Chinese Economics Thread

supercat

supercat

Major
...continued from above:
Its previous growth relied on massive labor and capital inputs rather than gains in efficiency. Its aging population won’t save as much as retirees begin to spend down savings, so capital will become scarcer. It has saturated its export market in developed countries, and so forth.

All of these arguments are factually correct, just as Krugman’s argument about the Asian Tigers was factually correct in 1994, that is, correct about facts of the past that had become irrelevant. What Krugman missed and the China doomsayers miss today is the intersection of jump in human capital and the emergence of new technologies.

South Korea’s new educated workforce mastered Third Industrial Revolution technologies and transformed what had been one of the world’s poorest countries into a high-tech powerhouse within a single generation.

When Deng Xiaoping began his economic reforms in 1979, just 3% of Chinese high school graduates went on to tertiary education. Today, the proportion is 63%, about the same as most European countries. A third of Chinese undergraduates study engineering, compared to just 6% in the United States.

South Korea was the poster child for the Third Industrial Revolution of computers and communications. China is determined to lead the Fourth Industrial Revolution driven by artificial intelligence and high-speed data transfer.

A new Chinese economy gestates within the belly of the old. Deng’s low-skill smokestack economy is subject to diminishing returns: Not so the Fourth Industrial Revolution economy that China is building today.

According to Huawei, 10,000 Chinese businesses including 6,000 factories already have installed private 5G networks. It’s still early days, but preliminary results are remarkable.

At the Tianjin Port, where AI-guided cranes linked by 5G wireless broadband pick containers out of ships and place them in autonomous trucks, large container vessels are emptied in 45 minutes, Huawei says. Before Huawei installed its 5G system, it took eight hours. Unloading a large container ship takes 48 hours at America’s largest port at Long Beach, California, according to reports.

By no means is China’s success guaranteed today, any more than Deng’s success was guaranteed in 1979. But it is not improbable, either. China’s doomsayers are likely to be as wrong today as Krugman was about the Asian Tigers 30 years ago.
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Eventine

Junior Member
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Precisely why the US is trying to shut China down through sanctions. They know from experience what a highly educated work face can do with respect to new technology adoption and mastery. That's why they're trying to prevent China from adopting new technologies in critical sectors through restricting Chinese access.

Although the article doesn't really address what's happened to South Korea recently. Demographics do eventually catch up.
 
supercat

supercat

Major
Quite some disclosures before the Yellen trip: first, China's forex reserve might have been underestimated by $3 trillion. Now foreign investments into China might have been underestimated by about $1.4 trillion. However, I don't think China has much interest in buying more US treasuries. China should buy more precious metals instead. On the other hand, foreign investors have far more confidence about China's economy than it appears.

Tax Havens Obscured at Least $1.4 Trillion of Foreign Investment in China​

  • US and Europeans more exposed to China than official estimates
  • Report shows key role of tax havens in Chinese fund raising
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SanWenYu

Captain
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supercat said:
Quite some disclosures before the Yellen trip: first, China's forex reserve might have been underestimated by $3 trillion. Now foreign investments into China might have been underestimated by about $1.4 trillion. However, I don't think China has much interest in buying more US treasuries. China should buy more precious metals instead. On the other hand, foreign investors have far more confidence about China's economy than it appears.

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The BGM starts when the panhandler is on her way to China...
 
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xypher

Senior Member
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supercat said:
...continued from above:

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Exactly what I was saying. People make a rookie mistake of equating the people just entering the workforce with the ones that are leaving. That might be true for developed countries but blatantly false for developing ones. This is especially true for China which experienced a massive leap in development - the productivity gap between the retiring uneducated farmers & manual workers and incoming well-educated high-tech specialists is astronomical. The main problem for China right now is not creating more of those specialists but efficiently employing them to make the maximum impact. Even if we assume that the technological progress will freeze at the current level, the impact of demographic decline will be felt only decades after.
 
sunnymaxi

sunnymaxi

Major
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Moderna will announce its investment in Shanghai as soon as tomorrow, Local media learned today from people familiar with the matter. The investment, which will be the US vaccine maker’s first in China, is expected to be worth USD1 billion and involve several projects..

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