Chinese Trust Companies on the Brink

With numbers like 1.) YOUTH UNEMPLOYMENT is somewhere between 20% and 50%, 2.) 95% decrease in FDI https://unherd.com/thepost/foreign-investment-plummets-as-th... 3.) double digit plunge in import and export in July https://www.cnbc.com/2023/08/08/china-reports-double-digit-p... 4.) negative CPI

I would call it what it is: China is in a great depression

Regardless of the political and economic issues, the CCP leadership is well aware that they still lack the amphibious lift capacity to invade Taiwan's main island. It will take a few more years at least to build that capacity. In the mean time if they choose to make a push it will likely be toward some of the smaller islands closer to the mainland.

I mean this would be good for the whole planet, if only we got stop the 10 cent army today instead of 40 years from now when they have poisoned discourse for the whole planet.

Sycophants

The overproduction of housing and other real estate in China has been a clear bubble that must eventually burst for at least 15 years. I’ve been stunned consistently they’ve managed to stave off the inevitable for this long. There are entire sections of cities that are entirely devoid of residents, entire sky scrapers empty - entire blocks upon blocks of empty sky scrapers. It could be waved away as long as growth was astronomical. But with weaker global demand, domestic demand waning, and almost every company figuring out their China production exit in some way or another, it’s bound to pop some day soon.

My worry is chinas instability economically leads to political instability leads to wars to distract and focus away from the man behind the curtain.

Kyle Bass had a great tweet recently on this too:

China's REPORTED GDP 'growth' for 2022 was +2.9%. In a year where Chinese LNG demand was down 22%, their real estate market (which represents 33% of Chinese GDP) was in the midst of a collapse, literally welding Chinese citizens into their apartment buildings, and the WeChat payments flowing through their system were down over 20% yoy. In 2023, YOUTH UNEMPLOYMENT is somewhere between 20% and 50%, 48 local governments are in some stage of default on their debt (LGFV debt is approximately $10trillion or just under 60% of GDP), the majority of Chinese property developers are in default of their dollar bonds (71% are in default of over $180 billion in bonds), Xi has ordered all corporate and macro level dat to be severed to the West, and the Chinese government is reporting +5.5% GDP 'GROWTH'?! Reputable economists don't believe these numbers from the CPC

No, it’s more like in the “Trust Buster” sense from US economic history. These are big conglomerates that control numerous subsidiary businesses across a number of industries. Japan, Korea, and numerous other countries have similar business entities.

My understanding is that is that in the Chinese system of commercial paper (corporate depth) not only is the company responsible for paying back the money but anyone who ever held and sold that piece of paper. These trusts are a type of (shadow) bank that manage this risk.

The problem is that Xi hijacked the CCP. He’s now on his way to transitioning China back to socialism and a centrally planned economy.

Jack Ma said that China should "not worry about financial systemic risks" and warned about "Collateralization with a pawnshop mentality" https://interconnected.blog/jack-ma-bund-finance-summit-spee... because Ant Financial was making uncollateralized loans on a huge scale, something they were only able to do because they weren't subject to the same regulations as established financial institutions, and this was about to change.

With Ant Financial being just another regulated lender, there was no way to justify their inflated valuation and by proxy the valuation of parent company Alibaba. Hence the sharp decrease in stock price.

So I think you have your causality backwards: Alibaba didn't lose value because of Jack Ma's warning, rather the "problem" with China's regulatory system he was warning about was that it was going to make Alibaba lose value.

(And invoking his advice when another financial systemic risk is rearing its head might not be the most appropriate.)

Europe tried this with Russia (fossil gas) and still ended up in a bad spot. Trade is important and can be beneficial, but one should still prepare for war if peace is desired. The mental models of some nation state leaders deviates from what one would consider logical. They won’t hesitate to burn what has been built for their goals.

Here here’s This is a key point.

Even without all this, the world’s existing systems of Government have a challenge ahead of them with emerging digital intelligence.

We rarely can predict or even conceive of the next era when the previous era is in retrograde before big changes, though people like to pretend it’s all very linear and predictable in history books.

Since 1840, China's goal has always been national independence and harmonious coexistence with the countries of the world. During this period, China also experienced democracy under capitalism, but these all failed under the dual interference of the United States and the Soviet Union. You may also say that China eventually chose to be like the former Soviet Union, but as long as you walk around a little, look around a little, come to China and see, China is completely different from the former Soviet Union. If people lack basic understanding of history, but rely on biased media propaganda, adopt preconceived views to treat China, or anything, it would be inappropriate. Moreover, even up to now, China is still willing to coexist peacefully with any country, and China's politicians and civil servants are still open enough. If we do not cherish such a rare atmosphere, one day in the future, when all countries' politicians adopt populism and warmongering, no one will have any good results.