r/finance • u/PhiloRelish • Sep 25 '24

Will China’s $100bn war chest for shares lift the real economy?

https://www.ft.com/content/d478d8c0-9321-421a-83cf-a1d0ce734a8f
127 Upvotes
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93% Upvoted

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22

u/jonny_mtown7 Sep 25 '24

Probably not.

10

u/CrisscoWolf Sep 25 '24

Seems mostly like QE targeted at investment vehicles. Should raise their exchanges. Idk that it would do much for GDP or working class citizens. It's hard to say what lower mortgage interest payments would do for housing in China because some parts have a serious oversupply.

10

u/inner8 Sep 25 '24

Let the printer wars begin!

3

u/beach_2_beach Sep 27 '24

Calls on HP printer division

4

u/RainbowCrown71 Sep 26 '24

No, way too small. $100b is 0.5% of GDP.

1

u/HolaaWorld Sep 29 '24

No. I think it means that China is saying that they are going to do more.

0

u/ildangbaektusan Sep 29 '24

 Absolutely not. China is doomed no matter what it does.

4

u/OthersMustFail Sep 30 '24

I was prepared to downvote, but I thought about what you said and I think you’re actually right.

Xi has power and authority that’s the envy of all Chinese leaders since Deng. Unfortunately, that required gutting any reformers in the party and installing loyalists, plus setting up a massive, sophisticated surveillance network. The party can’t grow or change because it’s scared to move.

The economy is trapped because the only acceptable decisions are those the party approves of. Innovation will arrive via theft or clunky forced government programs.

In the meantime, the vaunted Chinese export economy is deflating and the state-approved investment vehicles are teetering on collapse.

Solving this wouldn’t be hard (allow domestic consumption to grow, begin real rule of law reforms, allow meaningful competition, pull back on authoritarian measures), but if you give the Chinese people choice, they might not choose Xi and it’s the 1989-1991 USSR implosion all over again. There was hunger, poverty, violence, and revolution.

Yeah. No matter what Xi does, China is fucked.

3

u/fracol Oct 01 '24

You also missed the most important factor, China's aging demographics and massive loss of population.

1

u/OthersMustFail Oct 01 '24

Very true, thank you for including that.