Chinese market

[Sherman]

I'm sorry for having to post again, but I've just got to say this is one of the most ignorant pieces of writing of seen on the internet. Ever.

You're entitled to your opinion. As am I.

However, I really do think you should do some more research into the dreadful human rights abuses perpetrated daily by the Chinese government. For instance, look into the brutal repression of trade union or religious campaigns for fairer and safer working conditions. Or take a look at the Amnesty reports on Chinese sweatshops, including the documented use of child labour. Or the forcible removal of thousands of villagers from their ancestral homes in order to build hydro-electric facilities to fuel the insatiable demand for energy created by the great Chinese boom.

Perhaps ask yourself how the Chinese feel about having no say in how their country and its economy are run.

Maybe you might also care to ask yourself whether you feel particularly comfortable investing in a regime whose founding tenet is that all property is the property of the state. Yes, they seem to be softening this stance over the last 5 years. IMHO there remains massive risk to the investor that a more hard-line ideology could very easily be adopted by the Communist party in the next few years.

Ultimately, despite their efforts to control the economy through their heavy-handed interventions, the Chinese government will discover the oldest lesson in the book - the market will always eventually win.

Perhaps I should cheer you on in your dreams of getting rich while helping to prop up the Chinese regime - after all, when the bubble eventually bursts, all those millions of new Chinese capitalists will start demanding the one thing shareholders should be entitled to expect - accountability and the ability to oust an ineffective leadership.

Just my opinion however.

 

[room305]

Perhaps I should cheer you on in your dreams of getting rich while helping to prop up the Chinese regime - after all, when the bubble eventually bursts, all those millions of new Chinese capitalists will start demanding the one thing shareholders should be entitled to expect - accountability and the ability to oust an ineffective leadership.

I remain deeply suspicious of the "China story" and aspects of the zealotry of its converts remind me of the Nasdaq bulls circa 1999. However, I thought I'd chime in here even if I did promise myself I'd simply ignore your oxymoronic rant about "communist stock markets".

The China bubble is mainly being driven by Chinese investors, not foreign investors. The biggest gains have taken place on the Shanghai Composite and Shenzuan exchanges. Access to these exchanges is mostly restricted to Chinese citizens. Foreign investors invest primarily via the Hang Seng index where many Chinese companies maintain a dual-listing and NYSE quoted Chinese ADRs. Stocks on the Shanghai Composite trade at a premium to their counterparts on the Hang Seng.

Furthermore, foreign investors are buying shares in Chinese companies not the Chinese government (although the government typically retains a shareholding in newly listed companies, like the Irish government did with Aer Lingus). You do not seem to be able to distinguish the two.

As for your statement that "the market will always eventually win", this makes little sense. A market is a place where buyers and sellers meet. They cannot both win. What you probably mean is that capitalism will always eventually win. Which is true, it is the single greatest engine of human liberty ever known. Once people taste economic freedom they can no longer tolerate political or religious oppression. This is something the Chinese government are in the process of discovering.

The danger is that this stock market crash could lead to political turmoil and/or a backlash against capitalism causing greater oppression of the Chinese people.

 

[jbax]

You're entitled to your opinion. As am I.

However, I really do think you should do some more research into the dreadful human rights abuses perpetrated daily by the Chinese government. For instance, look into the brutal repression of trade union or religious campaigns for fairer and safer working conditions. Or take a look at the Amnesty reports on Chinese sweatshops, including the documented use of child labour. Or the forcible removal of thousands of villagers from their ancestral homes in order to build hydro-electric facilities to fuel the insatiable demand for energy created by the great Chinese boom.

Perhaps ask yourself how the Chinese feel about having no say in how their country and its economy are run.

Maybe you might also care to ask yourself whether you feel particularly comfortable investing in a regime whose founding tenet is that all property is the property of the state. Yes, they seem to be softening this stance over the last 5 years. IMHO there remains massive risk to the investor that a more hard-line ideology could very easily be adopted by the Communist party in the next few years.

Ultimately, despite their efforts to control the economy through their heavy-handed interventions, the Chinese government will discover the oldest lesson in the book - the market will always eventually win.

Perhaps I should cheer you on in your dreams of getting rich while helping to prop up the Chinese regime - after all, when the bubble eventually bursts, all those millions of new Chinese capitalists will start demanding the one thing shareholders should be entitled to expect - accountability and the ability to oust an ineffective leadership.

Just my opinion however.

You make some good points. But, with respect, human rights abuse does not equate to slavery. If you had used the former instead of the latter, then I would be far more acceptant of what you say.

Then again, I amn't the ruling body which governs what is right and what is not; like you, that is my opinion.

 

[Sherman]

your oxymoronic rant about "communist stock markets"

Did you not see the bit in square brackets at the beginning about it being a sarcastic rant . Part of my whole point was that having a stock market boom in a tightly-controlled one-party communist state is oxymoronic, illogical, and likely to end in tears.

Furthermore, foreign investors are buying shares in Chinese companies not the Chinese government (although the government typically retains a shareholding in newly listed companies, like the Irish government did with Aer Lingus). You do not seem to be able to distinguish the two.

I think you will find that there is little to distinguish the two. In order for a business to succeed in China, it must have very, very close links with the Communist party. Therefore successful Chinese companies are by their very existence complicit in the corruption and repression of the Chinese people by 'their' government.

Once people taste economic freedom they can no longer tolerate political or religious oppression. This is something the Chinese government are in the process of discovering..

My point exactly.

The danger is that this stock market crash could lead to political turmoil and/or a backlash against capitalism causing greater oppression of the Chinese people.

I am the last person who would wish to see the Chinese people suffer any more than they currently do. However I don't think fear of the unknown is a particularly good reason to protect a disastrous status quo.

 

[room305]

Did you not see the bit in square brackets at the beginning about it being a sarcastic rant . Part of my whole point was that having a stock market boom in a tightly-controlled one-party communist state is oxymoronic, illogical, and likely to end in tears.

Well then we are very much in agreement.

I am the last person who would wish to see the Chinese people suffer any more than they currently do. However I don't think fear of the unknown is a particularly good reason to protect a disastrous status quo.

Who's protecting? One of the reasons for the Chinese stock bubble is that Chinese citizens have few other outlets for investment. Inflation is a real problem over there and the interest rates offered by banks are paltry. Much of this is the result of currency manipulation by the Chinese government to keep export prices low relative to the US dollar and thereby US customers. So unsurprisingly, money pours into the stock market. Similar things have happened to the stock market in Zimbabwe although it garners much less international attention.

However much I would question the logic of foreign investment in China, I think it is a stretch to imagine foreign investors are supporting the Chinese government and suppression of the Chinese people, which is what you seem to be suggesting.