Author Topic: China  (Read 324993 times)


Crafty_Dog

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Stratfor: China's recovery hits a wall
« Reply #801 on: January 07, 2022, 11:49:16 AM »
China’s Economic Recovery Hits a Great Wall
China’s economy faces significant headwinds in 2022, including recurrent COVID-19 outbreaks, weak domestic demand, and constraints on the country’s state-led investment model. This will force Beijing to provide stimulus by potentially increasing government and state-owned enterprise (SOE) infrastructure investment, relaxing its financial deleveraging campaign and intervening in the foreign exchange market, which could result in a slowdown in economic reforms and a falloff in long-term potential output. As Chinese President Xi Jinping starts his third five-year term as General Secretary of the Chinese Communist Party (CCP) and head of state, political stability will depend on the government delivering continuous growth. Slower growth in the world’s second-largest economy would slow the aggregate global economy, as well as potentially challenge the social contract in which the CCP provides Chinese citizens economic prosperity in return for political legitimacy.



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ET catching up to me and adding lots of specificity
« Reply #804 on: January 20, 2022, 06:44:46 AM »
China Builds 27 Empty New York Cities
James Dale Davidson
James Dale Davidson
 January 19, 2022 Updated: January 19, 2022biggersmaller Print
Commentary

As of 2016, China’s empty apartment units could house New York City 27 times over.

What does this mean to you? There are a lot of carry-on effects from wasting so many resources. As you delve into a thought exercise to get more acquainted with the ruinous consequences of credit bubbles, be grateful that you don’t really have to worry about malicious genies magically tagging you with mortgaged deeds.

That could be scary. Imagine that some cruel genie took a perverse dislike to you. What worse instance of malevolent magic could the genie perform than to present you with deeds to the astonishing inventory of 70 million empty apartments structures accumulating dust throughout China.

You might think it would make you a billionaire, a real estate magnate on par with Donald Trump. But think again.

This may be a good moment to retell an uncharacteristically charming story Trump told on himself, dating to the savings and loan crisis (S&L crisis) of the late 1980s and early 1990s. That was a time when 1,043 out of the 3,234 savings and loan associations in the United States failed as they tried to digest billions in over-mortgaged real estate properties.

At that time, Trump found himself walking the streets of the Upper East Side of Manhattan one evening with his girlfriend of the moment. As they walked, they came upon a bum in a tattered peacoat lying on a grate. Trump remarked to his companion, “That guy has $1 billion more than I do.” She responded, “But he doesn’t look like he has a penny.” Trump replied, “He doesn’t.”

When he said that, Trump’s fortune was hostage to the banks to which he owed about a billion dollars more than his properties would have realized in a fire sale. I describe this “as an uncharacteristically charming story” because Trump is hardly famous for making jokes at his own expense. Nonetheless, he confirmed to me in a conversation that the above account I share with you is valid. It shows Trump humorously acknowledging the implications of double-entry bookkeeping at his best.

With that in mind, how could you afford to pay the construction mortgages on 70 million apartment units with no residents deeded to you by the evil genie? A challenging question. You would have to do some fast talking with the Chinese banks of the sort Trump managed with New York banks decades ago during the S&L crisis.

Your only hope of avoiding being sucked into a black hole of debt defaults would be to hire some creative scoundrels disguised as accountants to help you persuade the banks to lend you additional billions (or more probably, trillions) to postpone the day of reckoning. Note that the extent to which you could succeed would only worsen the ultimate malinvestment problem. Your assets would not be enhanced in any way by being encumbered with additional debt. They would just become more costly.

Could you keep kiting the debt?

A $36.4 Trillion Question?
That is at least a $36.4 trillion question. Maybe a $45.9 trillion, or possibly even a $116.6 trillion question. The correct answer depends on China’s actual debt level. Unlike Trump’s challenge of three decades ago when the systemic debt issue was denominated in billions of dollars, the Chinese bad debt problem is 1,000 times worse.

Forbes reports the estimate of Professor Victor Shih of the University of California San Diego. Shih believes that Chinese official debt figures have proven woefully inadequate.

A $45.9 Trillion Question?
In 2017, Shih put total Chinese debt at 328 percent of GDP (reported at $14 trillion), therefore $45.9 trillion. According to Shih, “total interest payments from June 2016 to June 2017 exceeded the incremental increase in nominal GDP by roughly 8 trillion RMB.”

If so, that hints that the end is near. However, as rough as that sounds, the actual situation may be even worse.

Or a $116.6 Trillion Question?
If you are a connoisseur of forbidden truths, as I am, you don’t take official figures at face value. You keep digging for tells that reveal the real story. I am convinced that Chinese government statistics are as bogus as those in the United States. And more so.

Evergrande Community
An aerial view shows the Evergrande Changqing community in Wuhan, Hubei Province, China, on Sept. 26, 2021. (Getty Images)
Professor Christopher Balding of HSBC Business School, Peking University, an authority with good sources in the People’s Bank of China’s (PBOC) Financial Stability Board, recently did some subversive arithmetic combining “on balance sheet assets” with “off-balance sheet assets.” Remember, while debts are liabilities to the borrowers, they are assets to the lenders.

He concludes that total debt in China is a breathtaking 833 percent of GDP. That means a debt of roughly $116.6 trillion.

Wow. Just wow!

The actual debt level could be three and a half times higher than suggested by official figures. The National Development and Reform Commission says Chinese debt amounts to 260 percent of GDP ($36.4 trillion). The International Monetary Fund (IMF) accepts a lower official estimate of 230 percent. But suppose Balding’s report of 833 percent is correct. In that case, this is a matter of capital importance to the world economy and your investments.

Annual Interest Payments of 29 Percent of GDP?
Remember, interest rates in China are not as minuscule as those in the United States or negative as those in Europe and Japan. Assume the average interest rate paid equals the short-term interbank deposit rate of 3.5 percent. Balding observes, “this would imply financial services costs to the economy of 29% nominal GDP.” A large nut to crack. Even Chinese growth rates would not come close to covering annual carrying costs of 29 percent.

Is it possible that Balding is right?

Yes. I see several hints that he is.

Are Official Financial Figures Wildly Wrong?
For one thing, almost every Chinese bankruptcy case brings evidence of undisclosed liabilities of individual companies. Balding observes, “it is common to find enormous amounts of undisclosed debts or (Enron-like) asset management products in Chinese bankruptcies or defaults.”

This underscores the suspicion that the actual level of debt has been low-balled. In Balding’s words, it also means that “official on balance sheet financial figures are wildly wrong with disastrous consequences.” He warns, “This implies that we need to rethink the entire story of Chinese development and finance since probably about 2000.”


Balding continues: “Excessive indebtedness is distributed in virtually every sector of the economy. Before, if there was a shock to the corporate sector, householders and the government could step in and help. However, virtually no sector of the Chinese economy does not have an enormous indebtedness. Distributing it throughout simply lowers the capacity to handle a shock.”

‘No Good Deed Goes Unpunished’
Speaking of “shocks,” you should not be shocked to learn that Balding was fired from his post at Peking University after discussing his conclusion—based on PBOC data—that total debt in China has surged to 833 percent of nominal GDP.

In a corrupt world, where people have trillions of reasons to lie about the economy (and some have no doubt lost their lives for failing to heed them), the firing of Professor Balding is as close as you can expect to come to official confirmation that his numbers are correct.

A way of restating Balding’s revelations is that no one knows who owes what to whom or how much can be settled before the whole Chinese house of cards collapses. Estimates of bad debt in the Chinese banking system run as high as 50 percent of GDP—or about $7 trillion. Far more than enough to make the banking system insolvent.

A collapse of China’s asset bubble lies ahead. I doubt any Chinese tycoons are strolling the streets of Shanghai with their girlfriends, making jokes about street people being a trillion yuan richer than they are. That underscores a problem when the government of a country enlarges debt to magnitudes beyond the scale of assets held by even the wealthiest persons. That makes it all the more unlikely that mortgaged assets can be redeemed from hock while encumbered by anything like their current level of debt.

Crafty_Dog

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ET: Political Instability awaits the CCP
« Reply #805 on: January 20, 2022, 06:47:37 AM »
second

Political Instability Awaits the CCP
Ching Cheong
Ching Cheong
 January 19, 2022 Updated: January 19, 2022biggersmaller Print
Commentary

This year the Chinese Communist Party (CCP) will be plagued with internal political instability as its leader Xi Jinping tries to secure a third, if not lifelong, term at the 20th Party Congress set for autumn 2022.

Such a move violates the CCP’s tradition of upholding the two-term limit (each lasting for five years) of the presidency, which was stipulated in Article 79 of the 1982 version of the Chinese constitution. In 2018, however, Xi amended the constitution to delete this clause, which removed the legal barrier to his bid for perpetual power. Naturally, Xi is sure to meet stiff resistance from various quarters within the Party.

Several events suggest that this year is likely to be a turbulent one for Xi and the CCP.

The first is the mysterious absence of Xi’s right-hand man, Li Zhanshu, at a tea gathering on New Year’s Eve, a traditional occasion in which members of the top leadership showcase their solidarity. Although Li reappeared on Jan. 11, proving that he’s politically safe, his absence still caused speculation that Xi is facing strong opposition.

Li ranks third in the seven-member Politburo Standing Committee, the supreme governing body in China. As chairman of the National People’s Congress (NPC), China’s rubber-stamp legislature, he was instrumental in amending the Chinese constitution to delete Article 79, the clause limiting the presidential term limit to two.

Li’s absence was not caused by illness. Under normal circumstances, when a senior official is unable to attend an important meeting due to an illness, the communique would say that he applied for sick leave so it wouldn’t cause speculation. However, there was no such announcement on Li’s absence.

Li’s absence could be the result of the anti-Xi faction trying to dislodge him, since he was the chief lawmaker who helped paved the way for Xi to retain power. Pressure against Li could have grown to the extent that Xi had to make some compromise, leading to Li’s temporary absence. This is a plausible explanation since during Li’s absence, there was an article from China’s top watchdog, the Central Disciplinary Commission (CDC), pointing obliquely at him when it mentioned that “a former leader of the Guizhou Province” helped his family member to subdue a business rival. Li’s reappearance on Jan. 11, sitting right next to Xi during a high-level meeting, suggests that the latter had somehow overcome pressure to unseat his protégé.

Another anomaly was the recall of Wang Shaojun from retirement to serve as chief of the Central Security Bureau (CSB), his previous post. The CSB is responsible for guarding all the senior members of the Party and, therefore, its head must be someone who Xi totally trusts. At the same time, anyone trying to stage a coup d’etat has to rely on the CSB, just like what happened in 1976 when the so-called Gang of Four was arrested. Wang had already retired in 2019, but on Jan. 11 he reappeared at a conference of senior leaders, which suggests that he was reinstalled as chief of the bureau.

When Wang retired in 2019, Zhou Hongxu, deputy chief of staff of the Northern Theater Army, took over as CSB director. By tradition this post was usually taken up by people from within the bureau. The only exception was in 1963 when CCP founder Mao Zedong ordered a field army general to head the CSB after he was forced to claim responsibility for his failed policy in 1962, the Great Leap Forward, leading to mass deaths from starvation. The move showed that Mao was afraid of being dethroned after he was forced to recede from the forefront of the political stage.

Thus, when Xi ordered a field army general to head the CSB, it showed that he did not trust the bureau. However, after a short while, the former CSB chief was recalled from retirement to head the same bureau again. Wang, 67, is obviously past the retirement age of 60. Xi’s decision puzzled everyone and indicated some sort of uncertainty at the core of the CCP.

Then came the indictment of former public security chief Sun Lijun on Jan. 13. One of the three charges against him was “illegal possession of a firearm.” As the deputy head of the police, possession of a gun is not illegal except in some very specific circumstances such as in highly confidential senior conferences, or in very close proximity to top leaders. In such situations, gun possession has to be pre-approved. Thus, to charge a police head of illegal possession of a gun suggests that Sun could be suspected of trying to make an attempt on Xi’s life.

Sun owed his political rise to former CCP leader Jiang Zemin. Sun was the deputy director of the notorious “610 Office,” a Gestapo-like agency under the Public Security Ministry that was created for persecuting the spiritual group, Falun Gong. He was promoted to deputy-ministerial rank when Zhou Yongkang, a powerful member of the CCP’s Politburo Standing Committee (the top decision-making body), was secretary of the CCP’s Central Political and Legal Affairs, which controls the country’s police, procuratorate, and court systems. Shortly after Xi gained power, Zhou was sentenced to life in prison for his alleged attempt to stage a coup d’etat against Xi. This close connection with Jiang and Zhou made Sun an obvious target of Xi.

Epoch Times Photo
Five sacked “610 Office” directors/deputy directors. (The Epoch Times)
This is highly plausible when one takes into consideration the communique issued by the CDC on Sun’s arrest on Sept. 30, 2021, which enumerates his crimes such as the following:

Betraying the “two safeguards” and disregarding the “four awareness.” The “two safeguards” refer to safeguarding Xi’s position as the core leader of the CCP and safeguarding the centralized authority of the Party. The “four awareness” refer to political awareness (which means putting politics above all things else); awareness of the overall situation; awareness of Xi as the core of the Party; and awareness of the need to align oneself with Xi. These are the political slogans put forward by Xi as the standard for loyalty among CCP cadres. In the specific CCP lexicon, Sun’s political crime was his disloyalty to Xi.
Seriously endangering political security and seriously undermining unity of the Party. In the CCP context, this could mean an attempted coup d’état.
Manipulating power to achieve personal political gain, including engaging in factional politics.
If the CDC found Sun guilty of these political crimes, then his “illegal possession of a firearm” suggests that he might have tried to assassinate Xi. In this regard, it’s noteworthy that the CDC admitted publicly that there was a plot against Xi. On Sept. 13, 2021, two major news portals in China published the same article that recapped a CDC “morning brief,” which disclosed that a “sinister gang” within the public security bureau tried to make an attempt on Xi’s life.

It’s no wonder that in his “2022 No. 1 Command for the Military Forces,” a decree issued by Xi in his capacity as the supreme head of the military, he urged the military to prepare for a successful convening of the Party’s 20th Congress. Xi ultimately has to rely on the military to make sure that his ambition to perpetuate power will not be dashed.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

Ching Cheong
Ching Cheong
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Ching Cheong is a graduate of the University of Hong Kong. In his decades-long journalism career, he has specialized in political, military, and diplomatic news in Hong Kong, Beijing, Taipei, and Singapore.

Crafty_Dog

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Chinese Racism
« Reply #806 on: January 24, 2022, 04:40:43 AM »

Crafty_Dog

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GPF: Aid to interior presages deep issue for China's economy
« Reply #807 on: January 27, 2022, 06:01:46 PM »
What Beijing’s Aid to Debt-Ridden Guizhou Presages for China’s Economy
4 MIN READJan 27, 2022 | 23:34 GMT





A farmer walks along rice paddy fields in Congjiang, a city located in China's southwestern Guizhou province, on April 24, 2021.
A farmer walks near rice paddy fields in Congjiang, a city located in China's southwestern Guizhou province, on April 24, 2021.

(STR/AFP via Getty Images)

Financial relief efforts for China’s Guizhou province reflect a slight softening of Beijing’s stance on local government debt and could be an indicator of a worsening national economic slowdown. On Jan. 26, China’s State Council laid out plans to assist the southern province of Guizhou in managing its debt load and resuming development projects. Guizhou is one of China’s poorest provinces and has defaulted on 68 debt products since 2018, the most of any province in the country. The State Council will allow Guizhou to renegotiate payment plans with financial institutions and restructure its debt, in addition to raising Guizhou’s debt limit to allow the construction of government-approved (i.e. not real estate) investment projects. This program for Guizhou runs counter to Beijing’s recent efforts to reduce debt risks, and shows Beijing’s concerns for local economic health.

Beijing has been cracking down on real estate debt over the past year, as shown by its decision not to bail out Evergrande, which has resulted in the privately-owned property manager’s slow-motion and ongoing collapse. These efforts have directly impacted local governments that procure a large portion of their budget from selling land to real estate companies.
Beijing has also urged state banks to make it more difficult for local governments to take out real estate loans. In addition, central authorities have pledged to restrict local government debt by reducing their ability to use local government financing vehicles (LGFVs) to facilitate off-the-books borrowing, which contributes to China’s hidden local government debt that is estimated to have exceeded $8 trillion in 2020 (or half of China’s GDP).
Beijing’s crackdowns on debt held by local governments and real estate firms have heavily contributed to China’s slowing economic growth, given that real estate investment and management together contribute as much as 29% of China’s GDP. China’s economy is expected to expand by just 5-6% in 2022 compared with 8.1% in 2021.
Because of their poverty relative to coastal provinces, China’s interior provinces are getting attention from Beijing for special development projects as part of China’s long-standing strategy to reduce geographic economic disparities. But these provinces are also the most vulnerable to national economic headwinds. A Jan. 26 State Council meeting revealed Beijing’s plans for Guizhou as a growth engine for central China and a desire to connect the region’s economic development to the east coast, including the manufacturing hub of Guangdong province. These growth plans may have made Guizhou a high priority for Beijing’s debt assistance. In addition, Beijing is trying to prevent entire provinces from suffering widespread layoffs during fiscal restructuring, even though sub-provincial governments in interior cities have often gone without such assistance.

Hegang, a prefecture-level city in China’s rust belt along the Russian border, has not been as fortunate as Guizhou province. In late December, the Hegang city government ceased hiring civil servants and announced the beginning of fiscal restructuring — making it the first prefectural-level Chinese city to attempt such restructuring, according to Huachuang Securities Co. Ltd. 
Coastal Guangdong, one of China’s wealthiest provinces, announced on Jan. 21 that it had moved all hidden debt onto government books. Compared with interior regions like Guizhou, however, Guangdong is estimated to have much lower levels of hidden debt.
Should the central government assist other debt-ridden interior provinces in the coming months, it could indicate that Beijing is becoming increasingly worried about a prolonged national economic slowdown. China’s interior is home to the bulk of the country’s least productive and most indebted regions. Though Guizhou was particularly vulnerable given its country-leading debt portfolio, many other inland cities and provinces are similarly at risk — struggling under growing fiscal burdens and dwindling real estate incomes, with underdeveloped provinces like Guizhou and Hegang representative of the deep income divide between China’s wealthy coastal regions and interior ones. But amid weak domestic demand and constraints on state investment in 2022, Beijing knows it cannot afford to let these debt-strapped localities sink, as provincial and local governments (including those in poorer inland regions) also drive China’s economic development. Thus, it will be important to watch for other interior provinces receiving further debt relief, as such assistance could indicate China’s economic headwinds are strengthening, as could local financial restructurings like that of Hegang. Beijing will also generally maintain its restrictive stance toward real estate investment, even if it eases back on the most extreme of its loan restrictions to avoid more collapses in line with Evergrande. Unless Beijing is willing to take on even greater national debt in its support of local provinces, “approved” infrastructure projects in Guizhou and elsewhere will likely be insufficient to make up for the local financing void left by real estate. Such national debt would further delay Beijing’s push for “quality economic growth” and worsen any future debt fallout or the austerity measures meant to forestall a fallout.

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Re: GPF: Aid to interior presages deep issue for China's economy
« Reply #808 on: January 27, 2022, 06:04:08 PM »
Reminder: A economically fragile China makes it more dangerous, not less.


What Beijing’s Aid to Debt-Ridden Guizhou Presages for China’s Economy
4 MIN READJan 27, 2022 | 23:34 GMT





A farmer walks along rice paddy fields in Congjiang, a city located in China's southwestern Guizhou province, on April 24, 2021.
A farmer walks near rice paddy fields in Congjiang, a city located in China's southwestern Guizhou province, on April 24, 2021.

(STR/AFP via Getty Images)

Financial relief efforts for China’s Guizhou province reflect a slight softening of Beijing’s stance on local government debt and could be an indicator of a worsening national economic slowdown. On Jan. 26, China’s State Council laid out plans to assist the southern province of Guizhou in managing its debt load and resuming development projects. Guizhou is one of China’s poorest provinces and has defaulted on 68 debt products since 2018, the most of any province in the country. The State Council will allow Guizhou to renegotiate payment plans with financial institutions and restructure its debt, in addition to raising Guizhou’s debt limit to allow the construction of government-approved (i.e. not real estate) investment projects. This program for Guizhou runs counter to Beijing’s recent efforts to reduce debt risks, and shows Beijing’s concerns for local economic health.

Beijing has been cracking down on real estate debt over the past year, as shown by its decision not to bail out Evergrande, which has resulted in the privately-owned property manager’s slow-motion and ongoing collapse. These efforts have directly impacted local governments that procure a large portion of their budget from selling land to real estate companies.
Beijing has also urged state banks to make it more difficult for local governments to take out real estate loans. In addition, central authorities have pledged to restrict local government debt by reducing their ability to use local government financing vehicles (LGFVs) to facilitate off-the-books borrowing, which contributes to China’s hidden local government debt that is estimated to have exceeded $8 trillion in 2020 (or half of China’s GDP).
Beijing’s crackdowns on debt held by local governments and real estate firms have heavily contributed to China’s slowing economic growth, given that real estate investment and management together contribute as much as 29% of China’s GDP. China’s economy is expected to expand by just 5-6% in 2022 compared with 8.1% in 2021.
Because of their poverty relative to coastal provinces, China’s interior provinces are getting attention from Beijing for special development projects as part of China’s long-standing strategy to reduce geographic economic disparities. But these provinces are also the most vulnerable to national economic headwinds. A Jan. 26 State Council meeting revealed Beijing’s plans for Guizhou as a growth engine for central China and a desire to connect the region’s economic development to the east coast, including the manufacturing hub of Guangdong province. These growth plans may have made Guizhou a high priority for Beijing’s debt assistance. In addition, Beijing is trying to prevent entire provinces from suffering widespread layoffs during fiscal restructuring, even though sub-provincial governments in interior cities have often gone without such assistance.

Hegang, a prefecture-level city in China’s rust belt along the Russian border, has not been as fortunate as Guizhou province. In late December, the Hegang city government ceased hiring civil servants and announced the beginning of fiscal restructuring — making it the first prefectural-level Chinese city to attempt such restructuring, according to Huachuang Securities Co. Ltd. 
Coastal Guangdong, one of China’s wealthiest provinces, announced on Jan. 21 that it had moved all hidden debt onto government books. Compared with interior regions like Guizhou, however, Guangdong is estimated to have much lower levels of hidden debt.
Should the central government assist other debt-ridden interior provinces in the coming months, it could indicate that Beijing is becoming increasingly worried about a prolonged national economic slowdown. China’s interior is home to the bulk of the country’s least productive and most indebted regions. Though Guizhou was particularly vulnerable given its country-leading debt portfolio, many other inland cities and provinces are similarly at risk — struggling under growing fiscal burdens and dwindling real estate incomes, with underdeveloped provinces like Guizhou and Hegang representative of the deep income divide between China’s wealthy coastal regions and interior ones. But amid weak domestic demand and constraints on state investment in 2022, Beijing knows it cannot afford to let these debt-strapped localities sink, as provincial and local governments (including those in poorer inland regions) also drive China’s economic development. Thus, it will be important to watch for other interior provinces receiving further debt relief, as such assistance could indicate China’s economic headwinds are strengthening, as could local financial restructurings like that of Hegang. Beijing will also generally maintain its restrictive stance toward real estate investment, even if it eases back on the most extreme of its loan restrictions to avoid more collapses in line with Evergrande. Unless Beijing is willing to take on even greater national debt in its support of local provinces, “approved” infrastructure projects in Guizhou and elsewhere will likely be insufficient to make up for the local financing void left by real estate. Such national debt would further delay Beijing’s push for “quality economic growth” and worsen any future debt fallout or the austerity measures meant to forestall a fallout.

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Zero Wuhan and Manufacturing in China
« Reply #809 on: February 05, 2022, 10:26:31 AM »
February 5, 2022
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Zero COVID and Manufacturing in China
The increasing costs of China's containment measures are raising concerns about the sustainability of Beijing’s approach.
By: Geopolitical Futures
Zero-Covid & Manufacturing in China
(click to enlarge)

It was in China, specifically the city of Wuhan, where the first cases of COVID-19 were detected in early 2020 before quickly spreading worldwide. China is now pushing a zero COVID policy using contact tracing, mass testing, a special app and lockdowns to try to eliminate the virus completely. Similar strategies have been adopted in other countries but were eventually abandoned in the recognition that COVID-19 is here to stay. But China is holding firm, imposing regulations very similar to the ones adopted at the beginning of the outbreak.

In the first year or so of these measures, they seemed to be a reasonable approach and helped Beijing successfully and rapidly contain the virus with fewer deaths than most Western countries. Two years later, however, things don’t look nearly as bright for China. The Delta variant proved extremely hard to control, and the containment measures are having ripple effects. In Xian, which saw the biggest lockdown outside of Wuhan, food shortages and deficiencies in medical treatment are growing.

Now, the rapid spread of the Omicron variant, which reportedly first emerged in Tianjin in December, and the increasing costs of keeping it under control are raising concerns about the sustainability of China’s approach. The economic impact is becoming more apparent, especially in the manufacturing sector in terms of both supply and demand. In January, output slowed to its lowest level in two years, mostly due to factories being forced to temporarily shut down. It’s unlikely that China will ease the measures before the pivotal Party Congress, where President Xi Jinping is expected to secure his third term, set for the second half of 2022.

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ET: Xi not Shu In
« Reply #810 on: February 14, 2022, 06:46:23 AM »
CHINESE REGIME
Anti-Xi Article Goes Viral, May Derail Xi Jinping’s Plans for Third Term
By Nicole Hao February 13, 2022 Updated: February 14, 2022biggersmaller Print

0:00
6:01



1

An article criticizing Chinese leader Xi Jinping was allowed to go viral in mainland China, which analysts say reflect the intense struggle among different factions in the Chinese Communist Party (CCP) and its impact on Xi’s ruling.

China experts have said that Xi might not secure a third term, which will be revealed at the CCP’s Party Congress this fall, although Xi amended the Party’s constitution successfully in 2018 to remove term limitations.

“The 40,000-word long article listed mistakes that Xi Jinping has made in politics, economy, and diplomacy. It’s a summary of Xi’s ruling over the past nine years,” Li Hengqing, a China expert at the Washington Institute for Information and Strategy, told the Chinese-language Epoch Times on Feb. 8.

“After 2018, we all said that there’s no force to stop Xi from taking a third term. Now, we can see that the situation isn’t simple, and it’s unclear whether he can obtain it,” Li added.

He emphasized: “The article circulated broadly inside and outside of China. Even several friends from mainland China forwarded it to me [in the past days]. … It shows that the CCP factions against Xi are fighting to stop Xi from continuing in office.”

Xi became Chinese leader in November 2012 at the rubber-stamp legislature’s 18th conference, and won his second term in October 2017 at the 19th conference. The previous Chinese constitution ruled that each leader could only take two terms, which would have seen Xi retire in 2022. The amendment of the constitution paved the road to allow Xi to rule the country beyond the two terms—if he can secure support from the rest of the party leadership.

Xi Jinping
Chinese leader Xi Jinping is seen on a TV screen speaking remotely at the opening of the WEF Davos Agenda virtual sessions at the WEF’s headquarters in Cologny near Geneva, Switzerland, on Jan. 17, 2022. (Fabrice Coffrini/AFP via Getty Images)
Anonymous Commentary
On Jan. 19, an author under the pen name “Ark and China” published the article “Evaluate Xi Jinping Objectively” on overseas Chinese blogs. Since the Chinese New Year on Feb. 1, the commentary of Xi’s leadership became viral among readers inside China.

Taiwan’s state-run Central News Agency (CNA) reported on Feb. 9 that people in China had spread the article widely although the Chinese regime banned and censored the piece.

The commentary reviewed Xi’s performance over the past decade in the anti-corruption campaign, the party’s ongoing eradication of independent religion and beliefs, human rights abuses, its tight surveillance and control of the people, enhancement of propaganda, further revision of children’s textbooks and history books, the strengthening of state-run enterprises and suppression of the private sector, fighting with the Western world, and winning over developing countries by squandering the national treasury.

Its author opined that they don’t believe Xi has the capability to rule the country, and has angered both CCP officials who supported him and opposed him when he took office. Meanwhile, the Chinese people’s benefits and interests being encroached upon under Xi’s administrations, but their voices can’t be heard due to the regime’s censorship.

“At present, it’s difficult for him (Xi) to continue his ruling. The year 2022 will be his biggest turning point,” the author wrote. “Even if he miraculously secures another term, he will face more difficulties and complete failure before 2027.”

The author then went on to list three factors that could cause the collapse of Xi’s ruling alongside a predicted worsening of the political situation; the achievements claimed by the Xi regime are fabricated, the political foundation of Xi’s administration has been destroyed, and “the entire CCP bureaucracy” is opposed to Xi and his handful of supporters.

Fierce Infighting
Epoch Times Photo
The Chinese Communist Party’s Politburo Standing Committee, the nation’s top decision-making body (L-R): Han Zheng, Wang Huning, Li Zhanshu, Chinese leader Xi Jinping, Premier Li Keqiang, Wang Yang, and Zhao Leji meet the press at the Great Hall of the People in Beijing on Oct. 25, 2017. (Wang Zhao/AFP via Getty Images)
“Don’t treat the CCP as a political party! It’s actually a political gang. Like the former head of the Soviet Union Vladimir Lenin said, the communist party grows by fighting internally and cleaning (killing) its members,” Cai Xia, a former professor of political ideology at the CCP’s Central Party School, wrote in an opinion piece on Feb. 6 that was published on U.S.-based Chinese media YiBao.

Cai pointed out: “Due to the cruelty and bloody infighting within the party, all senior officials understand the hidden rule, which is to choose a faction and fight for it without thinking about what’s right or wrong.”

Li told The Epoch Times that the forces in the Chinese regime which are against Xi are gathering together now. “They are using all their resources and solutions to block Xi from taking the next term,” he said.

“The [viral] article is echoing the opinion of Chinese politicians. It stands on the point of maintaining the CCPs’s ruling in China but removing Xi Jinping,” Chen Weijian, New Zealand-based Chinese dissident and editor of online magazine Beijing Spring, told the Chinese-language Epoch Times on Feb. 8.

“At the Sixth Plenary Session of the rubber-stamp legislature’s 19th conference, the CCP factions presented their severe disagreements [on regime policies]. [The long article] is the latest bomb that the anti-Xi’s faction has detonated amid the factional fighting,” Gao Wenqian, former official biographer of the CCP’s first premier Zhou Enlai told VOA on Feb. 8.

Gao said that the CCP’s rigid dictatorship is growing increasingly fragile, and may break at any time.

Cai listed the crises the regime in Beijing is facing across China now, which include more white- and blue-collar unemployment, the financial crisis facing China’s largest real estate predators, the regime collecting more tax and fees from people who can’t earn a living and unprofitable enterprises, extreme COVID-19 policies that further damage the economy and threaten peoples’ lives, and young Chinese who refuse to have children even after marriage.

“This is a strong article that can drive public opinion against Xi,” Cai wrote.

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Re: ET: Xi not Shu In
« Reply #811 on: February 14, 2022, 09:01:01 AM »
Not possible to find an article criticizing Xi via collaborator Google.  I would like to see the English translation.

That's a big story.  You'd think it would come right up.

Crafty_Dog

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Re: China
« Reply #812 on: February 14, 2022, 10:44:46 AM »
Chinese to English translation capacity is well below that of the need, and so is the demand for it.

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Anti-Xi Article Goes Viral, May Derail Xi Jinping’s Plans for Third Term
« Reply #813 on: February 14, 2022, 11:46:22 AM »
Chinese to English translation capacity is well below that of the need, and so is the demand for it.

I'll settle for text of the original Chinese and I will post a translation.
Brave Browser has a Translate extension.  (So does Google.)

Google will lose it's commie contract if it circulates this document in any language.

It went "viral".  Somebody has it.

G M

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Re: Anti-Xi Article Goes Viral, May Derail Xi Jinping’s Plans for Third Term
« Reply #814 on: February 14, 2022, 02:21:26 PM »
Chinese to English translation capacity is well below that of the need, and so is the demand for it.

I'll settle for text of the original Chinese and I will post a translation.
Brave Browser has a Translate extension.  (So does Google.)

Google will lose it's commie contract if it circulates this document in any language.

It went "viral".  Somebody has it.

Machine translation is sometimes imperfect...

https://www.boredpanda.com/funny-chinese-translation-fails/

Crafty_Dog

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ET: Property Developer Meltdown in China
« Reply #815 on: April 02, 2022, 02:35:31 AM »
Property Developer Meltdown in China
Red-hot risk now expanding to Western auditors, shadow banks, and Beijing itself
 April 1, 2022 Updated: April 1, 2022biggersmaller Print
News Analysis

China’s big property developers are increasingly weak, and through the pressure of local officials, unloading risk onto the country’s financial system and Beijing itself.

Business news about China’s property developers on March 29 demonstrates multiple new fissures and risks in China’s already lagging economy.

The Financial Times revealed that the West’s Big Four accounting firms are abandoning many of their long-prized Chinese property developer clients due to the latter’s failure to file audited annual financial results by the deadline. In March, the embattled property developer China Evergrande was one of the companies that announced it would miss its deadline in Hong Kong.

“International auditors are resigning from China’s heavily indebted property developers as a wave of delayed financial results has increased uncertainty over the full scale of the sector’s worst-ever crisis and raised the threat of hidden debts,” according to the article by Thomas Hale and Tabby Kinder.

“Auditors are at increasing risk of legal action in connection with the turmoil in the Chinese property sector.”

Bloomberg noted that Chinese “shadow banks” are buying controlling stakes in projects from the distressed developers, likely due to pressure from local officials. One trust executive explained that the deals are preempting restructuring plans, which will make payments and deal-making more difficult.

Another possibility is that the spectacle of an American firm, Oaktree Capital, acquiring a major Evergrande asset in Hong Kong, the 2.2 million-square-foot “Versailles mansion” residential development, by repossession in January, embarrassed the Beijing regime. It may have reacted by forcing creditors to swap debt for Evergrande equity.

In December, Evergrande defaulted and will soon restructure more debt than was ever previously restructured by a single firm in China. Evergrande bonds coming due in 2025 are now trading at just 13 cents on the dollar, according to Bloomberg.

Police officers stand guard outside the Evergrande International Center
Police officers stand guard outside the Evergrande International Center where protesters have gathered to seek payment from China Evergrande Group, in Guangzhou, Guangdong Province, China, on Jan. 4, 2022. (David Kirton/Reuters)
PwC, a Big Four accounting firm, is currently under investigation by Hong Kong authorities for its Evergrande audit. PwC and Deloitte, both headquartered in London, have resigned over the last three months as the auditors for, at minimum, five developers from China.

“International investors are moving closer to legal action against Evergrande, which has borrowed around $20bn on international bond markets, after the company said last week that a mystery lender had claimed $2bn of cash at its property services arm,” according to the Financial Times.

Bloomberg sources made clear that China’s shadow banks are not necessarily buying stakes in failing development projects on a voluntary basis. “Local governments are pushing creditors, including trusts, to help distressed developers like Evergrande offload stakes in projects and find strategic investors to raise cash.”

Officials are apparently doing this not for the economic efficiency of the projects, but for state-planning purposes. “The most pressing concern for authorities is to ensure housing construction, and many trusts are considering taking additional stakes in Evergrande projects,” according to Bloomberg sources.

The sales may save Evergrande and other distressed property developers in the short-term, but they will only provide them with enough liquidity to settle some of their $3.4 trillion in liabilities, while offloading risk to the financial institutions that purchase the projects.

These financial institutions have less experience as property developers, and are under pressure from the regime, at the local level, to maintain the flow of financing and building to retain construction jobs and the illusion of economic growth.

Ultimately, the shadow banks could fail as a result, which would require a bailout by the regime.

“China’s shadow banks are emerging as unlikely white knights for embattled property firms by becoming mini-developers themselves,” according to the Bloomberg authors. “Trust companies including MinMetals Trust Co. and Zhongrong Trust Co. have bought stakes in at least 10 real estate projects this year.”

The unfinished housing projects that they bought may or may not “yield cash to pay off some of the $280 billion in property-backed funds sold by trusts to investors,” according to Bloomberg.

The hardest-hit Chinese property developer by indebtedness is China Evergrande, which announced on March 29 that trading in its shares will remain suspended, according to Reuters.

The good news for Evergrande is that it recently sold a minimum of seven housing developments, recovering $300 million of its initial capital contribution and settling liabilities of approximately $1.1 billion. The bad news is that these sales were to its creditor institutions rather than to actual customers who would live in the homes.

AVIC Trust, a financial firm affiliated with China’s main aviation and defense manufacturer, was the second-largest lender among trusts to Evergrande as of mid-2020. Instead of receiving payments on the debt, the aerospace-defense linked financial company took control of two residential projects in March, including a 5,000-unit project in Guangzhou, and a project in Nanjing.

Epoch Times Photo
An unfinished residential building through a construction site gate at Evergrande Oasis, a housing complex developed by Evergrande Group in Luoyang city, China, on Sept. 16, 2021. (Carlos Garcia Rawlins/Reuters)
Evergrande sold Chongqing and Dongguan projects to China Everbright Trust, owned by China Everbright Group, which is itself owned by China’s ministry of finance and a state investment firm.

MinMetals Trust, which purchased a 100 percent stake in a Kunming city residential project from Evergrande, as well as Evergrande stakes in Foshan and Guangzhou projects, said that buying stakes in the projects is an “optimal option” to dissolve Evergrande debt risk, at the same time getting the projects going again, according to Bloomberg.

MinMetals Trust is part of China MinMetals, a state-owned enterprise involved in metals and minerals trading. The company has comparatively little experience in real estate development.

The problem is that Evergrande debt risk is not being dissolved, as claimed by MinMetals Trust. It has just moved to Evergrande creditors who are not as good at property development, or will be forced by the Chinese Communist Party (CCP) to send more good money after bad, infusing capital into the building of phantom cities with few residents.

These and other economic failures of state-planning of the economy have real effects. The family company of Hong Kong billionaire Joseph Lau lost approximately $1 billion on China Evergrande shares and bonds in 2021.

Perhaps as a result, he is selling art assets, including up to $19 million worth of imperial Chinese porcelain from the Ming and Qing dynasties, due for sale by Sotheby’s in Hong Kong on April 29.


While Lau loses his museum pieces, regular Chinese are losing much more: their retirement savings and the homes they purchased, but never had the privilege of living in.

These are the sorry effects of Beijing’s state-planning of the economy, which the CCP is doubling-down on through forcing the purchase of Evergrande’s failing development projects by managers even less capable of making them successful.

This is the economic system that the regime seeks to export to the rest of the world through its plans of global hegemony.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

Crafty_Dog

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GPF: China's Real Estate Bubble
« Reply #816 on: April 06, 2022, 06:31:04 AM »
April 6, 2022
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Real Estate Is China’s Biggest Economic Vulnerability
Beijing has been reluctant to sacrifice growth and social stability to tackle its housing bubble.
By: Victoria Herczegh
China’s real estate sector is one of its economy’s most important assets. Real estate has contributed considerably to China’s transition to a socialist market-based economy and its strong economic growth in recent decades. Now, however, what once propelled the Chinese economy forward threatens to hold it back. Structural economic problems are emerging, and real estate is among the first sectors to show signs of distress. Given its significance to the Chinese growth model, failure to address these issues would likely trigger a crash that would wreck the Chinese economy and disrupt the global economic system.

On paper, there are multiple solutions to the crisis, but they conflict with another of Beijing’s priorities: reducing economic inequality. The inequality-fighting initiative, known as “common prosperity,” has been a major party focus since last year and is codified in the Chinese Communist Party’s current five-year plan. China will need to choose between resolving its real estate crisis or staying the course on common prosperity. While it will try to do both, in the end Beijing will prioritize common prosperity and delay tackling the real estate issue until later.

Seeds of a Crisis

China’s approach to growth – questionable by Western standards – stems from its perpetual need to maintain an economy that can both support a large population and prevent the wealth gap from widening further between the rich coastal cities and the vast interior. The country’s rapid urbanization, evolving financial sector and, just as important, the appetite of domestic and international investors have caused a real estate boom in China that kicked off in the 1990s and has continued ever since.

Quarterly Real Estate Contribution to Chinese GDP

(click to enlarge)

However, the reliance on real estate for strong and steady growth came at a cost: a reduction in Beijing’s control over market forces. The property market started to expand rapidly from the early 2000s on, as investors and developers assumed that its importance meant the government would backstop it. China depended on the sector’s expansion to maintain high rates of economic growth and households’ net worth, thus any market downturn would be short-lived. This optimistic assumption was true only for a while, though. Beijing soon started trying to contain the speculative fervor and rapidly rising prices – issues that threatened to undermine China’s exceptional economic growth.

Fearing a bursting of the housing bubble, the People’s Bank of China issued the “three red lines” policy, an ambitious set of reforms intended to improve the financial health of the sector by reducing developers’ leverage, improving debt coverage and increasing liquidity. In 2020, the first year of the reforms, most companies saw improvements in their asset-liability and debt ratios. However, as can be expected with new policies, there have been some side effects. For example, some firms increased their use of minority interests and joint ventures, enabling them to increase leverage through a subsidiary and net the equity value in their balance sheets. This reduced the transparency of the financial statements but did not reduce leverage. Also, with limits on the amount of debt companies could raise, their freely available cash levels and overall liquidity sources were decreasing, which could weaken a company’s ability to weather short-term crises.

China's Three Red Lines Policy
(click to enlarge)

The main reason the three red lines policy didn’t work as hoped is that it was too little too late. Because of China’s constant focus on maintaining the previous years’ growth rates, the country risked introducing reforms only when it appeared critical. Unfortunately for Beijing, it was the three red lines that triggered the current property market crisis.

It hit the headlines in December 2021: China Evergrande Group, one of the country’s largest property developers, was formally declared to be in default. Despite the government’s initial assurances that Evergrande was isolated and correctable, more cracks in the foundation soon appeared. At the beginning of March 2022, trading was abruptly halted for shares of Evergrande and two of its units on the Hong Kong stock exchange. The company said it and its units would not publish their annual financial results before the end-of-March deadline due to a comprehensive restructuring. The results still have not been published, and although Evergrande said its restructuring was on track, this has naturally raised further questions and concerns about the true size of the company’s debt.

The bigger problem facing the Chinese government is that the debt crisis is not at all confined to Evergrande. Since late November 2021, several other real estate developers have shown signs of trouble or, like Evergrande, even defaulted. International auditors are resigning from China's heavily indebted property developers as uncertainty grows about the scale of the crisis. Fears of hidden debt have sent some developers’ bonds plunging, even those that were previously deemed safe. This resulted in a severe loss for China: Last year’s defaults on offshore bonds from Chinese borrowers set an annual record, with the real estate sector making up about one-third of the missed payments. Every event taking place now within China’s real estate sector is compounding the crisis, making it increasingly difficult to solve.

Growing Debt of Chinese Real Estate Companies, 2022
(click to enlarge)

Too Big To Fail

Despite the alarm bells from the real estate sector, the Chinese government’s emphasis on stability and short-term growth has so far taken precedence over making more extensive real estate reforms. The principal reason for this is that the solutions to the real estate problems in the short term pose a huge risk of destabilizing the economy, which could threaten the Communist Party’s authority. In theory, property tax reform would correct the market distortion by disincentivizing real estate speculation and raising revenues for local governments. At the National People’s Congress on March 5, a comprehensive property tax plan was in fact rolled out as one of the main targets of the common prosperity program, topped with the slogan “houses are for living, not for speculation.” However, party elites criticized the plan, arguing that since many party members owned more than one property, the tax would burden them disproportionately and affect social stability.

Chinese President Xi Jinping’s property market reforms also did not align with the interests of senior local officials, whose priorities are generating economic growth, securing government budgets and preventing social chaos in their regions. Even though Finance Minister Liu Kun called for implementing and deepening the package of reforms at the beginning of the year, it has recently been announced by the Chinese Finance Ministry that the trial property tax reforms that are currently in effect in 10 cities would not be extended to more cities. Maintaining high employment and social stability and reducing the harm to loyal investors are too important for Beijing to risk.

Construction accounts for about 16 percent of urban employment in China. A collapse in the industry would leave about 5.5 percent of China’s population, without work. Already, a sudden rise in unemployment – to 5.5 percent in February from 4.9 percent in October – is almost certain to seriously impact social stability. It also won’t help narrow the wealth gap. Moreover, 30 percent of Chinese bank lending goes to housing construction, and at least 60 percent of bank loans are backed by property as collateral. Therefore, if the property market collapses, China will experience a full-blown financial crisis, which could undermine regime stability and have serious consequences for the global economy.


(click to enlarge)

China still has options to regulate the issue, even in its current state. Some positive changes are already taking place: Chinese banks are finally ready to soften up the three red lines policy to provide safe landing for the several real estate companies that are in trouble or have already defaulted. Also, the government is encouraging mergers and acquisitions in the real estate development sector, with larger, generally state-owned developers likely to take over financially weaker players perceived to have leveraged their connections to local governments to gorge themselves on debt. But rather than a few minor policies here and there, the scale of the problem will probably require a well-timed, well-coordinated chain of shock reforms – which is nowhere in sight right now.

Despite many red flags pointing to a full-scale economic crisis, China is keeping to its common prosperity initiative, implementing only policies that align with the growth objectives included in the current five-year plan. Those objectives are intended to help maintain domestic order and political stability. According to the current plan and the “China Vision 2035” proposal, China hopes to become a “moderately developed economy” – defined as an increase in gross domestic product per capita to $30,000 – by 2035. Even if harsh reforms significantly lowered growth rates for a few years, that would still be a reasonable goal, whereas it could take the country decades to recover from a total economic crisis. For China, there will probably not be a better time than now to reconsider its priorities.

G M

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Agony in Shanghai
« Reply #817 on: April 10, 2022, 12:16:41 PM »

Crafty_Dog

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ccp

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Gordon Chang on China
« Reply #820 on: May 08, 2022, 06:48:21 PM »
heard the tail end of Gordon Chang on some radio show today on way home

and

he mentioned his web site

though I would post here
I have not had chance to read yet
though:

http://www.gordonchang.com/article.htm


G M

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Back to being a giant N. Korea
« Reply #822 on: May 24, 2022, 02:06:56 PM »
https://www.youtube.com/watch?v=XmIxBb7BI24

Good thing that can't happen here.


Crafty_Dog

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Elon Musk agrees with point I have been making here for several years
« Reply #824 on: June 09, 2022, 05:47:32 AM »
Elon Musk Predicts China’s ‘Population Collapse’
By Eva Fu June 6, 2022 Updated: June 7, 2022biggersmaller Print


Tesla CEO Elon Musk suggests that China could soon be facing a “population collapse” in the aftermath of Beijing’s decades-long population control program that until recently had restricted most families in China to a single offspring.

“Most people still think China has a one-child policy,” he wrote in a June 6 tweet that was pinned to the top of his Twitter account.

“China had its lowest birthdate ever last year, despite having a three-child policy! At current birth rates, China will lose ~40% of people every generation!” he wrote, before adding the grim note: “Population collapse.”

The one-child policy was instituted by the Chinese Communist Party between 1980 and 2015 in a bid to curb a population growth rate that the regime considered too rapid and facilitate economic growth. Violators of the limit were fined, forced to go through abortions or sterilizations, and could potentially lose their jobs.

Until its official abolishment in 2016, the policy had caused some 400 million abortions, accounting for about 28 percent of the nation’s 1.4 billion people, according to official statistics. It also led to child abandonment and infanticide of baby girls due to traditional social preferences for a son.

The decades-long policy has precipitated a demographic crisis in China, marked by a rapidly aging population and falling birth rates. Faced with a looming economic crisis from its dwindling workforce, the Chinese regime allowed two children for couples in 2016 and then increased the limit to three in 2021, as well as providing benefits on childcare, income tax, and housing to support growing families.

Epoch Times Photo
Children play at a playground inside a shopping complex in Shanghai on June 1, 2021. (Aly Song/Reuters)
But those measures have done little to convince couples to have more children.

China’s birth rate has been falling for five consecutive years. In 2021, about 7.52 babies were born for every 1,000 people, the lowest level since the regime’s takeover of China in 1949. By contrast, the birth rate for the United States in 2021 was 12 per 1,000 people.

In Guangxi Province, an autonomous region in southern China neighboring Vietnam, authorities in March started allowing married couples to have a fourth child in eight border counties.

But the latest official data from May show that the population of at least 15 Chinese provinces or municipalities, including Beijing, have shrunk, with 11 provinces seeing a decline. That included five provinces where the number of deaths exceeded births for the first time in decades.

Recent demographic studies indicate that the world at large, which currently has about 8 billion people, is confronting a population decline problem.

One of them, published in the medical journal Lancet, predicted that the global human population will peak at 9.7 billion in roughly four decades before starting to decline.

“Once global population decline begins, it will probably continue inexorably,” the authors wrote in a study published in 2020.

The Lancet study projected that by the end of this century, China will have lost 668 million people, or nearly half of its current population.

Musk has been vocal about the consequences of the world’s declining population growth.

CHINA-TECHNOLOGY-AI-CONFERENCE
Elon Musk (R), Co-founder and CEO of Tesla, and Jack Ma, co-chair of the UN High-Level Panel on Digital Cooperation, speak onstage during the World Artificial Intelligence Conference (WAIC) in Shanghai on Aug. 29, 2019. (Hector Retamal/AFP via Getty Images)
He recently shared a clip taken during the World Artificial Intelligence Conference in 2019, where Musk was seen sitting side by side with billionaire Jack Ma, founder of Chinese e-commerce giant Alibaba.

“Assuming there is a benevolent future with AI, I think the biggest problem the world will face in 20 years is population collapse,” he said. “I want to emphasize this: The biggest issue in 20 years will be population collapse. Not explosion. Collapse.”

Ma, in the video, concurred with him. “1.4 billion people in China sounds like a lot, but I think next 20 years, we will see this thing will bring big trouble to China,” Ma said. “The speed of population decrease is going to speed up.”

“Population collapse is the biggest threat to civilization,” wrote Musk in a May 24 tweet accompanying the short clip.

ccp

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China men beat up women in China
« Reply #825 on: June 12, 2022, 03:27:09 PM »
https://www.yahoo.com/news/outrage-china-over-video-women-062157117.html

my question is how is this handled in China?

We know here they get  free cards get out of jail cards.





G M

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Re: China men beat up women in China
« Reply #826 on: June 12, 2022, 08:49:55 PM »
Depends on who has the political connections to the CCP.

If the perps do, little to nothing will happen, only those reporting on it will face consequences. If the victim does, then the liver of the primary aggressor will be available for purchase soon.


https://www.yahoo.com/news/outrage-china-over-video-women-062157117.html

my question is how is this handled in China?

We know here they get  free cards get out of jail cards.

Crafty_Dog

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Bank run? What bank run?
« Reply #827 on: July 14, 2022, 06:12:35 AM »
https://www.breitbart.com/asia/2022/07/14/china-urges-world-to-disregard-protesters-storming-banks-for-cash/

============================

WSJ

China Property Market Shudders as Buyers Threaten to Stop Mortgage Payments
Bank shares and developers’ bonds sink, investors’ hopes of a near-term housing recovery fade

Aggregate new home sales at China’s 100 largest developers have fallen every month on a year-on-year basis since last July.
PHOTO: CFOTO/ZUMA PRESS
By Cao Li and Rebecca Feng
July 14, 2022 10:48 am ET

SAVE

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TEXT

Global investors and home buyers in China are losing confidence in the country’s property market, which has entered a new stage of turmoil after a year-long slide in sales, stalled projects and mounting real-estate developer defaults.

This week, a movement among frustrated homeowners who have threatened to stop paying their mortgages on unfinished homes quickly gathered steam on Chinese social media. People all over the country declared that they would do the same if developers don’t fulfill promises to deliver apartments that were earlier presold.

Shares of some large Chinese banks fell Thursday, led by declines in China Merchants Bank Co., which declined 3.7%. Several lenders released statements saying they have limited exposure to property projects where construction has been delayed, and that their risks from mortgage defaults are small and manageable.

The shares and U.S. dollar bonds of many developers also dropped, sending their debt securities to deeply distressed levels. Some investors described a wave of indiscriminate selling that has dragged down the bonds of even financially stronger Chinese companies with investment-grade credit ratings.

“It’s like a fire sale now,” said Kenny Chung, executive director and portfolio manager of fixed-income hedge-fund manager Astera Capital Partners, referring to the selloff in developers’ bonds. He said investors have lost almost all confidence in the entire China property sector, as home sales have shown few signs of recovery and the overall economy faces significant growth hurdles.

Pressure has been building in China’s housing market since authorities put in place rules to prevent excessive borrowing by the country’s developers. The country’s most heavily indebted property giant, China Evergrande Group, started having serious liquidity problems last summer, leading to construction halts at many of its unfinished projects. Spooked investors dumped many Chinese junk bonds, and more than a dozen developers, including Evergrande, subsequently defaulted on their dollar debt as credit-market contagion spread.

Country Garden bond due in 2030
Greenland bond due in 2025
Cifi bond due in 2028
Feb. 2022
July
10
20
30
40
50
60
70
80
90
100
cents on the dollar
Since then, many of the developers still standing have struggled to convince investors and the Chinese public that they can withstand the downturn. An ICE BofA index of Chinese dollar junk bonds that haven’t defaulted had an average yield of around 29% on Wednesday, reflecting extreme market dislocation.

Aggregate new home sales at the country’s 100 largest developers have fallen every month on a year-on-year basis since last July, and the declines accelerated in the first half of this year, according to China Real Estate Information Corp., an industry data provider. Home prices have also been falling, and private indicators of housing prices have been showing far bigger drops than China’s official data.

“The market hasn’t reached its bottom,” said Song Hongwei, a research director of Tongce Research Institute, which tracks and analyzes China’s real-estate market.

A
« Last Edit: July 14, 2022, 08:19:57 AM by Crafty_Dog »

Crafty_Dog

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Bank run? What bank run? 2.0
« Reply #828 on: July 16, 2022, 12:38:50 PM »


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Is China economy a house of cards ?
« Reply #830 on: July 27, 2022, 04:59:43 AM »

Crafty_Dog

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Re: China
« Reply #831 on: July 27, 2022, 09:49:12 AM »
I would point out I consistently have been making this point here for several years. :-D

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GPF: New Purges, New Targets
« Reply #832 on: August 01, 2022, 06:50:28 AM »
August 1, 2022
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In China, New Purges, New Targets
The arrests of Evergrande’s leadership embody the debate over how Beijing handles economic recovery.
By: Victoria Herczegh

China’s restructuring of real estate giant Evergrande Group is not exactly going as planned. In mid-May, the company was on track to deliver a preliminary restructuring plan by the end of July that never materialized. Instead, the Chinese government has taken measures into its own hands. Beijing forced the chief executive officer and the chief financial officer to resign, and then arrested them for their alleged involvement in an embezzlement scheme. Similar fates have befallen officials of smaller real estate development companies, and there’s evidence to suggest the crackdown is spreading to the tech sector as well. All signs point to a possible countrywide purge, impeccably timed with the Central Committee Meeting in November and rapprochement talks between China and the United States. Politically, the purges help President Xi Jinping remove opposition; economically, they could help improve how Chinese companies interact with the West. Beijing needs both to succeed for it to have any hope of saving the Chinese economy.

Beijing’s intervention in Evergrande’s leadership embodies China’s internal debate over how it should recover economically. The company entered default in late December 2021 with over $300 billion in liabilities. The promise of debt restructuring, a measure of last resort, did not happen. Given the company’s size, it had an outsized influence on China’s GDP expanding by only 0.4 percent year-on-year. But it’s just a matter of economic policy. The two officials arrested are affiliated with Shanghai-centered banks and other large companies associated with political opposition to Xi. They aren’t politicians, strictly speaking, but their shared interest in maintaining foreign trade and investments comport with the opposition’s coastal growth model, as opposed to Xi’s consumption-based model.

It’s not uncommon for Chinese leaders to remove their enemies through purges based on corruption charges. Between 2012 and 2017, Xi himself ousted more than 150 people he believed to be a threat to his power. That campaign was aimed at political figures, mainly members of the Communist Party of China. But the current one appears to be taking aim at economic targets. Zhao Weiguo, the former head of the large and once very promising semiconductor producer Tsinghua Unigroup, was placed under investigation by officials in Beijing on July 26 after being forced to resign in May. Like Evergrande, Tsinghua struggled to repay the company’s debts, and its leader has had close personal ties with former President Hu Jintao, with whom Xi has had a fraught relationship. Xi’s purge has even netted such high-profile figures as Xiao Yaqing, China’s minister for industry and technology. Not coincidentally, Xiao started his political career as deputy secretary-general under Hu Jintao.

The cases of Zhao and Xiao show that no one, not even high-ranking officials, is safe as the purge continues in the coming weeks. One sector that is almost certainly going to be targeted is banking. Recently, depositors at some rural banks in central China were unable to withdraw their money, which resulted in regional protests. The banks promised to return the money, but those refunds are still in progress. Expect Xi to respond in kind.

Strategically, the purges are meant to show that Beijing is serious about allaying the concerns of Western investors. The episodes in real estate, tech and banking all share two characteristics: large amounts of Western money and major problems with servicing large sums of debt. Evergrande alone has $20 billion of its liabilities in offshore dollar-denominated bonds. These concerns are only compounded by retaliatory tariffs, financial restrictions and renewed COVID-19 lockdowns. A leadership reshuffle in such a prominent company suggests a major shakeup in how Chinese companies do business could be in the works. While the new leadership and debt repayment structures have yet to be finalized, the changes made in Evergrande will be a good indicator of how the Chinese government may be trying to prepare its economy to restore faith with Western businesses.

China needs to improve its ties with the U.S. Last week, Beijing gave its clearest signals yet that it intends to do so, at least on the economic front. On July 28, Xi spoke with U.S. President Joe Biden on the phone to discuss various aspects of their bilateral relationship and global issues. China’s Foreign Ministry released a statement emphasizing the need for China and the U.S. to communicate and coordinate on macroeconomic policies, keep global industrial and supply chains stable, and protect global energy and food security. They also discussed the need to de-escalate regional hotspots and to reduce the risk of stagflation and recession. Biden reportedly said U.S.-Chinese cooperation can benefit the people of each country. China’s current economic model depends heavily on exports, which have tanked over the past couple of years. China’s best hope for improving exports – and therefore reviving its struggling economy – depends on gaining access to the U.S.

While the purge will remove “problematic” actors, it’s not yet clear how the Chinese government plans to address some of the structural problems facing these sectors. Real estate companies of various sizes have yet to submit debt restructuring plans, and changes in leadership slow the process of drafting and implementing them. Liquidity crunches have forced developers to stall many projects across the country. Similar strains are being felt in the tech sector. Real estate, tech and banking are the foundations of China’s finances, and putting new, Xi-allied people to lead the most important companies would certainly change their management practice. It may also help align moves in the business sector with the country’s broader international economic agenda.

What’s clear is that Xi intends to consolidate political power and reposition Chinese businesses in a more favorable light to Western business. But this is not without risks of its own. The purge has just started, and even though it has already claimed several, it’s not clear how long or broad it will be. Moves on the political front, at the very least, are likely to continue as there is already talk about installing a new generation of party officials at the next Central Committee meeting. The sacking of Xiao shows that the reshuffling may have already started


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Stratfor: Chinese Energy
« Reply #835 on: August 30, 2022, 12:46:38 AM »
Not what I was expecting:
===============
The Obstacles China Will Face in Fixing Its Energy Grid
8 MIN READAug 29, 2022 | 21:12 GMT


Editor's Note: The primary author of this assessment, Satvik Pendyala, is an Applied Geopolitics Fellow at RANE who has conducted significant research over the summer into China's electricity policy.

China's implementation of renewable grid reforms may address longstanding connectivity issues, but the emphasis on transmission infrastructure may raise new concerns about the grid's ability to respond to challenges. China is reinvigorating plans for long-range ultra-high voltage (UHV) power lines to connect underutilized renewable energy supplies to centers of consumption. Beijing is also expanding its plans for and implementation of smart grids to manage the complex flow of electric power across the country as Beijing seeks to advance its carbon reduction commitments, as well as mitigate concerns regarding pollution levels and regional imbalances in power production and consumption. These efforts have the potential to ease the greater challenges currently plaguing China's domestic development — namely, interregional competition, centralization of governance, mismatched regional implementation of national policies, and a poorly optimized electricity grid. If the reforms are enacted, China can finally integrate its renewables into a larger grid to reduce the amount of wasted power generation. An interconnected grid, however, also creates new vulnerabilities. And this, combined with climate-related shortages of hydroelectricity, may result in more power disruptions in the future.

For the next few years, China's electricity policy will focus on grid interconnectivity, peripheral installed capacity, and introducing ''smart grid'' technologies.

China has been continuing to develop the West-East Transmission grid project, which aims to connect the country's more power-generating provinces in the west with the more power-consuming provinces in the east. Significant UHV lines and generation infrastructure has already been constructed as part of the project, with more slated to be built over the coming year.

China's 14th Five-Year Plan, released in 2021 and updated in March 2022, emphasizes ''smart grid'' management along with UHV transmission and storage, increasing the central government's ability to track local grids given the interprovincial connectivity of such a smart grid system
In April, China's Central Comprehensively Deepening Reforms Commission (CCDRC) announced that environmental performance would be a key part of future cadre evaluation for promotion, which suggests local cadres may align their environmental policies with Beijing's to advance their careers.

Through these grid projects, Beijing is hoping to address the connectivity issues that have plagued its renewable sector. China's installed renewable capacity has rapidly expanded over the past decade. In 2010, solar and wind power together comprised only 3% of installed capacity, but as of 2020, they comprised nearly 25%. China has also invested billions in installing renewable energy in western, peripheral provinces. Connectivity issues, however, have hindered the utilization of this newly installed power capacity. Due to over-construction, renewables in China have had a high rate of ''curtailment,'' which is the amount of potentially generated energy that was not delivered to the grid. This largely stems from local governments in China building power capacity without concern for integration into the national network due to development incentives and regional development evaluations. For China's power grid, this scattershot approach to the energy transition has come at the cost of reduced efficiency and reliability.

Curtailment rates for renewables in China have often spiked above 8% over the last decade. The curtailment rate for wind energy in the country temporarily decreased after the central government imposed limits on renewable construction in 2017. But in 2020, wind and solar developments exploded amid the reintroduction of government subsidies, which has increased China's curtailment rate by causing the country's potential power capacity to further exceed absorption ability. So far, in 2022, Inner Mongolia and Qinghai reportedly face curtailment rates of up to 10-12% for renewables (the U.S. state of California, by comparison, averaged about a 3% curtailment rate in 2021).

Hydropower makes up the largest portion of China's installed renewable capacity. But in recent years, extended droughts related to climate change have significantly reduced the reliability of this energy source by leaving dams without enough water to generate electricity. In provinces like Yunnan, low rainfall in 2020 and 2021 reduced hydropower generation by 30% in some months. Sichuan — which relies on hydroelectricity for 80% of its power generation — is also currently facing a major ongoing drought, which recently forced the province to implement power cuts for industrial operations. Nonetheless, new dams have just finished construction in southwestern China and more are scheduled to be built.

The underutilization of installed renewable capacity in China partially reflects central-local and inter-regional policy disagreements on electricity production and transmission. Beijing's policy priorities are codified in its Five-Year Plans, but their implementation is left to local officials who must balance those central priorities against their region's economic and social interests. The Chinese government financially incentivizes provinces to develop local renewable energy sources by offering subsidies, guaranteed pricing and feed-in tariffs, which has resulted in oversupply and inadequate connections for built installed capacity. Another form of regional protectionism arises when local energy providers provide tax revenue for provincial governments, which incentives cadres to buy power from local power generators (and deters them from relying on inter-provincial transmitted power). This often results in the propping up of unprofitable companies, insecure financing for renewable ventures, and an unwillingness to fully utilize national UHV transmission lines.

For China's power grid, this scattershot approach to the energy transition has come at the cost of reduced efficiency and reliability. In August 2021, the NDRC reprimanded several provinces for failing to maintain ''low energy intensity,'' a measure of how efficiently energy gets turned into economic output. In 2020, China also failed to meet its 15% national energy intensity reduction goal laid out in its 13th Five-Year Plan. In the wake of these failures, China modified its energy intensity caps to encourage renewable energy production and greater efficiency, as well as bolster renewable usage and grid connections, while phasing out traditional energy generators. But grid disruptions have nonetheless continued to draw widespread attention.

In September 2021, due to coal shortages and concerns about industrial power use, the Chinese government ordered power-intensive industries to slow operations, which caused production delays. This iteration of cuts spanned many northern provinces and extended until December. Since then, power cuts have resumed amid a series of heat waves and droughts, which have increased the demand and slashed hydropower capacity.

China's energy plans can significantly reduce curtailment and promote regional interconnectivity in the long term. The political capital of leading renewable investment is not lost on Chinese leaders, who are keen on bolstering its domestic production of renewable components with an international market in mind. ''Smart grid'' technology, in particular, has been a major focus for the export market. Many countries that look to Beijing for energy leadership may request China to help upgrade their own grids.

Popular sentiment in coastal provinces has been to shift pollution- and land-intensive energy production out to China's western regions. As the central government is politically dominated by coastal provinces, Beijing has been massively investing in solar and wind power in the west, with Xinjiang alone planning to increase its solar and wind capacity to 80 gigawatts by 2025. This is bolstered by new UHV lines meant to increase transmissions eastward, contrary to regional protectionism that prioritizes local generation. Recent power cuts have tempered Beijing's ambitions, but have not slowed projects aimed at increasing China's peripheral generation and transmission. As of July, major interconnectivity projects are set to finish before the end of this year, such as the Huadian Jinshang Suwalong hydropower station in Sichuan.
The West-East Transmission project, connecting as far west as Xinjiang and Tibet to as far East as Jiangsu and Anhui, is expected to accelerate in the coming years. As this transmission grid matures, and as more provinces are connected out west and renewables are further able to deliver electricity, China will once again be able to bring its curtailment rates under control.
But this reform push will also come with trade-offs, including:

Increased risk of social unrest. As China increases its focus on renewables and prioritizes energy transmission, local traditional power generators in some areas risk going bankrupt, leaving people without jobs. In areas that are heavily dependent on coal-fired power generation, like Inner Mongolia and Shaanxi, unemployment in local energy sectors may cause social unrest and disrupt the implementation of the improved grid.

Potential for construction-related outages. There are some risks inherent in the construction of UHV lines. They are points of failure that increase the risks of outages by sabotage or accident. These lines become critical nodes, which may serve as points of reduced physical redundancy for the grid.

Continued vulnerability to extreme climate events. China's grid remains heavily dependent on hydropower generation in the West. This will leave the country's power grid vulnerable to supply disruptions as climate change increases the length and severity of droughts and, in turn, decreases the generative capacity of China's rivers. Such disruptions may eventually force China to walk back some of its more ambitious renewable transition goals and/or scale up non-hydropower energy sources. Beijing could also possibly look to nuclear to replace hydroelectricity as the base power load of its grid.

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FA: China's RE debts come due
« Reply #836 on: August 30, 2022, 07:39:05 AM »
Second

=========

eijing’s Debts Come Due
How a Burst Real-Estate Bubble Threatens China’s Economy
By Brad Setser
August 30, 2022

https://www.foreignaffairs.com/china/beijing-debts-come-due-china-economy

The Chinese real estate sector is teetering. The largest private Chinese developer has defaulted on its external bonds. Most developers are struggling to refinance their domestic bonds. Home prices have gone down for the last 11 months. New construction is down 45 percent. The most acute stress can be traced back to developers who raised large sums by preselling yet-to-be built apartments. Some, however, failed to set aside reserves to guarantee the completion of these units, and households that took out mortgages to buy these homes have threatened to stop paying.

China’s real estate crisis poses financial risks, but it is ultimately a crisis of economic growth. Since the development and construction of new property is estimated to drive over a quarter of the country’s current economic activity, it is not difficult to see how a temporary downturn in the property market could become a prolonged economic slump.

The country’s state-backed financial system can still take large losses and thus avoid a financial meltdown. One state-backed institution can put money into another state institution, limiting the chance that losses on lending to a failed property firm will lead to the collapse of its creditors and trigger a cascade of defaults. The Chinese government can ask state-backed developers to complete building projects abandoned by private developers, providing financial help through the state policy banks. Pervasive government intervention isn’t the best way to run an economy over time, but the presence of institutions with deep pockets can prevent the destabilizing withdrawal of all financing to the property market.

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As a result, China likely will not suffer a crisis that recalls the U.S. Great Recession of 2008. But that doesn’t mean the Chinese economy is in the clear. A new growth engine won’t automatically replace the boost that the property sector traditionally provided. If China elects to goose growth by increasing exports—as it has done in the past—that could have serious implications for countries around the world struggling to find their economic footing after the shocks of the COVID-19 pandemic and Russia’s invasion of Ukraine.

THE ANT, NOT THE GRASSHOPPER
China’s banks, trusts, and other financial institutions have lent huge sums to China’s property developers, to households looking to buy apartments, and to local governments building public infrastructure even as China’s big policy banks financed construction projects around the world as part of its Belt and Road Initiative. China’s financial system could do both kinds of lending without borrowing large sums from the rest of the world, thanks to the country’s enormously high domestic savings rate, which has averaged about 45 percent of its GDP over the last 20 years. By contrast, most large economies save about 25 percent of their GDP; before the pandemic, the high-saving Asian economies other than China generally saved about 30 percent of their GDP. Only oil-exporting economies generate comparable levels of national savings to China, and they usually do so for only a brief period after a large and unexpected rise in the price of oil.

Saving is often considered a virtue and the absence of significant external debt gives China more options for managing the current property slump. External credit, especially external credit to banks, is often withdrawn quickly during a market downturn. Domestically raised funds, in contrast, are generally stuck inside China.

But too much saving helped create China’s current financial difficulties, as it fostered an economic environment where China’s rapid growth effectively required increasing domestic debt. To understand why, it helps to remember that the counterpart of high savings is low domestic consumption. As a result, China’s rapid growth over the last 20 years has rested on either the ballast of exports or periodic bursts of investment.


China will not likely suffer a crisis that recalls the U.S. Great Recession of 2008.
Before the 2008 global financial crisis, China’s internal debt-to-GDP ratio was stable, as China could rein in its financial sector while stunning export growth propelled China’s economy and industrial development. Export-led growth minimized debt risks inside China but was destabilizing to the rest of the global economy. It led to job losses in the manufacturing-intensive parts of the European and U.S. economies; the United States was able to overcome the drag on demand from large external deficits only through an increase in household borrowing that proved to be globally destabilizing. Put simply, it was one of the factors that helped spark the 2008 recession.

After the global financial crisis, China maintained its rapid growth while its trade surplus shrank through extraordinary investment in property and infrastructure. Mobilizing such high investment required higher domestic borrowing as well. In the ten years following the global financial crisis, China’s internal debt-to-GDP ratio rose from around 150 percent to well over 250 percent of GDP. In essence, the debts of households, local governments, real estate developers, and state firms have all increased faster than their incomes. Ultimately, that is a risky dynamic.

That said, China’s central government debt has been stable: the country’s debt is less than 20 percent of its GDP—far below that of the world’s other major economies. China’s central state unambiguously has a large role in China’s economy, but that is because it backs most large Chinese banks and many investment funds. The Chinese government doesn’t collect a lot of tax, nor does it spend a lot on social benefits: China has not created a national system of unemployment insurance, does not offer high-quality universal health care, and limits the public services available to Chinese workers who move from rural areas to more prosperous coastal cities.

The result is an unusual mix of financial strengths and weaknesses. The central government in Beijing owns some of China’s most profitable companies, and it backs the healthiest part of China’s financial system, namely the big national banks. It has little direct debt. Local governments, however, are carrying substantial debt and have a weaker revenue base. They are also indirectly responsible for the many state firms that have been created to finance local infrastructure projects, and they back many of the weaker locally owned banks.


China’s central government doesn’t want to cover all losses from the real estate bubble.
The big property developers, meanwhile, carry staggering debt. The market borrowing of the largest private property developer, Evergrande, is around $100 billion. If all its promised apartments and unpaid bills are counted, the company owes an estimated $300 billion. Its peers have only slightly smaller balance sheets. China’s total debt isn’t a problem for an economy that saves as much as China does—the real problem is that the wrong parts of the economy are carrying most of the debt and will have difficulty repaying.

Still, China will likely manage the immediate financial risk that its property downturn has created. Some of the weaker property developers may not pay all their debt on time and in full. But China’s central government has the capacity to protect important institutions that lent to the big property developers. Beijing can also help local governments that will need to rescue local banks so they can support locally important firms.

China’s central government doesn’t want to cover all losses, however. Too much help would fail to teach a lesson to those who lent to the most poorly managed property developers, and that could potentially lead to a new round of risky behavior. At the same time, the central government cannot allow all the big property developers to fail simultaneously. It also cannot allow losses on past investment projects to stop the flow of new infrastructure financing because China’s economy would seize up from unpaid bills and stalled building projects. Unemployed urban workers and angry buyers of unbuilt apartments would threaten social and political stability. A restructuring of the debts of the developers is inevitable—but that restructuring must be combined with steps to help the financial system bear the associated losses and make sure the flow of credit to the economy doesn’t stop completely.

A NEW MODEL
In addition to avoiding a severe financial crisis, the Chinese government also needs to find a new growth engine to replace the ballast the property sector used to provide. Specifically, household consumption needs a jolt. COVID-19 lockdowns have taken a toll, and falling property prices could lead worried households to cut back on spending just when the overall economy needs more consumer demand.

This means China must shift to a new model for delivering stimulus by providing help directly to households. China’s persistently low consumption reflects the insecurities created by limited social benefits, high income inequality, and the burden low-income households carry because of a tax system that raises the bulk of its revenue from consumption taxes and poorly designed payroll taxes. In the long term, China needs a stronger national system of social insurance—in particular, more spending on public health and a better system of unemployment insurance—that is financed by higher progressive income taxes collected by the central government.

In the short run, China simply needs to shore up its existing system for providing social services and income support by transferring more revenue to local governments. China has historically kept central government borrowing down by shifting the fiscal burden to local governments. But this approach now risks the country’s financial stability. Local government revenues are under pressure from the property downturn, as they have relied extensively on land sales to property developers to help cover their budgets. The path to a healthier economy—one driven more by household consumption and less by state-guided investment—currently runs through an increase in the central government’s budget.

China, however, has been reluctant to move away from its existing model. The country’s top leadership views direct support for household spending as unproductive, and the finance ministry has consistently resisted running large central government budget deficits. The Chinese government’s recent announcements suggest that it wants to try to restart growth by authorizing more local investment in infrastructure and displacing imports with Chinese technology. But the high-wire act required to keep China’s economy moving without a more stable base of increased domestic consumption will only get more precarious over time.

GLOBAL IMPLICATIONS
China’s trade partners have a large stake in the outcome of the internal Chinese debate. For most of the global economy, the way China grows matters at least as much as how fast it grows. China relied on exports, rather than a rebound in household consumption, to drive its recovery from the outbreak of COVID-19 in Wuhan in 2019. With a shift in global demand toward goods putting upward pressure on prices everywhere, countries around the world have tolerated (if not always warmly welcomed) the increased supply out of China. China’s trade surplus was expected to fall naturally as COVID-19-related disruptions eased globally and in China.

That hasn’t happened. Instead, the latest trade data show that China’s external surplus is rising on the back of weakness in China’s imports. Over the summer, the world economy was lucky, as China’s slowdown reduced demand for commodities when the global economy was struggling to adapt to a reduction in the supply. But this doesn’t mean that the global economy can make up for a sustained shortfall in China’s own ability to generate demand for the industrial goods that its economy can now produce in large quantities.

Back in 2009, China’s economy was able to pivot away from exports toward domestic real estate investment to mitigate the global fallout from the U.S. housing crisis because China’s financial system was strong enough to support this shift. Plus, China needed more housing and modern infrastructure. Today, China could not reverse that pivot with a large move away from real estate and back to exports without significant disruption, in part because its share of the global economy has roughly tripled in the years since the global financial crisis. The scale of the lost domestic activity from real estate that would need to be made up through a shift in global demand toward Chinese goods is just too big, and China’s trading partners themselves are often struggling with their own debt challenges.

China can try to manage a permanent downshift in real estate investment by taking steps to sustain and strengthen household demand and by finding new ways to help the industrial sectors that have relied on excessive property investment retool to meet internal consumer demand. Above all, Chinese government officials need to accept this difficult truth: rising internal debt and the end of a period of unusually high investment means that China’s historic growth surge is most likely a thing of the past.

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GPF: China's National Congress
« Reply #838 on: September 19, 2022, 01:58:55 PM »
September 19, 2022
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Winning Friends and Influence at China’s National Congress
The level of dissent is unusually high ahead of this year’s planning conference.
By: Victoria Herczegh

The immediate future of China’s economy rests on the rapidly approaching 20th National Congress of the Chinese Communist Party. Unlike other recent congresses, where most major decisions were made ahead of time, the Oct. 16 meetup is awash in uncertainty. A beleaguered economy has created visible discord within the party leadership and civil society. Most notably, an influential party faction is pushing an economic recovery plan whose priorities starkly contrast with the strategy of President Xi Jinping’s government. Despite its best efforts, the Xi government has not managed to win over these critics or fully rein in social unrest before the congress. Though Xi is likely to win out, it’s important to watch the event for revisions to China’s short-term economic strategy and indications of regime instability.

A True Opposition

Held every five years in Beijing, the National Congress is where party elites elect members of China’s top political body, the Central Committee, which then approves the membership of the party’s most powerful decision-making organ, the 25-member Politburo and its seven-member Standing Committee. In other words, it's where China chooses its leadership and strategy for the next half-decade. The Standing Committee presides over all sessions of the congress and sets the agenda, the routing of legislation and the nominations for offices. Any major strategy or government initiative goes through the committee. The most important choice, though, is that of who should be president – the person with the greatest influence over the Standing Committee and other powerful bodies.

On paper, China has a multiparty system for cooperation and consultation, meaning there has always been an “opposition” in the country’s political framework. In practice, that opposition has been primarily symbolic. Minor democratic parties operate under the watchful eye of the Communist Party of China (CPC) and have influence only over insignificant social and environmental issues. This year’s congress is different. The strongest opposition is coming from within the government itself, in the Politburo, and its point of disagreement concerns the country’s economic recovery plan, not some trivial peripheral issue.

The political factions vying for control have made no secret of their dispute and intentions in the months leading up to the congress. This too is unusual. China’s political system leaves little room for competition over policy, so proceedings at a National Congress are typically a formality. Major decisions and appointments have already been made, and the congress is where they’re announced to the public. There is no agreed-upon, comprehensive list of “pre-appointments” this time around, even with the gathering less than a month away. There may be other reasons for this, but the obvious explanation is that the party hasn’t been able to agree.

Wide Base of Resistance

Xi’s opponents aren’t only people already in the halls of power. The CPC’s sometimes peculiar employment of COVID-19 containment measures suggests a deliberate effort to suppress potential popular unrest that Xi’s rivals in government could exploit. Since late August, Beijing has put millions of people in several cities under partial or full lockdown in response to even the slightest hint of a viral outbreak. Just a handful of asymptomatic cases have been enough to trigger lockdowns in large districts. The poor quality of China’s COVID-19 vaccines and rollout difficulties, as well as the government’s early emphasis on complete suppression of cases as indicative of its systemic superiority over the Western model, surely play a role in its heavy-handedness. But given the larger context, the primary cause of Beijing’s disproportionate public health response is probably political.

Conspicuously, the regions under the strictest public health scrutiny are the same areas that make up the economic base of Xi’s rivals. These include Shenzhen, Chengdu and Dalian. All three cities are major technology and manufacturing hubs, and thus host large firms and banks that support those sectors. These industries rely heavily on foreign trade and are thus hypercritical of lockdowns – in addition to Xi’s crackdown on their sectors and China’s increasingly strained commercial ties with the West.

Another example is Shanghai. The leading figure of the opposition in the Politburo is Han Zheng, the former mayor of Shanghai, who is still closely connected to the city’s financial and trading activities. It was notable, then, that Beijing earlier this month indefinitely postponed the finance-focused, Shanghai-based Lujiazui Forum a day before it was supposed to start. Han, along with other senior Chinese officials and economists, had openly criticized Xi’s handling of the economy, and the forum was very likely to feature a critical evaluation of the government.

For the dominant actors in these outward-looking cities, Xi’s economic and foreign policies are a real threat. They want Beijing to curb China’s substantial debt and further support tech and manufacturing. Given their ties to international markets, they also advocate cooperation with foreign actors to resolve China’s most pressing economic issues: an unsustainably large real estate bubble and a liquidity crisis in the banking sector. Their strong preference is for a strategy that favors coastal economies and requires a less confrontational approach toward the West.

The Xi government sees the country’s challenges differently. Its focus is on redistributing wealth (under the rubric of “common prosperity”), where the drivers of growth are government management and domestic consumption. To the extent possible, it wants to sideline international actors. It calls for the transfer of the coastal provinces’ immense wealth to the much poorer interior in the name of social cohesion (read: to avoid a peasant revolt). Xi’s crackdown on big tech and big finance, ongoing since 2020, is a major part of this plan.

Tale of the Tape

How this political battle plays out will to some degree determine what happens at the National Congress. The opposition’s main strength is in its ability to capitalize on social unrest from lockdowns and other social repression. Already fatigued from years of such measures, the public will have little appetite for tolerating new ones. In cities like Shenzhen and Chengdu, where government interests align with those of the Politburo’s opposition faction, there’s a risk that local leaders would allow citizens to express their discontent if it’s politically expedient for them to do so.

This is unacceptable for the president. To prevent the opposition from drawing on this social support, the Xi camp must continue its repressive measures. Since addressing the root problems of the opposition is a non-starter, it’s the only option the government has. Beijing adopted the COVID-19 strategy because it allows the national government to enact social and security measures outside the purview of local authorities. (Normally, local governments are responsible for maintaining law and order.) This wouldn’t dissolve the opposition of course, but it will at least make it think twice before acting, giving Xi and his loyalists time, if nothing else. Xi will meanwhile use his control over state media to downplay public protest, even if his ability to do so appears to be waning. He was unable, for example, to prevent national media from covering the Henan banking protests and the Wuhan lockdown protests.

Xi’s camp has an inherent advantage over its adversaries in that it is starting from a position of strength. The president has purged the government of potential threats since 2012, and he has used his economic agenda to help support his camp’s political agenda, most notably in the tech and real estate sectors. Most of his targets were affiliated with wealthy cities aligned with the Politburo opposition. But there are limits even to these crackdowns. And though they’ve claimed many victims, they have yet to nab members of the Central Committee and Politburo such as Vice Premiers Han Zheng and Hu Chunhua.

The opposition, then, comes from a position of relative weakness. Yes, it can incite local populations to action, but it is not powerful or organized enough to challenge Xi head-on at the congress. Some high-ranking opposition figures have enough political capital to keep their positions, but there’s a limit to how outspoken they can really be. And perhaps most important, it has yet to rally behind a single leader. Han and Hu play a role, as do local government officials throughout the country, but it’s hardly an organized network capable of creating and sustaining a viable alternative movement. CPC tradition dictates that presidential candidates present themselves at least six months before the congress to be able to solidify their national strategies within the party and publicize them. If a new presidential candidate presented himself now, he would not have much support in the party.

Who walks away with the vice premier posts will signal which political faction did well at the congress and, consequently, which national economic strategy will be pursued. There are currently four premiers, three of which are 68 years old or older – the retirement age established by party regulations. There have been exceptions to the rule, of course, as when older members resist surrendering their seats to a younger replacement whose views don’t align with theirs. Such may be the case this year. Two vice premiers, Liu He and Sun Chunlan, both in Xi’s circle, are set to retire, but there has been no indication of who will replace them. How these posts are divided among the factions will indicate the relative strength of each camp. The Xi camp is expected to remain in power, which means China will pursue its shared prosperity economic strategy. But with a good showing at the congress, the opposition could undermine such initiatives, thus weakening the party. And as history has shown, a weak central government in Beijing can often lead to crisis.


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A lot of smoke coming out of China
« Reply #839 on: September 25, 2022, 10:05:39 AM »