important, but this is China and the CCP, infrastructure projects as big as they can be are a show of power and wealth, the megalomania things they built are not just for practical purpose but for their politics, as every dictator would want buildings bigger, shinier and bigger again than everyone to show the world his might! Usually with citizens starving to death looking at them!


Now, one can start to understand why China is scared of a property crash,  the real estate constitutes 30% of China's GDP, if that would take a 20% hit it would balloon the debt to 305-310% to gdp bankrupting local governments, and this is the reason why prices are fixed in China, see my other topic about how they try deal with that:
China real estate crisis: Buy a house and get a gold bar!


PS!

I'm pretty sure that some even after readying the title are already typing something about the US debt so keep the shitty low effort propaganda whataboutism out of this:

Stick to the topic and leave the frustration of having a green card rejected somewhere else! 
I know it's a pain for some who wake up ten times at night to check if the de-dollarisation is happening to read stuff like this, but again, this is reality!