Chinese Economics Thread

[abenomics12345]

Economic growth is not ever going to go back to 6% sustained growth. Look at S Korea's growth curve before and after 2000. Once you out of the middle income range, a lot of the low hanging fruit for fast growth is gone. The amount of total increase needed for each percentage of growth is three times higher than it was a decade ago, and the amount of investment needed to generate growth is substantially higher.

China is no longer cost competitive in labor intensive manufacturing, which means a lot more people are going to have to find work in service industries. Natural consequence of moving up the value chain and becoming an advanced, high income economy.

If you compare to the US, then you see a lot higher proportion of the workforce holds college degrees in the US, and a lot more college degree holders in the US are working in service / gig jobs that do not really require college degrees. This is a natural consequence of developing into an advanced, high income economy. Due to high wages and incomes, a lot of labor intensive jobs are just no longer economically viable, so you have more people driving Uber or delivering Doordash.

The fact of the matter is, true STEM talent anywhere in either the US or China gets scooped up in an instant. I can guarantee you there is a shortage of STEM talent in China. Doesn't mean every STEM graduate has the necessary ability and skills to fill those jobs. So what's so wrong for them to work as delivery drivers or taxi drivers? At least they aren't saddled with tens of thousands of student debt like their American counterparts.

I've read How Asia Works too - I know how countries develop.

The fact remains, private FAI from Jan-May was -0.1% vs Shanghai lockdowns in 2022 as an easy layup of a comparable. I am really curious, how are STEM grads to find jobs (STEM or Service jobs) if POEs do not invest to create jobs?

 

[FriedRiceNSpice]

I've read How Asia Works too - I know how countries develop.

The fact remains, private FAI from Jan-May was -0.1% vs Shanghai lockdowns in 2022 as an easy layup of a comparable. I am really curious, how are STEM grads to find jobs (STEM or Service jobs) if POEs do not invest to create jobs?

My primary point from one of my previous posts is that at this point in China's economic transition, there is going to be increased unemployment, coupled with current cyclical unemployment further amplified by many of the temporary reasons you mentioned (primarily real estate situation).

China had much higher unemployment in the 90s, when economic growth was even faster. Then eventually enough jobs were created to absorb the influx of available labor. With China rising on the value chain, job creation is going to have a hard time keeping up with the number entrants on the job market. It is not just low cost manufacturing - the main driver of the increase in job seekers has been urbanization and the tens of millions of rural Chinese migrating to the city annually.

This elevated unemployment is part of the growing pains of China's ongoing development. On the converse, despite the low unemployment in the US, growth in real output is at its slowest since Covid and worker productivity is decreasing for the first time in decades.

Also, I intend to ask you what is the main point you are trying to make? Pointing out there is an unemployment issue is just stating a fact, and you seem to constantly complain about the real estate situation in China. Are you just dissatisfied with government policies on real estate?

 

[FriedRiceNSpice]

Originally I posted in a wrong thread, so I deleted this post. Since you summoned the "troll", I'll bite for this post only since its off topic.





Nation, state and country are three separate things, please don't confuse them. It seems like FriedRiceNSpice was deliberately trying to avoid calling Taiwan a country so he used the term nation, which is also a term whose definitions are widely debated. Without resorting to awkward sounding terms, out of the three terms I mentioned, its probably most politically correct (from the Chinese perspective) to refer to Taiwan as a state in his given context.

Oh please spare me, I repent! I guess the term I intended to use was "politically ambiguous economic entity."

 

[FairAndUnbiased]

Economic growth is not ever going to go back to 6% sustained growth. Look at S Korea's growth curve before and after 2000. Once you out of the middle income range, a lot of the low hanging fruit for fast growth is gone. The amount of total increase needed for each percentage of growth is three times higher than it was a decade ago, and the amount of investment needed to generate growth is substantially higher.

China is no longer cost competitive in labor intensive manufacturing, which means a lot more people are going to have to find work in service industries. Natural consequence of moving up the value chain and becoming an advanced, high income economy.

If you compare to the US, then you see a lot higher proportion of the workforce holds college degrees in the US, and a lot more college degree holders in the US are working in service / gig jobs that do not really require college degrees. This is a natural consequence of developing into an advanced, high income economy. Due to high wages and incomes, a lot of labor intensive jobs are just no longer economically viable, so you have more people driving Uber or delivering Doordash.

The fact of the matter is, true STEM talent anywhere in either the US or China gets scooped up in an instant. I can guarantee you there is a shortage of STEM talent in China. Doesn't mean every STEM graduate has the necessary ability and skills to fill those jobs. So what's so wrong for them to work as delivery drivers or taxi drivers? At least they aren't saddled with tens of thousands of student debt like their American counterparts.

its a curious logic that puts employment of labor - an input - as the highest priority rather than the output of goods and services as the end goal of an economy.

you can arbitrarily increase inputs for the same output with arbitrarily low efficiency. the opposite is not true: you cannot arbitrarily increase output for the same input because improving efficiency is difficult.

by that logic, if maximizing labor input is the point rather than maximizing output of goods and services, that's easy. dig with machines? now dig with shovels. dig with shovels? now try spoons.

 

[coolgod]

My primary point from one of my previous posts is that at this point in China's economic transition, there is going to be increased unemployment, coupled with current cyclical unemployment further amplified by many of the temporary reasons you mentioned (primarily real estate situation).

China had much higher unemployment in the 90s, when economic growth was even faster. Then eventually enough jobs were created to absorb the influx of available labor. With China rising on the value chain, job creation is going to have a hard time keeping up with the number entrants on the job market. It is not just low cost manufacturing - the main driver of the increase in job seekers has been urbanization and the tens of millions of rural Chinese migrating to the city annually.

This elevated unemployment is part of the growing pains of China's ongoing development. On the converse, despite the low unemployment in the US, growth in real output is at its slowest since Covid and worker productivity is decreasing for the first time in decades.

Also, I intend to ask you what is the main point you are trying to make? Pointing out there is an unemployment issue is just stating a fact, and you seem to constantly complain about the real estate situation in China. Are you just dissatisfied with government policies on real estate?

Check out his post history. He is a 公知 concern trolling about all of China's problems. In the 1990s people like him would have said things like OMG, SOE laying people off, how will people feed their family? In the 2000s, people like him would have said things like, OMG, so many Chinese immigrants, this must mean most Chinese people don't believe in the future of China and the Yuan.

He deliberately ignores the same problem occurring world wide, he makes it seem like in the west everyone with a STEM PhD works in the field of their study. It's like he is oblivious to the term NEET or basement-dwellers. Apparently real estate problem is unique to China, there definitely aren't any problems in South Korea, Canada, US, UK, etc.

Clearly China has economic problems, just like every other country. Doomposting about them and arguing in bad faith is not productive. Repeatedly posting non relevant "stats" and "data" to prove his logically flawed points is also not helpful.

Oh please spare me, I repent! I guess the term I intended to use was "politically ambiguous economic entity."

I wasn't really responding to you, but I think the commonly used english term in your context in international orgs is Country/Territory.

 

[abenomics12345]

He deliberately ignores the same problem occurring world wide

Last time I checked, this was the CHINESE economics thread, I really don't give a shit about the rest of the world. Troll duty is over, if you're not going to say anything else useful, piss off.

This elevated unemployment is part of the growing pains of China's ongoing development. On the converse, despite the low unemployment in the US, growth in real output is at its slowest since Covid and worker productivity is decreasing for the first time in decades.

I really don't give a shit about the US. You seem to live in New York, if you hate it so much, leave?

Also, I intend to ask you what is the main point you are trying to make?

As I've made clear 3 times, that you've not read - social unrest. Whatever 'growing pains' China is experiencing today will get worse the next 3-5 years. That you think unemployment was high when growth was high in the 1990s is a demonstrated lack of understanding of the situation facing the country at the time.

by that logic, if maximizing labor input is the point rather than maximizing output of goods and services, that's easy. dig with machines? now dig with shovels. dig with shovels? now try spoons.

Should all homeless people who do not 'contribute to the production of goods and services' be shot and burnt for fuel? They are clearly a waste of air and food.

 

[FriedRiceNSpice]

I really don't give a shit about the US. You seem to live in New York, if you hate it so much, leave?

I for one do see the economic system in the US as a system that works pretty well overall, for the most part. The point is not that the US has all these problems or has a broken system. I use the US primarily as the example of what happens at certain points in development for any high income economy. Look at what happened to manufacturing jobs in the US. Yet the US is fine today with extremely low unemployment now that growth has stabilized. You see the same trends in any nation's development, ie Japan, South Korea, Poland, Taiwan, etc.

As I've made clear 3 times, that you've not read - social unrest. Whatever 'growing pains' China is experiencing today will get worse the next 3-5 years. That you think unemployment was high when growth was high in the 1990s is a demonstrated lack of understanding of the situation facing the country at the time.

So, during Deng's first decade of reform: SOEs shuttered, unemployment went through the roof, there was some social unrest, and yet? Looking back, was it worth it?

Look, the situation from the real estate market is unfortunate, but do you honestly believe the government should have just left real estate alone? Do you think the income to housing cost ratios in tier 1 cities was healthy for the economy and society? Do you think that continued unaffordability of homeowning was going to be good for avoiding social unrest? Or would you prefer a 2008 style collapse instead? Unfortunately, the real estate market was allowed to grow uncontrolled for too long, and if anything the government had acted too late before doing anything about it. Or do you have any policy alternatives you would can recommend?

 

[abenomics12345]

I for one do see the economic system in the US as a system that works pretty well overall, for the most part. The point is not that the US has all these problems or has a broken system. I use the US primarily as the example of what happens at certain points in development for any high income economy. Look at what happened to manufacturing jobs in the US. Yet the US is fine today with extremely low unemployment now that growth has stabilized. You see the same trends in any nation's development, ie Japan, South Korea, Poland, Taiwan, etc.

Until USD dominance away, the 'problems' of the US economy is feature, not bug. Put another way, until PBoC can print China's problems away (which it cannot), China cannot do what the US does and 'be fine'.

So, during Deng's first decade of reform: SOEs shuttered, unemployment with through the roof, there was some social unrest, and?

The GDP in 1990 was 361 billion USD. There were *a lot* of low hanging fruits to grow - so whatever problems there were, you can grow out of it. If you read Isabella Weber's book "How China Escaped Shock Therapy" which goes through the history of how planned economy was ported over to market economy - the dual-track price mechanism was solved not via anything special, the market economy simply grew to multiples of the planned economy.

That option does not exist today given the size of the Chinese economy, standing at 18trln USD, with significantly more debt in the system.

Look, the situation from the real estate market is unfortunate, but do you honestly believe the government should have just left real estate alone? Do you think the income to housing cost ratios in tier 1 cities was healthy for the economy and society? Do you think that continued unaffordability of homeowning was going to be good for avoiding social unrest? Or would you prefer a 2008 style collapse instead? Unfortunately, the real estate market was allowed to grow uncontrolled for too long, and if anything the government had acted too late before doing anything about it.

If you go through my responses in this thread in early 2023 - I was getting flak for saying that the RE controls were painful but necessary - so uh - you're preaching to the converted. I am simply pointing out the pressures for the Chinese economy has actually deteriorated since early 2023.

 

[lube]

I have nothing against STEM students, and my point has nothing to do with whether "STEM is better or worse off than Non-STEM" - my point is that an oversupply of university graduates that cannot find jobs being a significant problem to social stability.

The initial conditions of the last time that China had such high urban unemployment rate was quite different - the economy was small enough (+ WTO entry in 2000s) where China quickly grew out of and absorb the excess labour, but this wasn't without challenges ("All Dongbei people are gangsters" and "Henan people steal manhole covers").

But FWIW, oversupply of STEM is not any better than a shortage of STEM, where it is especially not a problem in the US when the US will have carte blanche for all the Indian STEM students that are lining up to get H-1Bs - because ironically, the more people think India is a shithole, the better the US is as a relative destination.

I've read How Asia Works too - I know how countries develop.

The fact remains, private FAI from Jan-May was -0.1% vs Shanghai lockdowns in 2022 as an easy layup of a comparable. I am really curious, how are STEM grads to find jobs (STEM or Service jobs) if POEs do not invest to create jobs?

A country with no STEM talent is going to suffer a lot more than a country with lots of STEM talent only because it's a natural indicator of a country's education level. The larger the educated pool of workers is, the greater capability for innovation. Yes, regardless of unemployment.

A skills mismatch is a structural issue but it seems to me people are dooming or celebrating over something that is partially structural and partially cyclical. Everything is an unavoidable death spiral until it isn't.

 

[fatzergling]

He deliberately ignores the same problem occurring world wide, he makes it seem like in the west everyone with a STEM PhD works in the field of their study. It's like he is oblivious to the term NEET or basement-dwellers. Apparently real estate problem is unique to China, there definitely aren't any problems in South Korea, Canada, US, UK, etc.

The current Western economics system is notorious for under employing PhD, even in STEM. Many a physics or a math PhD are working on various coding tasks that could have been done by even a high schooler. Whether China can figure out how to utilize PhD grads effectively in the job market is something to watch out for in the next decade.