Chinese Economics Thread

[Strangelove]

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Industrial robots on march amid demand from new energy plays​

By MA SI | CHINA DAILY | Updated: 2022-07-06 09:05

Two technicians test an industrial robot at a tech company in Binzhou, Shandong province. CHU BAORUI/FOR CHINA DAILY

Industrial robots are expected to see rapid growth in China as the recovery of the downstream manufacturing sector and the expansion of production of lithium batteries, new energy vehicles and other industries drives demand.

Estun Automation Co Ltd, a leading Chinese industrial robot company, said the company is working overtime to complete orders.

The Nanjing, Jiangsu province-based company said that since May, market demand for industrial robots represented by medium and large-load robots has grown rapidly, and its industrial robot production lines are running at high speed.

Estun is not alone. A string of Chinese industrial robot companies are seeing a revival of demand for their products, as customers such as new energy industry players have resumed work and stepped up production capacities amid better containment of the COVID-19 pandemic.

Amid rising demand, some companies have raised prices of industrial robot products. Efort Intelligent Equipment Co Ltd, for instance, issued a price adjustment letter saying that starting from July 1, prices of all robot products would jump by 3 to 10 percent.

Meng Pengfei, an analyst at Chinese securities company Kaiyuan Securities, said new energy vehicles, lithium batteries, photovoltaics and other highly prosperous downstream industries are accelerating production expansion, which increasingly rely on automated manufacturing and spur demand for industrial robots.

"Industrial robots have become an important tool for lithium battery production. High-performance, high-speed, and high-stability industrial robots can provide more economical and efficient production solutions for lithium battery production," Meng said.

China's factory activity expanded in June for the first time in four months, with the official purchasing managers index for China's manufacturing sector in June coming in at 50.2, said the National Bureau of Statistics. The data suggest that the country's economic recovery is gathering pace amid better containment of the COVID-19 pandemic and more substantial policy support.

China has been the world's largest market for industrial robots for eight consecutive years. The Ministry of Industry and Information Technology said in a five-year plan that the operating income of China's robotics industry is expected to grow at an average annual rate of 20 percent from 2021 to 2025.

In 2020, the manufacturing robot density, a metric used to measure a country's level of automation, reached 246 units per 10,000 people in China, nearly twice the global average. Wang Weiming, an official with the ministry, said China aims to double its manufacturing robot density by 2025.

 

[escobar]

So CN going to settle dispute with AU?

Farrell said Australian producers were “not getting what they used to for their product, and that’s having an impact on their prosperity and living standards”.

He cited examples including neighbours of his Clare Valley vineyard who allowed their shiraz grapes to rot on the vine, and the price of crayfish in Robe falling from $109 a kilogram to $75.

https://twitter.com/i/web/status/1544483445359116288

 

[mossen]

If there was ever a symbiosis between Germany and China, that time has passed. Germany is slowly but surely realizing that a national industrial strategy based on synergy with China is headed toward a dead-end.

The author never substantiates how this is the case. Her argument is basically political: Germany is now aligning itself closer to the US due to the Ukraine war and thus must align to US interests on China too.

That may well happen, but that's a political choice - and a stupid one - rather than based on market logic. It's tiresome to read political rants dressed up as sober economic analysis.

 

[NiuBiDaRen]

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China is in no danger of losing its supply chain supremacy to India or Vietnam

• For all the talk of foreign firms leaving China over the Covid-19 pandemic and global uncertainty, examples of wholesale departures are hard to find
• China’s advantages in quality, cost, timeliness and security will keep its central role in global supply chains in place for a long time to come

Subramanian Swamy on suicide watch list please

This whole India-Vietnam alliance is a joke please

 

[AndrewS]

The author never substantiates how this is the case. Her argument is basically political: Germany is now aligning itself closer to the US due to the Ukraine war and thus must align to US interests on China too.

That may well happen, but that's a political choice - and a stupid one - rather than based on market logic. It's tiresome to read political rants dressed up as sober economic analysis.

I think the logic is obvious.

China has an internal market which is already larger than the combined West in many categories eg. Smartphones, electric cars, renewable energy etc.

Even with lower Chinese growth in the future, we can reasonably expect this to extend to almost every category, given a 2035-2040 timeframe.

In the same scenario and given a modest increase in R&D spending to 3% of GDP, we could also expect Chinese R&D spending to exceed the combined West. It means China can aspire to create world class companies in every field.

At the same time, average GDP per capita in China would still be significantly lower than the average of the combined West.

So China-based companies would benefit from a combination of huge domestic sales and therefore revenue/profit when compared to foreign competitors. That feeds into more money to develop the latest products and also overseas expansion.

At the same time, lower cost levels in China combined with a larger scale of production means goods can be produced at lower cost than in the West. China products would displace competitors in the rest of the world, further increasing global sales and the scale of production in a feedback loop.

...

This is a trend that would happen regardless of political choices. But political choices will determine how much foreign companies can operate in China and therefore be able to compete against their competitors.

 

[NiuBiDaRen]

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Whoa CNN = Communist News Network?

 

[mossen]

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For all the talk of foreign firms leaving China over the Covid-19 pandemic and global uncertainty, examples of wholesale departures are hard to find.
China’s advantages in quality, cost, timeliness and security will keep its central role in global supply chains in place for a long time to come

 

[mossen]

Even with lower Chinese growth in the future, we can reasonably expect this to extend to almost every category, given a 2035-2040 timeframe.

In the same scenario and given a modest increase in R&D spending to 3% of GDP, we could also expect Chinese R&D spending to exceed the combined West. It means China can aspire to create world class companies in every field.

At the same time, average GDP per capita in China would still be significantly lower than the average of the combined West.

So China-based companies would benefit from a combination of huge domestic sales and therefore revenue/profit when compared to foreign competitors. That feeds into more money to develop the latest products and also overseas expansion.

At the same time, lower cost levels in China combined with a larger scale of production means goods can be produced at lower cost than in the West. China products would displace competitors in the rest of the world, further increasing global sales and the scale of production in a feedback loop.

That's pretty sound logic - if you believe in a zero-sum world. I think China will continue to increase market share but there is a cost/effiency trade-off the more you try to do everything at once. Just because everything can be done domestically, doesn't mean it will unless there is a political imperative to do so (e.g. chips).

Remember, if it weren't for Trump's tradewar, then it was far from certain that Chinese firms would have switched to domestic suppliers as fast as they did. In many ways, Trump helped 'Made in China 2025' more than anyone else on the planet, even more than Xi Jinping!

My point is that such outcomes are basically grown out of Western blunders. It may be that Germany will double down on this foolish approach, prodded by their US masters to do so, but then we should be clear that this was a choice they made. Not inevitable fate.

 

[Strangelove]

So CN going to settle dispute with AU?

https://twitter.com/i/web/status/1544483445359116288

WTO anti-dumping disputes typically take 10 to 20 years to settle, China can wait this long, but the Aussie 4-yr election cycle can't!

There might be some back-channel chat ever since Albo (their new prime minister) came to power, despite the need to superficially maintain being tough on China.

 

[AndrewS]

That's pretty sound logic - if you believe in a zero-sum world. I think China will continue to increase market share but there is a cost/effiency trade-off the more you try to do everything at once. Just because everything can be done domestically, doesn't mean it will unless there is a political imperative to do so (e.g. chips).

Remember, if it weren't for Trump's tradewar, then it was far from certain that Chinese firms would have switched to domestic suppliers as fast as they did. In many ways, Trump helped 'Made in China 2025' more than anyone else on the planet, even more than Xi Jinping!

My point is that such outcomes are basically grown out of Western blunders. It may be that Germany will double down on this foolish approach, prodded by their US masters to do so, but then we should be clear that this was a choice they made. Not inevitable fate.

It's not just zero-sum.

Remember that we already see low-value manufacturing leaving China because China is becoming expensive.

Let's imagine a world (around 2035) where China has grown to twice the size of the US. Today, China is about 30% larger.
That would mean 6 of the 8 billion in the world would be lower income than the West or China. That is a majority of the world.

The effect of a wealthy China would be to drag up average incomes in the rest of the developing world eg. SE Asia, South Asia, Africa, Latin America

We should see a further deindustrialisation in the West (particularly in Germany and Japan).

Japan has limited opportunities to diversify because it is a small geographically isolated island on the fringes of Asia. But China sits in the middle of Asia, is closer to export markets that Japan focuses on, plus China has far more links (cultural, trade, political, people, linguistic) than Japan.

In comparison, Germany is first amongst equals in Europe which is a domestic market of 500 million people, and Europe neighbours other regions. So Germany has other options to diversify into non-manufacturing industries and also into services for the region.