Chinese Economics Thread

Gogurt4ever

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. Very pessimistic article on the economic consequences of China's demographic troubles. While it will no doubt be challenging for China, I am doubtful about some of the article's statements, like claiming that China will barely see individual worker productivity growth, or that China is "unlikely to overtake the economy of the US or the EU" (despite the fact that the latter already happened).

In my opinion, China still has 2-3 decades of decent demographics left. Articles emphasizing the burden of retirees often forget the short-term benefits of a low TFR: less money/productivity being "wasted" (as expressed in short-term GDP numbers) on childcare. China's low GDP per capita should also allow for more profitable avenues for investment and growth for the near term, meaning that one can continue to expect Chinese growth outpacing that of developed economies.
 

TK3600

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For you to see "if I'm right" - it would help that you first accurately remember what I wrote.

Also, as much as I'm trying to be approximately right about the short term (note, 5.5 or 5.7 or 5.3 - the difference is really not that important), what really matters is whether structural reforms are being executed in 2023/2024 successfully - this is what will determine whether GDP CAGR through 2030 starts with a 3 handle or a 4 handle.
5%, 5.5%, don't really matter, none of them are 6.5% predicted by the bank. I cannot see what 2030 does that is not my concern. My prediction is 2023 without any big reform, just the removal of covid restriction should bring it to 6%+. Don't get me wrong, I am not here to bully you or anything. You claim yourself to be an economist, and had a whole bunch of data supporting lowish rate of growth, many of which suggests below 5.5% even. I am very curious how those data match up to reality. I am holding you to higher standard because you called yourself a professional.
 

YVHunter

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. Very pessimistic article on the economic consequences of China's demographic troubles. While it will no doubt be challenging for China, I am doubtful about some of the article's statements, like claiming that China will barely see individual worker productivity growth, or that China is "unlikely to overtake the economy of the US or the EU" (despite the fact that the latter already happened).

In my opinion, China still has 2-3 decades of decent demographics left. Articles emphasizing the burden of retirees often forget the short-term benefits of a low TFR: less money/productivity being "wasted" (as expressed in short-term GDP numbers) on childcare. China's low GDP per capita should also allow for more profitable avenues for investment and growth for the near term, meaning that one can continue to expect Chinese growth outpacing that of developed economies.
There are literally hundreds of articles like this being pumped out on a monthly basis, they all say the exact same things and add nothing new to the conversation, China's low TFR is a fact but trying to build a projection decades into the future is a fool's errand, we're better off observing what happens year by year, also like you said, it's difficult to take an author seriously when they get basic facts wrong, China's economy surpassed the EU's in GDP in 2021, what does this tell us about the author if they can't even be bothered to Google this basic fact?
 

abenomics12345

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5%, 5.5%, don't really matter, none of them are 6.5% predicted by the bank. I cannot see what 2030 does that is not my concern. My prediction is 2023 without any big reform, just the removal of covid restriction should bring it to 6%+. Don't get me wrong, I am not here to bully you or anything. You claim yourself to be an economist, and had a whole bunch of data supporting lowish rate of growth, many of which suggests below 5.5% even. I am very curious how those data match up to reality. I am holding you to higher standard because you called yourself a professional.
If you bothered to read the actual message, the specific reference to 6.5% is Q4 2023 vs. Q4 2022 - which, given all the covid disruptions, would be an easy comp. Furthermore, that is a Quarter over Quarter number and is not an Year over Year number.

The real irony of this is that GS's official forecast is actually the same as what I said. You really should hold yourself to a higher standard than this. lol.

1676414719767.png
 

HighGround

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If you bothered to read the actual message, the specific reference to 6.5% is Q4 2023 vs. Q4 2022 - which, given all the covid disruptions, would be an easy comp. Furthermore, that is a Quarter over Quarter number and is not an Year over Year number.

The real irony of this is that GS's official forecast is actually the same as what I said:

View attachment 107313
How good is GSach's team?

I typically follow aggregates only, but your comments on individual teams intrigued me. I'll definitely be looking more into who exactly makes the predictions and their profiles.
 

Overbom

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What's the need for all this back and forth. Just make a call for what China's 2023 gdp growth is going to look like and then come back to discuss your predictions when the final results are out a year later.

Or, you might as well as do the IMF trick and "revise" your prediction every few months or so. 100% guaranteed method to be spot on with your final prediction..

For me, I will stick with my original prediction of 6.5% growth.
 

abenomics12345

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How good is GSach's team?

I typically follow aggregates only, but your comments on individual teams intrigued me. I'll definitely be looking more into who exactly makes the predictions and their profiles.

I don't follow their work too closely so I don't know. One thing I will also state is that GS (and most of these bulge firms) has a number of teams and there is no really one house view. Their Investment Strategy Group published a 100+ page report that has all the bearish arguments people have on China and firmly argues why they believe China has already stuck the middle income trap. The file is too large to share but I'll attach the title page:

1676420108479.png

And this is my initial point - treat the work of people as discrete individuals/arguments and not associate with their employer. What if Gordon Chang and Justin Lin were both hired by Goldman tomorrow?
 

supercat

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. Very pessimistic article on the economic consequences of China's demographic troubles. While it will no doubt be challenging for China, I am doubtful about some of the article's statements, like claiming that China will barely see individual worker productivity growth, or that China is "unlikely to overtake the economy of the US or the EU" (despite the fact that the latter already happened).

In my opinion, China still has 2-3 decades of decent demographics left. Articles emphasizing the burden of retirees often forget the short-term benefits of a low TFR: less money/productivity being "wasted" (as expressed in short-term GDP numbers) on childcare. China's low GDP per capita should also allow for more profitable avenues for investment and growth for the near term, meaning that one can continue to expect Chinese growth outpacing that of developed economies.
I posted the article in the China Demographics thread. Since it pertains to what you commented here, I will post the link here also. I would call it delusional to claim that China's economy would never overtake America's.
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Strangelove

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Path of agricultural modernization with Chinese characteristics emphasizes self-sufficiency, common prosperity


Government lists 'solidifying food security' as a key job for 2023

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Published: Feb 14, 2023 06:49 PM

Farmers harvest rice with harvesting machineries in Huai'an, East China's Jiangsu Province. Photo: VCG

Farmers harvest rice with harvesting machineries in Huai'an, East China's Jiangsu Province. Photo: VCG

China will strive to shore up food security and mull more targeted moves to prevent a large-scale return to impoverishment in the countryside, Chinese officials said on Tuesday, as the world's second largest economy vowed an all-out effort to bolster farmers and make it a "strong agricultural nation."

The comment came after the central government on Monday published the "No.1 central document" for 2023, outlining nine tasks to comprehensively promote rural vitalization. It is also the 20th consecutive year that China's central authorities have issued the first policy statement on agricultural and rural work.

Tang Renjian, director of the Central Rural Work Leading Group Office and minister of Agriculture and Rural Affairs, said at a press conference in Beijing on Tuesday that the key policy priorities of the document could be summarized in three aspects - "securing the bottom line, bolstering rural revitalization efforts and reinforcing support."

A view of a press briefing of the State Council Information Office on February 14, 2023 Photo: Li Xuanmin/GT

A view of a press briefing of the State Council Information Office on February 14, 2023 Photo: Li Xuanmin/GT

"Securing the bottom line is intended to ensure national food security and forestall any large-scale re-emergence of poverty," Tang said, while highlighting the goal of achieving grain output of more than 650 million tons this year and pushing production to a new level of 700 million tons.

According to Tang, China will stabilize its planting area while striving to increase grain production. For example, authorities will encourage southern regions to develop grain varieties that yield more than one crop per year, and implement projects to increase yields of soybeans and corn.

China will also expand the planting of edible oil crops such as soybeans, steadily push forward corn-soybean strip intercropping and develop saline land for planting soybeans.

"China has the potential to achieve grain output of 700 million tons this year. Planting conditions are favorable, disruption from the pandemic has ebbed, and the prices of agricultural materials have dropped. So it is necessary to maintain the momentum with more muscular support," Li Guoxiang, a research fellow at the Chinese Academy of Social Sciences, told the Global Times on Tuesday.

In 2022, China's grain output reached 650 million tons for the eighth year in a row, providing a better, stronger and more stable source of rice for 1.4 billion Chinese people despite global uncertainties, Tang said.

Production of soybeans, a crop for which China is heavily reliant on imports, reached a new high last year, exceeding the milestone of 20 million tons.

Also, China moved to solidify the results of poverty reduction in 2022 - a key year that saw deepened integration between poverty relief and rural revitalization - "with a better foundation and more sustainable results," Liu Huanxin, deputy director of the Office of the Central Leading Group for Rural Affairs and Director of the National Rural Revitalization Administration, told the Global Times on Tuesday.

According to Liu, the consolidation of the results of poverty reduction - a foundation for carrying out rural revitalization - was manifested in three aspects: no large-scale backsliding to poverty, which was helped by a monitoring and support mechanism, as well as stable employment and rising incomes among rural workers who have been lifted out of poverty.

In 2022, a total of 32.78 million migrant workers enjoyed full employment, which was 2.59 million people above the annual target. The country's yearly per capita disposable income of farmers in areas just emerging from poverty grew 7.5 percent last year to 15,111 yuan, which was 1.2 percentage points higher than the national average for farmers.

China will work harder to reduce poverty through helping poor workers secure jobs, Tang said, noting that the country will make sure that more than 30 million people who have shaken off poverty will be employed.

Li suggested that rural authorities to establish a more comprehensive mechanism to diversify and shore up farmers' income, in case of a resurgence of poverty in rural areas where the agricultural product structure is too simple and vulnerable to overcome market fluctuation.

At the press briefing, officials expounded on the connotation of "strong agricultural country," a grand goal set for the first time in the annual policy document, which observers said would buttress the building of a Chinese path of modernization with a longer vision.

"Building a strong agricultural nation has rich meanings. On the one hand, it needs to incorporate the common traits presented by developed countries. On the other hand, it should take account of Chinese characteristics, including a large population with relatively little arable land, the farming civilization deeply rooted in Chinese history, and the harmonious coexistence between man and nature," Tang said.

He said that the factors that determine the path of agricultural modernization with Chinese characteristics should be "holding rice bowls firmly by ourselves, developing ecological low-carbon agriculture, and steadily pushing forward common prosperity."
 
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