Chinese Economics Thread

[AndrewS]

China is not larger by the metric that matters - nominal GDP. The CCP itself doesn't use PPP when they are writing economic reports. If they don't use PPP, why should we? Whether China will pass the US or not is an open question. I think they have a decent shot but they won't become 2X USA's GDP by 2035.

In the medium-long term, the exchange rate should converge to the PPP.

The CCP use the RMB when they are writing economic reports, but remember that the USD-RMB exchange rate is set to whatever the Chinese government wants it to be.

And if we look at international organisations, we've seen a marked shift towards the use of PPP because the exchange rate figures are really under-reporting Chinese economic output.

I disagree. Remember that as China climbs the income ladder, their needs to import expensive stuff also increases in tandem. China will certaily export more machinery than they import, but it's a complimentary issue. There will always be niche cases in every industry where it makes sense to import a specialised piece of equipment than do it all yourself from scratch. As long as China become much bigger, it doesn't necessarily imply deindustrialisation for Germany. Even if China's share of imports decreases, in absolute nominal terms it will continue to rise.

That assumes the equipment is not subject to US sanctions and can be imported.
Also remember that these Chinese "niches" will likely be larger than the Western ones.
So on the back of the Chinese market, why couldn't a Chinese company grow to become larger and more technologically advanced than its foreign equivalent?

In addition, we see entire sectors like semiconductors or aviation, where the denial of any *niche* component means the entire product will fail. So it has to be a completely Chinese industrial chain which is not subject to US sanctions.

A growing pie is good for everyone. I just reject the zero-sum theories.

Overall, we'll see a growing pie in the world.
That will also apply to most countries, including Germany.

In the past 20 years of globalisation, we've seen the benefits concentrated in certain countries and sectors.

But there are also many cases where localised industries and locations suffer. For example, the deindustrialisation of the USA, where the rust-belt cities haven't been able to adapt and find alternative economic activity. But in the US overall, there have been significant gains.

Japan and Korea are the most exposed to Chinese competition in terms of the mid-tech and hi-tech industries that China is expanding into.

 

[xypher]

China is not larger by the metric that matters - nominal GDP. The CCP itself doesn't use PPP when they are writing economic reports. If they don't use PPP, why should we? Whether China will pass the US or not is an open question. I think they have a decent shot but they won't become 2X USA's GDP by 2035.

CPC does not use it because they write it in RMBs, lol. The nominal GDP is not any better than PPP - when your growth starts stabilizing, the changes in nominal GDP become mostly dependent on currency fluctuations. Look at the Japanese GDP since 1995 - it is wildly fluctuating around the $5-5.5 trillion mark. Do you think their economy is actually behaving like this - down to $4.5 trillion in one year, then up to $6 trillion in the next? Of course not, it is just the result of the floating yen. Another example of why it is overall a poor metric - if we simply follow the nominal GDP, then the US actually needs to encourage high inflation because it basically gives them 8%+ growth every year. However, both we and the US government understand that it does not work that way.

I would look at the real GDP (changes in local currency adjusted for inflation) or at fixed exchange rates - they are the best for observing the underlying economy rather than currency manipulations. For example, after fixing the exchange rate, the GDP plot accurately shows the period of stagnation followed by very slow growth for Japan rather than the nominal GDP rollercoaster.

 

[FairAndUnbiased]

We need to setup upstream manufacturing of pharma chemical ingredients in Xinjiang, so we can stamp Made Proudly with Chemicals from Xinjiang, China on every bottle of antibiotics.



View attachment 92221

I thought India was a pharmaceutical superpower. Looks like Italy is a hyperpower.

Gloria Romae! I mean, Jai Hind!

 

[AndrewS]

China no longer has an abundance of low-skilled workers. China's workforce has been declining since about 2014 and the new workers who are replacing the old ones are much more skilled.

There would still have a surplus of low-skilled workers in China, if you account for the complete disappearance of low-value manufacturing in the future.

China will continue to gain market share even once wages rise to high levels. Why do you think Germany is so competitive in manufacturing despite having high wages? Productivity matters more. Trying to compete on low wages is a fool's errand.

It's not just productivity. Germany can sustain high wages because it has so many companies which make *niche* products that have no alternative elsewhere in the world. Something similar applies to Japan.

But it is these sorts of companies that China is trying to foster with its "Little Giants" programme which focuses on strategically sensitive niches. That will extend to every niche as Chinese venture capitalists see opportunities to grow a Chinese technology leader in specific niches.

 

[FairAndUnbiased]

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.

But Japan has already 脱亚入欧 so they can join the EU.

 

[AndrewS]

But Japan has already 脱亚入欧 so they can join the EU.

Since the Meiji restoration, Japan has rejected its Asian heritage and the geographical reality that it is an Asian nation.

 

[KYli]

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[Strangelove]

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Technology improving agriculture​

By ZHAO YIMENG | China Daily | Updated: 2022-07-05 09:21

Farmers use drones to maintain a corn field in Linze, Gansu province, on June 22, 2022. [Photo by WANG JIANG/FOR CHINA DAILY]

Precision approach, mechanization saving farmers time and money

With new technologies such as artificial intelligence and big data, smart agriculture is expected to bring about essential changes to traditional agriculture in China, an expert said.

Shi Yun, a researcher at the Chinese Academy of Agricultural Sciences' Institute of Agricultural Resources and Regional Planning, said China will realize fully mechanized, automated and digital agriculture through developing smart and precision agricultural technologies.

Precision agriculture is an agricultural management system aimed at optimizing inputs to achieve the most economic and environmental benefits, using technologies including remote sensing and satellite navigation, he said.

The concept was proposed in the 1990s by experts from the United States, hoping to alleviate production and environmental dilemmas encountered in global agriculture.

Precision agriculture is able to reduce labor costs, save water, fertilizers and pesticides, and avoid or reduce unnecessary decision-making errors, Shi said.

China has included smart or precision agriculture into its No 1 Central Document since 2012. So far, demonstration bases for smart agriculture have been built in 13 areas including Beijing, Heilongjiang province and the Xinjiang Uygur autonomous region.

"In recent years, the country has been developing precision agriculture techniques in terms of irrigation, fertilization and harvesting," Shi said.

Precision irrigation－for instance, drip irrigation under mulch－can greatly reduce costs and increase the efficiency of water and fertilizer use.

The technique is particularly important in Xinjiang, where more than 80 percent of the country's cotton is produced.

By increasing soil temperature, storing water and controlling diseases, the technique has improved water and fertilizer utilization while also improving cotton quality.

The technique can reduce agricultural inputs by 35 percent on average and increase cotton production by 30 percent, according to China Science Communication.

Other technologies for precision agriculture such as plant protection drones and harvesting robots can also save resources and costs, increasing farmers' incomes and reducing their economic losses caused by natural disasters, Shi said.

XAG, China's largest agricultural drone maker, cooperates with Alibaba Cloud to help farmers improve efficiency and reduce costs.

With cloud computing, and database and cloud storage technologies, XAG has established a farmland navigation network. Drones can automatically generate routes by accessing high-definition farmland maps, fly and spray accurately, and provide standardized agricultural services.

Using cloud technology and AI, remote sensing drones are able to analyze plant growth, diseases, pests and weeds, and accurately guide the spraying drones to carry out targeted operations, greatly reducing the use of pesticides and fertilizers.

According to a social responsibility report by XAG, in cooperation with Alibaba Cloud the company has helped more than 4 million farmers cope with labor shortages and rising costs.

Meanwhile, accurate spraying technology has helped save 1.4 million metric tons of water and 6,000 tons of pesticides and fertilizers, the company said.

However, the development of precision agriculture still faces challenges and lags behind developed countries.

"Some core equipment and techniques, such as parts of agricultural sensors, still rely on imports, and big shortages remain in smart agriculture technicians," Shi said, adding that more financial support is needed to comprehensively promote smart agriculture nationwide.

Robotics technology and artificial intelligence, which have been applied in developed countries, will be the future direction of precision agriculture development in China, but they need to be adapted to fit local conditions in different areas.

"Since artificial intelligence and robotics have been applied in China for a relatively short time, it is necessary to open up a modern path with Chinese characteristics based on local conditions," Shi said.

For example, major grain producing areas, such as Northeast China, the middle and lower reaches of the Yangtze River may try the digital agriculture model of Germany and France.

Israel's automatic drip irrigation technology can be introduced to water-scarce areas in China, he said.

"Developing precision agriculture is an essential way to realize agricultural modernization, greatly increase production capacity and further ensure national food security," he added.

 

[HereToSeePics]

Though I'm not a fan of hubris, this opinion piece has some though realities for Western societies to swallow:

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I’ve spoken to hundreds of Chinese and China-haters and heard everything they had to say. By now I’ve learned roughly as much about China as anyone can learn without knowing the language or living in the country, and I’ve reached my conclusion. China attracts a lot of haters, know-nothings and armchair experts.

The truth is that China is the greatest country on the face of the earth. It makes all other countries look insignificant and contemptible. It is the most brilliant, most industrious, most ambitious, most educated, meritocratic and technocratic, most modern, sophisticated, and civilised, and best-governed by far.

It is the first nonwhite, non-Western country to reach this status since the 1600s. The determination of this country is indescribable. Supernatural. There is no force that can stop it from accomplishing anything it wants to do.

Forty years ago a flush toilet in China was a luxury. Today it has its own Space Station. This is a tiny example of China’s capabilities.

It doesn’t matter who we are. Egyptians, Syrians, Pakistanis, Indians, Africans, even Americans. Next to the Chinese, we are pathetic. We can’t do what they do. We would have a mountain, an Everest of changes to make, and we would whine and bicker and fail at every one of them. China’s story since the 1980s has been one of an almost divine metamorphosis.

Next to China the entire Western world from Alaska to New Zealand has stagnated. Next to China the entire developing world from Brazil to Madagascar has progressed only at a crawl.

China is the mother of all gargantuan bullet trains. Every day it manages to create something new and astonishing. And unlike the United States, unlike the British Empire, unlike the French, Dutch, Germans, Spanish, Portuguese or any other Western nation that had its turn at being a superpower in the past four centuries, China doesn’t need to run anybody over or take something from somebody else, to rise majestically.

[ trimmed, full text in link ]

 

[manatee988]

Honestly that article borders on Jai Hind levels of wankery. I'm all for the world moving away from the Western narrative on China but this goes way too far in the other direction.