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Brass Tacks. Or A Lack Thereof
Phrases like "without specifying an amount" and "without specifying a time frame" are prevalent in mainstream media recaps of Chinese economic policy briefings.
If I spent a week sorting through historical coverage of such briefings, and I endeavored to tally all instances of those phrases and phrases like them, I'd have a very large number.
Because that's what's usually missing from Chinese policy briefings: Large numbers. Often, there are no numbers at all and rarely does the government comm
So….classic “pump and dump”?
https://en.m.wikipedia.org/wiki/Pump_and_dump
I mean I think so. The excuse today (Lan even whispered as much to a deputy) was that they need to wait on approval from the higher-ups later this month. But if that was the case, then why call another briefing? And there’s always an excuse. It’s just excuses after excuses. I think the reality is just that this is really, really hard, and they don’t have perfect answers. That’s one problem with governments like Xi’s: You can’t admit that you don’t have all the answers, because that’s an admission that you’re not in total control.
My question was rhetorical- I have read every word you have written about China; and on this subject, I believe you and I are in total agreement 🙂
Getting harder to see how this will lift 2025 growth to 5%. Long decision making process, sums yet to be determined, actions yet to be decided, very laggy transmission.
Suppose after another month of meetings the central govt bonds are issued, some LG debt mitigated, state banks recapitalized . . . in mid November. Is the economy supposed to explode in December, one Bacchanal month of drunken spending to lift the year to 5%? Seems very unlikely as well as un-Xi. Yet the govt seems to have doubled down on the 5% rhetoric.
Maybe the statisticians have been instructed to goal seek 5%. How will they paper over the chasm between the official December exuberant growth of 10% or whatever and the sullen private market data?
Silver lining, I guess, is that after failing to make 5% in 2024 – or having to transparently fake the numbers – the govt may be compelled to actually do the great big stimulus thing in 2025. If I were a Chinese broker, that’s how I’d spin it.
By now, Xi’s men have heard from many sources, for many years, from govt-associated economists to the markets, that they need to focus on the consumer in a major and structural way.
But almost everything they have trotted out, as un-formed as it is, focuses on debt and investment – and in the MoF briefing, almost all on debt.
Is this because the govt still doesn’t agree that the consumer and the consumer economy needs major immediate help (stimulus) and major structural changes (reform)? That would be very negative.
Is this because it agrees, but needs time to figure out what to do? For the structural changes, that is understandable if not encouraging; the scale and cost of the required changes could take a decade even at “full speed ahead”. For the stimulus, that is less understandable; the US quickly figured out how to get $4TR to its households, China should know how to get a much smaller sum to its households, unless the govt just woke up to the idea of major stimulus.
Or is this because it thinks the full scale of the debt problem is such that central govt funds have to be committed to debt relief, and – rightly or wrongly – it feels fiscally constrained in its ability to do either major stimulus or structural reform? That would be very discouraging as well. But possible, I think.
What I find amusing is the assumption that stimulus money will be productively employed. Centralized government is oriented to supply production. Stimulating demand and trusting that supply will respond is a capitalist notion foreign to the current government.
The demographic issues facing China means that hitting past growth numbers will become even more unrealistic. Even if you could believe any statistics published by the state.