Chinese Economics Thread

[Sinnavuuty]

China’s economy in 2024 continued to far outgrow the U.S.

By John Ross (Posted Feb 05, 2025)

This is an edited version of an article which originally appeared in Chinese at Guancha.cn.

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High rates of fixed investment into the economy correlates to strong levels of growth.

Savings = loans = investments.

Gawd daynm!

Okay, that is the basic thing.

But how China does it, then it is interesting.

Because that road is winding and twisting.

The state owned bank, gives the money to the state owned enterprise, but then often they get beat silly by the private sector, who also got a loan from someone.

Anyways, lots of stuff to reflect on.

The return on capital should be higher among Chinese private companies than among Chinese state-owned companies, this is practically a rule within the world economy, although there are exceptions. If all this volume of credit were directed to more productive Chinese private companies, the Chinese economy would gain much more than granting credit to more inefficient state-owned companies.

 

[tphuang]

so the stimulus with respect to phone subsidies is working out well in January. Huge sales increase for Huawei and xiaomi vs last year. Apple and Honor are down.

https://twitter.com/i/web/status/1889665749142081557

 

[Moonscape]

The return on capital should be higher among Chinese private companies than among Chinese state-owned companies, this is practically a rule within the world economy, although there are exceptions. If all this volume of credit were directed to more productive Chinese private companies, the Chinese economy would gain much more than granting credit to more inefficient state-owned companies.

Wrong. Chinese SOEs generate society-wide positive externalities that are not captured in Western-style accounting. They're more efficient if your ultimate goal is to ensure widespread, generalized prosperity in a society, which is the goal of a Marxist-Leninist government like the PRC.

Anglos with their oligarchical economy and political system controlled by the wealthy will never understand this, and their societies will continue to crumble.

 

[fatzergling]

Wrong. Chinese SOEs generate society-wide positive externalities that are not captured in Western-style accounting. They're more efficient if your ultimate goal is to ensure widespread, generalized prosperity in a society, which is the goal of a Marxist-Leninist government like the PRC.

Anglos with their oligarchical economy and political system controlled by the wealthy will never understand this, and their societies will continue to crumble.

It's kinda crazy how *opposed* Anglos are to state-run industry in general. Anglo countries are averse to the state holding any corporate assets compared to Singapore, China, France, Germany, etc. I have no idea why this is the case: maybe somebody on this forum can elaborate?

 

[Moonscape]

It's kinda crazy how *opposed* Anglos are to state-run industry in general. Anglo countries are averse to the state holding any corporate assets compared to Singapore, China, France, Germany, etc. I have no idea why this is the case: maybe somebody on this forum can elaborate?

Anglo feudalism, a civilizational history of being dominated by various petty lords and earls vs strong central government.

 

[memmy]

The return on capital should be higher among Chinese private companies than among Chinese state-owned companies, this is practically a rule within the world economy, although there are exceptions. If all this volume of credit were directed to more productive Chinese private companies, the Chinese economy would gain much more than granting credit to more inefficient state-owned companies.

Can we have the emoji dislike to choose to show our disagreement with certain opinions?

 

[RoastGooseHKer]

Anglo feudalism, a civilizational history of being dominated by various petty lords and earls vs strong central government.

It is a serious issue for policymakers who need to balance between the interests of the majority and the few who have the capacity to bring about innovation and change via inventions to solve problems.

That’s the essence of freedom in the Anglo and Germanic narrative. Freedom does not equal to democracy. The good old USA only started championing democracy in the 1980s and arguably did not become a democracy until 1965. But it has had freedom for propertied white male, successful white capitalists and their descendants since 1789. Now democracy is being rolled back under King of Knowing Everything and his few oligarchs, whilst the opposition party itself has also been hijacked by few oligarchs and political families instead of representing the majority. Therefore, freedom=tyranny of minority in this context. Protection against the tyranny of majority means preserving the unspoken dictatorship of the privileged, albeit there are indeed effective checks-n-balance between these elites (but ONLY between these elites).

In short, freedom means lords, landed elites, and oligarchs have the liberty to live under privilege and exploitation of lower subjects whilst be institutionally protected against redistribution by higher authorities. Checks-n-balances only occur between themselves and higher public authorities, whilst the masses only need to obey and work for the lord/elite/capitalist in which their jurisdiction fall under. Finally by controlling media narratives, the masses were being told that they should hate members of other race and foreigners so the ruling elites could direct attentions away from much needed social-economic redistribution via taxation/welfare.

And China is not immune to such political issue. Say Jack Ma and all those pro-west oligarchs (many in the financial and real estate sectors) of Beijing, Shanghai, and Hong Kong who buy into the neoliberal West. They believe that the only way for themselves to be ultimately protected against redistribution (via paying higher tax) by CPC is to institute liberalism in Chinese politics. They also hope to be able to legally bribe officials via lobbying like their American counterparts; thus, having the ultimate say in politics.

On the other hand, smart government can’t just use brute force against rising capitalists and other elites demanding bigger say in property/IP protection and policy making. Doing so would be stupid (killing the goose laying the golden egg) because it prevents creative destruction from bringing about the necessary technological innovation, entrepreneurship, and bolstering of national security. China learned this lesson the hard way between 1949 and 1978, as did the former USSR and Russian Federation today. When you have a strongman whose legitimacy is based on radical populism (real tyranny of the majority here), nobody dares to become innovative.

It is a tricky balance for policymakers. They have to accommodate and work with entrepreneurs who invent new solutions to existing problems in order to improve governance. These innovative individuals in turn would demand protection of their newly gained property and wealth through participation in decision making. They also want their descendant to inherit a significant portion of their wealth, if not all, against seizure by other societal forces. It is therefore unavoidable that innovative individuals who invent solutions to problems would enjoy more freedom than the masses if policymakers seek technological progress and prosperity. If you want Huawei and BYD to keep churning out best phones and EVs, the CPC would have to protect the economic and property freedoms of Mr. Wang and Mr. Ren, whilst probably giving them a seat during official policy meetings related to EVs, semiconductors, and telecommunication. Yet policymakers - who represent more than just entrepreneurs - cannot prevent these ambitious entrepreneurs from hijacking the government and becoming the government themselves. Therefore, the question of freedom is a question of magnitude and degree. Too much and too little would bring about different problems. As for China and most countries, neither the dictatorship of the elites/oligarchs nor absolute egalitarianism seem like good ideas.

 

[bd popeye]

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Editor's note: As China wraps up its 8-day Spring Festival holiday, the country has witnessed consumption booms ignited by hundreds of millions of family reunions during the period that ran from Jan 28 through Feb 4 this year.

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[bd popeye]

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[virsuvei]

The return on capital should be higher among Chinese private companies than among Chinese state-owned companies, this is practically a rule within the world economy, although there are exceptions. If all this volume of credit were directed to more productive Chinese private companies, the Chinese economy would gain much more than granting credit to more inefficient state-owned companies.

Chinese society is able to create so much money as needed. There are several targets for the economy, GDP is not the only one. Strengthening the base is one. Further on, private capital is more risk averse. To proceed in new areas either state guarantees or some state companies are necessary. In China often the most dynamic players are local governments.