Economics Realities of China's Global Influence

1. Economic Realities of China’s Global
Influence
December 2019
By Chaganomics Editorial
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2. China Debt Woes 2018-2019 Headlines
● SINGAPORE (Reuters) - The collapse in China of a complex web of debt
guarantees involving several private firms highlights risks in its financial
system and opens up a potentially hazardous front for an economy in the
grip of its slowest growth in nearly three decades.
● HONG KONG (SMCP) - Banks reluctant to lend to non-state sector
without a guarantor, so cross-guaranteeing is common and one bad loan
can trigger multiple defaults.
● The private sector accounted for 126 of 165 bond defaults in 2018.
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3. Everyone is familiar with Jack Ma and Alibaba? Great examples of state
enterprise mixed with private enterprise.
Alibaba went public September 19th 2013 (Raised $21B). Everybody
bought the stock despite the issues behind disclosure and state
ownership it has made everyone money. No one discuss the state control
of Alibaba anymore.
Are you familiar with Ant Financial ?
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4. Economic Times of India
June 09, 2018
Ant raises $14 billion in largest single mop-up; biggest-ever single fund-raising
globally. Ant Financial Services Group, operator of China’s biggest online payment
platform, on Friday said it raised around $14 billion in what market watchers called
the “biggest-ever single fund-raising globally” by a private company.
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5. www.chaganomics.com

6. China & State Capitalism
In this system, governments use various kinds of state-owned companies to
manage the exploitation of resources that they consider the state's crown
jewels and to create and maintain large numbers of jobs. They use select
privately owned companies to dominate certain economic sectors. They use
so-called sovereign wealth funds to invest their extra cash in ways that
maximize the state's profits. In all three cases, the state is using markets to
create wealth that can be directed as political officials see fit. And in all three
cases, the ultimate motive is not economic (maximizing growth) but political
(maximizing the state's power and the leadership's chances of survival). This is
a form of capitalism but one in which the state acts as the dominant economic
player and uses markets primarily for political gain.
- Ian Bremmer
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7. State-Controlled Capitalism
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8. Since 1978, China has legalized the emergence of private enterprise, but
strong pressures remain which restrain its expansion.
As China’s power increases, it is increasingly likely we will see more state
controlled capitalism and state owned enterprises.
China’s private enterprises often exclude state debt on their balance
sheets.
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9. Hong Kong was once a preiment trading hub for commerce and financials,
anchored in part to the Canton System (1757–1842) which concentrated all
trade in HK - Guangzhou. After that system ended the British led HK until
1997.
Upon breaking apart “The Basic Law” ensured Hong Kong will retain its
capitalist economic system and own currency (the Hong Kong Dollar), legal
system, legislative system, and people's rights and freedom for fifty years,
as a special administrative region (SAR) of China. Set to expire in 2047.
China began meddling in Hong Kong elections immediately.
In the last decade HK has been replaced by Singapore for global trade, and
eventually it will be replaced by Shanghai.
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10. Recently the U.S. State Dept issued a warning about traveling to
China.
The warning included:
- Private messages containing negative statements about
China would be read, and those sending such messages
could be detained.
- Emphasized that China did not recognize dual citizenship
whatsoever.
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11. Ant Financial credit scoring program is called Sesame Credit
Behavior and Preferences: Reveal users’ online behavior
Interpersonal Relationships: Reflect the online characteristics of a users’
"friends”
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12. China’s One Belt, One Road
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13. China’s One Belt, One Road
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14. Try 2025 or 2030...
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16. The future...
China has a massive population of people.
This large population that requires upward mobility
(meaning impoverish >> middle class)
Most of that mobility and dynamic ability will come from global trade.
There is no growth in China without the United States, because a growing
middle class will consume American products. However, China does not
wish to be totally reliant on the United States or US influenced economies.
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17. What Do We Buy From The US? (2017 Nums.)
China's exports to America amounted to $526.2 billion or 21.8% of (American)
its overall imports.
1. Electronic equipment: $150 billion
2. Machinery: $112.4 billion
3. Furniture, lighting, signs: $34.8 billion
4. Toys, games: $26.7 billion
5. Plastics: $17.6 billion
6. Vehicles: $15.6 billion
7. Knit or crochet clothing: $14.9 billion
8. Footwear: $14.8 billion
9. Clothing (not knit or crochet): $13.5 billion
10. Iron or steel products: $12.4 billion
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18. China’s road to global dominance isn’t assured, but it could happen.
In recent years China has beat the US in domestic patents granted, and Asia’s
capital markets have been bringing in far more fees that US banks.
Influence is easily bought by great IPO markets. China markets allow Chinese
companies to go public without disclosing state debt and sensitive materials. No
one knows how much influence the Chinese government has in these Chinese
public equities.
Too much Chinese influence in the global market could topple the global economy,
or make us “adversely” close with China.
Unless this is a new economics. Some attribute state control to their longevity.
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19. Private Industry In China:
You can't accept anything for face value regarding private enterprise and wealth in
China.
The entire private sector in China may only be 17 - 20 % of China’s economy.
The rest could be state owned.
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20. As for Chinese entities with revenue over 5M¥ (small-medium cut off) 160,000
chinese entities listed between (1998 - 2005) in a National Bureau of Statistics
“Industrial China Study” individuals owners accounted for 3.7% of entity ownership. (1)
All successful economies in history have been primarily private-sector and market-
driven. (2)
Not a single centrally planned economy has ever succeeded in attaining high income
status and a living standard comparable to that of the west. (3)
China has a high quantity of capitalism, but so did Brazil and India in the 1980s. (4)
- Points from Yasheng Huang (MIT Sloan)
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21. This file is for educational information and is not intend for commercial sale.
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