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本帖最后由 choi 于 9-21-2024 11:16 编辑
The first is an essay, a survey of China's economy. The second is about China's electric vehicles; I do not drive, know nothing about cars, and certainly not electric vehicles.
(1) Jacky Wong, China Risks a Deflationary Spiral; Pressures are building amid excess capacity and insufficient stimulus from Beijing. at page B9 (in the "Heard from the Street" column).
Quote:
(a) "As China sits on the precipice of deflation, Wall Street economists are calling for more fiscal stimulus in the country. But Beijing may not act boldly enough.
"While much of the world has been combating inflation over the past couple of years, China is facing the opposite. Deflationary pressure is building up in the country. China's consumer prices [as measured by consumer price index (CPI)] rose 0.6% from a year earlier in August, but that was largely driven by food prices, which were affected by extreme weather [record rainfall causing floods, damaging grains in Jilin and vegetables elsewhere]. Stripping food and energy [such as fasoline], China's core CPI [which is definition of core CPI, which tends not to fluctuate as much as CPI] actually rose 0.3%.
"Another way to look at this [inflation or deflation] is the GDP deflator, which is the difference between China's nominal and real GDP growth, representing broad changes in prices. By that measure, China has been in deflation for five straight quarters.
"The implosion of the housing market has put a drag [but that is only part of the story, in MY view] on the whole economy.
(b) "In a recent note, Morgan Stanley's analysts went as far as saying deflation is now China's 'public enemy No 1.'
"Instead of directly providing stimulus to households to boost consumption, Beijing has opted to support the manufacturing sector. That has led to excess capacity in many sectors, which eventually finds its way into overseas markets. While that has helped China boost exports -- they grew 8.7% year over year in August -- excess capacity is putting further pressure on prices. China's producer-price index [on the upper -- nearer to the source -- or opposite end of consumer-price index], a measure of factory-gate prices received by producers, has been falling for nearly two years.
"China's export surge has caused concern in many countries, triggering trade barriers in sectors like electric vehicles. This means it could soon become more challenging to rely on exports alone to continue to drive growth. What is more, further investments in manufacturing and exports don't address the root cause of the problem: the sluggish housing market.
"The policy announced in May of buying unsold apartments to be used as affordable housing is in the right direction of reducing housing inventories. But the local governments tasked with the purchases have been hit hard by dwindling land sales and tax revenue, giving then little firepower to work with.
(c) "At some point, Beijing is likely to hit a pain threshold in the economy that forces it to take more decisive action. One possibly would be to transfer more funds to local governments, assisting them in cleaning up property overhangs.
* * *
"Things will have to get a lot worse in China before real change can come.
Note:
(a) "Another way to look at this is the GDP deflator, which is the difference between China's nominal and real GDP growth, representing broad changes in prices."
(i) That is the definition of GDP deflator.
(ii) Imagine an economy (usually a nation, because GDP is an indicator of a nation, not a state; on the other hand, Hong Kong is deemed independent enough to have its own GDP reported) grows from amount A to amount B. I am not talking about in dollar terms )which has to take into consideration the foreign exchange rate IN ADDITION), but in terms of its own currency. The difference between A and B (B is nominal GDP) can be accounted for by two factors: real GDP growth and inflation -- the latter is GDP deflator in economics.
(iii) CPI is what an urbanite (city dweller) paid for a basket of diverse but limited items. By definition, the index excludes what country folk pays. CPI is reported monthly.
On the other hand, GDP deflator, measured quarterly or yearly (because GDP is reported at the same frequency) is, by definition, change in prices of ALL final products and services of a nation. Final because price of a final product includes all intermediate products, such as screws and nuts that go into it. Counting final product only will obviate double counts.
(b) The manufacturing in China has the problem of overcapacity, in part because China encourages certain sectors which are considered strategic and in part because of trade barriers like tariffs (the US (at least two presidents: Trump and Biden) simply does not want to buy from China.
(c) Jacky Wong was born and raised in the US. So his view might be influenced by how the US dealt with toxic assets in the great recession around 2007. There is an en.wikipedia.org for toxic asset; read the definition at the top, but it (section 3 Geithner attempt at bail-out( is muddled, that I could not comprehend it.
James Chen, Public-Private Investment Program (PPIP): Meaning, How it Works. Investopedia, updated Mar 2, 2021
https://www.investopedia.com/terms/p/ppip.asp
says it was a success, and the US got its money back. In Taiwan, there has never been a buyback of toxic assets; but look at its GDP growth rate, which has marched on despite the 1990 Japan meltdown, 1997 East Asia financial crisis (when S Korea suffered a lot) etc.
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发表于 9-17-2024 13:37:54
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