Chinese Economics Thread

[Overbom]

It's not impossible to do a stimulus without the money going into real estate.

The key is property taxes. The Chinese government has been reluctant to do anything drastic with this, but it is the proven way to get people off of investing solely in property. If your apartment is collecting dust and costing you 2% of its purchase price in taxes every year, it's not going to be considered a great investment. Actually, the Chinese government should be promoting bonds & treasuries as investment vehicles, which it can then direct to anything it wants to support, like chip companies, while using the proceeds from property taxes to deliver pay outs. Property taxes can go a long way to giving the government the levers it needs, in this respect.

But implementing country wide property taxes could very well crash the housing market, so you need to offer a carrot with the stick to combat deflation. Helicopter money is actually a great idea here, but it should be targeted, not thrown at the masses like the US did. In particular, helicopter money should be used to motivate people to have children. Through a combination of tax breaks, monthly pay outs, and priority housing for people looking to get married and start families. This could help stabilize housing prices after instituting property taxes, while at the same time, encouraging single people to stop dreaming about their "child free" comforts, because it should be made clear that China is not a country for toxic individualists.

Property tax proposal is on the freezer until the housing market recovers and the overall economic conditions allow it

I personally don't think the tax will happen in the next 5 years

 

[FairAndUnbiased]

The Russian and Chinese economies are highly complementary. China mostly imports raw materials and exports finished goods, while Russia is the exact opposite. By being the country with the largest land area on Earth, Russia is also the world's largest source of raw materials. And that is with current resource exploration, Russia has a lot more resource potential which thus far has not been explored.

The Russians found out they could replace all motor vehicle imports, i.e. cars and trucks, which used to come from Europe and Japan with Chinese ones. Right now a lot of formerly foreign owned car factories in Russia are still being transitioned to new owners. But in a year or two the Russian car industry will go back to 2021 car production levels. China's car exports to Russia might decrease somewhat and be replaced with car parts exports. But I think this change is pretty much going to be permanent and the Western cars won't be coming back in any significant fashion.

Russia was China's largest export market for cars. With basically double the amount of cars exported than the next on the list which is Mexico. Russia helped propel China into world's largest car exporter over the past year.

Russia could also have been replacing imports of European civilian transport aircraft (planes and helicopters) with Chinese ones. If such were available for their acquisition. For example if China gets the MA700 into production with Chinese components, Russia will quite likely be a client for such an aircraft, Russia might also end up buying light helicopters from China. For this China needs to come into the Russian market with such products.

Russia also bought way too many ships from the West and used the services of Western shipping companies. That will need to change. And as the world's largest shipbuilder it is hard to think that China will not have a role in this.

having a pure raw materials trade partner is pretty bad, as it encourages final product assemblers in your own economy. See Xiaomi's growth in Africa and India, and how that led them to be lazy, forget innovation, and get rekt when India confiscated their money.

thankfully, Russia is so industrialized that it can become a huge market for tools and/or components that go into its own branded final products. That is good for both China and Russia: China ascends the industrial ladder while Russia keeps its industries going without bearing the overhead of having to develop every little component.

for instance, I wouldn't be surprised if there is soon a joint semiconductor system with fabs taking Russian fabless orders and Russian fabs buying tools. Or Russian planes selling and getting certified in China.

 

[gelgoog]

Eventually sales of Russian civilian transport aircraft to China might happen. But right now Russia is pretty much screwed if they do not replace their own aircraft. So I am pretty sure that will be their priority. The current ban was certainly not in the plans when the Superjet-RUS and MC-21-RUS projects were initially proposed. So existing and planned production facilities are all insufficient.

I am fairly sure the Russians would be open to starting factories in other countries with the technology of those aircraft. They are already in a joint venture with the UAE to produce the Superjet there.

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But exporting aircraft from their own facilities will likely not happen in a big way for quite some time. The problem is less with final assembly, which is enough, but with lack of enough capacity to manufacture aircraft components from engines to everything else.

The Russians are focused on the Superjet and MC-21 projects. But they have a severe shortage of small aircraft, light helicopters, and large aircraft, like I said. While there are existing projects none are quite enough to cover demand. So they would buy those if China had them available for sale I think. Even the rest of the market in the middle would do this I think.

Russia has been increasing its purchases of Chinese machine tools since the sanctions. But they are still buying Western tools via secondary channels way too often for their own good. I think China needs to be more pro-active with this. The Russians are massively investing into their own tool production however. The Russian MIC never quite stopped making its own machine tools. One good example of this is the Kalashnikov Group like I said before. A lot of companies in the Russian MIC have their own tools divisions. To a degree it is a matter of expanding available production.

Having a semiconductor industry that is resistant to US sanctions would be something not just Russia, but also Chinese companies, and other companies could use and would pay for I think. So yes, I also expect such a business model to show up eventually.

 

[gelgoog]

How about machinery from India? anything exported to Russia ?

India is exporting medicine and vehicle parts to Russia supposedly. But clearly not enough to balance the energy purchases they are making.

 

[tphuang]

Eventually sales of Russian civilian transport aircraft to China might happen. But right now Russia is pretty much screwed if they do not replace their own aircraft. So I am pretty sure that will be their priority. The current ban was certainly not in the plans when the Superjet-RUS and MC-21-RUS projects were initially proposed. So existing and planned production facilities are all insufficient.

I am fairly sure the Russians would be open to starting factories in other countries with the technology of those aircraft. They are already in a joint venture with the UAE to produce the Superjet there.

Please, Log in or Register to view URLs content!

But exporting aircraft from their own facilities will likely not happen in a big way for quite some time. The problem is less with final assembly, which is enough, but with lack of enough capacity to manufacture aircraft components from engines to everything else.

The Russians are focused on the Superjet and MC-21 projects. But they have a severe shortage of small aircraft, light helicopters, and large aircraft, like I said. While there are existing projects none are quite enough to cover demand. So they would buy those if China had them available for sale I think. Even the rest of the market in the middle would do this I think.

Russia has been increasing its purchases of Chinese machine tools since the sanctions. But they are still buying Western tools via secondary channels way too often for their own good. I think China needs to be more pro-active with this. The Russians are massively investing into their own tool production however. The Russian MIC never quite stopped making its own machine tools. One good example of this is the Kalashnikov Group like I said before. A lot of companies in the Russian MIC have their own tools divisions. To a degree it is a matter of expanding available production.

Having a semiconductor industry that is resistant to US sanctions would be something not just Russia, but also Chinese companies, and other companies could use and would pay for I think. So yes, I also expect such a business model to show up eventually.

Sounds like china can still increase its market share and export more machineries into Russia. Good news, we might get to $300b trade in a couple of years

 

[FairAndUnbiased]

Eventually sales of Russian civilian transport aircraft to China might happen. But right now Russia is pretty much screwed if they do not replace their own aircraft. So I am pretty sure that will be their priority. The current ban was certainly not in the plans when the Superjet-RUS and MC-21-RUS projects were initially proposed. So existing and planned production facilities are all insufficient.

I am fairly sure the Russians would be open to starting factories in other countries with the technology of those aircraft. They are already in a joint venture with the UAE to produce the Superjet there.

Please, Log in or Register to view URLs content!

But exporting aircraft from their own facilities will likely not happen in a big way for quite some time. The problem is less with final assembly, which is enough, but with lack of enough capacity to manufacture aircraft components from engines to everything else.

The Russians are focused on the Superjet and MC-21 projects. But they have a severe shortage of small aircraft, light helicopters, and large aircraft, like I said. While there are existing projects none are quite enough to cover demand. So they would buy those if China had them available for sale I think. Even the rest of the market in the middle would do this I think.

Russia has been increasing its purchases of Chinese machine tools since the sanctions. But they are still buying Western tools via secondary channels way too often for their own good. I think China needs to be more pro-active with this. The Russians are massively investing into their own tool production however. The Russian MIC never quite stopped making its own machine tools. One good example of this is the Kalashnikov Group like I said before. A lot of companies in the Russian MIC have their own tools divisions. To a degree it is a matter of expanding available production.

Having a semiconductor industry that is resistant to US sanctions would be something not just Russia, but also Chinese companies, and other companies could use and would pay for I think. So yes, I also expect such a business model to show up eventually.

Mikron could, if they wanted to, be able to be 100% supplied with Chinese tools right now. You'd never hear about this though, I would assume that any interaction between Mikron and any non-Russian suppliers would be 100% secret until the suppliers themselves were 100% secure in their supply chain.

 

[mossen]

While Russia's economy can absorb a lot of Chinese imports, that is no replacement for the EU+US markets. But I am not even worried about any "decoupling". Even Western policymakers are now openly admitting that's just a fantasy. That's why they are now moving towards phrases like "de-risking", which is code for "we'll invest in a few areas like chips and forget the rest".

 

[luminary]

China has a massive internet market.

Rank	Platform	Launch	Time to 100M Users
1	Threads	2023	5 days
2	ChatGPT	2022	2 months
3	TikTok	2017	9 months
4	WeChat	2011	1 year, 2 months
5	Instagram	2010	2 years, 6 months
6	Myspace	2003	3 years
7	WhatsApp	2009	3 years, 6 months
8	Snapchat	2011	3 years, 8 months
9	YouTube	2005	4 years, 1 month
10	Facebook	2004	4 years, 6 months

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[gelgoog]

Mikron could, if they wanted to, be able to be 100% supplied with Chinese tools right now. You'd never hear about this though, I would assume that any interaction between Mikron and any non-Russian suppliers would be 100% secret until the suppliers themselves were 100% secure in their supply chain.

How come Chinese companies do not do it themselves then? Nexchip and HuaHong expansion being good examples of this.
They are still buying imported tools. There are many other instances of this like CanSemi, etc.
All fabs which were built recently even.

While Russia's economy can absorb a lot of Chinese imports, that is no replacement for the EU+US markets. But I am not even worried about any "decoupling". Even Western policymakers are now openly admitting that's just a fantasy. That's why they are now moving towards phrases like "de-risking", which is code for "we'll invest in a few areas like chips and forget the rest".

China needs to focus on the emerging economies like Indonesia or Latin America. There are lot of possible consumers there.

 

[FairAndUnbiased]

How come Chinese companies do not do it themselves then? Nexchip and HuaHong expansion being good examples of this.
They are still buying imported tools. There are many other instances of this like CanSemi, etc.
All fabs which were built recently even.


China needs to focus on the emerging economies like Indonesia or Latin America. There are lot of possible consumers there.

Chinese companies still have a choice and are still competing commercially, while Mikron is heavily focused on Russian MIC. It would be very foolish for them to rely on US or European tools, seeing that they're in direct conflict with them in Ukraine.