Chinese Economics Thread

[sunnymaxi]

Fairchild Semi got started making chips for missile guidance but over time started making chips for consumer products. You can't just do one or the other, you need both. Have a read of the document I linked earlier, it goes through how they think they can generate additional demand.

so you think China only building supply chain of semiconductor for defense industry. PLA has own chip fab strictly for military industrial complex.

China have enormous civilian demand. SMIC massive expansion , Hua hong expansion. AMEC , NAURA , SMEE all these firms just building tools/materials for commercial purpose.

 

[dingyibvs]

It's easy to ramp up renewables when they're only a small proportion of the overall electricity supply. China is still only at 30% renewables and that includes hydro. Once supply is closer to 100% of electricity demand, it will become a lot less efficient as you need so much more capacity to cover peak demand. So having some flexible nuclear power would be very complementary. I'm not sure if any of the new nuclear reactors China is developing are built with flexibility in mind

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Nuclear is more for baseload, that accentuates their advantages. Using them as a peaker is a waste IMO. That should be the job of ESS

 

[sunnymaxi]

So from your point of view do you think China should slow down on stimulating innovation until the demand go up?

absolutely not. China continue spend huge amount of money in R&D.

In 2022, despite downward economic pressure, China's total R&D expenditure surged by 10.4 percent to nearly 3.09 trillion yuan ($456 billion), hitting the 3 trillion yuan milestone for the first time, official data showed.

With annual increase of 7-10 percent in next 5 years.

we have different strategy. as long as we are able to build/produce/manufacture all high tech products its fine. demand comes later.

ever since the Founding of PRC in 1949, west continue to blockade critical technology. so we cannot comprise on National security. we don't care about demand. LOL

So from your point of view do you think China should slow down on stimulating innovation until the demand go up? Or perhaps stimulation innovation while provide even greater incentives to build demand?

China represented 53.7% of worldwide chip sales. we are the largest market of semiconductor. so all recent breakthrough in semiconductor field is because of enormous demand.

China need 8000 narrow body aircraft in next 2 decades. all work COMAC doing just to build supply chain. cannot miss the piece of cake. again huge demand

just because China overproduce renewables energy it doesn't mean there is no demand of latest technology. more and more people in China have associate with science and technology.

 

[TK3600]

Absolutely not on slowing down innovation expenditures. Fairchild Semi got started making chips for missile guidance but over time started making chips for consumer products. You can't just do one or the other, you need both. Have a read of the document I linked earlier, it goes through how they think they can generate additional demand.

The issue is structural reform of problematic policies to unleash demand - demand is a function of agency of the consumer; the question is how you get average citizens to consume more and have them save less.

- For example only 45% of migrant workers (some 290 million population) feel that they are 'locals' in the city they work.

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This needs to go up for people to want to plant roots - people will buy modern conveniences for their place (computer/AC/washing machine/dishwasher/cars) if they consider it as a permanent home. But why would they consider it as their 'home' if they are treated as second class citizens? (Inferior access to healthcare insurance coverage, inferior access for education for their kids, and inability to purchase affordable real estate)

- As another example, I have had at least half a dozen Chinese companies complain to me about local protectionism. Local governments have punitive enforcement of policies/laws against non-local competitors in benefit of local players - that doesn't bode well for 'may the best win' and instead sets up a 'may the one with the best connections win' situation. Companies therefore don't want to deal with this and competition goes away and you have monopolies that provide sub-par products/services. This is a deadweight loss in not reaching 'potential growth' that needs to be addressed.

These things all take time to realize and the demand side is a lot harder to reform than the supply side ("we need a new bridge in the next year" vs. "residents need to make enough money to afford buying cars to use said bridge")

Are things like long term migrant workers a problem of local or central government policy?

 

[Deleted member 24525]

Its a pretty classic center-local conflict situation. The center wants to gradually repeal hukou restrictions so that migrant workers can settle in urban areas, get higher productivity/more secure jobs, spend more, and send their kids to better schools. Local governments resist this because they would have to bear the fiscal burden of providing the social services to these new official residents, and also their constituencies don't want even more competition for things like school enrollment.
The center also has to be cautious since some areas, particularly the most developed coastal cities, genuinely are at their carrying capacity in terms of population and just cannot support millions of new residents in terms of transit or other needs.
There's also the obvious problem of finding a sustainable way to finance the social service expenditures of local governments for these migrants. Real estate taxes are the clear solution but that is its own massive can of worms.

Are things like long term migrant workers a problem of local or central government policy?

 

[KYli]

More stimulus for real estate market and consumer demands might be needed.

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• Industrial production rose 3.5% in May from a year earlier, the National Bureau of Statistics said Thursday, in line with the median estimate in a Bloomberg survey of economists
• Retail sales climbed 12.7%, missing the median estimate of a 13.7% increase
• Growth in fixed-asset investment slowed to 4% in the first five months of the year, weaker than forecasts of a 4.4% uptick
• The urban jobless rate was unchanged at 5.2%

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[Feima]

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New-home prices in 70 cities, excluding state-subsidized housing, increased 0.1% last month from April, when they grew 0.32%, National Bureau of Statistics figures showed Thursday. Prices declined 0.23% in the secondary market, snapping three months of gains.

Above, they say it like it is a bad thing.

On other sites, I see terms like 爆雷 talking about South Korean and Vietnamese residential property markets, implying it is bad for them.

But, as a man on the street, constantly rising home prices means more and more people get priced out, seeing as such increases usually outpace wage growth, and can't be good for society as a whole.

So is it received political-economic wisdom that says always rising home prices are good for an economy as a whole although usually bad for individuals?

 

[Deleted member 23272]

More stimulus for real estate market and consumer demands might be needed.

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• Industrial production rose 3.5% in May from a year earlier, the National Bureau of Statistics said Thursday, in line with the median estimate in a Bloomberg survey of economists
• Retail sales climbed 12.7%, missing the median estimate of a 13.7% increase
• Growth in fixed-asset investment slowed to 4% in the first five months of the year, weaker than forecasts of a 4.4% uptick
• The urban jobless rate was unchanged at 5.2%

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Youth unemployment also rose again to hit 21%. Looks like its going to be a belt tightening year. Its a fact that bragging about geopolitical chess moves or military tech is never a wise thing when your house is not in order, and the harsh truth is that China's ain't for the time being.

 

[FairAndUnbiased]

Youth unemployment also rose again to hit 21%. Looks like its going to be a belt tightening year. Its a fact that bragging about geopolitical chess moves or military tech is never a wise thing when your house is not in order, and the harsh truth is that China's ain't for the time being.

you only have to be better than others. good is relative.

when the other side has their youth slaving away at McDonalds or coal mines for minimum wage, while yours have the freedom to pursue their own interests, who is really winning?

 

[Deleted member 23272]

while yours have the freedom to pursue their own interests,

Care to elaborate on this part?