Chinese Economics Thread

[henrik]

it amaze me. why people always forget RMB appreciation when it comes to nominal GDP ..

they thinks, RMB will forever stay on 6-6.50. LOOL

it is matter of few years before RMB will appreciate. China doesn't need much growth to surpass USA in nominal

1 US dollar = 5 RMB .. game over

According to some, China is still under-counting GDP (by 15-20%), by leaving out certain types of economic activity.
As the US$ is removed from most trading transactions within the global south, its value will go down by 20-30% easily.
So the Chinese gdp can easily jump by 50% vs the US gdp.

 

[siegecrossbow]

In the past 3~4 years the US has been the most resilient economy but somehow they have an inflation, banking, infrastructure etc disasters. So big doubt about the US being the most resilient.

Just print more dollars and hope the dollar stays strong. Is not a stable economic/industrial policy

If you question the narrative then you are gonna find out how resilient your skull is.

 

[Lethe]

They're assuming an exchange rate of 6.16 RMB per dollar in 2028. If the US continues to grow mostly by inflation with very little growth in real terms, then the dollar should depreciate. If the currency doesn't adjust, then the RMB will be even more highly undervalued given its purchasing power. That doesn't seem very likely. And even if the exchange rate prediction implicit in IMF estimates comes true, then the US will end up with a highly overvalued currency, which is just going to kill domestic manufacturing and make them more import dependent

The criticisms raised by you and others about inflation and exchange rates would seem to have implications not only for these specific forecasts from the IMF, but for the very utility of nominal GDP expressed in USD as a meaningful measure of economic activity. Yet irrespective of the arguments one might advance for and against the measure, it does seem to have been embraced, at least in the west, as the principal measure of China's economic strength. If it is the case that nominal GDP in USD significantly understates China's real economic strength, one could argue that this actually serves China's interests, by leading Americans and others to underestimate the scale of the economic transition that is underway.

 

[Biscuits]

The article you link is from January 2023. Notably, this is also when the current WEO report began to be put together: "The World Economic Outlook (WEO) database is created during the biannual WEO exercise, which begins in January and June of each year and results in the April and September/October WEO publication."

For comparison, the April 2017 edition of the WEO projected China's GDP in 2022 to be $17.7tn against USA $23.76tn (74.5%). The April 2023 edition lists China's 2022 GDP as $18.1tn against USA's $25.46tn (71%).

As I have warned before, West-funded/sourced/influenced data is propaganda. You guys just don't learn huh?

This.

Let's play a game of spotting where the fake news comes from this time.

Pretty easy: These numbers don't account for inflation in either country. So whichever country decides to print more money would have a vast temporary boost, which however does not reflect actual economic capability. For obvious reasons, a serious gdp calculation would account for this, because the point of gdp is to express the country's economic reality.

The way IMF has done these calculations, their worth is nearly on the toilet paper level, because if China lets the RMB appreciate here, they can "overtake" America immediately, but it would not add anything to the economy output or living quality wise.

Calculation has poor value because it is constantly fluctuating based on inflation and appreciation.

When adjusted for inflation, China maintains a stable ~20% lead and this lead can't be changed by central bank dictated currency fluctuations. Stable growth at 5% would keep them widening the gap with America.

 

[Minm]

The criticisms raised by you and others about inflation and exchange rates would seem to have implications not only for these specific forecasts from the IMF, but for the very utility of nominal GDP expressed in USD as a meaningful measure of economic activity. Yet irrespective of the arguments one might advance for and against the measure, it does seem to have been embraced, at least in the west, as the principal measure of China's economic strength. If it is the case that nominal GDP in USD significantly understates China's real economic strength, one could argue that this actually serves China's interests, by leading Americans and others to underestimate the scale of the economic transition that is underway.

Oh, there's plenty of utility of nominal GDP. But when making forecasts of GDP it's fairly straightforward to do so in the national currency. But when forecasting in USD, the IMF makes an implicit assumption that the exchange rate will not change. Is it realistic to project that the RMB is not going to appreciate? Nominal GDP tends to fluctuate a lot as the exchange rate moves up and down. If you want to judge their past record, compare their predictions for GDP in national currency to what really happened

They also project that China is going from 118% of US GDP in 2022 in purchasing power parity to 136%. Once the domestic economy is so much larger, even minor exchange rate changes can add trillions to nominal GDP and real growth becomes less relevant

If the projections in this database for GDP in the national currency are roughly right, China will be larger by nominal GDP in 2028 if the RMB rises to 5.2 to the US dollar.

 

[coolgod]

Why are we arguing endlessly about IMF projections about the Chinese economy. Just because the I stands for International, doesn't hide the fact that it is a US puppet organization, no different from the rest of Alphabet soup orgs by the US. Can you imagine if we were to argue about IMF's projection about China, 30, 20 or even 10 years ago?

Just because some members post western financial propaganda, doesn't mean we need to argue about how it's wrong, just ignore and move on. IMF reports are just like Gordon Chang's books except with more numbers.

 

[proelite]

Looking at the IMF projections the US GDP nominal growth is like 70-80% driven by inflation which is pretty unprecedented. I don't know how sustainable that is, and I wonder the long-term effects on the US competitiveness. They could probably get away with that if they had a monopoly on technology (like they had for the past decades and enjoyed solid growth as a result) but with the technological rise of China I don't think this is sustainable at all.
And apparently China's growth is going to decelerate to 3.4% in 2028? So basically China will stagnate at around 1/4th of US GDP/capita. This report seems rather absurd to me.

It's not that absurd when the US GDP per capita is massively inflated due to dollar being reserve currency.

 

[henrik]

Binance's founder Zhao Changpeng likes the dimsum in Hong kong.

https://twitter.com/i/web/status/1646093130528161792

 

[tphuang]

Binance's founder Zhao Changpeng likes the dimsum in Hong kong.

https://twitter.com/i/web/status/1646093130528161792

looks like there is a web3 conference in HK right now.

Please, Log in or Register to view URLs content!

He is getting chased around by regulators right now.

But it seems like he is appreciating the move by HK into crypto world

Please, Log in or Register to view URLs content!

`

If you trade crypto, you will know that Binance has their service hosted by AWS Tokyo. So if Binance moves to HK it will probably be hosted by Alicloud (which is what OKEX is doing). Given the turbulence in the market in the past year, a lot of people got burnt, so HK might be the only one this enthusiastic about crypto right now.

we will see what happens, because HK is trying to attract more investment after 3 tough years of covid lockdowns. Crypto might be one way for them to attract capital and investors back to HK.

 

[coolgod]

looks like there is a web3 conference in HK right now.

Please, Log in or Register to view URLs content!

He is getting chased around by regulators right now.

But it seems like he is appreciating the move by HK into crypto world

Please, Log in or Register to view URLs content!

`

If you trade crypto, you will know that Binance has their service hosted by AWS Tokyo. So if Binance moves to HK it will probably be hosted by Alicloud (which is what OKEX is doing). Given the turbulence in the market in the past year, a lot of people got burnt, so HK might be the only one this enthusiastic about crypto right now.

we will see what happens, because HK is trying to attract more investment after 3 tough years of covid lockdowns. Crypto might be one way for them to attract capital and investors back to HK.

CZ said he couldn't attent the web3 conference in person due to scheduling conflict, I'm wondering if he did attend would HK extradite him to US authorities? HK is going to be a safe haven for gray market and sketchy people, I'd expect a lot more russian oligarchs to invest in HK instead of London.