Chinese Economics Thread
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Xiaomi-14 is huge winner of 11/11
All new sales highs on JD
Same with Tmall
Great day of e-commerce I guess
btw, iPhone still sold well. So even with new competition, still plenty of Apple fans out there in China
All new sales highs on JD
Same with Tmall
Great day of e-commerce I guess
btw, iPhone still sold well. So even with new competition, still plenty of Apple fans out there in China
Yeah but US is 26 trillion economy vs Russia's 5...
Let's compare Russia with economies that are more it's own size:
1. Germany (5.5): they have not even produced an indigenous 4th gen. Without foreign components, their whole air force would be non existent. And even in their current state, their SEAD is far inferior to Russia's. Let's not get into the differences in tank and artillery production. Next.
2. Japan (6.5): their whole military is imported. Granted, it is large, and the navy is almost comparable to the Russian navy. Ground forces are nowhere nearly as developed. Also incapable of independent SEAD, but at least they bought 90 5th gens, vs Russia's 14 self developed ones.
3. UK (3.9): lol, lmao
Russia have their role in China's security environment, but they're not anywhere near the main fighting force for a reason. There are many limitations in what a 5 trillion economy can do vs a 30+ one.
What does china do with all the annual trade surplus it accumulates??
Bear with me, this comes back to China I promise.
NATO member has a combined 1.26 trillion compared to 72 billion. Fact is Soviet Union never spent more than US even though Soviet Union devoted more of its economy to military. The amount donated to Ukraine is also higher than Russian defence budget. In conclusion it is not a lack of dedication holding NATO back.
That is actually the crux of the issue. US cannot acquire what is needed (artillery shells), it can only buy things it doesn't need right now (F-35, destroyers). Despite more budget, it failed to translate into capability. Goes to show money do not always translate into the capability, because it assumes what you want is available in the market. Same issue with GDP.
Soviet Union got dismantled thoroughly. Old factory closed from lacking budget, key industrial regions separated from country. Russia spent decades to get back a fraction of old ability. It is not inherited for free. USA never got dismembered, it let it all go willingly.
Now where does it relate to Chinese economy? China respects the limitation of world market, so it make needed things for itself, instead of chasing pure profit. It irks the western economists a lot. But this is the most sensible industrial strategy for major nations. If China also let go of artillery production, and chase what is more profitable like medicine, then today China will also suffer like US. Likewise, China can very well 'afford' to buy EUV machine, but it will never get one because it is not available.
The best kind of economy is one that fulfills everything a country ever needs. Success is best measured by how well those needs are fulfilled, because that translates into national capability.
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Loll. Why did they play Dr. Dre’s Chronic as Eric Li’s intro song?
I think this comparison might not work because Germany, Japan and UK all happen to be under the US security umbrella. So while they might have similar economic size to Russia, they have different security concerns. Neither of those nations are expected to defend themselves independently and their defence industrial capacity reflects that fact.
I listened to this during my morning commute. It's amazing to me how easy to is to admit problems once they are too obvious to ignore. The fact that real estate is ~30% of Chinese GDP is bonkers. And the authorities sat on their asses and did nothing for years on end until it blew up in their faces. Should disabuse people of the notion that China is immune to the financial speculation/excess model that the West is plagued by.
I like his criticism/analysis of what he calls the "platform economy" (think Didi) which is basically about taking lots of investor money during the rapid growth phase, then establish a semi-monopoly (or oligopoly) while collecting rents. Once you reach that rent-seeking perch, you do very little actual innovation. It's basically a new business model rather than genuine innovation is his argument, and I agree with him. He thinks it is good that the CPC is cracking down on those tech companies and re-directing investment towards "deep tech" or "hard tech" (think AI, semiconductors, etc). Again, I agree.
He then looks ahead and notes that while China's industrial production is very high, its value-add is quite low. It has increased in recent years but it still too low, which is why China is not yet rich. His solution is for China to focus climbing the value-add ladder in industry. This might work to perhaps double China's GDP per capita, but it ignores the key weakness of many East Asian countries, namely a weak service sector. You see this in South Korea or Japan too. Both countries have strong industrial companies but you look at the service sector and you see very little.
Even fairly stagnant countries like Italy is richer than South Korea or Japan and it's not like Italy is known for dynamism. Their reliance on tourism is also much less than e.g. Spain or Greece as a share of GDP. For very rich countries (think Switzerland, Scandinavia, Netherlands, US, Australia etc) then a competitive service sector is a must. One advantage China has against South Korea and Japan is a stronger IT services ecosystem, but after growing very rapidly during the 2010s they have sort of stagnated. I would have wished him speak a little about this, but he seems to think they are all part of his "platform economy" and thus unworthy of support. I think that is a mistake. Companies like Baidu should not be lumped together with those such as Didi.
China is not deleveraging, as the IMF data clearly shows. It's in fact very rapidly taking on more debt, albeit from lower levels than in many advanced countries (though China is also much poorer in per capita terms, which makes it less defensible).
Deflation is obviously bad, but it is still early to say if it is permanent. It could just be a temporary spell. If deflation persists into next year, then the topic will merit a more thorough response.
Yep. However, the question needs to be raised whether China even needs FDI these days to the same extent that it used to. 20 years ago, one could make the plausible argument that FDI was necessary for technological upgrading. Today? Much less clear to me.
I'm not advocating China shut off sectors from FDI. Just raising the possibility that perhaps tracking FDI isn't as important today as it used to be to monitor the health of the Chinese economy. So perhaps we shouldn't really care as much whether it goes up or down or stays the same. It's probably more important for the foreign companies than China per se.
What I liked about his talks is his manner of weaving through stock and flow ideas and variables, alternating between zooming in and out.
Economics, or its precursors like managing state and common people's welfare, was, is, and will be part and parcel of statecraft, at least in historical and modern Chinese setting. Being a part of statecraft, it's not perfect, a deliberate choice between competing morals, hence there are a lot of errors and mistakes given the circumstances, intended or unintended, foreseen or blindsided. One the feature is that you cannot stop something until a consensus formed that it should be or must be stopped. That's the nature of the political beast ; do not cry wolf until so many see the actual wolf, or a lot of wolf footprints and damages it causes, otherwise your political rivals will come and get you, sooner or later, one way or the other, your good intentions be damned. There is no fall guy for that. Ditto that to real estate sector, property tax, etc. So by nature, they tend to not pop the zit before its time.
Speaking of stock and flows, my original intention was that we should focus our approach to that kind of concept to widen the discussion and deepen the understanding, instead of heated arguments all hanged up on narrow specific areas like gdp, gdppc, etc, and mind you which are all man made numbers and concepts with their own shortcomings and innate flaws, one of them being a conceptual straitjacket that tries to fit real outside world into its construct, and just one of so many other data-points of equal or more importance to consider in a given circumstance, all of which nevertheless still fall under stock and flows ideas. One can easily look up what is this rather old concept on the web.
Well that's at least a suggestion since we are pretty tired of seeing a lot of good folks bogged down in heated arguments over little things and some got even booted out, even though they have some insights and info that we either do not have or overlook, rinse and repeat, so here is at least a suggestion, or a wish, to stop that.