Chinese Economics Thread

Blitzo

Lieutenant General
Staff member
Super Moderator
Registered Member

So far this is not a repeated pattern of behaviour from yourself yet that I've observed, so this is not yet a formal moderator warning, but just advice -- in the future, if you are posting videos from youtube "content creators" please accompany it with commentary and justification for why it is worth people's time to watch it and why its presence is justified on this forum. At minimum, please provide at least your own views on the video.

Given videos need more time to view and watch compared to looking at images or reading articles, it is even more important that an accompanying description and justification for why people should spend their time on it.

To everyone -- posting content creator youtube videos on the forum should be done in a manner where you are not only trying to sell your video to members here for why it is worth their time to watch it, but also justifying why its presence on the forum is worthwhile.


Merely copy and pasting a URL is not enough.
 

Bellum_Romanum

Brigadier
Registered Member
So far this is not a repeated pattern of behaviour from yourself yet that I've observed, so this is not yet a formal moderator warning, but just advice -- in the future, if you are posting videos from youtube "content creators" please accompany it with commentary and justification for why it is worth people's time to watch it and why its presence is justified on this forum. At minimum, please provide at least your own views on the video.

Given videos need more time to view and watch compared to looking at images or reading articles, it is even more important that an accompanying description and justification for why people should spend their time on it.

To everyone -- posting content creator youtube videos on the forum should be done in a manner where you are not only trying to sell your video to members here for why it is worth their time to watch it, but also justifying why its presence on the forum is worthwhile.


Merely copy and pasting a URL is not enough.
Duly noted. Not to make an excuse of why I didn't write an accompanying commentary on the YouTube link I posted, I feel that I am priming what folks here that are already pro-China what to expect or see from these type of videos. That's why sometimes like on this particular case I am tempted to let the video speak for itself without necessarily coaching or previewing the viewers of it's content so that the viewing individuals can freely decide for themselves if the content and narrative discussed are objective or just pure b.s. having said that, I understand the warning and will heed on such advice; after all, rules are rules.
Thank you.
 

Blitzo

Lieutenant General
Staff member
Super Moderator
Registered Member
Duly noted. Not to make an excuse of why I didn't write an accompanying commentary on the YouTube link I posted, I feel that I am priming what folks here that are already pro-China what to expect or see from these type of videos. That's why sometimes like on this particular case I am tempted to let the video speak for itself without necessarily coaching or previewing the viewers of it's content so that the viewing individuals can freely decide for themselves if the content and narrative discussed are objective or just pure b.s. having said that, I understand the warning and will heed on such advice; after all, rules are rules.
Thank you.

I appreciate the response.
As I said, in this case it is not a warning, just advice, so there's no marks in this case.

However I think in general, if videos are from content creators on youtube and/or not brief depicting clear events (like a plane flyby or a QBZ-191 shooting video), a couple of sentences for why a longer form video is worth watching is beneficial to the forum as a whole.
 

xypher

Senior Member
Registered Member
I'll say that the Japanese-style stagnation is also pretty unlikely. I feel like the people are mainly drawing these parallels simply because they are Asian countries - i.e. it is not grounded in actual data but in their biases. The reason why I think that the Japanese economy prior to the collapse and the current Chinese economy are different:

1) Japan severely reduced its monetary independence when they signed the Plaza accord where they had to rapidly appreciate the yen which in turn increased the dollar asset prices and gave a push to the growing property bubble, this is not the case for China because the asset inflation there is primarily limited to the large cities and is of different nature - it was driven primarily by the lack of available financial instruments and education as property was viewed as the only destination for the long-term savings;

2) by 1995, Japan has already reached 90%+ urbanization rate and moved to the top of the value chain, exhausting all the "low-hanging" growth vehicles to offset the stagnating\declining population - this is clearly not the case for China, which still has sub-70% urbanization rate, is still in transition to high-value industries, and has a lot of low-value labor-intensive sectors (like low-mechanized agriculture, clothing, etc.) which consume a lot of the workforce & could be replaced in the future, moreover, I think China is currently facing the reverse problem: the job creation in the high-tech industries is lagging behind and is unable to employ all of the incoming workforce;

3) unlike Japan, China has a large internal market that can act as another growth vehicle when the exports start slowing down and this source of growth remains largely underexploited, as China has one of the highest savings rates in the world at 44% (2019), almost twice of Japan's at 24.7%;

4) China is relatively secure for key sectors like agriculture and energy, which makes them less open to the global commodity volatility compared to resource-scarce countries like Japan.

Basically, I think that the relative abudance of the potential growth vehicles makes Japanese-style stagnation highly unlikely for China. The growth rates might slow down and China might enter recession during the crisis years (unlike in the past), but overall it will continue growing faster on average than the developed countries.
 

FairAndUnbiased

Brigadier
Registered Member
I'll say that the Japanese-style stagnation is also pretty unlikely. I feel like the people are mainly drawing these parallels simply because they are Asian countries - i.e. it is not grounded in actual data but in their biases. The reason why I think that the Japanese economy prior to the collapse and the current Chinese economy are different:

1) Japan severely reduced its monetary independence when they signed the Plaza accord where they had to rapidly appreciate the yen which in turn increased the dollar asset prices and gave a push to the growing property bubble, this is not the case for China because the asset inflation there is primarily limited to the large cities and is of different nature - it was driven primarily by the lack of available financial instruments and education as property was viewed as the only destination for the long-term savings;

2) by 1995, Japan has already reached 90%+ urbanization rate and moved to the top of the value chain, exhausting all the "low-hanging" growth vehicles to offset the stagnating\declining population - this is clearly not the case for China, which still has sub-70% urbanization rate, is still in transition to high-value industries, and has a lot of low-value labor-intensive sectors (like low-mechanized agriculture, clothing, etc.) which consume a lot of the workforce & could be replaced in the future, moreover, I think China is currently facing the reverse problem: the job creation in the high-tech industries is lagging behind and is unable to employ all of the incoming workforce;

3) unlike Japan, China has a large internal market that can act as another growth vehicle when the exports start slowing down and this source of growth remains largely underexploited, as China has one of the highest savings rates in the world at 44% (2019), almost twice of Japan's at 24.7%.

Basically, I think that the relative abudance of the potential growth vehicles makes Japanese-style stagnation highly unlikely for China. The growth rates might slow down and China might enter recession during the crisis years (unlike in the past), but overall it will continue growing faster on average than the developed countries.
Japan also has 0 natural resources and cannot sustain life without imports while China is rich in strategic resources including coal, gold, tungsten, titanium, even things that China has to import China produces a ton of like iron ore, oil, food. China produces huge quantities of basic industrial outputs like steel, ammonia, refined petrochemicals, polymers, copper, aluminum, fibers.

Having no natural resources like Japan means that a substantial fraction of industrial output is used to simply pay for their upkeep via imports, and to pay for society existing. Meanwhile most of China's industry can be used to raise living standards.
 

GodRektsNoobs

Junior Member
Registered Member
I'll say that the Japanese-style stagnation is also pretty unlikely. I feel like the people are mainly drawing these parallels simply because they are Asian countries - i.e. it is not grounded in actual data but in their biases. The reason why I think that the Japanese economy prior to the collapse and the current Chinese economy are different:

1) Japan severely reduced its monetary independence when they signed the Plaza accord where they had to rapidly appreciate the yen which in turn increased the dollar asset prices and gave a push to the growing property bubble, this is not the case for China because the asset inflation there is primarily limited to the large cities and is of different nature - it was driven primarily by the lack of available financial instruments and education as property was viewed as the only destination for the long-term savings;

2) by 1995, Japan has already reached 90%+ urbanization rate and moved to the top of the value chain, exhausting all the "low-hanging" growth vehicles to offset the stagnating\declining population - this is clearly not the case for China, which still has sub-70% urbanization rate, is still in transition to high-value industries, and has a lot of low-value labor-intensive sectors (like low-mechanized agriculture, clothing, etc.) which consume a lot of the workforce & could be replaced in the future, moreover, I think China is currently facing the reverse problem: the job creation in the high-tech industries is lagging behind and is unable to employ all of the incoming workforce;

3) unlike Japan, China has a large internal market that can act as another growth vehicle when the exports start slowing down and this source of growth remains largely underexploited, as China has one of the highest savings rates in the world at 44% (2019), almost twice of Japan's at 24.7%;

4) China is relatively secure for key sectors like agriculture and energy, which makes them less open to the global commodity volatility compared to resource-scarce countries like Japan.

Basically, I think that the relative abudance of the potential growth vehicles makes Japanese-style stagnation highly unlikely for China. The growth rates might slow down and China might enter recession during the crisis years (unlike in the past), but overall it will continue growing faster on average than the developed countries.

This is literally what I don't understand. Do the people funding these type of video creators think that the people that are actually in charge of FDIs watch these videos? Because FDI into China is at a record high right now, especially with a de-industrializing EU. Tesla, BASF, BMW, Volkswagen, etc are doing the exact opposite of leaving China. US actually have to force Intel and GF by law to not invest in China, and I'm sure everyone is aware how they are faring right now.

On a spearate note, you guys ever noticed when was the last time these type of China collapse theory was trending? Around 2008 I recall. And we all know what happened around that time. And then everyone suddenly went back to minding their own business during early 2010s all the way to 2017.
 
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vincent

Grumpy Old Man
Staff member
Moderator - World Affairs
This is literally what I don't understand. Do the people funding these type of video creators think that the people that are actually in charge of FDIs watch these videos? Because FDI into China is at a record high right now, especially with a de-industrializing EU. Tesla, BASF, BMW, Volkswagen, etc are doing the exact opposite of leaving China. US actually have to force Intel and GF by law to not invest in China, and I'm sure everyone is aware how they are faring right now.

On a spearate note, you guys ever noticed when was the last time these type of China collapse theory was trending? Around 2008 I recall. And we all know what happened around that time. And then everyone suddenly went back to minding their own business during early 2010s all the way to 2017.
Mist not let the populace know the ChiComs are doing much better than we do
 

AndrewS

Brigadier
Registered Member
@GodRektsNoobs
@FairAndUnbiased
@xypher

Below should be a fairly comprehensive set of arguments on Chinese development

---

At a micro-level, I see Chinese companies having a unique combination of advantages in terms of:

1. A huge domestic market.
China has a population larger than the combined West. For example, this means more smartphones are consumed by China every year than in the combined West.

2. Ample development and production resources
In terms of available financing, scientific personnel, technical personnel and production personnel etc. 30% of global manufacturing resides in China, which is more than the USA, Japan and Germany combined. The Nikkei recently also reported that China has passed the USA in terms of the quantity and quality of scientific research papers. Batelle and the NSF are reporting that Chinese R&D spending is comparable (or has exceeded) the USA these days.

3. Middle-income cost levels in China versus higher costs in the developed West

4. Speed of execution


So given time, Chinese companies can leverage world-class technology development at a lower cost and faster speed than their counterparts in the developed West.

Chinese companies can put these products into production faster. They'll find ready customers in the vast Chinese market, and therefore be able to produce at scale and at lower cost than their competitors.

So Chinese companies should be able to catchup and then compete with foreign rivals on a global basis in every sector. Of course, foreign companies can invest in China as well to take advantage of these factors. Just look at Tesla which has made Shanghai their main production and export location and also to tap into the Chinese market which accounts for 60% of the world's electric vehicle sales. But foreign companies are generally slower and less attuned to local tastes than domestic Chinese companies like BYD which has a dominant position in the Chinese electric vehicle market.

---

China is still only a middle-income country which is not yet fully urbanised, so there is still significant growth yet from urbanisation.

China also has an exceptionally high level of R&D spending at 2.4% of GDP. This is exceptionally higher (more than twice as high) as any other low-income or middle-income country. They are all stuck around the 1% mark.

If China was stuck in the middle-income trap, it means this level of R&D spending is being wasted, since most R&D spending is conducted by private companies (as per The Economist). And if these private companies are wasting money on R&D, then they should have gone bankrupt or reduced R&D spending.

But that is not what we are seeing reported by the vast majority of Chinese companies. Furthermore, overall Chinese R&D spending is still growing explosively every year and I expect it to reach 3% of GDP in 5 years time. The implication is that Chinese R&D spending is profitable and finding a market for its products, which would make sense given the advantages outlined previously.

And on a historical note, Chinese R&D spending has seen significant increases over the past 20 years, as per OECD figures. So this isn't a new thing, but something which has been sustained for decades.

And if Chinese R&D spending reaches 3% of GDP - that would be comparable to Germany and the USA. After that there are only a handful of countries (all high-income) with higher levels of R&D spending. And the implication is that a hi-tech China becomes a wealthy.

---

Looking further to the future, the Chinese economy is roughly equal to the US, when looking at the PPP and nominal figures. But China has a population some 4x larger than the USA, so China is still only a middle-income country. Therefore China does still have a lot more growth potential than a mature US.

China already has a commanding overall lead in the technologies underpinning the Third Industrial Revolution (eg. Solar, Wind, Batteries, Electric Vehicles, 5G/IOT, AI/ML). Rifkind's book "The Third Industrial Revolution" outlines this.

So like the UK and USA in the 2 prior industrial revolutions, what are the chances of China becoming a wealthy, hi-tech nation? And given that China has 4x the population of the USA, you would expect the Chinese economy to become 4x larger.

Of course, this hasn't happened yet and will take another 20+ years to play out.

But it is easy to imagine:
1. China with higher military spending than the US
2. China driving the clean energy revolution globally and reducing the worst effects of climate change
 
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