China’s fixed asset investments: smaller discrepancy and better numbers vs 2023

Found another closing discrepancy in reported numbers.

These were the reported numbers for fixed asset investments (excl. rural) between 2020 and 2024.

The 2023 number has the biggest difference. If you directly compare 503,036  and 572,138, that’s dropping -12% yoy. Yet, the reported yoy was +3%.

This resulted in a 15% gap in yoy percentage number for 2023.

That gap has been shrinking to less than 1% in 2024, with +3.2% reported for 2024 fixed investments, compared with +2.3% in calculated comparison.


In 2024, the investment in the water conservancy management industry increased by 41.7%, investment in the air transportation industry increased by 20.7%, and investment in the railway transportation industry increased by 13.5%.

Those are some big % numbers. If you compare some headline numbers, e.g. water conservancy, the growth should be 13%, rather than 42%.

  • 2023年全年完成水利建设投资11996亿元
  • 2024年完成水利建设投资13529亿元

Maybe 2023 was indeed a lower base than reported.

Anyways, the picture in 2024 indeed looks better.

So, investors think tariff is negotiation tool?

Tariff is not an unknown factor.

Trump talked a lot about tariff during campaign and after election.

However, stock market was buoyant until recently.

The most common excuse? Investors thought tariff is just an negotiation tool that won’t be implemented.

That sounds reasonable, but actually it doesn’t make any sense.


Let me explain.

If stock market reflects the common wisdom and it doesn’t go down, then it means everyone assumes tariff threat is not that real.

Then why should the negotiation be effective?

Governments are not fools. Like in poker, if they think Trump is just bluffing, they would call.

The stock market almost sells Trump out if it doesn’t fall.

So, if US wants to be considered serious on the negotiation table, stock market must fall.

Why?

Because you need to let everyone know tariff is real. Every company needs to talk about it. Investors need to be panicking about it. When investors are really worried, they sell, even with losses.

Stock market drop is a manifesto that everybody realizes the tariff can be as real as the losses in their retirement accounts.

That’s when the “negotiation tool” is effective.

Nvidia GPUs as financial products

Nvidia GPUs can be used as collateral to borrow. Financial Times reported that $11 billion of loan was created for these chips.

That’s something too creative for me.

I think it’s generally safe to borrow against assets with a growing value.

Chips, however, are like cars to me, depreciating… with new versions better than the previous one.

Well, it seems you can borrow against your car, but that’s still based on your ability to pay back the loan.

So how does it work?

Maybe it’s actually a loan borrowed against the “service contract” or rental agreement carried by the chips, which makes it more like an asset with “yield”.

But still, this market sounds a bit too arbitrary…

Hard to imagine that the rental income will be stable or rising, as Nvidia chips supply is up to Nvidia and TSMC. That capacity can increase over time.

How amazing is (incremental) profitability at Meta?

For the past 8 quarters (2023 & 2024), incremental gross profit margin is well above 80%, more like 90%.

This is easy to understand, e.g. one more successful ads sale (click etc.) on Instagram won’t cost Meta more.

What’s even more amazing is the incremental operating profit conversion, which on average is like 100% for the past 6 quarters!

What does 100% mean? It means one dollar of additional gross profit earned by Meta was converted into one dollar of operating profit – how amazing is that!

The operating profit margin increased from 20% in 2022 Q4 to 48% in 2024 Q4, growing at 91% CAGR.

Although there were some one-off opex optimization efforts, thus incremental operating margin should definitely fall, it’s still a very very powerful business franchise, demonstrated by this amazing incremental earnings power.

Music in AI age should focus on memorable experiences

Back in 2016, I saw this day coming – AI is creating music that is really good.

However, I like natural “things”.

How to have more human elements?

I would argue live concerts are more “human”.

The unique performance, the friends and family who join you, the broader audience, even the historical background, could make a concert a more meaningful experience than any song.

That piece of memory is unique – it’s hard to replicate the exact same “experience”. Even if the singer may perform similarly across concerts, the audience is different. And audience is part of the whole performance.

Some thoughts of Tariffs

I think tariffs is just another form of tax.

It’s shared by buyers and sellers and is a tax on consumption, especially lower-end consumption – as the outsourced/imported products should proportionally be more lower-end.

It’s actually a more onerous “tax” on low to mid income US people, assuming that high-end consumers care more about high-end products which are not produced in China etc.

And it does increase gov income. Instead of higher taxes on wealthier people, this form of “tax” is more shared across average consumers.


Separately, tariff will income US mfg jobs.

However, who will do these jobs? With the current wave of AI, you could imagine more average “white collar” workers will be replaced by AI and maybe they shall go to manufacturing.

I think we should say all jobs are created equal – however, if you look back, when those manufacturers jobs were transferred out of the US, US was in the dominating position in the world. No one could force the US to get rid of “good jobs” and keep “bad jobs” back then – I could only imagine that those outsourced jobs were considered “worse”.

So now more people in the US will pick up those “bad jobs”. That’s not a very comforting vision for many average people in the US – probably more dangerous, more exposed to health issues, more repetitive (well white collar jobs can be repetitive). However, this should do good for US overall.

Where are talents?

If talents are born randomly, each year he or she could be anyone that is born anywhere in the world.

Even if China has 1/6 of global population, its newborn is less than that. In 2024, 132mn babies were born. In 2023, China has 9mn newborns.

That makes ~7% of global new born, less than half of the 17% population weight.