
Everyday Economics: The Rise and Fall of the Chinese Economy - danboarder
http://marginalrevolution.com/marginalrevolution/2016/01/china-video.html
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paulpauper
Am I the only one who is still on the fence about China? It’s too early to say
there is actually a mess. There is evidence maybe growth is glowing, but it’s
far too early to call it a catastrophe, even though the doom and gloom media
has been calling it one for the past year. The debate is over 7% GDP growth
vs. 5.5%.

 _The Rise and Fall of the Chinese Economy._

If by 'fall' he means 5.5% GDP growth instead of 7%.

Maybe a lot of this doom and gloom comes down to a a simple math
misunderstanding, which is that 'slowing growth' is not the same as shrinkage.
Slowing growth implies the second derivative is negative, but the first one is
still positive, meaning the size of the economy is still expanding. An example
is the function ln(1+x)

Rather, his video does a good job of explaining what _could_ go wrong, but I'm
not sold on the idea that there's a crisis now. I would not be surprised if
this blows over in a a couple months like it did in the past during past
concerns over China.

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jevgeni
I'd say the main reasons to be worried are:

\- notoriously murky economic figures from the government

\- explosive growth of credit and especially shadow banking

Oversimplified, imagine borrowing money for 6% p.a. and investing all of it
into some mutual fund that the last 10 years yielded 7% p.a. If the fund's
returns drop to 5% that's still a pretty good return, but doesn't make you any
less f'd.

So, given that people can't really trust any official statistic from China,
and remembering very loose to non-existent shadow banking control, people are
nervous.

And I'd say, it's best to be nervous and earn less, than euphoric and lose
everything like during subprime.

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TACIXAT
>What is going on in China right now?

Click bait title.

>Given all of the recent publicity, I thought I would re-up on my China video,
The Rise and Fall of the Chinese Economy.

How about:

>Everyday Economics: The Rise and Fall of the Chinese Economy

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danboarder
Agreed, edited. I found it to be a concise overview of the history leading up
to current situation.

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jhonovich
The problem is not the growth rate but how they are getting that growth.
Credit growth is increasing significantly faster than GDP and, since the 2008
financial crisis, China has 'invested' massively and inefficiently. This is
not sustainable.

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forgetsusername
> _" This is not sustainable."_

Why does spending have to be sustainable to be practical or good? It needs
only be temporary and helpful.

~~~
AnimalMuppet
The problem is that "not sustainable" often turns into "temporary and
_temporarily_ helpful". When it quits being helpful, though, it can bite you
hard enough that it wasn't worth it. (See 2008 for an example.)

