Chinese Economics Thread

[Serb]

Hello. I just joined the forum. If depopulation is not going to have a negative impact, why does India have twice the economic size of Korea and is about to surpass Japan? With their superior technologies, these two countries should not have even brought India closer to them.

Why does Latin America have twice the size of the total GDP of Africa, despite being 2 times less populous continent for example?

Why is India 20 times weaker than China, on average, in various national metrics, despite them both having around 1.4 billion populations?

Quality of population is all that matters for the future world when slowly only some STEM-related jobs remain and AI takes everything else.

 

[CMP]

Hello. I just joined the forum. If depopulation is not going to have a negative impact, why does India have twice the economic size of Korea and is about to surpass Japan? With their superior technologies, these two countries should not have even brought India closer to them.

I recommend you do much more reading here and much less posting, given you are new and clearly lacking in knowledge. Not to mention your user name clearly indicates a lack of sincere desire to engage and learn.

To answer your question, one dollar of GDP from producing and consuming paneer is not equal to one dollar of GDP from producing a high tech product. Likewise, one dollar of GDP from producing a high tech product in which all inputs were foreign is not equal to one dollar of GDP from producing a high tech product in which all inputs were domestic.

1.4 billion Indian people exporting petroleum-derived chems, low end meds, and white collar services, assuming their market share and margin continues to grow, are obviously going to eventually have more GDP than 100 million. That's why China now distinguishes between high quality GDP growth (tech/high end industrial/science) and low quality GDP growth (food, real estate, apparel).

If we take a different approach and assess high quality GDP vs low quality GDP, it will be obvious that South Korea and Japan are vastly superior to India.

 

[Umut]

I recommend you do much more reading here and much less posting, given you are new and clearly lacking in knowledge. Not to mention your user name clearly indicates a lack of sincere desire to engage and learn.

To answer your question, one dollar of GDP from producing and consuming paneer is not equal to one dollar of GDP from producing a high tech product. Likewise, one dollar of GDP from producing a high tech product in which all inputs were foreign is not equal to one dollar of GDP from producing a high tech product in which all inputs were domestic.

1.4 billion Indian people exporting petroleum-derived chems, meds, and white collar services, assuming their market share and margin continues to grow, are obviously going to eventually have more GDP than 100 million. That's why China now distinguishes between high quality GDP growth (tech/high end industrial/science) and low quality GDP growth (food, real estate, apparel).

If we take a different approach and assess high quality GDP vs low quality GDP, it will be obvious that South Korea and Japan are vastly superior to India.

Make sure I'm reading. Here I am trying to emphasize the influence of population on economic size. So much for the population, so much for the economy. That's why China needs to protect its internal Market.

 

[tankphobia]

Population decline wise, a lower working population is not the only thing that matters, the actual percentage demographic also matters. Currently the average age of a Chinese person is 39 years old, which I would say should be mid career. In 25-30 years if that number goes up continuously, the money spent on elderly support will start significantly dragging on the economy.

China should be watching Japan, Italy extremely closely as they're currently in the middle of this demographic percentage crisis right now.

 

[Eventine]

AI and Robotics can increase China's global competitive in service/product research, development and sales. If China doesn't use those available tools then China will fall behind, out compete by countries that uses them, and, as a result, more Chinese will be unemployed. Robotics, and probably AI too, are being used by highly competitive Chinese manufactures like, CATL, Nio, BYD...etc.

China main plan/objective is not to "overtake" or "dominated" the west/world, it is to be the best it can be. And to do that China needs to use all tools available: AI, Robotics, Super/Quantum-comptures, .. etc.

The West does not see it that way. For the West, it's dominate or be dominated. China may try to "live and let live" but whenever Europeans gained a major technological advantage over others, they've gone & conquered. It's a pattern - Indo-Europeans riding out of the steppe on their chariots to subjugate the civilizations of the Mediterranean, Alexander and the Romans marching out of Europe to conquer the Near East, the British, the French, and the Spanish ethnic cleansing their way through the New World and the Old.

History will happen again. Rule or be ruled - this is the way the world is.

 

[Wrought]

The West does not see it that way. For the West, it's dominate or be dominated. China may try to "live and let live" but whenever Europeans gained a major technological advantage over others, they've gone & conquered. It's a pattern - Indo-Europeans riding out of the steppe on their chariots to subjugate the civilizations of the Mediterranean, Alexander and the Romans marching out of Europe to conquer the Near East, the British, the French, and the Spanish ethnic cleansing their way through the New World and the Old.

History will happen again. Rule or be ruled - this is the way the world is.

Attributing ancient conquests like Macedonian and Roman to technological disparity seems like quite the reach. European imperialism, sure, and especially after the Industrial Revolution. But everyone was more or less using the same swords and spears back in the day.

And conquest is universal across history, including Chinese history. 中州 was not a very big place.

 

[gelgoog]

The Macedonians and Romans had decent equipment but their victories were more due to better organization, training, and logistics than actual military technology. Most of the time back then the powers they opposed didn't have regular field armies. You basically had levees where people brought whatever weapons they had lying around.

The Romans had issues where they faced superior technology several times. Be it the better steel and swords in Hispania, or the better boats the Carthaginians had, or the better cavalry the Partians had. The thing is they managed to adapt their own equipment and techniques to keep themselves relevant.

 

[donjasjit]

Where are consumers? Well, if someone is 3 times more productive (meaning he earns 3 times more money on average than now), at that time, than he is today, then, of course, that average citizen will also become a bigger consumer individually and consumption would rise overall too, simply he would spend more money. Not to mention that China is not a Mickey Mouse economy like the West where 80% of GDP is domestic consumption in the first place.

This argument is flawed. The reality is very different, as observed in other countries with demographic decline.

As people get older, they spend less even though they have the money. That is because they don't need to spend on the many things that are required by families. Older people almost always spend less than younger people. In addition a large proportion of older people don't need to work because they have money saved. Or they can't work because of health issues..

This starts a vicious cycle, low spending means low demand, which requires lower production, which means less money in the pockets of people, which means lower spending.

China does not have a problem now, as it's population of older people is still low. However, 25 years from now, things will start getting bad.

The first thing to solving a complicated problem like demographic decline is to acknowledge that is exists and then think of solutions.

 

[Serb]

This argument is flawed. The reality is very different, as observed in other countries with demographic decline.

As people get older, they spend less even though they have the money. That is because they don't need to spend on the many things that are required by families. Older people almost always spend less than younger people. In addition a large proportion of older people don't need to work because they have money saved. Or they can't work because of health issues..

This starts a vicious cycle, low spending means low demand, which requires lower production, which means less money in the pockets of people, which means lower spending.

China does not have a problem now, as it's population of older people is still low. However, 25 years from now, things will start getting bad.

The first thing to solving a complicated problem like demographic decline is to acknowledge that is exists and then think of solutions.

I talked mainly about working-age people (in the context of economic productivity), not the already people in retirement you are talking about.

Working-age people - as they move toward higher value-added industries, they will certainly have higher incomes.

(Those industries have fewer workers available globally, and higher profit margins due to lower market saturation allowing for higher pricing, hence corporations are forced and able to pay more their workers, due to the competition between them and due to the labor market supply/demand dynamics).

Hence, they will be 100% more than today (that's how human psychology and economics work, humans are natural spenders, especially when you give them more money). So the argument that quality improvements in population won't drive consumption is invalid.

They will not spend everything they earn, of course, as people in China are already very frugal and have the highest personal savings on Earth.

However, overall domestic consumption will still rise (btw domestic consumption in China is way less important economically than in the West, but still important a bit nonetheless). As for the older age pyramid in China at that time, that's totally another topic.

That's the topic regarding the pension system in China, etc. That could be solved by increasing the retirement age, or simply by the government having more income from taxes and other sources thanks to overwhelming increased productivity from the working population getting more qualified and paid in those 20-30 years.

Not many countries in the world today have a pension fund that is self-sufficient and can pay retirements on its own, governments often assist with it from their budgets, and that's nothing strange.

Also if we talk about health conditions, China has a way better health system than in the US for example, lower metabolic syndrome rates, higher lifespans, and probably overall healthspans too, so the retirement age could easily be raised.

However, China is a socialist country, so I don't think that they will even raise the retirement age, they will probably pay it from its budget if the pension funds stop being self-sufficient (I think they maybe already aren't, but we see no problems in debt levels).

 

[Serb]

To make a hypothetical projection, let's say that China can have 30% less total population in 20-30 years simply due to falling birth rates (pessimistic projection), and let's say its age pyramid will be skewed more heavily to the older side, hence they will have relatively less working age population percentage-wise as well. Then let's say that it makes the total working-age population decrease to around 50% of now (don't know how to calculate this, I'm not a demographics expert, so let's go with the pessimistic scenario).

However, factor in that the remaining working-age population at that time will be 300% more productive than today (If we equate China's average citizen's productivity peak potential scenario to that of Japan), making China's real GDP at least 2 times bigger than now. This is not to mention that China has way lower retirement ages than the West despite having way better health metrics (healthspans mainly), so it could make it easy to offset the age pyramid's potential negative changes in that way if they choose so. Not to mention advancements in medicine, sophistication of working technology, etc. I still think China's peak is around 3-4 times more.