Chinese Economics Thread

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Overbom

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escobar said:
Everyone cook this book in one way or another. Interesting interview from Joerg Wuttke the president of the EU Chamber of Commerce in China
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But a more expensive sourcing is better than nothing. That’s also because China maintains an extremely rigid travel policy. As a CEO or as a purchasing manager, you can’t just fly quickly to Shanghai or to Guangzhou, but today you can easily get to Jakarta, Kuala Lumpur or Manila. With the current situation in China comes a huge loss of confidence, which will eventually lead to changes in supply chains. Foreign companies are not packing up and moving out of China, but they are considering moving parts of their investments to other countries. China has lost its nimbus as a base for sourcing and manufacturing, at least for the moment.
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This part is true. China's supply chains are unparalleled in the world. But if you can't just fly there quickly to do your business, companies will inevitably hold their noses and choose another location for their factories even if it ends up more expensive.

This is also part of the reason why I was against the covid lockdowns this year and also was for quickly vaccinating the elderly in order to open up quickly.

In any case, leaving covid policies aside, for every foreign company which leaves/reduces investment, there are 2 domestic companies awaiting to utilise China's supply chains to beat international competitors which use more expensive factories/suppliers.

So ultimately, who will benefit and who will lose is not as clear cut as saying "China has lost"
 
Coalescence

Coalescence

Senior Member
Registered Member
Overbom said:
This part is true. China's supply chains are unparalleled in the world. But if you can't just fly there quickly to do your business, companies will inevitably hold their noses and choose another location for their factories even if it ends up more expensive.

This is also part of the reason why I was against the covid lockdowns this year and also was for quickly vaccinating the elderly in order to open up quickly.

In any case, leaving covid policies aside, for every foreign company which leaves/reduces investment, there are 2 domestic companies awaiting to utilise China's supply chains to beat international competitors which use more expensive factories/suppliers.

So ultimately, who will benefit and who will lose is not as clear cut as saying "China has lost"
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I don't know why they couldn't just do like a live meeting call or livestream their operations to do their businesses, but for industries requiring specialist on the ground, this is more understandable.

Gonna agree with the lockdowns being very disruptive to their economy, but even if 100% of the population in China is vaccinated, they still would not open up because of fear of newer variants, waning vaccine efficiency, long covid or healthcare being overwhelmed. Countries with high vaccination rates still got pummeled by Omicron.

I think they would invest into more into preventive methods like massive testing during non-lockdown/outbreak times, regularly testing individuals working in possible high-risk places like restaurants, logistics and schools, then quicker tracing and isolation responses. So that they don't need to do city-wide lockdowns which disrupts the economy the most.
 
O

Overbom

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Registered Member
Coalescence said:
I don't know why they couldn't just do like a live meeting call or livestream their operations to do their businesses, but for industries requiring specialist on the ground, this is more understandable.

Gonna agree with the lockdowns being very disruptive to their economy, but even if 100% of the population in China is vaccinated, they still would not open up because of fear of newer variants, waning vaccine efficiency, long covid or healthcare being overwhelmed. Countries with high vaccination rates still got pummeled by Omicron.

I think they would invest into more into preventive methods like massive testing during non-lockdown/outbreak times, regularly testing individuals working in possible high-risk places like restaurants, logistics and schools, then quicker tracing and isolation responses. So that they don't need to do city-wide lockdowns which disrupts the economy the most.
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Its a simple matter. We can talk and debate for hours but ultimately this is a fundamental economic principle:

Open economies will ultimately beat closed economies. The more you close while your competitors stay open, the more you will lose.

Does anyone really think that even a periodic-lockdown-China can beat open Western economies? Fortunately this will be resolved soonish, China will IMO reopen sometime after the Party Congress in Fall.
 
Coalescence

Coalescence

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Registered Member
Overbom said:
Its a simple matter. We can talk and debate for hours but ultimately this is a fundamental economic principle:

Open economies will ultimately beat closed economies. The more you close while your competitors stay open, the more you will lose.

Does anyone really think that even a periodic-lockdown-China can beat open Western economies? Fortunately this will be resolved soonish, China will IMO reopen sometime after the Party Congress in Fall.
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True, I wonder how the open economies would fare with bi-quarter disruptions from covid waves, and the slow grind of their labor force because of long covid and medical debt. If its not that bad, then the lockdown approach should be abandoned as soon as possible, and not timed to political events.
 
O

Overbom

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Coalescence said:
True, I wonder how the open economies would fare with bi-quarter disruptions from covid waves
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I personally don't think more covid waves will happen. Omicron is far more contagious than other variants. It will take a (bad) miracle for a sudden new more lethal covid variant to beat Omicron.


Coalescence said:
and the slow grind of their labor force because of long covid and medical debt
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I think this will be manageable. However it is true that long covid is going to be a drag on their economies.

Ultimately the question is, what is worse for a country, closed economy with lockdowns or labour force with long-covid? For the West, they have already chosen to go with the second way of staying open but suffering long-covid complications.

For China, it doesn't matter. As of now, the matter is political, not scientific, so it doesn't matter if we scientifically talk about China's covid policies. If were talking about science, the elderly would had been fully (3-doses) vaccinated months ago. Due to this not happening, paradoxically, the science now says that China needs to continues with its dynamic-zero policy approx. until Fall (if they start from today to do immediate vaccinations of the elderly), otherwise the medical system would collapse.

Politically, or scientifically, Fall is when things will start moving
 
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Overbom

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