This guy's level of delusion is off the charts. How is he a professor at Peking University?
Chinese Economics Thread
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This guy's level of delusion is off the charts. How is he a professor at Peking University?
I do not think he is deluded, he could be just flat out wrong.
There are counter points to his points. Briefly, we can say this.
1. Re: convergence. The point here is that that there is no law for convergence in economics, otherwise India will be a superpower like yesterday. The point is that he does not know when that Chinese economic miracle will slow down or stop. It could be the next 5 years, or the next 100 years, he does not know. It is not about convergence, it is about momentum, and does the PRC have the ability in them to keep the momentum going. So far, so good.
2. The Plaza Accord triggered the collapse of the property bubble and stock market bubble in Japan that had to be a contributing factor to the deflation the Japan is still fighting. Maybe they have some inflation now, but that deflation over two decades was economically debilitating if you ask me. The Plaza Accord, which readjusted the values of the Yen and USD to the liking of the Americans, probably was the trigger for the debt deflation scenario that Japan experienced. Unless there is a debt deflation scenario awaiting China, then Pettis is barking up the wrong tree in his objections.
3. Re: tech ... it could be that China today is more advanced than Japan in tech back then. China got lucky too, because of this precise time in history, Chinese technological powers have risen, and it is riding a new change in economics and technology, in other words, this 4th industrial revolution. When Japan was rising, the world was set in its way in the Cold War. In China's rise, we saw the interent revolution now the incoming 4th industrial revolution. China is leading the way with the 5G which is suppose to enable this 4th industrial revolution. Seems that China has a real advantage today in its rise compared to Japan back in the day, because Chinese tech today will be riding up on a revolutionary period, whereas the era Japan rose was less dramatic. Since China is spearheading this 5G revolution, that surely should be another growth driver that was not available to Japan back then.
4. Lastly, he brings out how similar were the trajectory of Japan's miracle and China's rise, regarding investment driven growth, income disparity, debt levels, blah blah blah. All I have to say to that is that are not automatic outcomes. That is the difference between the CCP and this guy in the ivory tower. They are both driving car. CCP looks ahead to the future. Pettis looks at the rear view mirror to drive forward. That is an expression from Wall Street, not the ivory tower. Instinctively, we know who is more likely to be right and more successful in their prognostications.
@horse nicely done bro, great analysis , may I add one more China is the market, Japan during her heydays need the Collective West, now its the reverse and with the debt level they hold they need the Chinese more than ever.I do not think he is deluded, he could be just flat out wrong.
There are counter points to his points. Briefly, we can say this.
1. Re: convergence. The point here is that that there is no law for convergence in economics, otherwise India will be a superpower like yesterday. The point is that he does not know when that Chinese economic miracle will slow down or stop. It could be the next 5 years, or the next 100 years, he does not know. It is not about convergence, it is about momentum, and does the PRC have the ability in them to keep the momentum going. So far, so good.
2. The Plaza Accord triggered the collapse of the property bubble and stock market bubble in Japan that had to be a contributing factor to the deflation the Japan is still fighting. Maybe they have some inflation now, but that deflation over two decades was economically debilitating if you ask me. The Plaza Accord, which readjusted the values of the Yen and USD to the liking of the Americans, probably was the trigger for the debt deflation scenario that Japan experienced. Unless there is a debt deflation scenario awaiting China, then Pettis is barking up the wrong tree in his objections.
3. Re: tech ... it could be that China today is more advanced than Japan in tech back then. China got lucky too, because of this precise time in history, Chinese technological powers have risen, and it is riding a new change in economics and technology, in other words, this 4th industrial revolution. When Japan was rising, the world was set in its way in the Cold War. In China's rise, we saw the interent revolution now the incoming 4th industrial revolution. China is leading the way with the 5G which is suppose to enable this 4th industrial revolution. Seems that China has a real advantage today in its rise compared to Japan back in the day, because Chinese tech today will be riding up on a revolutionary period, whereas the era Japan rose was less dramatic. Since China is spearheading this 5G revolution, that surely should be another growth driver that was not available to Japan back then.
4. Lastly, he brings out how similar were the trajectory of Japan's miracle and China's rise, regarding investment driven growth, income disparity, debt levels, blah blah blah. All I have to say to that is that are not automatic outcomes. That is the difference between the CCP and this guy in the ivory tower. They are both driving car. CCP looks ahead to the future. Pettis looks at the rear view mirror to drive forward. That is an expression from Wall Street, not the ivory tower. Instinctively, we know who is more likely to be right and more successful in their prognostications.
China is just at a different stage of development than Japan.
When the Plaza Accord occurred, Japan in 1985 had already reached $14K per capita which was not far off the $18K per capita in the US.
In comparison, the average Chinese person is still 3-4x "poorer" than the average American.
I don't think the history books will call it a 4th Industrial Revolution.
What we're seen so far in the past 20 years is more like the beginning of the 3rd Third Industrial Revolution, which still has another 30+ years to play out.
When Japan developed, yes, it was on the back of the technologies from the 2nd Industrial Revolution. But that era peaked around 1990, as demonstrated by Japan/Germany/US when their aggregate efficiency couldn't get past 14-20%.
I would agree with Rifkind's analysis that the ongoing Third Industrial Revolution comprises Solar, Wind, Nuclear, Electric Vehicles, Batteries, 5G/6G and Artificial Intelligence. And when you look at each of these sectors, China has a commanding overall lead in these areas.
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I think Pettis also doesn't take into effect the deflation of high tech consumer products prices and the ever expanding markets that actually can consume those products. When Japan rose up it was primarily the west as in western Europe and united states these two players probably owned like 70~80% of the world economy.
These days the high tech consumer products(mobiles, tv ranging, pc etc from $200~2000) which China manufactures can be sold to a way bigger market, China's own domestic market for example.
The global consumer markets is also way more spread out, so the west alone doesn't have the monopoly to set the standards anymore, you see the west complaining about this phenomena. Wasn't it Borrel some time ago that said the west should be the only one to set the world standards etc. Setting the world standards means contributing more to the standards IP pool which means a bigger share of the IP pool income if i'm not mistaken. That is what the west really fears is that their monopoly on standard setting and rentier profits from creating patents and standards is gone. Even if they block Chinese and Russian standards the west at the end of the day is the smaller group like around a billion citizens of Natostan.
When it comes to it, Natostan will have an exclusive market of around 1 billion, SCOstan will have an exclusive market of around 1.6 billion assuming SCOstan will mostly be China, Russia and Iran. If you take the other members of SCOstan into account it quickly doubles with India and Pakistan as export market.
These days the high tech consumer products(mobiles, tv ranging, pc etc from $200~2000) which China manufactures can be sold to a way bigger market, China's own domestic market for example.
The global consumer markets is also way more spread out, so the west alone doesn't have the monopoly to set the standards anymore, you see the west complaining about this phenomena. Wasn't it Borrel some time ago that said the west should be the only one to set the world standards etc. Setting the world standards means contributing more to the standards IP pool which means a bigger share of the IP pool income if i'm not mistaken. That is what the west really fears is that their monopoly on standard setting and rentier profits from creating patents and standards is gone. Even if they block Chinese and Russian standards the west at the end of the day is the smaller group like around a billion citizens of Natostan.
When it comes to it, Natostan will have an exclusive market of around 1 billion, SCOstan will have an exclusive market of around 1.6 billion assuming SCOstan will mostly be China, Russia and Iran. If you take the other members of SCOstan into account it quickly doubles with India and Pakistan as export market.
SCO (China) will always have a natural advantage with SEA due to geography, with China increasing in strength this advantage will only grow. So you can add another 0.5B to the max pop pool.
Good question. Another question is why you're amplifying him if he's just noise?
Manufacturing output by country in 2018
Even in 2018, China was by far and away the largest manufacturing power. I am curious to see how this has changed.
By now, I'd imagine China is significantly larger than US + Japan + Germany.
I think in 2021 China is the equal of US + EU + Japan.
Does anyone have the data for 2021?
Even in 2018, China was by far and away the largest manufacturing power. I am curious to see how this has changed.
By now, I'd imagine China is significantly larger than US + Japan + Germany.
I think in 2021 China is the equal of US + EU + Japan.
Does anyone have the data for 2021?