Chinese Economics Thread

[ansy1968]

I see Russia falling into the Chinese sphere of influence as:

a) the former is cut off from western technologies and to a certain extent, markets
b) the power disparity between Russia and China grows from large to absurd

No amount of Soviet ego and hubris will change the brutal reality of the situation: Russia has few to turn to aside from its giant neighbor twenty times its size.

Agree bro BUT they have something we want and for me its a perfect marriage, they complement each other.

 

[56860]

Agree bro BUT they have something we want and for me its a perfect marriage, they complement each other.

I agree. Russia will bear the brunt of the west's economic assault and parrot China's position on Taiwan, while China remains neutral on the Ukraine war. Russia will provide China with natural resources at a massive discount while China utilizes the Russian market as a dumping ground for its nascent semiconductor industry and other tech sectors. This is a mutually beneficial arrangement where one party is clearly the superior.

 

[FairAndUnbiased]

I agree. Russia will bear the brunt of the west's economic assault and parrot China's position on Taiwan, while China remains neutral on the Ukraine war. Russia will provide China with natural resources at a massive discount while China utilizes the Russian market as a dumping ground for its nascent semiconductor industry and other tech sectors. This is a mutually beneficial arrangement where one party is clearly the superior.

Russia greatly benefits from buying into the Chinese semiconductor supply chain. Modern fabs are very expensive. Wouldn't Russia be better off buying the higher node fab equipment to build the older power/analog/RF chips they really need? their design companies can outsource to Chinese fabs for the newer logic and memory chips.

 

[ansy1968]

I agree. Russia will bear the brunt of the west's economic assault and parrot China's position on Taiwan, while China remains neutral on the Ukraine war. Russia will provide China with natural resources at a massive discount while China utilizes the Russian market as a dumping ground for its nascent semiconductor industry and other tech sectors. This is a mutually beneficial arrangement where one party is clearly the superior.

Bro Russia is doing the heavy lifting on the diplomatic front as China hadn't have the experience, so in a way China is the Junior partner.

 

[Topazchen]

@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

China with a per capita income half the US will have an economy twice its size.. Scary shit for Anglos and that is what keeps them awake.

 

[pmc]

Sir I think Globalization will devolved into 4 Regional Bloc with a Central power in the middle like that of the Solar System.

1) China with ASEAN,

2) US with NAFTA,

3) Russia with the Central Asia

4) EU with Central Europe.

All four will vie for influence for the remaining BLOC such as Africa, Latin American and the Middle East, from the four Blocs we can see the merging into two with China and Russia combining with Eurasia Economic Union and that of BRI and the US enforcing their policy over EU. And here China BRI policy is crucial, as shown by the willingness of major countries of each Bloc want to participate like Argentina from Latin America, Iran and SA from middle east and most of Africa. Making China as the center of trade and commerce instead of the US. IF implement well those BLOCS will receive Chinese investment, to produce Chinese brand product with critical component coming from China. Thus a win win situation. Lessening the Collective West economic footprint and making them irrelevant.

These blocs depend on Boeing/Airbus and Western energy/IP/education system. that constrained these countries ability to rise up in economic and technological chain.
NAFTA and EU are control mechanisms not economic blocs.
do German even care that East Europeans have to pay high prices. or American even think about Canadians have to wait so long to get automobiles at reasonable prices. US can print all dollars to get Canadian/Mexican resources/products without giving them much in return. and this with generous US government.

The only true economic bloc is OPEC+ as it benefit the members. they buy and sell each other products. they facilitate each other people travel and consumer products delivery. You can include Turkey also part of it. without OPEC+ there wont be 700 flights per week between Turkey and Russia. This OPEC+ agreement gives Russia time to built independent engineering industry for things that OPEC+ depends on West. such as Aviation/Semiconductor/Energy etc.

 

[AndrewS]

These blocs depend on Boeing/Airbus and Western energy/IP/education system. that constrained these countries ability to rise up in economic and technological chain.
NAFTA and EU are control mechanisms not economic blocs.
do German even care that East Europeans have to pay high prices. or American even think about Canadians have to wait so long to get automobiles at reasonable prices. US can print all dollars to get Canadian/Mexican resources/products without giving them much in return. and this with generous US government.

The only true economic bloc is OPEC+ as it benefit the members. they buy and sell each other products. they facilitate each other people travel and consumer products delivery. You can include Turkey also part of it. without OPEC+ there wont be 700 flights per week between Turkey and Russia. This OPEC+ agreement gives Russia time to built independent engineering industry for things that OPEC+ depends on West. such as Aviation/Semiconductor/Energy etc.

The 700 flights per week between Turkey and Russia aren't due to OPEC+ It is because that is the only way flights to/from Russia can occur now due to sanctions.

And bluntly speaking, Russia and OPEC don't have anywhere near the population, economic heft nor R&D spending required to develop an independent semiconductor industry which is competitive, for example.

As mentioned previously, look at the difficulties that China is encountering in developing a completely independent technology sector.

And in the fields of aviation and semiconductors, China is a better choice for neutral countries (like in OPEC) because
1. China's overall technology level is far better
2. China isn't being strangled with sanctions
3. Neutral countries trading with China doesn't attract venom from the West, whereas working with Russia does

 

[pmc]

The 700 flights per week between Turkey and Russia aren't due to OPEC+ It is because that is the only way flights to/from Russia can occur now due to sanctions.

Turkey wont be doing things without OPEC+. just look at OPEC+ fight increases Turkey is not only way.
You just need read between lines.

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And bluntly speaking, Russia and OPEC don't have anywhere near the population, economic heft nor R&D spending required to develop an independent semiconductor industry which is competitive, for example.

OPEC+ have world largest sovereign wealth funds and trade surplus. unsurpass by anyone else. they know alot just due to size of wealth and connections.

As mentioned previously, look at the difficulties that China is encountering in developing a completely independent technology sector.

And in the fields of aviation and semiconductors, China is a better choice for neutral countries (like in OPEC) because
1. China's overall technology level is far better
2. China isn't being strangled with sanctions
3. Neutral countries trading with China doesn't attract venom from the West, whereas working with Russia does

OPEC+ is too powerful as system that they care that much.
Just by saying does not mean any thing.. Even Chinese made phone in Russia still use Android and Qualcom. The Haval vehicles was stripped. it has US and German engineering. what is Borg Warner.
OPEC+ have perfect understanding of Aviation, GE and Siemens turbines that is foundation of there wealth generation.

 

[AndrewS]

OPEC+ have world largest sovereign wealth funds and trade surplus. unsurpass by anyone else. they know alot just due to size of wealth and connections.

That is not an accurate statement.

Of the 10 largest sovereign wealth fund countries, half come from non-OPEC countries, namely Norway, China, Singapore, Australia and the USA. And these non-OPEC countries account for 56% of the value.

And remember that OPEC trade surpluses come from exporting natural resources and they are not manufacturing nations. So it does mean they have to import many goods as they don't make them themselves.

I don't understand your logic of how [Sovereign Wealth fund] + [Trade Surplus] => Connections => "Know a lot"???

OPEC+ is too powerful as system that they care that much.
Just by saying does not mean any thing.. Even Chinese made phone in Russia still use Android and Qualcom. The Haval vehicles was stripped. it has US and German engineering. what is Borg Warner.
OPEC+ have perfect understanding of Aviation, GE and Siemens turbines that is foundation of there wealth generation.

But remember that there are Chinese phones in China which do not use Android and Qualcomm. But Russians have to be willing to buy. Haval vehicles are old technology and will soon be obsolete. Within 2 years, the majority of Chinese car sales will be electric where Chinese companies dominate the supply chain and components for electric vehicles.

You've got to stop cherry picking isolated examples and look at the broader picture.

 

[AndrewS]

China with a per capita income half the US will have an economy twice its size.. Scary shit for Anglos and that is what keeps them awake.

But let's try to imagine such a world, which I reckon could come in 15 years time.

Such a China would be on the cusp of being a high-income country and be a far more expensive location with much higher wages.

So a lot of manufacturing will inevitably relocate from China to the poorer nations in the Global South. That will raise up their incomes and be a good thing.

But at the same time, resource demands will increase due to a richer China and a richer Global South. Currently the Global South accounts for 7 of 8 billion people in the world. That will require a revolution in energy production and transport - and it is China which is leading the renewable energy and electric vehicle revolution.

And overall, a faster transition to renewable energy is a good thing for everyone in the world.