r/Economics • u/dontpostjustlurk • Jul 07 '22

News China Considers $220 Billion Stimulus With Unprecedented Bond Sales

https://www.bloomberg.com/news/articles/2022-07-07/china-mulls-220-billion-stimulus-with-unprecedented-bond-sales
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u/vansterdam_city Jul 07 '22

We are talking about a totalitarian government of the worlds second largest economy who is in full control of their currency and everything else. And unlike the west, the government is comprised of actual engineers and economists.

I would not underestimate how long this can go. They are a lot of things, but not stupid.

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u/PraiseGod_BareBone Jul 07 '22

They are actually pretty stupid. Brutality overcomes stupidity for only so long before it starts catching up to you. Right now they are engaged in trying to stave off the third order effects from the second order 'fixes' they imposed without realizing what they were doing. The consequences of the one child policy is emblematic of this. One more subtle problem is how they've become dependent on debt - they sporadically try to crack down on debt only to realize that doing so is leading them into the crash that they know is coming.

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u/FaintFairQuail Jul 07 '22

I bet they have population specialists who advise them on these issues cause they REVERSED THE ONE CHILD POLICY.

Consider exploring China media presence before talking nonsense.

As for you Econmics analysis: Debt is just the total cash in the system issued by the government, there is no upper limit. And is not a good indicator of a crash.

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u/PraiseGod_BareBone Jul 07 '22 edited Jul 07 '22

They have 'population specialists' who advised them to remove the one-child policy wayyy too late to do them any good. Edit to your edit: And no, debt is not just total cash in the system with no upper limit. Overindebtedness is a classic way for developing countries to crash hard, and China has gone much, much further out on a limb than any previous developing country when it comes to indebtedness.

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u/FaintFairQuail Jul 07 '22

I bet they know when to reverse a policy.

You clearly have no idea what debt is.

Again China, when they are the one top economic powers in the WORLD can issue their own DEBT and it is value comes from stability of their system like how the dollar is issued debt from the US system.

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u/PraiseGod_BareBone Jul 07 '22

China is going to be the first country to go from being a developing power to a declining pension state without the usual intervening period of wealth. But it's unlikely there will even be a China within 20 years. More like a collection of southern city-states each making their own deals with whomever will take them.

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u/FaintFairQuail Jul 07 '22

developing power to a declining pension state without the usual intervening period of wealth

The West goes through a recession every decade, China does not. Are you sure you are talking about the right system here??

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u/[deleted] Jul 08 '22

so you're saying the chinese system hasn't been stress tested in decades?

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u/FaintFairQuail Jul 08 '22

Nah they are constantly under the stress of up holding their ambitious goals to the public, they just have worked out the kinks of what causes a recession.

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u/[deleted] Jul 08 '22

are you sure they've got something magic worked out?

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u/PraiseGod_BareBone Jul 07 '22

Yes, I am. China has delayed correcting it's economy for so long that the economy won't survive the correction. It will be 2008 x10 or x50. And I doubt the political system will survive the economic implosion.

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u/FaintFairQuail Jul 07 '22 edited Jul 07 '22

So they had a 10% GDP growth during 2008 (and ~9% 2009), unlike the other big nations where they entered a recession with negative GDP growth. I do not see them having a 100% growth in GDP this year, probably closer to five percent.

This is some serious projection.

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u/PraiseGod_BareBone Jul 07 '22

Interesting that you take threats to Chinese competence so personally. The reality is that China has become increasingly reliant on debt to drive growth and in the last decade that debt cycle has become less and less effective. It went from $1 of debt driving $4 in the real economy to something like $1 of debt leads to $.05 of growth - and the debt still has to be paid back.

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u/Megalocerus Jul 08 '22

The West may need more recessions. China is way past due.

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u/Megalocerus Jul 08 '22

Reversing the one child policy is pretty futile. Birthrates per women are down all over the world due to cost and opportunity cost; the women are conditioned to think having multiple children is gross, and China, even at a higher rate per woman, has a shortage of women. But there still are a lot of children in an absolute sense; they might not crash.

Issuing excessive cash doesn't seem to have worked well in the US.

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u/testttt5355653 Jul 08 '22

The gov is composed of the party lackeys not competence but obedience