Chinese Economics Thread

[TK3600]

It is critical for China to continue retain that *market access* of its successful exports for this strategy to continue. Thus far Europe has played ball - it is up in the air whether it will continue to do so going forward, at least to the degree it has in the past.

As we are seeing in various industries (to varying degrees), the US has started limiting such market access either via tariffs or non-tariff trade barriers (FDA dragging their feet with Chinese drug approvals for example, or what they insinuate against Huawei). This is precisely why Chinese companies are setting up factories in Mexico (I've met them and this is what they say) - to retain market access.

Sit back and think about the implication - it means some of the jobs of these Chinese companies will not be Chinese workers but Mexican (and in some cases, Vietnamese/Indonesian) - while Chinese GNP will be higher, its GDP will be somewhat impacted going forward.

We should be under no illusion in understanding that the next decade will be tougher than the last - for anyone anywhere in the world.

Totally agreed. If nothing else happens China will eat the industry of all the so called "developed country" like the Japanese automobile, German automobile. Under the American influence they might act up and resist. It is imperative for these companies to both secure their positions and have back up plans. By securing position I mean making themselves harder to dislodge. For example, see BYD. They do business in US, one of the more hostile and protectionist country. They intertwine themselves with state government, have factory with union workers. Alternatively by aggressively expanding market shares they can make sure alternative suppliers are too small to replace them, thus unable to be banned without major supply chain consequence. Lesser country would be crying unfairness. For a country like China they should appreciate the current seemingly hostile situation, because it can and will be a lot worse.

 

[Abominable]

Totally agreed. If nothing else happens China will eat the industry of all the so called "developed country" like the Japanese automobile, German automobile. Under the American influence they might act up and resist. It is imperative for these companies to both secure their positions and have back up plans. By securing position I mean making themselves harder to dislodge. For example, see BYD. They do business in US, one of the more hostile and protectionist country. They intertwine themselves with state government, have factory with union workers. Alternatively by aggressively expanding market shares they can make sure alternative suppliers are too small to replace them, thus unable to be banned without major supply chain consequence. Lesser country would be crying unfairness. For a country like China they should appreciate the current seeminly hostile situation, because it can and will be a lot worse.

I don't think we'll see Chinese cars taking over western markets the Japanese or Korean ones did. Not because they won't be good enough, but because decoupling would have happened by then. European, Japanese and American sales in China will of course be annihilated.

We'll have a strange parallel to the global economy during the Cold War where both the west and eastern blocks made cars, radios and electronics but there was a big disparity in quality and cost and supply between the two.

 

[TK3600]

I don't think we'll see Chinese cars taking over western markets the Japanese or Korean ones did. Not because they won't be good enough, but because decoupling would have happened by then. European, Japanese and American sales in China will of course be annihilated.

We'll have a strange parallel to the global economy during the Cold War where both the west and eastern blocks made cars, radios and electronics but there was a big disparity in quality and cost and supply between the two.

I disagree. Why are German cars popular? Why are Japanese cars popular? Is it because every German own 6 cars? No. It is because they are popular globally. China will offer a compelling choice to the world and win. Germans and etc can try to be protectionist on their own turf but it won't stop rest of the world.

The big concern here is the possibility of them banding together and selectively reject China in some fields like semi conductor. If they actually go soviet bloc style total reject imports they will collapse fast. This is because much of their own industry compete/overlap among themselves.

 

[HighGround]

I disagree. Why are German cars popular? Why are Japanese cars popular? Is it because every German own 6 cars? No. It is because they are popular globally. China will offer a compelling choice to the world and win. Germans and etc can try to be protectionist on their own turf but it won't stop rest of the world.

Sure, but why are cars "popular"? Cars aren't like airplanes or semiconductors. Those are bought by large corporate customers who mainly care about performance and for all their faults, try to be objective about their purchases.

Who buys passenger cars? Everyday consumers, who are not the most "reasonable" people. They argue about looks, technology, where it comes form, who built it, and how "well" it drives. It takes decades to build a reputation, to say nothing of the political protectionist games being played by every single country on Earth.

It took decades for Japanese cars to become as dominant in the US car market as they are today. It did not happen overnight. It was also made more difficult by the incredibly racist and protectionist reaction of both U.S. consumers, auto makers, and politicians who saw that the Japanese were making vehicles higher in quality, more efficient, and cheaper than their U.S. counterparts.

To this day, Japanese auto makers haven't managed to properly penetrate the European car market. And what of the Koreans? They tried to be even more aggressive on price and innovation, but haven't quite secured a foothold like established brands have. Conversely, household name Volkswagen failed to establish a strong position in the U.S. market despite strong efforts and decades of venerated automotive excellence and industrial spirit.

In my opinion, when it comes to cars, no matter how good China is, no matter how aggressive they are with pricing and technology, it'll take many decades to even establish a secure position in the global car market, let alone "win" it.

The big concern here is the possibility of them banding together and selectively reject China in some fields like semi conductor. If they actually go soviet bloc style total reject imports they will collapse fast. This is because much of their own industry compete/overlap among themselves.

U.S. has some pretty ridiculous protectionist policies when it comes to cars. I don't know about the EU or other countries, but United States is unlikely to offer a "fair" battleground for Chinese automakers. I will be very impressed if China manages to secure 5-10% market share of new car sales in the U.S. car market within the next 10-20 years.

 

[Abominable]

I disagree. Why are German cars popular? Why are Japanese cars popular? Is it because every German own 6 cars? No. It is because they are popular globally. China will offer a compelling choice to the world and win. Germans and etc can try to be protectionist on their own turf but it won't stop rest of the world.

The big concern here is the possibility of them banding together and selectively reject China in some fields like semi conductor. If they actually go soviet bloc style total reject imports they will collapse fast. This is because much of their own industry compete/overlap among themselves.

German cars aren't very popular outside the western world, I think the only Asian market they have a significant share in is China. Japanese cars however are popular globally and I think the future world market will be split between Chinese and Korean/Japanese industries.

I think semiconductors are a non issue in the timeframe it'll take for the Chinese car industry to mature, semiconductor industry moves very fast compared to cars. I'm sure by then all major semiconductor components will be Chinese made.

Europeans are already protectionist in their domestic markets but I think the impetus will come from China switching to yuan based currency trade. There won't be much demand for dollars or euros in China, and if any are needed they can easily obtain them from sales to Africa, Asia and South America.

 

[Abominable]

Sure, but why are cars "popular"? Cars aren't like airplanes or semiconductors. Those are bought by large corporate customers who mainly care about performance and for all their faults, try to be objective about their purchases.

Who buys passenger cars? Everyday consumers, who are not the most "reasonable" people. They argue about looks, technology, where it comes form, who built it, and how "well" it drives. It takes decades to build a reputation, to say nothing of the political protectionist games being played by every single country on Earth.

It took decades for Japanese cars to become as dominant in the US car market as they are today. It did not happen overnight. It was also made more difficult by the incredibly racist and protectionist reaction of both U.S. consumers, auto makers, and politicians who saw that the Japanese were making vehicles higher in quality, more efficient, and cheaper than their U.S. counterparts.

To this day, Japanese auto makers haven't managed to properly penetrate the European car market. And what of the Koreans? They tried to be even more aggressive on price and innovation, but haven't quite secured a foothold like established brands have. Conversely, household name Volkswagen failed to establish a strong position in the U.S. market despite strong efforts and decades of venerated automotive excellence and industrial spirit.

In my opinion, when it comes to cars, no matter how good China is, no matter how aggressive they are with pricing and technology, it'll take many decades to even establish a secure position in the global car market, let alone "win" it.

U.S. has some pretty ridiculous protectionist policies when it comes to cars. I don't know about the EU or other countries, but United States is unlikely to offer a "fair" battleground for Chinese automakers. I will be very impressed if China manages to secure 5-10% market share of new car sales in the U.S. car market within the next 10-20 years.

The American car market is far less protectionist than the European one. The UK is probably the most open in the developed world and you can see cars from pretty much every major manufacturer here. For many years the UK was known as the Japanese car hangar as they allowed Japanese cars to be assembled from knock down kits and sold in Europe as "made in the EU". With Brexit that's over now.

With electric cars I don't think a 5-10% market share is particularly difficult. The question will be, what's in it for China to make cars for the American market? We all know any dollars they make is just going to be sanctioned. What's America going to export to China in return?

 

[HighGround]

The American car market is far less protectionist than the European one. The UK is probably the most open in the developed world and you can see cars from pretty much every major manufacturer here. For many years the UK was known as the Japanese car hangar as they allowed Japanese cars to be assembled from knock down kits and sold in Europe as "made in the EU". With Brexit that's over now.

That's good to know. I don't know much about the EU car market aside from market share breakdowns.

With electric cars I don't think a 5-10% market share is particularly difficult. The question will be, what's in it for China to make cars for the American market? We all know any dollars they make is just going to be sanctioned. What's America going to export to China in return?

Well, to sell cars for one thing. United States is the second biggest car market in the world after China. It makes sense to try to establish a foothold there, and many car manufacturers do. But anyway, I do think EVs will definitely pick up a lot in US in the next 10-20 years, but probably not in the next 5. There is still a lot of resistance to EV adoption in US.

In my opinion, United States is a lot more "backwards" than the rest of the world when it comes to electric vehicles. The infrastructure for EVs is weak, customer demand is significantly lower than in other countries, and quite frankly, US customers are very picky and not in a good way. I have been pleasantly surprised by how readily EV trucks have been accepted by most Americans, but even customers who live in urban areas are reluctant to buy vehicles like Nissan Leaf or Hyundai Ioniq.

For non-US members, stuff like this happens.




I think this really does reflect the type of backwardness that many Americans actively celebrate, which just embarrasses me. Like I said before though, I do expect this to change eventually, especially as EV trucks take over as the next big status symbol for a lot of Americans. Small numbers of permanently "regressive" folk will always be there, but I think in 10-20 years America will be on its way to EV adoption.

As Churchill said, Americans can always be counted on to do the right thing…after they have exhausted all other possibilities.

 

[Abominable]

That's good to know. I don't know much about the EU car market aside from market share breakdowns.



Well, to sell cars for one thing. United States is the second biggest car market in the world after China. It makes sense to try to establish a foothold there, and many car manufacturers do. But anyway, I do think EVs will definitely pick up a lot in US in the next 10-20 years, but probably not in the next 5. There is still a lot of resistance to EV adoption in US.

In my opinion, United States is a lot more "backwards" than the rest of the world when it comes to electric vehicles. The infrastructure for EVs is weak, customer demand is significantly lower than in other countries, and quite frankly, US customers are very picky and not in a good way. I have been pleasantly surprised by how readily EV trucks have been accepted by most Americans, but even customers who live in urban areas are reluctant to buy vehicles like Nissan Leaf or Hyundai Ioniq.

For non-US members, stuff like this happens.

View attachment 106756


I think this really does reflect the type of backwardness that many Americans actively celebrate, which just embarrasses me. Like I said before though, I do expect this to change eventually, especially as EV trucks take over as the next big status symbol for a lot of Americans. Small numbers of permanently "regressive" folk will always be there, but I think in 10-20 years America will be on its way to EV adoption.

As Churchill said, Americans can always be counted on to do the right thing…after they have exhausted all other possibilities.

It's not dumb for Americans to be against electric cars, for most of America they are impractical. Americans drive long distances all the time, that isn't the case in Europe or most of the rest of the world. Your cities are designed around cars for the most part, and your public intercity infrastructure is non existent.

Until there's some major breakthrough in battery technology or electric transmission I doubt electric cars will ever become popular in America.

 

[HighGround]

It's not dumb for Americans to be against electric cars, for most of America they are impractical. Americans drive long distances all the time, that isn't the case in Europe or most of the rest of the world. Your cities are designed around cars for the most part, and your public intercity infrastructure is non existent.

Until there's some major breakthrough in battery technology or electric transmission I doubt electric cars will ever become popular in America.

I disagree. I think most people would actually benefit from EV adoption, especially suburban homeowners. I think most people "think" that EV range is too short, but it actually isn't.

 

[luminary]

That's good to know. I don't know much about the EU car market aside from market share breakdowns.



Well, to sell cars for one thing. United States is the second biggest car market in the world after China. It makes sense to try to establish a foothold there, and many car manufacturers do. But anyway, I do think EVs will definitely pick up a lot in US in the next 10-20 years, but probably not in the next 5. There is still a lot of resistance to EV adoption in US.

In my opinion, United States is a lot more "backwards" than the rest of the world when it comes to electric vehicles. The infrastructure for EVs is weak, customer demand is significantly lower than in other countries, and quite frankly, US customers are very picky and not in a good way. I have been pleasantly surprised by how readily EV trucks have been accepted by most Americans, but even customers who live in urban areas are reluctant to buy vehicles like Nissan Leaf or Hyundai Ioniq.

For non-US members, stuff like this happens.

View attachment 106756


I think this really does reflect the type of backwardness that many Americans actively celebrate, which just embarrasses me. Like I said before though, I do expect this to change eventually, especially as EV trucks take over as the next big status symbol for a lot of Americans. Small numbers of permanently "regressive" folk will always be there, but I think in 10-20 years America will be on its way to EV adoption.

As Churchill said, Americans can always be counted on to do the right thing…after they have exhausted all other possibilities.

In the US, different states will move at different paces. I'm guessing California (10 yrs) and Texas (est. 20 yrs) will lead the way.

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