Chinese Economics Thread

[gelgoog]

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.

Unfortunately Chinese companies are not 100% reliable either. A lot are scared of Western sanctions. Like Huawei, DJI, or Alibaba even.
Huawei left the Russian mobile phone provider space in Russia. Basically 30% of base stations in Russia use Huawei equipment. And now they have zero support or upgrades.

The Russians will just smuggle whatever they need, if they cannot buy it outright, it is as simple as that. If the Chinese industry does have alternatives, they just need to prove it, and make a case for a sale really.

I suspect the Russian semi industry is already cooperating with the Chinese one to a degree, but of course this is not being done out in the open.

 

[Deleted member 23272]

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

ASEAN is still the next big source of consumers, but Latin America's been stuck in the middle income trap for some time now and in cases like Argentina, forever. Don't know what it'll take for the region to finally get its act together.

In the end however, the North American and EU markets are still too important to ignore.

 

[dirtyid]

Something I don't see enough people talk about with numbers when considering export decline, PRC export value increased over 1 TRILLION with a T or 36% in the last 4 years. I think that's the LARGEST increase in export volume in human history by a wide margin. For reference PRC export value grew from 2.5T in 2019 to 3.6T in 2022. PRC exports grew as much in last 4 years (~1T) as it did in decade between 2008-2018 (1.4T-2.4T). Meanwhile PRC export:gdp increased 2% from 18%-20%. Yes everyones export is falling, but PRC is falling from stupid higher baseline. Only other relative contender is TW with 270B / 38% increase but solely due to semi.

 

[Proton]

Something I don't see enough people talk about with numbers when considering export decline, PRC export value increased over 1 TRILLION with a T or 36% in the last 4 years. I think that's the LARGEST increase in export volume in human history by a wide margin. For reference PRC export value grew from 2.5T in 2019 to 3.6T in 2022. PRC exports grew as much in last 4 years (~1T) as it did in decade between 2008-2018 (1.4T-2.4T). Meanwhile PRC export:gdp increased 2% from 18%-20%. Yes everyones export is falling, but PRC is falling from stupid higher baseline. Only other relative contender is TW with 270B / 38% increase but solely due to semi.

Context is important, but at the end of the day growth is probably good and decline is probably bad.

There is however room for other mitigating factors, for example Chinas traditional reliance on assembly greatly inflates trade numbers (It does however also puts it at the center of supply chains).
For example a smartphone merely assembled in China could perhaps be exported at $200 while the parts assembled are imported for $190, with only the difference being the value added in China.
Instead exporting screens for the phone at $10 (Ignoring further supply chains) could have the same economic and industrial value (And perhaps far greater in terms of technology), while trade could be cut by a factor 20.

The drop in consumer electronic exports might for example be further offset by a presumably larger share of added value in electric car exports. (While affluent Chinese can keep importing Gucci bags to balance the financial flows.)

 

[gelgoog]

Yeah, but China is taking the advantage provided by assembly to create their own companies which sell products to end users (like Xiaomi or OPPO), not to mention their own supply chain (like BOE). China already dominates in the battery market and is close to dominating in the display market. Were it not for the US sanctions on semis, China would likely be the major player in memory right now as well, both with its own companies, and with foreign companies operating in Chinese soil. That leaves, what, the main processor and the software? Android is basically commodity software. And China does have its own designers of SoCs. Even if they are not particularly successful anymore. With HiSilicon gone, UNISOC is probably the only major player left.

This is unlike, say, Hong Kong, which never got past the assembly part of the business. When the labor in HK got too expensive those foreign companies packed up and went somewhere else, nothing was left.

 

[Nilou]

Most interesting thing is the fact that China’s decrease in exports is almost entirely matched by a corresponding decrease in imports. As a result, China’s trade surplus is virtually unchanged. Rather, it is economies of places such as South Korea which are in doubt.

 

[AndrewS]

Context is important, but at the end of the day growth is probably good and decline is probably bad.

There is however room for other mitigating factors, for example Chinas traditional reliance on assembly greatly inflates trade numbers (It does however also puts it at the center of supply chains).
For example a smartphone merely assembled in China could perhaps be exported at $200 while the parts assembled are imported for $190, with only the difference being the value added in China.
Instead exporting screens for the phone at $10 (Ignoring further supply chains) could have the same economic and industrial value (And perhaps far greater in terms of technology), while trade could be cut by a factor 20.

The drop in consumer electronic exports might for example be further offset by a presumably larger share of added value in electric car exports. (While affluent Chinese can keep importing Gucci bags to balance the financial flows.)

The iPhone example is not representative as China value-add is 25% these days.

Source below

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---
And in terms of overall Chinese exports, back in 2016, foreign content as a share of exports was

China: 16%
EU: 16%
US: 9%

So we can see that the vast majority of Chinese export value in 2016 was from China-value add and that this is comparable to the EU.

And since 2016, I would expect the share of Chinese content in Chinese exports to continue increasing due to:

1. Chinese companies moving up the value chain
2. High energy prices resulting in deindustrialisation in Europe, Japan etc

In comparison, Vietnamese value-add is only 43% of overall exports.

Source below

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[SanWenYu]

The largest battery energy storage system in China has been connected to the grid in full capacity of 200MW/800MWh. This energy storage system is built in combination with a photovoltaic power station in Xinjiang for the total investment of 5 billion yuans.

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储能200MW/800MWh！国内最大电化学储能电站全容量并网投运​

人民网长沙7月14日电 今天，由陕西新华水利水电、陕西建工新能源和中车株洲所援疆建设的新华发电莎车光储一体化项目成功并网发电，该项目配套光伏电站和储能电站两部分，总投资约50亿元，占地2.7万亩。其中，配套储能电站规模达200MW/800MWh，是目前国内最大的电化学储能电站。

该储能电站位于新疆维吾尔自治区喀什地区莎车县光伏发电园区，其全套储能系统集成设备由中车株洲所提供，共配备77套升压变流一体机、154台直流电池预制舱和1套能量管理系统。

为保证储能电站的高安全、长寿命、高效率和智能化，中车株洲所为其量身定制了一体式解决方案。通过应用优越的控制技术，支持海量数据和设备接入，可实现“毫秒级”快速功率及协同控制。

在数据安全方面，通过高稳定性和高安全性系统设计，在极端故障情况下，可保障数据存盘安全；采用基于大数据的故障预测与健康管理，对电池进行全生命周期管理，能有效识别异常、诊断故障、提前预警及维护。

同时，在系统消防安全上，配备多类型探测装置，采用全淹没管网式七氟丙烷设计，舱内预留水喷淋管道，舱外配备自动水消防系统，能精准探测烟雾和温度变化，进行多级报警、自动灭火和联动灭火。

储能电站建成投运后对整个新疆电网的调峰、调频、调压等支撑作用明显，可提高当地电网的安全稳定性。按照每天一充一放测算，每年可发2.92亿度电，减少二氧化碳排放23万吨，相当于用电高峰时，50万居民用户一个月所需电能。

新型储能是构建新型电力系统的重要技术和基础装备，是实现碳达峰碳中和目标的重要支撑，也是催生国内能源新业态、抢占国际战略新高地的重要领域。2022年，国家发展改革委、国家能源局联合印发了《“十四五”新型储能发展实施方案》，方案提出到2025年，新型储能由商业化初期步入规模化发展阶段，具备大规模商业化应用条件。

目前，我国新型储能技术发展呈现多元化态势，产业已进入规模化快速发展的车道。截至去年底，全国新型储能累计装机规模达到870万千瓦，较上年增长110%以上，居世界首位。随着“双碳”战略的持续推进，未来空间和前景看好。

 

[sunnymaxi]

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.

interesting situation building up..

today i just heard a strong rumor on Chinese internet

ARJ-21 might end up in Aurora Airline, headquartered in

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,

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Russian far east. Aurora Airlines is currently flying Harbin to Vladivostok with Airbus A319, and it has also ordered SSJ-New.

Both ARJ-21 and MA-700 have huge scope in Russian market as you said, they have a severe shortage of small aircraft.

MA-700 already flew.

 

[Biscuits]

I'd say that a weak currency is currently in China's interest to retain existing low-value and medium-value industries as:

1. wages in much of China are still low and these jobs as useful for lower-skilled workers
2. it limits the ability of the US (or anyone else) to decouple from China
3. due to capital controls, it's difficult for a weakening currency to result in large currency outflows. But in any case, China still has a huge annual trade surplus

At the same time, we also see:

1. a comprehensive effort to develop in new emerging industries (eg. electric vehicles, energy, AI, Telecoms) and those jobs
2. develop companies in existing industries where China currently imports (eg. semiconductors, specialty components) and those jobs
3. continued wage increases and GDP growth, so that minimum wages will reach moderate levels.
4. China is still accumulating large trade surpluses every year, and has nowhere to put them except in US assets which can be seized

So in 5-10 years time, a weak currency won't be required.
At that point, I can see a significant (steady) currency appreciation happening

The usual drawback of heavily suppressing your currency is that it will fuck up your import costs and make imported goods less affordable.

But for China where people can largely consume exactly everything locally sourced, that isn't a very pressing issue.

China would just keep devaluing as long as there is market share in useful sectors that can be grabbed.

Basically it is pointless to look at non inflation adjusted gdp, because it will largely be determined by Chinese central bank rather than economy size. China can undercut currency even more, or it can massively push up value.

China's current gdp value is 33 trillion. If you let the currency go up, it can shoot past 33, but once you adjust for actual prices, it will go back down to 33 anyways. If you let the currency go down, it will still adjust to the same value when you calculate the final usable gdp measure.

More important than thinking how much the central bank will let the RMB go up, it's tracking when China will surpass NATO economically, because at that moment, no amount of "west unity" can out stick China economically.