All I know is people like you in the West have been overly pessimistic about China for ages.
Chinese Economics Thread
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Engage the question - what is the contribution of your magical house renovation? Dollars and cents sir, not cope and hope.
Also - my career is actually a bet on the future growth of the Chinese economy - so I'm actually quite bullish longer term. Put your money where your mouth is.
retail growth of 8% is very conservative when considering that people basically did not spend money in Q2 & Q4 of 2022 due to covid. Consumer confidence was rock bottom in Q4 due to covid, which basically ceases to be an issue by March.
For example, American consumer spending increased 9.1% from 2020 to 2021 and that was with economy locked down for part of 2021. Given that China is going from a full year of lock down to a full year of no lock down, I think 15% growth is not unreasonable.
44 * 0.15 = 6.6 trillion
I would see a 10% contraction in trade as pretty bad, but let's use that scenario. I tend to think that was due to excessive inventory of goods from earlier in the year.
export - import = 4.3 trillion. a 10% contraction in trade in regular stuff -> 430 billion RMB
$30 billion PnL from energy arbitrage -> 200 billion RMB
Going to sleep now, but less focus on export and more focus on trade surplus is needed imo.
Give me a break. If you are so good at predicting future economic performance you would be on a yacht somewhere in the Caribbean instead of arguing with someone like me.
The field of economic studies is all guess work. Micro-economics may have some use since the focus is small. Macroeconomics is more faith-based than actual science.
FYI, our family do have a stake in Chinese property market.
Well, look at how Kalecki & Keynes were vindicated after the Great Depression in the late 1920s/early 1930s when the Herbert Hoover wing and the Austrian school of economics got everything disastrously wrong. Or take the German-dominated austerity policies during 2011 eurozone crisis, which only made matters worse.
Clearly, we have an empirical record showing some macro schools doing well - and some not - during crises.
Yes, economics will never be an exact science, because it's fundamentally about dealing with humans rather than objects. But as long as those limitations are kept in mind there are still plenty of things to be learned.
I think a major problem with modern econ is that it isn't honest with itself. What we call "economics" today was in fact called "political economy" for most of its early history. That's an appropriate name because it signals that it is intertwined with political interference, which is true. Rebranding the field as just "economics" and throwing in a bunch of equations is an attempt by economists to try to lend a veneer of detached scientific inquiry to their study which doesn't exist. But I would still say it isn't total nonsense like e.g. most of sociology is.
Just my opinion, the real drivers of today's Chinese economy are the following.
1) Entrepreneurship which is buttress by high growth numbers, which fuels a self-feeding loop. Chinese people are cheap. We like money, and we want to make some more!
2) Urbanization. The central government been saying that for a long time, and it is true, that mega-urban clusters are a real driver for growth, and innovation.
3) Trade is a major driver of growth. Needless to say we know who is the world's biggest trading nation.
4) The 4th Industrial Revolution will be another major driver of growth, which will appear slowly and steadily, it will push things forward, whether we like it or not.
There are probably more, blah blah blah.
4) The 4th Industrial Revolution will be another major driver of growth, which will appear slowly and steadily, it will push things forward, whether we like it or not.
If I look at it, I think it's more accurate to call it the 3rd Industrial Revolution.
The big growth drivers I see for China in 2022
1. $4.8 Trillion in excess family savings from 2020-2022, as per the FT
That works out as 31 Trillion RMB of potential consumer spending.
In comparison, you have a 2021 figure of 44 Trillion RMB for total retail sales.
Hence your 8% retail spending growth is way too low.
If only one-fifth of those excess Chinese savings are turned into retail sales, that an extra 6 Trillion RMB (15% of retail sales growth)
Ditto, if one-fifth of excess Chinese savings are put into real estate or renovations, that is 6 Trillion TMB. That compares to the 20 trillion RMB figure
Then you still have the other three-fifths left from those excess savings
2. Polysilicon capacity expansions for 2022-2023-2024-2025. Running at approx 1 million tonnes per year, as per BNEF and others
That works out as up to 350GW of solar panels being dumped into the Chinese and overseas markets.
That will drive down the costs of solar significantly from current high levels.
Total solar farm investment required would be approx $350 Billion ( 2 Trillion RMB), bearing in mind the caveats above
Remember that solar is already the lowest cost electricity in many places.
Add 1% growth from low productivity workers with primary school degrees retiring being replaced with university graduates. Another 1% for some of the 25% of the Chinese population $0 GDP per capita farmers becoming urban workers with average GDP per capita. Add another 1% for technological upgrading, improving per worker productivity with robots. There's still a huge amount of inefficiencies that will fuel trend growth. Anything that the government does is just on top.
I'd expect growth to be high enough that stimulatory policies will be withdrawn again to save up dry powder for the less certain 2024, when we might see some big infrastructure spending again
China ride-hailer Didi says it can register new users again
Thank God. Didi is an innovative and job creating company that is one of the few to go toe to toe with Uber worldwide. It looks like the government is really ending its attack on Chinese software companies? If so, they only have the US govt to contend with.
Between this and the end of the Australian coal ban, it seems the Chinese govt has gotten more economically rational in the past few months. That's good news for the economy as long as it lasts.
Thank God. Didi is an innovative and job creating company that is one of the few to go toe to toe with Uber worldwide. It looks like the government is really ending its attack on Chinese software companies? If so, they only have the US govt to contend with.
Between this and the end of the Australian coal ban, it seems the Chinese govt has gotten more economically rational in the past few months. That's good news for the economy as long as it lasts.