By Gareth Vaughan
The Chinese people are very concerned about their country's tense relationship with the United States and it's a factor in weak consumer confidence, says Beijing-based David Mahon.
Mahon, a New Zealander who has lived in China since 1984, is Managing Director of Mahon China Investment Management. He spoke to interest.co.nz in the latest episode of our Of Interest podcast.
Mahon says during a recent visit to a mountain village in Yunnan Province, one of the more remote places in China, he had dinner with a group of locals. This highlighted worry about ongoing tensions with the US.
"All were asking me about why is it America wants a war with China. They are concerned with the tension they could sense. It worried them for their own futures, their kids, their own prosperity," Mahon says.
"If people living as remotely from the centres of power and commerce are concerned about a dynamic like that, it shows all of China is concerned. It is a factor of the low consumer confidence at the moment."
Mahon says the Chinese economy's "probably more complex than I can remember."
"There's a lack of confidence, consumers are not going back to buying and investing as they were and the Government is now struggling to reset things as far as it feels it needs it must to get demand back on track."
"China's not in the doldrums but there are a patchwork of doldrums across the country," says Mahon.
Nonetheless Mahon says by the second quarter next year "all these major concerns and these doubts about the Chinese economy will be being put to one side." And whilst there's a challenging 12 to 18 months for New Zealand dairy exports to China and Fonterra, with China sitting on more than 500,000 metric tonnes of whole milk powder in storage, there are good times ahead, which will be helped when all NZ dairy exports to China become tariff free from the start of 2024.
In the podcast Mahon also talks about China's efforts to become carbon neutral, why he thinks deflation fears are overdone, what's going on with China's property sector, the importance of the Chinese middle class, what the Chinese Communist Party needs to do to shore up the tacit support of the people, why tax changes are needed, recent floods, and more.
22 Comments
IMF's forecast on Chinese GDP growth this year is 5.2% vs . 1.8% for the US. and the forecast on the US is very likely to be based on the US fake data.
While checking the recent US econ data,
1. the US electricity consumption decreased by 3% and the decrease are across all sector while the report US GDP increased??!
2. Bureau of Labor Statistics revised down employment number by 300k, almost 30% down on their previous stated to fake a strong job market.
here here, say say..
Here's a better question, why is the CCP gradually reducing the number of internal measures it makes public, all together? Perplexing, given the numbers were untrustworthy to begin with.
There's a reason more Chinese emigrate from China than Westerners move to it.
no one denies that the West, sitting on its wealth looted from colonized countries, is richer than China. It is natural for people to move from poor to rich. nothing to surprise.
the question is that will it hold in the next 30 yrs, when demography will dramatically change in the US and EU, and to less extend, the AUS and NZ.
There's also this thing called Rule of Law which is a decent motivator, outside of money.
Many ethnic Chinese moved away from the likes of Taiwan and Hong Kong since the 80s to get away from the CCP, and those from the motherland are and will continue to do also, in increasing numbers.
@HouseMouse, we talk about demographics in this podcast. And David also talked about them in the podcast I did with him last year - https://www.interest.co.nz/business/117359/david-mahon-explains-economic-impact-chinas-hot-summer-covid-zero-policy-and-much
In the podcast Mahon also talks about China's efforts to become carbon neutral...
This is actually interesting, especially given Von Der Leyen's and Annalena Baerbock's recent anti-China declaration: https://chinadaily.com.cn/a/202309/18/WS65072ff3a310d2dce4bb62a5.html So on one side we have both women calling China a threat, a "risk", especially to the auto-industry. On the other side we have Volkswagen partnering with Gotion High-Tech, a giant Chinese battery maker, to open a massive factory in Gottingen, Germany, to help the European auto-industry transition to EVs. In other words while the political rhetoric is that China is a threat, the business world sees China as an opportunity, to help them learn how to transition faster to the next generation of vehicles. Link
The U.S. once led the world in the innovation and capacity of its high-end machine tools sector, but U.S. standing has dropped significantly since 2000. Key changes in machine tool consumption affected global patterns of production. Until the mid-2000s, China accounted for no more than 15% of global machine tool consumption. By 2011, China's machine tool consumption accounted for 40% of the global total.45 As its need for machine tools increased, China leveraged its low cost of capital and labor to build domestic machine tool factories and required foreign companies to execute joint ventures to access the Chinese market. The combined effects of the 2008 recession and a general trend of industry consolidation further reduced the number of machine tool manufacturers. In 2015, China's global machine tool production skyrocketed to $24.7B,46 accounting for 28% of global production,47 while the U.S. accounted for only $4.6B, after China, Japan, Germany, Italy, and South Korea. Link
I see the EU are now trying to suppress the Chinese EV's. The EV's are now made in China and designed in China and they pretty much own the market. There is sudden panic in Europe now with their automotive industry and the shit is already hitting the US with car workers on strike. Huge changes in the Auto industry coming in the next 5 years and China make like 75% of the EV batteries not to mention they own all the resources.
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