In China: High Stakes, High Drama

In China: High Stakes, High Drama

If you were already concerned about global growth and, specifically, a downturn in China, Wednesday offered little in the way of respite. Activity data for August betrayed a marked decline in retail sales growth, not surprising under the circumstances perhaps, but disconcerting nevertheless. The growth rate "plunged from 2.8% to 0.7% in two-year CAGR terms, even worse than during the Chinese New Year period when there was another wave of local coronavirus outbreaks," SocGen's Michelle Lam and W
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6 thoughts on “In China: High Stakes, High Drama

    1. Right, EF. What’s happening now was dreaded by China watchers during the so-called “opening” phase of Chinese society and its economy. Back then, the thought that China was truly opening itself up was pessimistically imagined by some as a likely head-fake that would only result in a pivot back to a more powerful and assertive CCP.

      We hoped it was an incorrect prediction. But apparently, it wasn’t. I now wonder how the Chinese evolution will wash through the remainder of the decade, especially in regard to trade with the US and the EU. I hate to sound like Slim Pickens in Dr. Strangelove, but right now I reckon we’ll all be beholden to the commies for a little while.

    2. News this morning – A quote from the Global Times that appeared in The Guardian this morning, describing one Chinese reaction to the US and UK offering nuclear submarines to Australia: “Thus, Australian troops are also most likely to be the first batch of western soldiers to waste their lives in the South China Sea.”

      Sweet, eh? Ever the nice, welcoming, culturally endearing communication…

      And the South China Sea is not a globally recognized shipping lane. It’s the territory of China, even though China previously agreed to the ASEAN-China Declaration on the Conduct of Parties in the South China Sea.

  1. LVS recently sold all its Las Vegas businesses to focus on Macau and Singapore. Good bet?

    Per a (Reuters?) report yesterday, China plans to consolidate the EV industry, as the government has decided there are too many players.

    A surfeit of EV competition wouldn’t seem to harm common prosperity. If anything, it raises employment and lowers prices. The EV industry is one of the CCP’s champions for the future China.

    “Common prosperity” may be broadening to include old-fashioned Communist dirigisme.

    I sure wish there was better reporting on the workings of the CCP. Are there armies of earnest young technocrats carefully analyzing industry structure and socio-economic impact to determine the common prosperity-optimal reforms? Or are well-connected people whispering to Xi’s inner circle, policy by proximity?

    Pragmatically: if you invest in a Chinese semi or biotech, will you see it folded into a larger competitor, or its IP snatched away while the government looks blankly (see: recent ARM China debacle).

    More than ever, I think, you have to be a plugged-in insider to invest confidently in China. The more the media and analysts are muzzled, the less you know what is going if you’re outside of the whispering zone.

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