Chinese Economics Thread

[abenomics12345]

Most of the "global south" will never matter. They have high population but poor prospects (e.g. Nigeria, Pakistan, Egypt etc). Why is Taiwan so important for our global economy despite having only 24 million people? Because they specialise in high-tech exports, which relatively few countries can. It's quality, not quantity, that ultimately counts.

The only country that can seriously challenge the Western system is China. India in theory wants a multipolar world but is too weak to create it without help from China. Since India view China with suspicion, that's a non-starter.



ASEAN are atypical from the so-called "global south". Their economies are actually doing well but some of them are already quite old (e.g. Thailand) and others are being undermined by Washington (e.g. Myanmar). Vietnam and Indonesia are the two stand-outs but I'm only really hopeful about Vietnam of the two.

Yes, this is the right way to think about it. Folks who don't have an economic background should read some books like How Asia Works (Studwell) / Collapse (Zubok) to get a sense of how institutions actually work/fail.

Indonesia's logistics industry is never going to be as competitive as countries like China given how many islands it has - nobody wants to build factories whose supply chains can be interrupted by a typhoon. And even if they do, its not nearly as efficient as what you have in China. Vietnam has very good prospects, but like I said, it's the population of Henan and GDP of Heilongjiang *yawn*. It's quite irrelevant in the grand scheme of things.

 

[abenomics12345]

You ought to know that the volume of currency exchanged between the US and China is a trivial portion of both economies. Total trade with the US is less than 5% of China's GDP. The exchange rate is completely arbitrary and has no bearing on the fundamentals of China's economy.

Prove it.


Your decomposition doesn't add up to 100%.

Like I said, if the conclusion is that USD is overvalued vs the CNY, tell me a number you think USDCNY should be at, and I'll buy your USD off of you at that rate you think is fair.

I've been advised by a mod here to not get involved in a debate with you, so I don't think I will prove anything to you (Insert Captain America scene from Avengers Endgame).

Decomposition was a typo - it should read 60/20/20 (with only 20% from 'excess savings').

 

[sunnymaxi]

I'm too lazy to do this now, but would be good if we can do a chart of Chinese trading breakdown by region for 2022:
US
EU
ASEAN
Latin America
RCEP
Africa
Russia
Western Asia

Top 3

China's top three trade partners in 2022:

1. ASEAN: $970 billion

2. EU: $840 billion

3. USA: $750 billion

 

[ZeEa5KPul]

Like I said, if the conclusion is that USD is overvalued vs the CNY, tell me a number you think USDCNY should be at, and I'll buy your USD off of you at that rate you think is fair.

I don't think the USD is "overvalued" because I don't acknowledge any "fair" value between the USD and CNY. It's an arbitrary number that is unmoored from any fundamentals about the Chinese economy (and American economy, for that matter) - it's just a barometer of forex trader sentiment and convention.

I will note one thing about the exchange rate, however. It's returned to its "normal" value of around 6.7-6.8, but it's done so with US interest rates up to 4.5% from essentially zero and Chinese interest rates unchanged. That's significant because historically, when the Chinese economy was smaller and weaker, an interest rate difference like that would have squashed the RMB.

What is clear is that trade with the US (and trade in general) is shrinking as a percentage of Chinese GDP. Growth drivers are internal: Productivity growth, investment, technological advancement, new sectors like EVs/renewables and soon commercial aviation and semiconductors, and consumption.

I've been advised by a mod here to not get involved in a debate with you, so I don't think I will prove anything to you (Insert Captain America scene from Avengers Endgame).

You were advised well, though not for the reason you and the mod think.

Decomposition was a typo - it should read 60/20/20 (with only 20% from 'excess savings').

I'd like to see what went into that calculation, but whatever the case the suppressed consumption was primarily due to the Zero-COVID policy which is now a thing of the past. While the housing slump will continue (as it should until excess stock is cleared), a curtailment of real estate speculation is not going to cause significant dampening of day-to-day consumption.

 

[TK3600]

Tell me what you think the USDCNY exchange *should* be based on what you think PPP adjustments should be - and I will happily give you CNY at that exchange for your USD.



Substantial amount of ASEAN trade is actually rerouting by Chinese companies to bypass US tariffs; or Chinese parts (with high value added) to be assembled (cheap labour) in ASEAN; terminal consumption is still in the US - ASEAN actually doesn't have nearly as much economic value add in that trade relationship. So they don't quite matter other than what China used to do in the 90s. Majority of ASEAN is socially/politically as fucked as the US/LatAM - they do not have the institutions nor the state capacity to develop into middle income economies anytime soon. Like I said, wake me up when Belt and Road start paying dividends.



See my comment re: the decomposition of that 'pent up demand' - if western media is bullshit when they report 'anti-China' headlines, I don't see how you can credibly cite them when they report something that you happen to agree with. Idiotic reporters *cough* Minnie Chan *cough* are just idiots who should be ignored.

Shut up SleepyStudent

 

[4Runner]

Vietnam is doing great - but it's the GDP of Heilongjiang with the population of Henan.
Singapore is great, it's got the population of Chaoyang district in Beijing.
India's also big and growing, but it's base is so small that it doesn't move the needle globally. Majority of Indians consume similarly to Sub-Sahara Africa (see my comment on Africa below).

Brazil central bank overnight rate is 13% - inflation is running hotter than that.
A friend visited Indonesia to look at 'great investment opportunities' and came back saying that consumers are struggling.
Peru just had a coup, Chile is okay, but it's population smaller than Beijing.
Africa - sure, lots of people but they barely can feed themselves.

What you need to understand is that the Global South doesn't matter *today*, economically speaking. Global GDP is ~100 trln USD, top 20 economic entities account for about 80 trln of that 100 trln. Wake me up in a decade when Belt and Road starts to work out and their economies start growing.

View attachment 105052

Folks, if you're living in North America feeling the grocery bills - it's not like basic commodities aren't globally fungible goods that don't have the same prices - people in the global south are struggling 5-10x worse than you are.

Your perspectives are on the marks but your conclusion on global south or BRI is debatable.

First of all, nominal GDP is only good for trading of financial assets. Economic well-beings in each country is largely determined by the real economic activities on the ground. China's real economy is at least 120% of US based on all relevant economic hard numbers, except that Yuan is not a pricing currency but Dollar is.

The incremental contribution of Africa to global economic activities is way undervalued in nominal terms. The significance of BRI is not realized profits for Chinese SOEs, rather it is confidence building and trust. The global reserve currency is not established solely on GDP numbers. The two non-economic pillars of US Dollar are military and finance, which may take decades if not centuries to establish.

Based on my trading insights, I determined that US/CNY should be 1/5 in 2013 based on real economic gauges. Today, it should be at least 1/5 by all practical measures. That is the most important factor that US is waging Cold War 2.0 against China. I don't condone that rationale but I fully understand why US would do that regardless of partisan divisions. You can easily imagine US fiscal picture or living standard if US dollar even split its reserve currency privilege with CNY. If that was the case, for example, TSLA would not enjoy such high multiple vis-a-vis BYD; and this can be extrapolated to FAANG stocks.

Nominal GDP does not make any sense to developing countries. It only makes sense to countries with a significant financial industry.

 

[tphuang]

Shut up SleepyStudent

I can assure you that I know him personally and know that he is not sleepy. So unless you can find evidence otherwise, I suggest that you shut up.

 

[Bellum_Romanum]

Shut up SleepyStudent

I don't think he's sleepy student based on his posts

 

[tphuang]

Top 3

China's top three trade partners in 2022:

1. ASEAN: $970 billion

2. EU: $840 billion

3. USA: $750 billion

Right and trade with Russia is $190 billion and with Saudi Arabia is probably around $100 billion. But would be nice to have total with latin America (I think $400 billion?) And Africa.

 

[Overbom]

He isn't Sleepy. People should take a course on Sleepyology, as he has a unique way of writing and thought process that no fake account of his can hide