The drop in exports to ASEAN....China has been using ASEAN to export to US
Among major EM economies, exports to ASEAN declined 21.4% yoy in July (vs. -16.9% yoy in June).
"The Data Was Pretty Bad": China Exports Unexpectedly Plunge Most Since COVID As Economic Slump Accelerates
https://www.zerohedge.com/markets/data-w...ccelerates
Situation doesn't look good. Given the geopolitical tensions, wonder if or when the good old days will return ....
Any VBs who recently visited China can share some insights ?
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Shanghai Is Finished: No Foreigners at Shanghai Trade Fair or Foreigner Street, Rent Plummets 60%
https://www.youtube.com/watch?v=ahhude8zA7c
"As China's largest economic and financial center, Shanghai was consecutively ranked as the most attractive city for foreign talents in China for eight years...."
China is suffering from a crisis of confidence and being over leveraged
--> Real Estate defaults
--> Mutual fund/unit trust are unable to make payouts due to many of their investments tied to real estate/construction
--> Government vehicle funds are in zombie states as national projects were constructed at high cost and quickly since 2013 but revenue collected was low (example is China's High speed rail project because of the low fare charged to the people, the project is in constant operating loss). HSR project is now forced to operate within rational projections as part of the austerity
The only solution in my view is to charge the China citizens much higher for the public service they are utilising, while at the meantime wipe off their savings for their funds tied to fund investments.
Its going to be a major reset but this is due to policy missteps by Xi JinPing goverment since he took office. It is definitely a lost decade for China now with expected defaults and the citizens losing part of their savings
China has some tools it can use.
ie Corporate and personal income tax collection has always been very loose and lax
Collection of these taxes can be more stringent and more well enforced especially for the SMEs and personal income taxes.
China is a strange place where they pay very close attention to certain issues and less on others. Their list of priorities is somewhat different from democratic/free market economies. Citizens are somewhat more "respectful" towards their leaders and more tolerant.
From a market perspective Xi's gov may have stumbled a bit. From a political perspective, how he managed to solidify his position, he did extraordinarily well.
Yes. The closest resembelance is to Mao Zedong.
President Mao is loved by the people even though tens of millions died due to famine and lack of jobs under his grand plan "Great Leap Forward" which had many policy missteps.
Similarly, President Xi has a similar grand plan called "Common Prosperity". I hope it does not fall in the same missteps of killing tens of million of Chinese Citizens. Currently lack of jobs is appearing
I find it hard to discern what is the actual situation in China. On one hand, we read about property sector/unemployment woes, "uninvestable" comments etc, on the other, it seems things may not be as bad as what many media portray.
Granted it is a big country with multiple cities, for an investor, is it a "be greedy when others are fearful" or "fools rush in where angels fear to tread" situation ? Is it a new normal where we have to factor in a discount into our earnings estimate for China companies, due to geopolitical tensions i.e. what may seem cheap now may not be so, because moving fwd, things will never be like the good old days of the pre-tensions period ?
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What China’s big earnings say about the consumer
https://www.cnbc.com/2023/08/18/what-chi...sumer.html
"....Here’s what some have said so far:
Adidas
Revenues in Greater China grew 16% in the second quarter, reflecting double-digit sell-out growth in both wholesale and its own retail outlets......"
Market sentiment and public sentiment are not easy to decouple.
Making Sense Of The China Meltdown Story
Why the sudden drumbeat about collapsing Chinese real estate and impending financial crisis when the Chinese real estate problem has been a slow-moving car crash over the past five years, and when, as the charts above show, markets don’t seem to indicate a crisis point?
https://research.gavekal.com/article/mak...own-story/