Intensely competitive situations in which goods that are more or less substitutable for one another, mean that rates of profit are necessarily compressed as enterprises seek out sales by reducing prices to near or below marginal cost. This doesn’t last forever. Enterprises with deeper pockets are likely to survive ahead of others. Secondly, enterprises seek to arrest the decline in the rate of profit through mergers / acquisitions. This reduces competition enabling pricing to be increased. Thirdly, some enterprises seek to capture above average profits by cutting costs and / or introducing new products that offer opportunities for above-average profits (until competitors catch up). Lastly, as born out by the story, enterprises seek economic rents through regulatory privileges. These are dynamic systems, which will tend to shake out. Institutional reform may accelerate shake-out. It’s nonetheless worth noting that all of this is taking place in the context of rising consumer retail expenditure, rising real incomes and rising production output.
According to a book I read (Red Capitalism) China has only ever pretended to write off domestic non-performing loans. They usually are still held at full book value somewhere in the financial system.
Intensely competitive situations in which goods that are more or less substitutable for one another, mean that rates of profit are necessarily compressed as enterprises seek out sales by reducing prices to near or below marginal cost. This doesn’t last forever. Enterprises with deeper pockets are likely to survive ahead of others. Secondly, enterprises seek to arrest the decline in the rate of profit through mergers / acquisitions. This reduces competition enabling pricing to be increased. Thirdly, some enterprises seek to capture above average profits by cutting costs and / or introducing new products that offer opportunities for above-average profits (until competitors catch up). Lastly, as born out by the story, enterprises seek economic rents through regulatory privileges. These are dynamic systems, which will tend to shake out. Institutional reform may accelerate shake-out. It’s nonetheless worth noting that all of this is taking place in the context of rising consumer retail expenditure, rising real incomes and rising production output.
How will they handle the resulting bank write-offs?
No details mentioned, and I don't think they would mention it in this level meeting, the meeting is more directional
I think it's an important question to consider.
According to a book I read (Red Capitalism) China has only ever pretended to write off domestic non-performing loans. They usually are still held at full book value somewhere in the financial system.