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Joequant Profile picture
@joequant
Nov 3 • 5 tweets • 2 min read • Read on X
No this *isn't* how China works. The reason that Chinese companies are successful is that they can be indirectly *owned* by a govt entity, but they aren't *managed* by them.

So
file.finance.sina.com.cn/211.154.219.97… x.com/dunne_insights…
So one of the funds that is owned by the Beijing govt owns 10% of the company. The next largest owner is the HK Securities Clearing Company Ltd at 8%. Then you have a lot of different private shareholders. They are owners, but they are not managers. This structure was
created in the 1990's. And the Beijing govt's main interest is that the company makes money so that they pay a healthy return to the Beijing govt. So one reason this capitalism/socialism thing works is that
it allows different local govts to pool money. So the three largest shareholders are Beijing, Hong Kong, and Hefei. Also Beijing splits ownership through several funds.
The thing is that if you have a local govt own a company directly you run into all sorts of problems. First of all, its hard for the local govt to fire people. Second, what happens when a company owned by Shanghai does business in Beijing or vice versa.

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More from @joequant

Joequant Profile picture
Sep 27
The other thing is that Pettis thinks that it is impossible for China to deliver 5 percent GDP growth for another decade, and that just seems crazy to me. First urbanization in China is at 60 percent and the fraction of people employed in agriculture is 20 percent, which means
you still have one more round of farm to services. China still has a lot of farmers that are surplus. Second you look at AI, EVs, and the energy transition. Not to mention the jobs that are available if China just implements the 1971 Nixon plan for post-Apollo.
The thing is that if you go back to the 1960s you were getting Western GDP growth of 5 percent. This stopped in 1973 with the Arab oil shock. The obsession the Pettis has with efficiency came in the 1980s. Once both the Soviet Union and US got hit with an oil shock, then th
Read 7 tweets
Joequant Profile picture
Sep 24
So the economics of AI is very different in China. The people that are funding investments in AI are businesses that can take whatever developments they get in AI and immediately put it into their business processes and make money. So Alibaba spends a ton on qwen3, and
they immediately put that into Taobao chat bots that end up immediately generating revenue. The other thing is that Chinese companies are looking at AI to increase revenue and not decrease costs. The other thing is that because everything is open source, Chinese companies
are doing things with AI that are impossible because everything with AI is centralized. For example, I was at a presentation of how a bank was using AI in China. So it turns out that they have multiple models. There is a top level model that figures out a general question.
Read 7 tweets
Joequant Profile picture
Aug 19
So one fascinating question is "so how did China know that the world was going to dramatically change, whereas the US completely missed this?" I think a lot of this has to do with the fact that China has 5000 years of history whereas the US just has 300 years.
So lets step back. What was the *goal* of pre-Trump US foreign policy. It was to freeze the world as it existed in 1991-1993 or alternatively to freeze the world as it existed in 1947. The US won the cold war, and then the goal of US foreign policy was to keep US global
hegemony permanently. The problem is that with 5000 years of historical experience, China had enough historical sense to know that this was impossible, and that something was going to break. The US had a window around 2010 in which it could have cut a deal with Russia and China
Read 7 tweets
Joequant Profile picture
Aug 14
So some China hater asked "who believes Chinese numbers". I said "I do, because I was at a Chinese mall that was totally packed" (Coco Plaza in Futian). Someone asked about all of the social media posts with empty malls, and I mentioned that this is what I call *LYING*.
About this sort of thing is that you can often just blow up these lies if you just make a small post pointing out they are garbage. Anyway I was really disappointed since I was hoping to get tacos at the Taco Bell at Coco, but they seemed to have closed a few months ago.
Coco Park is what I would call a "bougie mall". High end middle class, but not super luxe (i.e. the type of place that would have a Taco Bell). One reason I wanted Tex-Mex is that I am not in a great mood that there was a shooting in Austin at a Target I used to frequent since
Read 4 tweets
Joequant Profile picture
Jul 19
So I just posted me digging down and coming up with research showing that this is *totally wrong*. In fact all of these increases in trade have nothing to do directly with Trump tariffs, and they were all things that were in the pipe. But rather than showing ....
how the US is hurting Chinese exporters, and how China is so dependent on the American consumer, once you do some research you find the *opposite* that China is the world manufacturing hub and is making tuna fish boats for Nauru, LNG tankers for Qatar, rubber tires for Paraguay.
And how the US is just falling behind. Look, this was published by a senior researcher for one of the big name think tanks, and they are just getting it very, very wrong. If you dig the numbers rather than having the US in the center of the world. You see ....
Read 4 tweets
Joequant Profile picture
Jul 19
I am going to be very rude here since there really isn't any excuse for this sloppy research. After spending a few hours on the internet and finding that Nauru was importing tuna ships, I went through the databases and looked at what everyone was importing......
So first of all the diagrams are misleading, and you see this spike right after 2025, but then the whole diagram is spiky so after going through the databases I found...
Qatar just bought a new fleet of LNG tankers from China
Bulgaria trade is batteries and they just set up a new plant for BYD
Hungary is commodites not otherwise specificed and batteries - they have a BYD plant
Jordan is importing cars
Jamaica is doing steel
Read 7 tweets

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