Chinese Economics Thread

[bsdnf]

For China to have free hand to determine its economic trajectory, it needs to have at least some equivalents of the US equivalents in terms of resources and technology to pull neutral nations to align towards itself. Automobiles- done, energy security- pretty close to be done , food security- a big risk, global aviation- laggard, semiconductor stack- moderately -risk free -but needs massive investments in fabs to have compute capacity using mature nodes. Before China has software capacity it will need to have its own platform, as steong as ios, android and wondows , so that the software wont have the risk of being deplatformed. Tiktok could have easily branched out apps for long format to compete with youtube and invested in movies and shows like Netflix. But it is kind of expected to restrain itself and do not compete with these existing platforms. Filling these two gaps would ensure the chance of having equivalent stacks and entice the global south.

Regarding food security, while I don't think it should be discussed in this post, the African swine fever outbreak has led to increased intensification and automation in livestock farming, resulting in higher efficiency. Coupled with companies competing to expand production, China's pork industry is facing a severe oversupply.

Although China is almost certainly not self-sufficient in food, I advise you not to fantasize like the Americans before the US-iran War about making China scream with oil. We have no idea how deep COFCO's reserves are.

 

[sunnymaxi]

Regarding food security, while I don't think it should be discussed in this post, the African swine fever outbreak has led to increased intensification and automation in livestock farming, resulting in higher efficiency. Coupled with companies competing to expand production, China's pork industry is facing a severe oversupply.

Although China is almost certainly not self-sufficient in food, I advise you not to fantasize like the Americans before the US-iran War about making China scream with oil. You have no idea how deep COFCO's reserves are.

China has achieved near-complete self-sufficiency in its primary staple grains include vegetables and fruits.

but to feed massive pork and livestock population it requires huge volumes of imported corn and soybeans for animal feed. we also relied on imports for other vegetable oils, oilseeds, and palm oil to meet cooking demands.

so food security is just a cope at this point.

 

[tamsen_ikard]

i didn't made any comment on your economic/financial analysis but this is my domain so i bound to answer.

you said, need massive investment in fabs to have compute using mature nodes. maybe you never tried to check or even visit semiconductor thread. China has already invested hundreds of Billions RMB in entire semiconductor supply chain. which makes China already the largest manufacturer of mature nodes. 1/3 of global mature chip production came from China. and China's 28% mature node market share is expected to grow to 40% by 2027. SMIC become the 2nd largest pure fab in the world after TSMC.

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China invested heavily in memory production too which resulted in ''YMTC/CXMT became globally competitive'' and started to compete with Micron/SK Hynix and SS.
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Huawei's HarmonyOS has displaced Apple's iOS in mainland China, becoming the second-largest smartphone operating system in the country, trailing only Google's Android. HarmonyOS currently captures approximately 19% of the Chinese mobile operating system market, outperformed iOS.

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to compete globally with ios/Android Chinese companies first need to capture domestic market. this process currently taking place right now. and i know this is a long and brutal process but the mission has already kick started. it will take time.

and yeah China is sill significantly behind in civil aviation but there are some fundamental reasons behind this. COMAC is working hard to solve all the problems. but if you have any question regarding this you can ask on aviation thread.

Cant have China speed in aviation without involution involving private companies fighting out. Comac is too slow

 

[tphuang]

https://twitter.com/i/web/status/2067341378313441703

May industrial growth shows some increasingly interesting trends among different sectors. Huge growth in new emerging and high tech sectors and declines in more traditional hard industries that they already dominate.

 

[Michael90]

Cant have China speed in aviation without involution involving private companies fighting out. Comac is too slow

Civil aviation is a very complex industry that requires a lot of experience in production and operation /maintenance etc . It’s probably one of(if not the most) difficult industry to crack and be successful. Reason until this day they are still only 2 players globally airbus and Boeing. Before this, Boeing had a world monopoly. Shows you how difficult it is to get right . Many players and countries have tried and failed . Even the Europeans had to come together to form airbus to be able to challenge Boeings supremacy and monopoly back then.
So I don’t think this is a sector China can rush. Moreover you need scale to be able to even stand a chance of competing. COMAC has a monopoly on domestic civil aviation industry in China, it’s a good thing to pool your resources together under one company to have a chance of competing . Having other multiple private players here and there won’t be detrimental and a waste of resources , since they stand no chance without scale/huge resources .

 

[ReanFean]

Isn’t UBI (universal basic income) the one that stimulates consumption by giving everyone a guaranteed income? Why is the discussion always stuck on raising the minimum wage?

A meaningful UBI of more than 500 yuan for 1.4b people would almost cover entire China government expenditure, they cant give everyone 2000 yuan a month. Maybe some sort of consumtion UBI with the new digital yuan, they can set digital yuan to expire if it's not spent in a certain amount of time, even then it'd be very difficult to fund it without printing money

 

[gk1713]

A meaningful UBI of more than 500 yuan for 1.4b people would almost cover entire China government expenditure, they cant give everyone 2000 yuan a month. Maybe some sort of consumtion UBI with the new digital yuan, they can set digital yuan to expire if it's not spent in a certain amount of time, even then it'd be very difficult to fund it without printing money

If even the people who run the currency printing machine can’t afford it, how could small businesses that have to pay salaries possibly manage.
Targeted subsidies for certain sectors and goods are already maxed out.

 

[tamsen_ikard]

Isn’t UBI (universal basic income) the one that stimulates consumption by giving everyone a guaranteed income? Why is the discussion always stuck on raising the minimum wage?

UBI is never going to fly anywhere in the world. There will never be a shortage of jobs. There could be shortage of cushy office jobs. But there will always be jobs for everyone. This is basic economics.

If labor is too abandunt due to shortageof jobs, then wages will go lower and after a while there will be employment once again.

If AI and robots lead to job shortage, there will be more jobs to serve the ultra rich who are getting rich on AI, likely more servants, butlers and massage parlors or entertainers. But there will always be things to do for people. May not be what they prefer, but they will adjust over time out of desperation.

 

[henrik]

China invested heavily in memory production too which resulted in ''YMTC/CXMT became globally competitive'' and started to compete with Micron/SK Hynix and SS.

How good are ymct and cxmt in hbm? When are they going to reach parity with the so-called leaders?

 

[Michael90]

They really need to do something about their stock market or they will (or may be planning to?) forgo any viable wealth building in the country. Bonds suck because the currency is kept low and even if they let it appreciate, it won't give as good returns. Real estate is off the list. There's two choices left: Invest in the Chinese stock market which sucks and is super risky, or funnel your money out of China to invest in the West. China keeps putting more and more capital controls so it seems like they're looking to force people to invest in the Chinese stock market. But they're doing this without making the stock market investible before hand. So really there is nothing. If China does not figure out a reliable and efficient way to build wealth then people will only continue to funnel there money out no matter what. It is simply much better to grow your money outside of China than inside and people will ALWAYS find a way. Hard decisions will have to be made like relaxing government interference.

I don’t think that is feasible for China. Chinas political system is different, with the party prioritizing their absolute control over the market at all cost. So I don’t think it’s realistic to expect them to open up the capital and stock markets anytime this century.
so I think it’s better to look at others sectors which is much more likely to be liberalized, but definitely not the stock/capital markets.