Chinese Economics Thread

[horse]

Likewise, as I said at the beginning, I was overly optimistic (despite being called pessimistic by most here). This is why I repeated my point earlier, that sentiment/narratives matter - even if they're false, because they influence behaviour. Ultimately, the way I interpret this is that, those who don't feel good about the economy outnumber those who feel good.

The wealth effect is real.

As long as the property market remains in the doldrums, people will feel poorer, and not spend.

In America, they don't have this problem, since people live paycheque to paycheque.

So, on some level, I tend to not be overly concerned, even though I fully agree with you.

If Chinese people inside China are negative about their prospects with an economy with 5% growth, these same people will be suicidal if they lived in Japan, Canada, the EU.

Keynes was right, animals spirits are important.

 

[xlitter]

Total retail sales of consumer goods from January to October was 6.9%, and catering increased by 18.5%

 

[abenomics12345]

I'm not sure what particular threads of discussion past or current you and others are quibbling over regards to GDP growth or specific claims about what constitutes XYZ or ABC.
I don't particularly care and it's not something I've been involved in.

In this case, I'm specifically saying that if you are portraying the people you've spoken to as a representative sample that is reflective of population level feelings towards the economy or general sentiments to the future, then that is no more valid than using a 2021 representative sampling survey for late 2023. This isn't a matter of requiring countering evidence but rather whether your anecdotes should be interpreted by anyone here as representative to begin with.
I assume given you're not choosing to reference this, that you are conceding this point, and if that is the case then I don't have any particular strong opinions about what you or others are writing.

If you read my initial post carefully, my observations are based on over 200 meetings with publicly traded companies who, themselves have 10s and 100s of millions of customers that they serve. If you believe those are "anecdotal evidence that do not represent the country", let me illustrate precisely why that is a naïve (at best) and if not disingenuous take.

As an example, Yum China has over 400 mln members and serve some 700 mln customers in China in over 1000 cities through approx. 15000 stores (KFC/Pizza Hut/Lavazza/Little Sheep/HuangJiHuang). When Joey Wat (CEO of YUMC) tells me that she's seeing consumption downgrade (because ticket size is shrinking), you should know to recognize that it isn't "an anecdote" but rather based on their millions of transactions that they see daily. They are facing significant competition from Tastien (Chinese hamurger joint with 3000 stores), Wallace (fried chicken chain with 20000 stores), and Saizeriya (Japanese company serving Italian fast food with a few thousand stores) - because these competitors serve cheaper products.

You can choose to view this as "an anecdote", but that tells me more about your intelligence than about your willingness to engage the subject matter.

Btw this point is just as valid when I claim industrial upgrade is happening at a faster rate - I'm not saying it because I spoke to "some guy" - I attended the China International Industrial Fair (the Zhuhai Airshow equivalent for industrial automation in China) and saw dozens of companies and spoke to dozens of attendees to understand the technology improvements.

By your logic, this can be also dismissed as "an anecdote" - but I don't see you address this point, but I assume that is because it "fits your opinion".

As I said I am more than happy to elaborate on specific examples but I do not appreciate this "your data is bad because it doesn't fit my view" vibes.

 

[Maikeru]

@abenomics12345

In terms of industrial upgrade, can you tell us what we can expect in the next few years please?

 

[xricxo]

@DoggyDog1208

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about Chinese consumption just dropped. It's a nice summary of his Twitter posts of the last couple of months. His choice of pen name, Han Feizi, made me chuckle a bit. My quibble with the article would be that the estimate of actual GDP being 25% to 40% larger then published seem to be a bit to high. For 2008,

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estimated a GDP about 15% larger then published by the NBS, using the results of the third economic Census and the raw data files used by NBS to calculate the revised GDP (for 2008). Now, if somebody would update Rosen's analysis of Chinese GDP using the data from the fourth economic Census in 2018, we might have a good shot at estimating accurate GDP growth rates for that decade.

Alas, with the current political climate between China and the US, this is probably just a pipe dream, since nobody in their right mind would share the raw data that NBS is collecting with any US based analyst.

 

[sunnymaxi]

@DoggyDog1208

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about Chinese consumption just dropped. It's a nice summary of his Twitter posts of the last couple of months. His choice of pen name, Han Feizi, made me chuckle a bit. My quibble with the article would be that the estimate of actual GDP being 25% to 40% larger then published seem to be a bit to high. For 2008,

Please, Log in or Register to view URLs content!

estimated a GDP about 15% larger then published by the NBS, using the results of the third economic Census and the raw data files used by NBS to calculate the revised GDP (for 2008). Now, if somebody would update Rosen's analysis of Chinese GDP using the data from the fourth economic Census in 2018, we might have a good shot at estimating accurate GDP growth rates for that decade.

Alas, with the current political climate between China and the US, this is probably just a pipe dream, since nobody in their right mind would share the raw data that NBS is collecting with any US based analyst.

https://twitter.com/i/web/status/1726978384063070326

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we also conclude that China’s GDP is under-reported by an amount largely equal to household consumption outside of retail sales. If we had to ballpark it, we would say China’s household consumption is 50-55% of GDP, investment is 30-34% of GDP and total GDP needs to be grossed up by 25-40%...

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i have already told. Party is chilling right now. we are sit on top when it comes to actual economy. be it nominal or PPP.

China's total GDP is largely under reported. night life and local/street vendors don't even count. actual Chinese GDP is much higher than what government reported.

this is the cultural problem inherited from ancestors . we don't publish accurate data and statistics.

 

[In4ser]

Makes sense. When everyone else is struggling you don’t want to be flexing your bling and designers goods. It’s going to attract negative attention and perhaps blame or demands for community contributions.

If true, then perhaps China is just waiting for the big crash to look like the hero and prop up its friends at the time of their greatest need and at America’s greatest weakness.

 

[Maikeru]

Makes sense. When everyone else is struggling you don’t want to be flexing your bling and designers goods. It’s going to attract negative attention and perhaps blame or demands for community contributions.

If true, then perhaps China is just waiting for the big crash to look like the hero and prop up its friends at the time of their greatest need and at America’s greatest weakness.

China would lose developing nation status if this theory is correct and it came out. Perhaps that's also why PBoC doesn't allow RMB to strengthen?

 

[xricxo]

i have already told. Party is chilling right now. we are sit on top when it comes to actual economy. be it nominal or PPP.

China's total GDP is largely under reported. night life and local/street vendors don't even count. actual Chinese GDP is much higher than what government reported.

this is the cultural problem inherited from ancestors . we don't publish accurate data and statistics.

One more thing is that the economy is in a structural transition now, from real estate / infrastructure to manufacturing / new infrastructure (mostly data transmission/compute/NEV/renewable energy related, compare recent credit flow from real estate (RE) to industry). In the medium term, this will lead to a reshuffling of the composition of economic elites, from RE/finance to industrial activities. Obviously, the current winners don't like this one single bit, hence the low (consumer) confidence right now. All in all, a good change in economic activity from rent extraction to productive activity in my view.

 

[sunnymaxi]

One more thing is that the economy is in a structural transition now, from real estate / infrastructure to manufacturing / new infrastructure (mostly data transmission/compute/NEV/renewable energy related, compare recent credit flow from real estate (RE) to industry). In the medium term, this will lead to a reshuffling of the composition of economic elites, from RE/finance to industrial activities. Obviously, the current winners don't like this one single bit, hence the low (consumer) confidence right now. All in all, a good change in economic activity from rent extraction to productive activity in my view.

Transition almost completed. shifted entire investment into industries/Manufacturing.

October month recorded highest ever electricity consumption.. overall Power consumption in 2023 is much higher than 2019.

Power consumption growth was likely driven by higher production of Cars, (esp. EVs) aluminum, (Cars , Aerospace) batteries, and integrated circuits and manufacturing equipment.

China’s specialized equipment manufacturing industry for semiconductor devices sees 33.9% surge in value added in October..