China

[easysurfer]

I know us Westerner have done more than our fair share of stupid things both as individual, exchanges, and as government. But every time I read another story about China's market just seems more and more crazy, its like somebody gave them a Book 23 stupid things not to do when running a stock market and they got confused and decide to do all of them at once.

Big shareholders banned from leaving for six months. That's nuts.

That's like if you are a high roller in a casino but forced to gamble for a certain amount of time.

 

[NW-Bound]

How about banning selling stocks at a loss?

A shareholder can only sell his stock once the price rises above what he paid for it. That way you cannot lose, and have to win by definition.

 

[Chuckanut]

Here is China's biggest problem. Too many single young men without enough young women to tame them, bear there children and give them a good reason not to drink and fight.

China's Growing Problem Of Too Many Single Men - Forbes

In a culture like China’s, where the mainstream societal expectation continues to put heavy emphasis on progeny, family network strength and family unit establishment as a benefit to status-building, for these one in four adult Chinese males, being single adds extra dimensions of undesirability. Deep personal anger and frustrations must inevitably be a byproduct of these societal pressures. If these single men will be found predominantly in a single demographic–namely rural, poor and uneducated men–what we might see is the emergence of a distinct subgroup of people, or a new class segregation. An entire class of potentially angry, frustrated, relatively poor and uneducated single men can mean serious threats to societal stability,

 

[marko]

Here is China's biggest problem. Too many single young men without enough young women to tame them, bear there children and give them a good reason not to drink and fight.

Per Wikipedia, in the 15-64 age range, the US has more males than China as do 25 other countries including Greenland and UAE countries.

China only ranks #1 in the under 15 age range.

https://en.wikipedia.org/wiki/List_of_countries_by_sex_ratio

 

[Chuckanut]

Per Wikipedia, in the 15-64 age range, the US has more males than China as do 25 other countries including Greenland and UAE countries.

China only ranks #1 in the under 15 age range.

https://en.wikipedia.org/wiki/List_of_countries_by_sex_ratio

Thanks. Those are interesting numbers.

 

[clifp]

I took an opportunity of the huge bounce in the Chinese market today to dump all my emerging market index funds. So I am thankful for the Chinese unique version of capitalism today.

I'd still like to invest in emerging markets, but I just don't want any of money in Chinese market at these levels with these crazy rules. Anybody know a good way of getting the rest of the world without China. I know that Russia market is also rigged and India has problems, but at least Russian stocks are relatively cheap.

 

[NW-Bound]

... Anybody know a good way of getting the rest of the world without China...

One can get country specific ETFs. However, countries with a small equity market may not get covered with an ETF. Plus this takes more work.

How about keeping the broad EM ETF or world ETF, then subtract out China with an inverse ETF?

 

[NW-Bound]

Thomas Friedman and many others (incl some in the US government) have gushed about the wonders and efficiency of the Chinese government, observing that the US government could do so much more if it could act with the same speed and centralized efficiency...

Some of these pols believe that they are better at deciding what is good for the rest of the people. They are closet elitist at the same time that they beat the drum about democracy.

 

[Ed_The_Gypsy]

Two good reasons to stay away from the Chinese markets:
1) "Lack of transparency"--so stockholders can't know how the books are being cooked, and
2) It is a big casino. It appears to me that the Chinese in China, Hong Cong and Singapore love to gamble and are buying stocks on the 'Bigger Fool' theory--wanting to sell them to the next guy for a capital gain.

There may be some Chinese stocks in my mutual funds, but I would never intentionally invest a penny in China.

 

[Ed_The_Gypsy]

An entire class of potentially angry, frustrated, relatively poor and uneducated single men can mean serious threats to societal stability....

It seems obvious, no? This seems to be the case in several countries, including places in the US.

 

[clifp]

Thomas Friedman and many others (incl some inthe US government) have gushed about the wonders and efficiency of the Chinese government, observing that the US government could do so much more if it could act with the same speed and centralized efficiency. Yep, that's how they get really expensive trains that nobody rides to places nobody wants to go. The Chinese government thought they could centrally manage an equities market, bend it to suit their needs if they rig it right.

I still do not understand why Vanguard thinks adding Chinese A Shares to their indexes is a great idea--it is not.

Actually I find there is much to admire in the speed and efficiency on how the Chinese build infrastructure. At least when the Chinese build high speeds trains to nowhere most of the money is spent on low and middle skill construction workers and its done over a short period of time.

In the US most of the money seems to get spent on "high" skilled lawyers and consultants develop plans writing EIS etc. The project drag out over decades and cost go through the roof. The Chinese system of jailing obstructionist lawyers does wonders on reducing the NIMBY attitude that is rampant in the US. #sorrynotsorry

However, there is really nothing that I can see worth emulate in the Chinese form of capitalism when it comes to financial affairs. Yes Vanguard is silly to pretend that Chinese shares are like American company shares. They are not as recent events show.

 

[petershk]

I don't think it's that different.

In the late 90s Americans were running around like the fundamental rules of economic didn't apply. Then during the housing boom people ran around saying prices never go down.

China is doing the same thing.

I live in Hong Kong and am shocked at how many people here and from the mainland think "housing never goes down" and I reply... Yup... That's what we thought in the US in 2007.

Of course the "huge losses" are big news but year over year they are still reasonable gains... The problem was there were unreasonable gains that are now being reverted... They will be over corrected and then go back up too high.

Looks like a functioning human market to me .

Sent from my HTC One_M8 using Early Retirement Forum mobile app

 

[Ed_The_Gypsy]

That may be, clifp, but our stuff doesn't fall down as often as theirs does.

I have noticed in both the US and Canada that immigrants believe they can't lose money in real estate. Yeah, you can. Usually at the same time they lose their job. I do know that immigrants own a LOT of rental properties and motels.

Sent from my SM-G900V using Early Retirement Forum mobile app

 

[papadad111]

Actually I find there is much to admire in the speed and efficiency on how the Chinese build infrastructure. At least when the Chinese build high speeds trains to nowhere most of the money is spent on low and middle skill construction workers and its done over a short period of time.

In the US most of the money seems to get spent on "high" skilled lawyers and consultants develop plans writing EIS etc. The project drag out over decades and cost go through the roof. The Chinese system of jailing obstructionist lawyers does wonders on reducing the NIMBY attitude that is rampant in the US. #sorrynotsorry

However, there is really nothing that I can see worth emulate in the Chinese form of capitalism when it comes to financial affairs. Yes Vanguard is silly to pretend that Chinese shares are like American company shares. They are not as recent events show.

Well put Clifp.

Having lived in china for the past 8 years, and in the field of finance, I know less about the inner workings of the Chinese financial markets today than the day I set foot on the Middle Kingdom soil.

Lack of financial Transparency, excessive speculation, and arbitrary and overnight government regulation are not ingredients for successful capital markets.

That said, I know many who made a boatload on the upswing this time and are still ahead despite the "crash" of the last 2 weeks. A year ago (and for much of the prior 5 years ) the market was at 2000... It recently flew to 5200 and now back to 3800 or so. Still nearly double from a year ago.

Not bad at all for an emerging market ...

The reason the USA catches a cold when china gets the flu is simply that the market is dominated by individual investors- consumers of stuff - who will not be able to afford the latest Mercedes Audi or Porsche with wealth decreasing in equities ( and a slow decline in real estate has not helped consumer confidence either).

There are those who say this was a government sponsored bull market. Great if you got in early ! Ride the bull. Tame the bear.

Most USA reporters and media are totally naive to china and her markers and the way business happens and to make even the vaguest comparison to the USA market is plain ignorant.

Back to the first point on infrastructure - I envy the Chinese infrastructure. USA infrastructure, bridges, roads absolutely suck. Decrepit and broken at best. And we have no high speed rail what so ever. The high speed trains are awesome. Used them between Beijing Shanghai Guangzhou hangzhou, Xian, Dalian and Cheng du all the time. They are much better than air travel and efficient as can be. We have that joke called Amtrak. Embarrassing ...

Ok. Enough for me . Let's see what the real china experts have to say.

 

[NW-Bound]

...
Back to the first point on infrastructure - I envy the Chinese infrastructure. USA infrastructure, bridges, roads absolutely suck. Decrepit and broken at best. And we have no high speed rail what so ever. The high speed trains are awesome. Used them between Beijing Shanghai Guangzhou hangzhou, Xian, Dalian and Cheng du all the time. They are much better than air travel and efficient as can be. We have that joke called Amtrak. Embarrassing ...

Wow! I knew that our mass transportation system trails that of other countries, but some of that is because Americans love their car too much to give it up. For long range travel, they like to fly more than taking the train, even if it is available.

But our highways and roads suck? I do not see that out here in the West. I have done a lot of RV'ing, and do not have too many complaints. I have not been to China to compare but would be very surprised if their electric grid and water supply are better than ours.

 

[papadad111]

Wow! I knew that our mass transportation system trails that of other countries, but some of that is because Americans love their car too much to give it up. For long range travel, they like to fly more than taking the train, even if it is available.

But our highways and roads suck? I do not see that out here in the West. I have done a lot of RV'ing, and do not have too many complaints. I have not been to China to compare but would be very surprised if their electric grid and water supply are better than ours.

After you have been to china, ping me with your impressions on their road and rail infrastructure and observations. Also the traffic is eye opening. Until then, it's unwise to assume what does or does not exist there.

I said nothing of electric or water initially. But, China is a developing country - everywhere that there has been investment the infrastructure including electric and water it is highly developed and quite mature- on par with USA.

Of course, There are still emerging places in China where infrastructure is lacking and there are also people in those rural and remote places who poop in an outhouse still.

But when it comes to "emerged" locations, china is on par or better infrastructure wise.

As for roads across the USA, it is very much state dependent. Compare any of the top 10 cities in the USA to the top 10 cities in China. The china roads are newer and paved better. Chinese love their cars as much or more than Americans. China is and has been , after all, the largest car market in the world for the last several years !.

I think Excuses + Denial is stage 1. ha ha

Some don't like to believe the USA is being caught/ lapped what ever you call it , we are being passed up in terms of transport infrastructure. New airports. New high speed rail. New highways and bridges and ports. All across china they are brand new.

One Can not deny the difference once you see it for yourself. Anyone who has visited China can attest to this and most Americans are in utter amazement and has "no idea" because our western news reporters don't report on it.

 

[NW-Bound]

I have seen photos of skyscrapers and boulevards in modern cities like Shanghai. But what is the condition outside of the cities?

Here in the US, the standard of living is more uniform. In fact, I would say that life in less crowded areas is better and more comfortable than the US inner cities. Perhaps in China it's the reverse.

 

[tulak]

Some don't like to believe the USA is being caught/ lapped what ever you call it , we are being passed up in terms of transport infrastructure. New airports. New high speed rail. New highways and bridges and ports. All across china they are brand new.

One Can not deny the difference once you see it for yourself. Anyone who has visited China can attest to this and most Americans are in utter amazement and has "no idea" because our western news reporters don't report on it.

I started researching a tentative trip to China next year and was surprised at how much high speed rail has been developed. I was looking at the logistics of traveling between Shanghai, Beijing, Xian and Hong Kong and learned that I could travel all of these routes using high speed rail. The distances involved are quite massive. Beijing to Guangzhou (outside of Hong Kong) is 1,428 miles. Traveling at 184mph it takes about 8 hours. Here's a description of the line: http://www.travelchinaguide.com/china-trains/beijing-guangzhou/

If we went, we'd break the trip up into smaller segments, but honestly, even doing the full stretch at once would be a lot of fun.

And for a comparison, Seattle to LA is about 1,150 miles. It looks like it takes Amtrak about 35 hours for that route.

I'm sure that there are gaps in China's infrastructure, but from what I researched, I think the gaps are less than you'd think.

 

[clifp]

That may be, clifp, but our stuff doesn't fall down as often as theirs does.

I have noticed in both the US and Canada that immigrants believe they can't lose money in real estate. Yeah, you can. Usually at the same time they lose their job. I do know that immigrants own a LOT of rental properties and motels.

Sent from my SM-G900V using Early Retirement Forum mobile app

I am not so sure, between bridges collapsing and 63,000 other bridges being structurally deficient, commuter trains derailing killing dozen, and trains carrying oil derailing on pretty routine basis. Air traffic control computer from the 1970s etc. I really can't hold up most of our infrastructure as model for anything.

I only spent a few weeks in China in 2007, but I was really impressed with speed of which they build stuff over there. Before the Olympics they built a light rail system extension very comparable to what we are building in Honolulu. China built it in on under a year. We started the project in 2005 and we will be very lucky to have done by 2020. China has been building remarkable public works projects, when most of our ancestor were still living in tents.

Sure they cut corners in China on a lot of stuff probably including their infrastructure projects. However given my choice between using something with some corner cutting that was built this century, or continuing to rely on project built by the WPA back in the 1930 or even the interstate highway system built mostly in the 1960s, I'll take this century stuff any day.

I think Pappadad is probably in a much better position to judge than most of us.

 

[papadad111]

I have seen photos of skyscrapers and boulevards in modern cities like Shanghai. But what is the condition outside of the cities?

Here in the US, the standard of living is more uniform. In fact, I would say that life in less crowded areas is better and more comfortable than the US inner cities. Perhaps in China it's the reverse.

Hi NW-B !

The conditions outside the cities are also very rapidly improving. 30000 Kms of new high speed rail in the last 4 years linking the top 50 cities is excellent and brand new. Same for highway infrastructure and it's the largest car market in the world - 22 million units per year.

New rail lines and bridges to the farest reaches of china that border the Himalayas to Nepal and the -Stan countries to the northwest, through the gobi desert to Mongolia and on . That's pretty darn rural. Interstate highway system that would make Eisenhower envious ... a parallel could be post war japan or Europe and the new infrastructure that essentially propelled them forward for the past 65 years.

Of course the western media sensationalize the rare train or boat accident ... And building collapses because that drama is what sells.

"New" China remains a 40 year old emerging economy with the opening reforms beginning in 1976. Not perfect by any stretch and definitely NOT multi party. It's a unique political and economic system that is not at all democratic and moves far faster as a result. However all parties are not represented and there in is in part the difficulty for the west to understand. It's easy to move forward once directional consensus is achieved ...

Yes in USA the standard of living is far more uniform. Sounds kinda like socialism in fact. The rich pay big taxes in the USA and the poor benefit from those taxes ... Wait that's more like communism from an economic standpoint .. Wait. I was talking about the USA. Wait ... Ha ha.

Bentleys park aside migrant street sweepers in many cities in China. The hard worker becomes wealthy. In some cases the corrupt official too. That's how state sponsored capitalism works. Not saying one system is better than the other. Both systems have advantages ..

There are more than 200 cities in China that are more than 1 million population. The cities of China are safer. Crime is lower. There are more conveniences living in the cities. There is major rural to urban migration as a result. Suburbia as we know it doesn't exist. We do live better /safer rural lives than in china.

Traveling by high speed rail is excellent. I usually do it for and flight less than 2 hours... By the time u figure airport traffic, security, possible delays etc, usually a 2 hour flight becomes a 5 hour trip making it about neutral to the high speed train. Longer hauls are usually better by air ..example Beijing to Shenzhen. But if you have time and are doing stops along the way as a tourist train is a great way to go. Economics drive this usage too. It's about half the cost of an air ticket. So emerging middle class prefer to save money at the cost of a bit of time. My MIL came for a visit last May and the Beijing to Xian trip was fun via train. 120 bucks each way as I recall. Ping me offline if I can answer any travel questions.

Cheers !

 

[NW-Bound]

China has made tremendous progress in the last two or three decades. I attribute that to the Chinese work ethics more than to its government, other than for the Chinese Politburo finally cutting the Chinese people some slack. It is amazing how hard the Chinese people will work if they are allowed to keep what they make, instead of throwing it all into the commune pot to "share".

In 1990, billionaire Jim Rogers visited China as part of his world-tour motorcycle trip, and chronicled it in his book Investment Biker. He was so impressed with the hard-working Chinese that he later decided to relocate to the Orient to be closer to the action (he finally chose to live in Singapore).

China's single party is Communist in name only, as it is now anything but. And the Politburo has learned that as it allows the citizenry to make money, it gets to "share" in the fruit of labor too. I recently read an article described how the riches of the Politburo members would put US Congress members to shame, Mitt Romney included. Surely, that amount of money does not come from their salary.

I think the money put into the crowded cities of China is to appease the population. It keeps the people working and making money, and not stirring up trouble. They have neglected the rural areas, and even now, the only way for the rural inhabitants to get to enjoy the modern amenities is to migrate into the cities. But they get locked out by a system called "hukou". Basically, if your birthplace is a rural location, you are doomed to a life of second-class citizen. It is possible to get your hukou "upgraded" to a city, but it is not easy. Until then, the migrant worker is treated like an illegal immigrant, and in his own country.

I still do not know a whole lot about China, but from what I have read, I prefer life in the US, thank you. I do not care to live in a crowded city anyway no matter how modern, even here in the US. I prefer to have more space, while still be able to enjoy electricity and running water.

But the world should learn a thing or two from the Chinese work ethics and thrift. If there is anything indisputable, it is that.

 

[papadad111]

Your understanding is quite correct. Hukou (household registry) reform is a major topic of discussion and has been cause for social unrest at times.

However this is not a communist invention. Hukou has existed for thousands of years through major dynasties. It is a way to control population and migration a tool ensuring those in power remain in power.

It's an amazing place. Not amazing as in greatest place on earth but amazing in the historic perspectives and dynamic nature of modern china today. Truly Fascinating.

 

[NW-Bound]

I also read that the hukou system was used by Mao Tse Tung to control migration of Chinese population. It's almost a caste system. Wonder how that jibes with the idea that people are born equal. Or perhaps that equality is never part of Communism?

 

[papadad111]

Like animal farm. All are created equal but some are more equal than others.

There are just 100M members of the communist party in china.. Ask any member of the party whether or not there is "benefit"....

Good article here: http://www.theatlantic.com/china/ar...-is-still-the-ultimate-resume-booster/276347/

 

[NW-Bound]

Don't we all want to be more "equal" than our neighbors? It's all about the reasons cited. I think I would like to be more equal because I work harder or am smarter, not because I belong to the Mafia or to the sole political party of the land.

Anyway, back on Chinese stocks, should we remember when the 6-month lockout on selling by major shareholders expires, in order to short Chinese market then? Chances are that I will not remember. Would anyone here with a true "superior memory" be kind enough to bump this thread to remind us all?