Chinese Economics Thread

[horse]

This decoupling I think is a crock.

I will provide another example. The Chinese EV industry.

The Chinese EV industry has vertical integration, meaning they got the stuff to build the battery, that goes into the car, and they can build the car, with the software that runs on semi-conductor chips, that China mostly fabs itself.

That is the whole supply chain, for the Chinese EV.

Look at that! Since the Chinese EV industry is quite advanced, this is total decoupling, already in place.

Should the Western politician be happy about that? That the EV industry has decoupled?

I think we know the answer. They are not that happy that the Chinese were able to decouple the EV industry from them.

So, on one hand they wanted decoupling. On the hand, when decoupling is achieved, they do not like it, in the case of EV.

They are either fools or morons. Cannot figure out which is true.

You know, things were not like this in the past. People usually had a brain when they were serving in public life.

 

[horse]

So, on one hand they wanted decoupling. On the hand, when decoupling is achieved, they do not like it, in the case of EV.

They are either fools or morons. Cannot figure out which is true.

Remember Borrell the gardener?

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It does not appear to be a mystery why the Chinese would feel that way, if we take a step back and actually look at what is going on.

There is some weird psychology phrase, cognitive disassociation.

The reality does not match the idealized images in their minds, hence all the crazy talk.

But, that really is their problem. Thank you very much.

 

[Arij Javaid]

Can somebody confirm this but doesn't a weaker yuan helps china attract oversees Chinese who are in America/Canada back to China since their purchasing power in china increases??

It might help to reduce emigration too because a weaker yuan makes it harder for Chinese to afford oversees living.

I haven't even touched on the fact that it boosts exports.

So in theory it should be beneficial to China?

 

[horse]

So in theory it should be beneficial to China?

It is really complicated I think.

There is no right answer.

Just try to understand the fundamental effects, such as like what you just posted, then think of what if this happens or what if that happens, and what do they want?



For example, the Clinton administration, if I remember correctly, or probably Obama, one of them had a strong dollar policy.

The reason for that, was to attract capital into the United States.

Also, with a strong dollar, everything else the world produces, becomes cheaper.



So, what do the Chinese want. They was a strong Yuan, but not too strong, because they still export a lot of stuff. Probably explains why Yuan always bounces around these levels relative to the USD without changing much for years and years.

The other consideration nowadays is those organizations that China is part of, such as BRICS, and RCEP.

What these organizations need is stability with the main countries involved. Having a stable currency would be a big part of it. That stability means reliability, people can make plans for the future.

The RMB is always worth about that much relative to the USD for years and years. That is no accident.

 

[gadgetcool5]

China Box Office Surges by Annual 83% in 2023 to $7.73 Billion​

Recovery after COVID year was dramatic, but imported films fared no better than in 2022.

Local ticketing firm Maoyan reported that the number of admissions in 2023 was the highest in four years, at 1.3 billion. That is fractionally below one cinema visit per person in the massive country.

Although the market was largely re-opened to imported titles, Chinese-made films accounted for an 84% share of the total box office market, according to consultancy firm Artisan Gateway Imported accounted for 16%. The proportions were little changed from the more restricted 2022.

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Re-opening has been a major success in at least one major industry: the box office. Particularly, more domestic films are being seen, a beneficial trend from around the world last year.

 

[Serb]

Interesting to see how Chinese homegrown brands decimated the competition in the domestic markets, now capturing the absolute majority for the first time in history. This just shows how far China has come as a nation and how Western companies continue to be outperformed by Chinese counterparts in every area of the economy.

Chinese domestic car brands are getting 5-6% market share increases every year nowadays. Even though all the other cars sold in China are basically also made in China and they just have a foreign brand name, this is still good because, after all, all the profits of Chinese brands are directly in the Chinese hands and it projects a good image.

China’s Homegrown Automakers Rise to Dominate Domestic Market​

Bloomberg) -- China’s demand for electric vehicles has delivered the nation’s homegrown carmakers a seemingly unassailable and irreversible lead over all foreign rivals in the world’s biggest auto market.

Led by the likes of BYD Co. and Geely Automobile Holdings Ltd., Chinese firms grabbed more than 50% of total auto sales for the first time in July, according to Bloomberg’s analysis of data from the China Automotive Technology and Research Center.

That growth is coming at the expense of legacy German, US and Japanese automakers from Volkswagen AG to Ford Motor Co. and Toyota Motor Corp. UBS AG analysts earlier this month warned western carmakers are set to lose a fifth of their global market share because of the rise of more-affordable Chinese EVs.

As Chinese buyers increasingly favor local manufacturers, foreign firms are in retreat. South Korea’s Hyundai Motor Co. is selling production facilities, Ford has cut jobs and Stellantis NV last year shuttered its only Jeep factory in China. Mazda Motor Corp.’s Chief Executive Officer Masahiro Moro earlier this year openly fretted about falling sales and faltering earnings in China.

“China is progressing with a scary speed,” Moro said. “Our sales in China, as well as earnings, will suffer.”

BYD alone holds an 11% share of China’s auto market. It’s strategy of selling a wide range of EVs at price points ranging from the budget Seagull and Dolphin to the top end of the market has helped fuel its rapid growth. Eleven of the 20 top-selling brands in China are now from local companies.

The market share of US brands, including the likes of Tesla Inc., Buick, Ford and Chevrolet, has fallen to the lowest level since the data started in 2008. Without EV pioneer Tesla, which opened its Shanghai factory in 2019, the picture would be even worse.

While German brands are faring slightly better, cracks are appearing. VW earlier this year lost its mantle of China’s top-selling car brand to BYD — dogged by a lack of electric models — while Mercedes-Benz Group AG has been caught up in a bruising price war. To get back in the game, VW in July struck a $700 million deal for a 5% stake in loss-making Chinese EV upstart Xpeng Inc., including an agreement to make at least two new VW-badged battery-powered models for the Chinese market.

Among the losers, French automakers have seen their popularity collapse in the past decade to the point they are also-rans, with Citroen, Peugeot and Renault all having less than 1% market share. It’s small wonder Stellantis CEO Carlos Tavares is shifting his strategy in China, without completely leaving. By exiting factories and relying more on partners, it leaves it with something more asset-light and less of a cost burden.

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Chinese-brand passenger car sales surge in China, capturing majority market share​

Sales of Chinese-brand passenger cars in China have experienced a remarkable surge, with a year-on-year increase of 23.8 per cent in the first 11 months of this year, reaching a staggering 12.98 million units, according to industry data.

The China Association of Automobile Manufacturers has reported that the market share of Chinese-brand vehicles during this period rose to 55.8 per cent, marking a significant increase of 6.6 percentage points compared to the same period in 2022.

The momentum continued to build in November, as approximately 1.56 million domestic-brand passenger vehicles were sold in China, representing a remarkable 37.9 per cent surge compared to the previous year.

These impressive sales figures accounted for 59.7 per cent of the nation’s total passenger vehicle sales in November, reflecting a notable increase of 5.4 percentage points compared to the same month in the previous year.

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[Serb]

Chinese commercial vehicles are often overlooked, but they are also a part of the reason why China has become the biggest auto exporter.

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For China, the pandemic-induced global slump in commercial-vehicle manufacturing and exports was an opportunity not to be missed. With the domestic automotive industry rebounding quickly thanks to government incentives, Chinese manufacturers filled the gap.

This was helped by China’s Belt and Road Initiative. Launched in 2013 as a global infrastructure development initiative, it helped Chinese manufacturers push commercial-vehicle sales into various other countries.

As a result, exports in 2023 were heavily boosted by tractor-trailers, along with trucks, dominating the Southeast Asian, Middle Eastern, African and South American markets with over 70% market share for Chinese manufacturers, says SPGlobal.

In the first half of 2023, Chinese-manufactured commercial-vehicle exports increased nearly 25% compared to the same period last year, totalling around 400,000 units and generating 77 billion yuan (€10 billion).

In July this year, diesel-powered commercial vehicles represented 77.3% of total commercial-vehicle exports from China, with 51,000 units. The export of petrol-fuelled commercial vehicles declined by 12.9% year on year, while the export of alternative-energy powertrains showed a striking 154.2% increase.

 

[AssassinsMace]

India has the courtesy culture where they will lie to you if they believe you'd rather hear the lie than the truth. At the other end of that is an American. The West resorts to reading tea leaves to understand something because the plain truth doesn't fit their narrative. For example they will use car sales as an indicator of how well their economy is doing by the logic that buying cars are generally not something that is necessary so therefore if people are buying cars, it's because consumers find it safe to buy big ticket items because they have confidence in the economy while if they didn't, they would be saving and not spending. Yet for China where China is still the largest car market in the world over the US and domestic cars are killing foreign, that logic doesn't apply because only a tea leaf reader can interpret what it means where no one else can by simple logic. Look at Biden claiming the US economy is doing great because inflation in the US has gone down being an indicator while public sentiment says otherwise because prices at the grocery store haven't gone down. Either that's a lie or inflation has only gone down for industry and they're not passing it down to consumers. They look for confidence in the economy by the general public not in industry because ultimately its the consumer that has to spend the money for private industry to make a profit. So all it takes for the American economy to do well is making Americans believe, even if it's a lie, the economy is doing well so they go out and spend their money.

Then on the flip side all they have to do is make everyone think the Chinese economy is doing bad to declare China is doing bad. They say because they're decoupling from China despite how the trade deficit continues to grow in China's favor, the Chinese economy is collapsing. China is a 1.4 billion people market and yet how they measure how China is doing by how much they're not buying from China. The domestic economy is irrelevant to them but the US goal being just about everything only America is what's going to make the US strong. How do they claim China is collapsing because there's no more young people to work as proclaimed by Peter Zeihan yet they say 20% of young people in China are unemployed...?

 

[Serb]

So far, this year, the reduction of FDI in China (around 10% YoY to the previous year) was mostly in the low-end sectors. A recent Fitch Ratings report quoted below confirmed this.

Very likely due to rising labor costs in China due to the industrial structural upgrading of the Chinese economy as a whole. Not that China needs them anymore.

Other foreign high-end industrial sectors in China have neither motivation nor any alternatives to decouple from China in those areas really. They will remain.

Those high-end industrial chains are not just worth in terms of investment numbers in one year, but in the future, they will help Chinese high-end industry development as a whole.

Recent report by Fitch Ratings, which said the move by global and Chinese companies to relocate production away from China amid rising trade barriers and geopolitical tensions remains limited to sectors involving low-skill assembly and mass production, such as textiles, apparel and footwear, with manufacturers persisting with higher value-added production in China.

"We believe the supply-chain shift is likely to be gradual, as China's competitive advantages of a large and relatively high-skilled workforce, well-developed infrastructure, industrial expertise and efficient and complete manufacturing value chain are unlikely to be overtaken by other countries in the near term," the report said.

Above mentioned low-end industries are losing value, but these high-end ones are rising:

China's manufacturing sector utilized 294.17 billion yuan in foreign investment, a decrease of 2.1 percent on a yearly basis between January and November, said the ministry on an online statement.

Within this sector, high-tech manufacturing saw a 1.8 percent increase on a yearly basis in foreign investment during this period. Specifically, the medical equipment and instrument manufacturing, as well as the electronics and communications equipment manufacturing businesses, experienced growths of 27.6 percent and 5.5 percent year-on-year, respectively.

Noting that China was estimated to contribute around one-third of the global growth and remain the biggest engine of global economic development in 2023, Zhu Bing, director of the commerce ministry's department of foreign investment administration, stated that the fundamentals of China's sound economic development remained constant in the long run.

Zhu added that multinationals value the Chinese market's massive scale, innovative competitiveness, and attractiveness of global innovation factor resources.

From January to November 2023, China's high-tech industries attracted investment of 386.65 billion yuan (about $54.45 billion), accounting for 37.2 percent of total foreign direct investment volume. During the period, the number of new foreign-invested firms in China increased by 36.2 percent year-on-year.

This last paragraph is from this article:

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This article below is on the state of the Chinese economy as a whole:

(My own prediction, continuing 5% GDP growth, and 1/3 global GDP growth share for the next few years).

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[Serb]

No real decoupling from China:

https://twitter.com/i/web/status/1744038987109412953

It seems that the world is decoupling from the US/West, and not from China. Not everything from this chart is purely Chinese trade rerouting for the West.

There are simply more exports from China to the Global South happening in general. Due to the Western economies being all in decline or stagnating for quite some time.

With real wages falling or stagnating, especially for average middle-income citizens, high inflation, quality of living decreasing overall...

So China has to export more to the Global South, which simply has higher growth rates, or better said growth at all, unlike the West.

The same is probably true for exporters in the Global South, with probably more and more exports going to China than to the West.

It seems that the Collective West "garden" is isolated not just politically, but economically as well.

Look at this article explaining why are Chinese TV exports closing in and threatening to overtake Korean TV exports market share soon.

Simply because Korean TV producers are positioned for high-end products in the West, but the West is economically collapsing.

Meanwhile, the Chinese produce mainly low to medium-end products and are stable and rising in exports to the Global South countries.

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