This week’s review will have a slightly different format. I will quickly list out a few things that happened in the last two weeks with minimal analysis (Last week I skipped a weekly review for Noah Smith Part 2), and I will then try to connect the dots for you.
What a great article you wrote, Robert! Bravo! 👏🏻👏🏻
I LOVE your illuminating concept of “Silent Traditionalist China” vs “Loud Liberalist China” (95% vs 5% of population). A REALLY useful conceptual framework to understand all those confusing events you listed in your weekly review “China’s schizophrenia Part 1”.
Of course, with the caveat that the reality is actually a spectrum across the two extremes, rather than a simple dichotomy of the two “extremes” — ie Silent Traditionalist ‘median income’ China vs Loud Liberalist ‘upper-middle & upper class’ China.
But the concept still holds up excellently! Thank you, mate.
as much as the loudness of the liberal minority, it is also because of the silence of the majority. it is in our people's nature to stay quiet. we stay watching the emperor's clothes with inconceivable ability to endure, either pretending to see something not there or avoiding to be named a fool. we are a people of silent majorities.
This might be reductive, but honestly, I see a big country with a bunch of unrelated incidents that, in actual context, are not very important (which is a good thing). The stock market is obviously a concern, but it's not big enough to really destroy the economy like it could in the US.
For most countries, and especially the big ones, there is always dumb or terrible stuff happening if you look hard enough.
I'm actually a proponent of the idea that no country should be larger than, say, Germany or France, because we've reached a point where our current forms of government can't really govern the massive countries. But that's a larger topic for another time.
I love this proposal! I also think the most “successful” countries in the world right now is around the 5m-10m population mark: Singapore, Switzerland, Norway, Sweden, Finland, UAE…
Canada is the exception that proves the rule. But honestly once you dive into Canadian politics they have a lot more problems than their reputation would have you believe haha.
I find it interesting you mention the difficulty in managing large population countries. I observe that Western-style democracy tends to break down somewhere near the 100 million population mark. Beyond that it is too difficult to achieve consensus and the “silent majority” won’t politely remain silent. I was intrigued that China’s merit-based hierarchical system would avoid this, but obviously some wrinkles need ironing out yet. Corporations spin off companies when they get too large and diverse. Perhaps governments should do the same.
I don't think it has anything to do with political systems, and that a certain population level is too diverse to effectively manage. I also don't believe merit-based systems are real, that's just not how the world works.
Consistent with your idea of two Chinas, I believe the reason why China Daily circulated an article that many of the Liberalist population found ridiculous about positive energy is that the median worker hasn't been much affected by recent events. Their life is still a struggle, has always been a struggle, but is no different than it has been and thus they have no concrete evidence whether things are actually better or worse.
In light of that, Beijing clearly believes in "setting the tone" to tell those people which way Beijing *wants* them to feel.
The awkwardness is when messages meant for that audience leaks over to the upper middle class (Liberalist) population.
Similar to the awkwardness when domestic messaging leaks overseas, or vice versa. The party isn't very competent at managing public opinion effectively, relying on many brute force methods instead of the more subtle touch that other political systems have due to lack of those brute force methodologies (e.g. censorship, state control of media, etc)
Interested to hear what you say in Part 2. My opinion is that while there certainly is a lack of skills (probably due to various reasons) the biggest problem is conflicting messaging intended for different audiences. Its almost impossible to control "message leakage" and thus consistent messaging is necessary across all possible audiences, otherwise things actually backfire and are made worse
It’s definitely very difficult to have different messagings, if not “conflicting messagings” But I believe skill and will can also make a difference. Younger generation of movers and shakers will breathe in new life into the system. A good communicator in China needs to be conscious of the reality of both Chinas, but right now the situation in terms of communication is that one China takes obvious precedence over other. What’s more important, is that it’s getting more and more necessary. History requires China to do 1) more foreign trade 2) rely more on capital market for financing, both of which require stronger ability to communicate “liberalistically”.
I'm not sure Beijing is convinced about the need for capital markets for financing (they prefer to use bank loans to direct key economic/tech initiatives to key companies).
As real estate’s boom years come to an end, the banking sector, which in China is essentially a derivative system off the real estate market in China, will become increasingly less effective in channelling funds. Also, the “high-end” tech and manufacturing businesses that Chinese govt wants will not be a great absorber of bank financing, but will be a great reservoir for equity investments.
An interesting and enjoyable read! You do a great job of articulating your perspective. There is a quite a bit of merit to the liberal/traditional if you want to put it all on one axis.
I would offer a slightly different perspective after spending a few months living in a (3rd?) tier city in Northern China. It's neither Shanghai nor the countryside and a lot of people I have met don't seem to be either particularly liberal/international or traditional. Are they in or out of the 'core constituency'? Its hard to say. China is a large and diverse country so perhaps it's no surprise that it feels a bit forced to define a core constituency that also happen to be a majority of the population. It's an interesting question whether in China's system leaders think of themselves as triangulating for approval of a majority (like the 'centre ground' in a democratic system), or rather dealing with multiple interest groups and assigning priority.
But I think you have hit the nail on the head that the rich liberal 5% are not so important (or numerous) as they might appear from the outside. That's generally a good insight about any country but goes double for China.
Hi Ewan! Thank you for your perspective. You have correctly exposed I know much more about the Liberalist than about the Traditionalist China (i try to avoid “liberal” and “traditional” because these words have loaded meanings that I don’t intend for). I am curious to know if you can elaborate on where you are what do you observe about the people around you!
I guess I am thinking mainly of people aren't in the liberalist sphere but are adjacent or connected to it. Some examples among people I met might be the man who was the owner/lead stylist of a hairdresser, he had previously lived in a tier 1 city then moved back. Or a train driver who has a son who studied abroad and now lives in a tier 1 city. There also seem to be quite a few people who have many parts of the middle class lifestyle (homes, cars, children's activities, travel) but without the desirable address. In that way it reminds me of parts of the UK when compared to London.
I can totally get whom you are referring to now. Yes, it’s highly fluid and there is wide space of greyness between the “two chinas”. I also have no clue at all how large this gray space is. At very best, it’s no better than an over-simplistic device I used to make sense of things. It’s like one can’t really use democrat and Republican to describe everyone in the US, but that labelling system is useful to certain extent and still better than imagining a single monolith
Sometime earlier this year I wrote a comment here about how China's stock market is mostly about insider trading and rumors. I'd like to add a further to that comment that this behavior of using the US Embassy Weibo as a big poster wall is further to the point, no one buys for the dividend payment, few look at long term prospectus for capital growth, and even fewer trust the "audited" accounts. Either retail investors need to be removed from directly investing(gambling) in the market or the reforms I mentioned need to be pressed forward. At least when the USA market blows up, and it will, it always does, only corrupt union/corporate retirement funds will get burned (sarcasm).
Robert, you are probably too young to have seen this, but I can remember 30 years or so ago how all the banking halls in Hong Kong, Taiwan, as well as Mainland China a bit later, would be full of retired people and housewives playing the stock market. It reminded me of off-track gambling centers. The one big change is mobile phone technology put the banking hall/gambling center into tea houses, restaurants and park benches.
Expanding on "are we out of touch?", I think "Liberalist China" is, very analogously to "Blue America", also extremely out of touch with what the rest of the world is like, thanks to the unusual economic boom in recent history and their insulated foreign connections. Here are some examples I've seen:
Complaining about unemployment, low salaries, when high unemployment and low disposable income are normal in Europe. The US is the lone exception, but for structural reasons people don't get. The wage earner doesn't thrive in a globalized world, but the Chinese wage earner has seen incredibly fast gains and seems more likely to think the trend is durable.
Thinking taxes are high, and not being aware that the OECD average tax burden is almost double. E.g. thinking housing is cheap abroad only to discover something called property tax.
Thinking financial markets are low risk and supposed to give outsized returns for zero effort. This is probably the most egregious naivety I've seen and this sounds patronizing but Chinese people are not prepared for the structural brutality of a free market system. Yes, your shares can be lent for shorting. Yes, short volatility products can lose your money very quickly, as can P2P lending. US index investing was not profitable 60 years ago because macro conditions were different.
Just as Westerners can be extremely naive about how Chinese think, I've seen liberal Chinese who studied or worked abroad with ideas that could only be formed in the most sterile of bubbles. E.g. "freedom of speech is why Hong Kong is so rich, Hong Kong's economy is going to succeed independent of the mainland". E.g. "US primary education must be better because kids don't need to study hard", thinking there is no tradeoff. E.g. "The poorest Americans have cars and mansions".
And one that will piss a lot of people off, but complaining about the Shanghai covid lockdown. Most Chinese people expect the state to keep things tidy, but complain when that power harms them. The lockdowns created periods of normalcy that the West did not ever have, and also periods of hardship that frankly more people should have prepared better for. Many Americans by contrast, understand "freedom is not free", and personal responsibility.
Very well written, as usual! But in regards to how the details of Covid policies "would never be the choice of the Shanghai government", Chengdu, Kunming and Chongqing never went any where near as strict as Shanghai? Also, I suspect, as was (and as was the case in in the USA and still is but unbeknownst to many of them) the ~10% you're referring to may have a split in their interests between those with hard sciences and industrial technical careers/desired careers and much of the rest, the former's interests lay with manufacturing and other "hard" industries which aligns them with much of the other ~90 whereas much of the rest would likely want to see a huge expansion of "services" type white collar work which, if it were to increase by a lot, may lead to amounts of deindustrialization...
Regarding Shanghai case, it’s actually a very interesting study on “perception”. Let’s say there are 3 types of covid control. 1) total citywide lockdown, like wuhan in early 2020, Shanghai in April -June 2022 and some other cities in China in 2022, 2) lockdown of whole neighbourhoods and districts, that’s most of China for most of 2022, 3) targeted, high precise lockdown of a building, even just a few floors of the building, that’s actually Shanghai pre-April 2022. At the time approach 3 was proudly adopted and promoted by Shanghai. Everyone marvelled at how advanced and how efficient Shanghai was - until highly contagious omicron strain broke that practice - and they realised about it and made changes to their practice too late - and that’s why they screamed into approach 1 right away. Approach 1 was what Shanghai was remembered for in the end, sadly… still, Shanghainese as they are, won’t go down this path silently, making a great noise about it. Overall, the perception of Shanghai’s covid treatment was extremely harsh, while the fact was to the opposite for most of the time. This is also why it was unfair to criticise premier Li Qiang (head of Shanghai in 2022) for this heavyhanded lockdown. He should have been remembered for a highly professional, least-impact covid management - until he got unlucky.
Thanks for the reply! Yes, Li got a lot of flack that he didn't deserve.
But Kunming, a great city BTW, didn't lockdown at all, and so, well, I dunno, I guess I was wondering why, if it was so centrally directed that every city must do it, why they didn't?
Regarding the “deindustrialization” theme, I think China will be different from US in the coming decades because of a greater emphasis and cultural preference for “hard” stuff. Overall, China (apart from internet and consumer sector) usually finds Germany to be a better role model, than the US.
Do you think government intervention in capital markets is fundamentally a good idea?
It has always been my understanding markets work best with the forces of supply and demand left to find their own levels, no matter what is being traded.
Thank you! I think govt intervention won’t be a good idea if, and only if, most people thinks like you do. Sadly, not many people will think this way when they get burned. Government in the end is the manifestation of a collective choice, not some alien body removed from “reality”.
I think the U.S. market has had far too much intervention for many years, and it has not all been for the better. At certain moments, perhaps a good thing, but that debate is for another day.
The problem is interventions not only disrupt the functioning of markets, which is price discovery for goods and financial instruments, but also that they go on for too long, at least in the case of the major Western financial markets over the last couple decades.
I will leave the discussion at that, except to say this:
In the end, the Chinese stock market, the U.S. and E.U. Stock markets, and especially their bond markets, are bigger than governments, by orders of magnitude.
Eventually, artificially supported markets will adjust anyway, and violently.
The participants are then forced to acknowledge that governments can no longer sustain artificial prices, and that of course makes it worse.
This question might be a little sensitive and I understand if you'd prefer not to dig into it but this quote:
"The Party is also conscious that if this majority is not treated well, this majority will turn the country upside down. In the late 1940s, it was this same majority that helped communists topple the KMT government"
Is this really the case for a silent majority that is both underfunded, underdeveloped and far past their prime years, dependent on transfers from the rich urban core? Civil War fantasies are common here in the States due to our short history and 2-party politics, but to me (diaspora Chinese) it's a remote possibility that's fodder for the logistically illiterate. On the other hand, civil strife seems all but impossible to me in modern China, which is more technologically segregated than ever in its modern history.
It's not fantasy at all. 2022 Henan village banking crisis is just one of many examples. When people have nothing to lose, they are the most dangerous.
There was a tonne of focus in your post on the government but comparatively little on the (listed) corporations.
How much ire does Liberalist China spare for CEOs who have presided over mediocre to disastrous performance given the amount of debt AKA savings they've binged on? Per the IMF, Chinese corporate debt is nearly 2x their American counterparts. The Yanqs delivered The Magnificent Seven; what have their Chinese counterparts done in comparison?
Great Post! I can't wait for Part II!
This young China-born, foreign-educated entrepreneur writes insightful posts about China. Don't miss him!
What a great article you wrote, Robert! Bravo! 👏🏻👏🏻
I LOVE your illuminating concept of “Silent Traditionalist China” vs “Loud Liberalist China” (95% vs 5% of population). A REALLY useful conceptual framework to understand all those confusing events you listed in your weekly review “China’s schizophrenia Part 1”.
Of course, with the caveat that the reality is actually a spectrum across the two extremes, rather than a simple dichotomy of the two “extremes” — ie Silent Traditionalist ‘median income’ China vs Loud Liberalist ‘upper-middle & upper class’ China.
But the concept still holds up excellently! Thank you, mate.
as much as the loudness of the liberal minority, it is also because of the silence of the majority. it is in our people's nature to stay quiet. we stay watching the emperor's clothes with inconceivable ability to endure, either pretending to see something not there or avoiding to be named a fool. we are a people of silent majorities.
Inconceivable!
This might be reductive, but honestly, I see a big country with a bunch of unrelated incidents that, in actual context, are not very important (which is a good thing). The stock market is obviously a concern, but it's not big enough to really destroy the economy like it could in the US.
For most countries, and especially the big ones, there is always dumb or terrible stuff happening if you look hard enough.
I'm actually a proponent of the idea that no country should be larger than, say, Germany or France, because we've reached a point where our current forms of government can't really govern the massive countries. But that's a larger topic for another time.
I love this proposal! I also think the most “successful” countries in the world right now is around the 5m-10m population mark: Singapore, Switzerland, Norway, Sweden, Finland, UAE…
Canada is the exception that proves the rule. But honestly once you dive into Canadian politics they have a lot more problems than their reputation would have you believe haha.
I happen to know a bit. Some of my friends who emigrated there had a lot of complaints
I find it interesting you mention the difficulty in managing large population countries. I observe that Western-style democracy tends to break down somewhere near the 100 million population mark. Beyond that it is too difficult to achieve consensus and the “silent majority” won’t politely remain silent. I was intrigued that China’s merit-based hierarchical system would avoid this, but obviously some wrinkles need ironing out yet. Corporations spin off companies when they get too large and diverse. Perhaps governments should do the same.
I don't think it has anything to do with political systems, and that a certain population level is too diverse to effectively manage. I also don't believe merit-based systems are real, that's just not how the world works.
Consistent with your idea of two Chinas, I believe the reason why China Daily circulated an article that many of the Liberalist population found ridiculous about positive energy is that the median worker hasn't been much affected by recent events. Their life is still a struggle, has always been a struggle, but is no different than it has been and thus they have no concrete evidence whether things are actually better or worse.
In light of that, Beijing clearly believes in "setting the tone" to tell those people which way Beijing *wants* them to feel.
The awkwardness is when messages meant for that audience leaks over to the upper middle class (Liberalist) population.
Similar to the awkwardness when domestic messaging leaks overseas, or vice versa. The party isn't very competent at managing public opinion effectively, relying on many brute force methods instead of the more subtle touch that other political systems have due to lack of those brute force methodologies (e.g. censorship, state control of media, etc)
I think there is big potential (as well as willingness) for improvement in that “awkward” part. I will briefly talk about it in part 2.
Interested to hear what you say in Part 2. My opinion is that while there certainly is a lack of skills (probably due to various reasons) the biggest problem is conflicting messaging intended for different audiences. Its almost impossible to control "message leakage" and thus consistent messaging is necessary across all possible audiences, otherwise things actually backfire and are made worse
It’s definitely very difficult to have different messagings, if not “conflicting messagings” But I believe skill and will can also make a difference. Younger generation of movers and shakers will breathe in new life into the system. A good communicator in China needs to be conscious of the reality of both Chinas, but right now the situation in terms of communication is that one China takes obvious precedence over other. What’s more important, is that it’s getting more and more necessary. History requires China to do 1) more foreign trade 2) rely more on capital market for financing, both of which require stronger ability to communicate “liberalistically”.
I'm not sure Beijing is convinced about the need for capital markets for financing (they prefer to use bank loans to direct key economic/tech initiatives to key companies).
As real estate’s boom years come to an end, the banking sector, which in China is essentially a derivative system off the real estate market in China, will become increasingly less effective in channelling funds. Also, the “high-end” tech and manufacturing businesses that Chinese govt wants will not be a great absorber of bank financing, but will be a great reservoir for equity investments.
An interesting and enjoyable read! You do a great job of articulating your perspective. There is a quite a bit of merit to the liberal/traditional if you want to put it all on one axis.
I would offer a slightly different perspective after spending a few months living in a (3rd?) tier city in Northern China. It's neither Shanghai nor the countryside and a lot of people I have met don't seem to be either particularly liberal/international or traditional. Are they in or out of the 'core constituency'? Its hard to say. China is a large and diverse country so perhaps it's no surprise that it feels a bit forced to define a core constituency that also happen to be a majority of the population. It's an interesting question whether in China's system leaders think of themselves as triangulating for approval of a majority (like the 'centre ground' in a democratic system), or rather dealing with multiple interest groups and assigning priority.
But I think you have hit the nail on the head that the rich liberal 5% are not so important (or numerous) as they might appear from the outside. That's generally a good insight about any country but goes double for China.
Hi Ewan! Thank you for your perspective. You have correctly exposed I know much more about the Liberalist than about the Traditionalist China (i try to avoid “liberal” and “traditional” because these words have loaded meanings that I don’t intend for). I am curious to know if you can elaborate on where you are what do you observe about the people around you!
I guess I am thinking mainly of people aren't in the liberalist sphere but are adjacent or connected to it. Some examples among people I met might be the man who was the owner/lead stylist of a hairdresser, he had previously lived in a tier 1 city then moved back. Or a train driver who has a son who studied abroad and now lives in a tier 1 city. There also seem to be quite a few people who have many parts of the middle class lifestyle (homes, cars, children's activities, travel) but without the desirable address. In that way it reminds me of parts of the UK when compared to London.
I can totally get whom you are referring to now. Yes, it’s highly fluid and there is wide space of greyness between the “two chinas”. I also have no clue at all how large this gray space is. At very best, it’s no better than an over-simplistic device I used to make sense of things. It’s like one can’t really use democrat and Republican to describe everyone in the US, but that labelling system is useful to certain extent and still better than imagining a single monolith
Yes, for sure. It is a bit like Chris Arnade's back-row America and front-row America.
Sometime earlier this year I wrote a comment here about how China's stock market is mostly about insider trading and rumors. I'd like to add a further to that comment that this behavior of using the US Embassy Weibo as a big poster wall is further to the point, no one buys for the dividend payment, few look at long term prospectus for capital growth, and even fewer trust the "audited" accounts. Either retail investors need to be removed from directly investing(gambling) in the market or the reforms I mentioned need to be pressed forward. At least when the USA market blows up, and it will, it always does, only corrupt union/corporate retirement funds will get burned (sarcasm).
Robert, you are probably too young to have seen this, but I can remember 30 years or so ago how all the banking halls in Hong Kong, Taiwan, as well as Mainland China a bit later, would be full of retired people and housewives playing the stock market. It reminded me of off-track gambling centers. The one big change is mobile phone technology put the banking hall/gambling center into tea houses, restaurants and park benches.
This is fantastic, you've really been knocking it out of the park with these substack pieces recently!
I voted for 'both please', but only on the condition that doing so doesn't take time away from you to enjoy the new years festivities.
I agree with Dolores 100%. Happy Chinese New Year Robert!
From a Chinese Australian reader of yours 🇦🇺
Expanding on "are we out of touch?", I think "Liberalist China" is, very analogously to "Blue America", also extremely out of touch with what the rest of the world is like, thanks to the unusual economic boom in recent history and their insulated foreign connections. Here are some examples I've seen:
Complaining about unemployment, low salaries, when high unemployment and low disposable income are normal in Europe. The US is the lone exception, but for structural reasons people don't get. The wage earner doesn't thrive in a globalized world, but the Chinese wage earner has seen incredibly fast gains and seems more likely to think the trend is durable.
Thinking taxes are high, and not being aware that the OECD average tax burden is almost double. E.g. thinking housing is cheap abroad only to discover something called property tax.
Thinking financial markets are low risk and supposed to give outsized returns for zero effort. This is probably the most egregious naivety I've seen and this sounds patronizing but Chinese people are not prepared for the structural brutality of a free market system. Yes, your shares can be lent for shorting. Yes, short volatility products can lose your money very quickly, as can P2P lending. US index investing was not profitable 60 years ago because macro conditions were different.
Just as Westerners can be extremely naive about how Chinese think, I've seen liberal Chinese who studied or worked abroad with ideas that could only be formed in the most sterile of bubbles. E.g. "freedom of speech is why Hong Kong is so rich, Hong Kong's economy is going to succeed independent of the mainland". E.g. "US primary education must be better because kids don't need to study hard", thinking there is no tradeoff. E.g. "The poorest Americans have cars and mansions".
And one that will piss a lot of people off, but complaining about the Shanghai covid lockdown. Most Chinese people expect the state to keep things tidy, but complain when that power harms them. The lockdowns created periods of normalcy that the West did not ever have, and also periods of hardship that frankly more people should have prepared better for. Many Americans by contrast, understand "freedom is not free", and personal responsibility.
Great post - looking forward to PII
Very well written, as usual! But in regards to how the details of Covid policies "would never be the choice of the Shanghai government", Chengdu, Kunming and Chongqing never went any where near as strict as Shanghai? Also, I suspect, as was (and as was the case in in the USA and still is but unbeknownst to many of them) the ~10% you're referring to may have a split in their interests between those with hard sciences and industrial technical careers/desired careers and much of the rest, the former's interests lay with manufacturing and other "hard" industries which aligns them with much of the other ~90 whereas much of the rest would likely want to see a huge expansion of "services" type white collar work which, if it were to increase by a lot, may lead to amounts of deindustrialization...
Regarding Shanghai case, it’s actually a very interesting study on “perception”. Let’s say there are 3 types of covid control. 1) total citywide lockdown, like wuhan in early 2020, Shanghai in April -June 2022 and some other cities in China in 2022, 2) lockdown of whole neighbourhoods and districts, that’s most of China for most of 2022, 3) targeted, high precise lockdown of a building, even just a few floors of the building, that’s actually Shanghai pre-April 2022. At the time approach 3 was proudly adopted and promoted by Shanghai. Everyone marvelled at how advanced and how efficient Shanghai was - until highly contagious omicron strain broke that practice - and they realised about it and made changes to their practice too late - and that’s why they screamed into approach 1 right away. Approach 1 was what Shanghai was remembered for in the end, sadly… still, Shanghainese as they are, won’t go down this path silently, making a great noise about it. Overall, the perception of Shanghai’s covid treatment was extremely harsh, while the fact was to the opposite for most of the time. This is also why it was unfair to criticise premier Li Qiang (head of Shanghai in 2022) for this heavyhanded lockdown. He should have been remembered for a highly professional, least-impact covid management - until he got unlucky.
Thanks for the reply! Yes, Li got a lot of flack that he didn't deserve.
But Kunming, a great city BTW, didn't lockdown at all, and so, well, I dunno, I guess I was wondering why, if it was so centrally directed that every city must do it, why they didn't?
I hope your weekend is starting off well.
--=Mike
Regarding the “deindustrialization” theme, I think China will be different from US in the coming decades because of a greater emphasis and cultural preference for “hard” stuff. Overall, China (apart from internet and consumer sector) usually finds Germany to be a better role model, than the US.
Thank you for the perspective.
Very interesting.
Do you think government intervention in capital markets is fundamentally a good idea?
It has always been my understanding markets work best with the forces of supply and demand left to find their own levels, no matter what is being traded.
That applies in any market, in any setting.
I look forward to more from you.
Thank you.
Thank you! I think govt intervention won’t be a good idea if, and only if, most people thinks like you do. Sadly, not many people will think this way when they get burned. Government in the end is the manifestation of a collective choice, not some alien body removed from “reality”.
I think the U.S. market has had far too much intervention for many years, and it has not all been for the better. At certain moments, perhaps a good thing, but that debate is for another day.
The problem is interventions not only disrupt the functioning of markets, which is price discovery for goods and financial instruments, but also that they go on for too long, at least in the case of the major Western financial markets over the last couple decades.
I will leave the discussion at that, except to say this:
In the end, the Chinese stock market, the U.S. and E.U. Stock markets, and especially their bond markets, are bigger than governments, by orders of magnitude.
Eventually, artificially supported markets will adjust anyway, and violently.
The participants are then forced to acknowledge that governments can no longer sustain artificial prices, and that of course makes it worse.
Eventually the math matters.
Eventually the biggest players in any market will become the government/monopoly on violence if it isn't asserted from the beginning.
I’m not sure what you mean?
I assumed that you were familiar with various academic text on the histories of markets. My bad.
Your initial response is far too vague to make any sense.
If you are looking for a discussion, a bit of context might help.
If your just trying to be obtuse and sound like a smarty pants, that’s fine too.
A thoughtful and interesting post Robert. Nice work.
This question might be a little sensitive and I understand if you'd prefer not to dig into it but this quote:
"The Party is also conscious that if this majority is not treated well, this majority will turn the country upside down. In the late 1940s, it was this same majority that helped communists topple the KMT government"
Is this really the case for a silent majority that is both underfunded, underdeveloped and far past their prime years, dependent on transfers from the rich urban core? Civil War fantasies are common here in the States due to our short history and 2-party politics, but to me (diaspora Chinese) it's a remote possibility that's fodder for the logistically illiterate. On the other hand, civil strife seems all but impossible to me in modern China, which is more technologically segregated than ever in its modern history.
It's not fantasy at all. 2022 Henan village banking crisis is just one of many examples. When people have nothing to lose, they are the most dangerous.
fucking liberals! 你写的对！
Happy New Year, Mr Wu.
There was a tonne of focus in your post on the government but comparatively little on the (listed) corporations.
How much ire does Liberalist China spare for CEOs who have presided over mediocre to disastrous performance given the amount of debt AKA savings they've binged on? Per the IMF, Chinese corporate debt is nearly 2x their American counterparts. The Yanqs delivered The Magnificent Seven; what have their Chinese counterparts done in comparison?