Chinese Economics Thread

[MortyandRick]

Depending on how you want to count, the largest advanced economy is still the U.S.

FDI brings in knowledge and innovation. Even the most developed countries actively develop policies to welcome FDI.

Xi is set to meet personally with a panel of U.S. executives/investors in the coming days. I think he understands the continual importance of foreign businesses, investors, entrepreneurs for China.

By this logic the US is shooting itself in the foot for driving away Chinese investment? They are truly screwing themselves over.

Also FDI is helpful in a way important, but if the US actively prevents FDI going going to China, it's the end of the world.

 

[SanWenYu]

Yes. I think global FDI and especially those from advanced developed countries are still very important for China.

But the numbers of

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and

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in year 2022 tell me that FDI are nice to have but not indispendsable.

In that year, the US received total FDI of 388 (in billions dollars, same for other countries). In the same period of time, it spent 660 on R&D. Even if 10% (***) of these FDI were spent on R&D, which is 39, it'd only contribute to about 6% of the total R&D expenditure in the US.

Japan and Germany received FDI of 47.5 and 47.4, respectively. Meanwhile their R&D expenditure were 194 and 147. If both also had 10% of their FDI went into R&D, that would be like 2.4% of the R&D amount for Japan and 3.4% for Germany.

For China, the FDI and R&D were 180 and 556. 10% of FDI would account for 3.2% of the R&D spending.

As I said, FDI used to be important to China when technologies or concepts came with FDI were new to Chinese. That was also the time when there were fewer ways for information and ideas to spread.

*** I am generous in assuming that 10% of FDI went into R&D. In fact, there are less companies spend 10% or more of their revenue on R&D than those spend much less. The ratio of R&D from the FDI would be even lower.

 

[Biscuits]

Depending on how you want to count, the largest advanced economy is still the U.S.

Nope, the inflection point was awhile ago, at 2015. Try to stay up to date.

FDI brings in knowledge and innovation. Even the most developed countries actively develop policies to welcome FDI.

Xi is set to meet personally with a panel of U.S. executives/investors in the coming days. I think he understands the continual importance of foreign businesses, investors, entrepreneurs for China.

Every little bit helps, and they're welcome to put their money in a place where it can easily be sanctioned, should America commit transgressions.

 

[Deleted member 24525]

Nope, the inflection point was awhile ago, at 2015. Try to stay up to date.

While nominal GDP certainly has its problems as a means of comparing output, PPP GDP is not necessarily any better and in many cases is actually worse. The main reason for this is that the product mix of different countries at different development levels and different industrial compositions is, well, different. To compensate for this economists have to either make dramatic compromises on what constitutes the 'same product' or, more commonly, they simply leave out large swaths of countries' product mixes that they do not share with each other. This will obviously tend to be biased against richer countries since they make many things that only a handful of other countries are capable of making, and so much of their product mix will simply be left out of the PPP calculations, causing their GDP to be substantially understated. When using the PPP measure, then, you will get results like India's GDP being over double that of Japan or Germany's, or Russia's GDP being over 2.5x that of South Korea. So while nominal GDP does tend to overstate rich countries' output due to things like imputed rents and the effects of labor costs on exchange rates, PPP GDP tends to be just as bad, only in the opposite direction. China's economy relative to the US is certainly bigger than nominal measurements would suggest, but it is very likely that the PPP measure goes too far in compensating for this.

We do not know what is causing the decline in reinvested FDI earnings, and I can think of at least four plausible reasons why it might be happening, but have not yet seen convincing evidence for any of them. I would recommend against speculating much in any direction until we have more information.

 

[Biscuits]

While nominal GDP certainly has its problems as a means of comparing output, PPP GDP is not necessarily any better and in many cases is actually worse. The main reason for this is that the product mix of different countries at different development levels and different industrial compositions is, well, different. To compensate for this economists have to either make dramatic compromises on what constitutes the 'same product' or, more commonly, they simply leave out large swaths of countries' product mixes that they do not share with each other. This will obviously tend to be biased against richer countries since they make many things that only a handful of other countries are capable of making, and so much of their product mix will simply be left out of the PPP calculations, causing their GDP to be substantially understated. When using the PPP measure, then, you will get results like India's GDP being over double that of Japan or Germany's, or Russia's GDP being over 2.5x that of South Korea. So while nominal GDP does tend to overstate rich countries' output due to things like imputed rents and the effects of labor costs on exchange rates, PPP GDP tends to be just as bad, only in the opposite direction. China's economy relative to the US is certainly bigger than nominal measurements would suggest, but it is very likely that the PPP measure goes too far in compensating for this.

We do not know what is causing the decline in reinvested FDI earnings, and I can think of at least four plausible reasons why it might be happening, but have not yet seen convincing evidence for any of them. I would recommend against speculating much in any direction until we have more information.

In the first place you cannot compare gdp in 2 different currencies without accounting for inflation.

Why is it surprising India has a large economy? They have the largest population in the world. Just by eating, shitting and drinking, they generate a lot of market share.

Through we can certainly discuss if gdp is a good measure at all.

After all, the Qing empire had a larger gdp than the British empire up to during the 2nd opium war. At that time, the British had over 4 times the productivity in steel, had far more efficient infrastructure and could produce goods at much better rates.

Imo what provides a more accurate picture of economic size is a combined comparison of: Basic resource production (i.e. steel) + energy output + advance goods production (for example, cars, electronics).

But even in these metrics, there is a clear gap between China and US. There is basically no metric one can use that wouldn't land China on the no1 spot. Well, unless you start measuring "economy size" through number of incarcerated and executions...

 

[Deleted member 24525]

In the first place you cannot compare gdp in 2 different currencies without accounting for inflation.

Why is it surprising India has a large economy? They have the largest population in the world. Just by eating, shitting and drinking, they generate a lot of market share.

Through we can certainly discuss if gdp is a good measure at all.

After all, the Qing empire had a larger gdp than the British empire up to during the 2nd opium war. At that time, the British had over 4 times the productivity in steel, had far more efficient infrastructure and could produce goods at much better rates.

Imo what provides a more accurate picture of economic size is a combined comparison of: Basic resource production (i.e. steel) + energy output + advance goods production (for example, cars, electronics).

But even in these metrics, there is a clear gap between China and US. There is basically no metric one can use that wouldn't land China on the no1 spot. Well, unless you start measuring "economy size" through number of incarcerated and executions...

If a GDP measure puts contemporary India's output at twice that of contemporary Japan, or contemporary Russia's output as about equal to that of contemporary Germany, then I do not think I should need to explain why something is obviously off about that measure.

 

[TK3600]

Depends on the subject. Since this is a defense forum I will start with military. For military economy yes Russia is equal or ahead of Germany. Reason being military products are mostly domestic made and priced to local price paid in local salary. Therefore PPP is the more accurate measure for military economy. If it were a subject heavily relying on international trade, like finance, them GDP is the better measure.


Similarly Chinese economy is mostly consumed by itself and relies little on import and export, PPP is more fitting than GDP. Although PPP is not perfect either because China is still a big trade nation.

 

[Wrought]

By this logic the US is shooting itself in the foot for driving away Chinese investment? They are truly screwing themselves over.

The US is shooting itself in the foot in many ways, driving away investment being just one. But due to historical advantages the US can afford to shoot itself in the foot quite a lot. That does not make it a good idea. China should be looking to exploit US mistakes as much as possible, not make the same ones.

 

[FairAndUnbiased]

If a GDP measure puts contemporary India's output at twice that of contemporary Japan, or contemporary Russia's output as about equal to that of contemporary Germany, then I do not think I should need to explain why something is obviously off about that measure.

what's so ridiculous about Russian output being comparable to Germany's? Russia has 50% larger population, much larger land area for extraction industries and independent aerospace, mining and oil/gas industry, all of which are some of the most profitable industries in the world.

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and doesn't even have much oil yet has $50k+ GDP per capita.

 

[Biscuits]

If a GDP measure puts contemporary India's output at twice that of contemporary Japan, or contemporary Russia's output as about equal to that of contemporary Germany, then I do not think I should need to explain why something is obviously off about that measure.

I told you gdp isn't as accurate as production measures tho didn't I? I never defended use of gdp.

Also in what world is Russia not equal to Germany? If anything, that's a significant lowball. Germany wouldn't remotely survive doing what Russia is currently doing.