China banning “feminine men” on television is part of a much larger shift taking place in the economy
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China is a mystery at best, but at the tipping points it is even more opaque.
We can be one now and it could have overwhelming repercussions for the global economy.
Recently, two stories have attracted media attention.
- Restrict minors from playing video games for 3 hours a week
- Banish effeminate men from television
It seems like the kind of thing you would see in a totalitarian non-democracy. It is not very good for the people there, but it is not very worrying financially.
problem is that there is much more to do. China has some problems that it is trying to address:
- A dramatic drop in the birth rate
- Excessive dependence and speculation in the real estate sector
- A growing gap between rich and poor
- Stay in control of the party
It increasingly seems that China wants to tackle these issues head-on and is willing to sacrifice economic growth to do so.
Xi not only called for a ban on effeminate men (perhaps the idea is that it would increase the rate of family formation), but he called for a “revolutionary culture” and “national rejuvenation” with tighter party control over education. culture and business.
se are toothless edicts. Weibo has suspended thousands of celebrity fan club and entertainment news accounts. Famous actress Zhao Wei was canceled.
Much more worrying is what is happening in the economy. China’s tech stocks crushed after the government banned for-profit educational tutoring and demanded more social spending from its tech giants. Chinese technology ETF was cut in half.
It could be just the beginning.
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A cryptic blog post by unknown writer Li Guangman was recently published in a coordinated manner by state-sponsored media.
“This change will remove all the dust and the capital market will no longer be a haven for capitalists to get rich overnight,” the post said.
Just today, President Xi announced the creation of a new stock exchange in Beijing.
post summarizes cultural repressions and calls for a new search for “common prosperity”
“[All] of this tells us that China is going through a major change. From the economic to the financial, from the cultural to the political, a profound transformation is taking place, or, one could say, a profound revolution.
Communist Party rhetoric rarely uses the word revolution, and the post was shared on 8 major state media sites on August 29.
Speculation now is that November Xi could redefine the current period as a “new era.” A move that would strengthen your leadership position and has not been declared since 1981. y are intended to be landmark statements setting new priorities.
During the meeting it was emphasized that, by learning from history, we can understand [the laws] of boom and bust. Summarizing the main historical achievements and experiences of the Party in its centuries-old struggle to build a cararn socialist nation, it takes a century of struggle to persist in the development of socialism with Chinese characteristics in the new era, it is necessary to strengthen a political mentality, a mentality macro, a ‘core’ mindset and a compliance mindset, to maintain trust on the road, trust in [the Party’s] theories, trust in the system, trust in our culture, and firmly maintain the status of Secretary-General Xi Jinping as the core of the party’s center and the entire party. . . .
What does this mean for the economy?
It can’t be good. GDP growth has been China’s main goal for the past 20 years, at the expense of just about everything else. Growth goals were sacrosanct.
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Chinese leaders may have felt that the shift to a consumer-led economy was not working as expected. Demographic changes also pose an existential risk to prosperity.
party may have concluded that cultural changes were needed to get where it wants to go. re are also signs that they are looking to expand economic gains, and two weeks ago Xi gave a big warning in a speech on common prosperity.
“We can support wealthy entrepreneurs who work hard, operate legally and have taken risks to start a business… but we must also do our best to establish a system of ‘scientific’ public policies that allows a more equitable distribution of income. At the same time, [the government] must protect and enhance livelihoods based on sound economic development with the aim of strengthening a universal and inclusive security system.
One particular area of interest is the real estate sector.
Nomura economists have argued that China may be facing a “Volcker moment”; similar to when the former Fed chairman pointed out that he would hurt the economy with higher interest rates to end inflation.
“Unlike previous rounds of economic recession, the Chinese authorities seem willing to tighten real estate policy and tame prices this time to reduce wealth inequality and increase the falling birth rate… and lawmakers will be willing to sacrifice the short-term economic growth to control house prices and divert financial resources from the real estate sector, which accounts for a quarter of China’s GDP.
If so, to negotiate is to sell everything.
re is ample evidence that Chinese markets are shaking. Evergrande, which is China’s second-largest developer, is on the brink of collapse. It has $ 302 billion in liabilities and its bonds are trading at 27 cents from 85 cents in June. Fight to find the money to pay the contractors and complete the houses. It is a snowball crisis and there are indications that the central bank has been involved with liabilities that span 128 banks and 121 non-bank institutions.
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Between Xi, China’s economic malaise and high debt levels, Evergrande could be the domino to topple the Chinese economy and market enthusiasm elsewhere.
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