Chinese Economics Thread

[tamsen_ikard]

Simple counterproof: any country with very different GDP per capita but equal economic complexity index.

Economic complexity directly measures the "more capital, more reputation, more knowhow, more relationship with existing customers" that you claim is important.

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If the relative rank of economic complexity deviates from the relative rank of nominal GDP per capita, then it means nominal GDP per capita is not captured by measurable technological capabilities but by other factors.

According to this Economic Complexity ranking, Slovenia, Slovakia and Chechia have a much more complex economy than both US and China. South Korea is number 3 in that list compared to US which is number 14. I have a hard time believing this complexity ranking. I do like this website for the huge economic data they provide in terms exports and imports of various countries. But I don't think their methodology for calculating economic complexity is good.

Edit:
Okay there are even more gems in this ranking, Mexico has a higher complexity than netherlands and Denmark. The same netherlands that makes ASML lithography. Yap, very accurate list.

 

[FairAndUnbiased]

According to this Economic Complexity ranking, Slovenia, Slovakia and Chechia have a much more complex economy than both US and China. South Korea is number 3 in that list compared to US which is number 14. I have a hard time believing this complexity ranking. I do like this website for the huge economic data they provide in terms exports and imports of various countries. But I don't think their methodology for calculating economic complexity is good.

Simple, they can have high average economic complexity not only by having many high value added industries but by having few low complexity industries like farming and oil/gas. So instead of say 1 IT engineer and 1 farmer or oil/gas technician, you have 2 automotive engineers. And in the US there are much more farmers, small shopkeeper, retail, oil/gas jobs, etc than in manufacturing.

I don't know about the rest but Czechia and South Korea has a huge % of the population working in high complexity, high value added heavy industry and very few doing low complexity jobs like farming, hand craft or mineral extraction.

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[Biscuits]

Simple, they can have high average economic complexity not only by having many high value added industries but by having few low complexity industries like farming and oil/gas. So instead of say 1 IT engineer and 1 farmer or oil/gas technician, you have 2 automotive engineers. And in the US there are much more farmers, small shopkeeper, retail, oil/gas jobs, etc than in manufacturing.

I don't know about the rest but Czechia and South Korea has a huge % of the population working in high complexity, high value added heavy industry and very few doing low complexity jobs like farming, hand craft or mineral extraction.

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I guess the problem is that it doesn't take into account the size of the country, so China and US having big farming/resource communities automatically tanks them into the gutter, when really if you took the most innovative parts of China or US, they'd match or exceed smaller countries in economic complexity.

According to this Economic Complexity ranking, Slovenia, Slovakia and Chechia have a much more complex economy than both US and China. South Korea is number 3 in that list compared to US which is number 14. I have a hard time believing this complexity ranking. I do like this website for the huge economic data they provide in terms exports and imports of various countries. But I don't think their methodology for calculating economic complexity is good.

Edit:
Okay there are even more gems in this ranking, Mexico has a higher complexity than netherlands and Denmark. The same netherlands that makes ASML lithography. Yap, very accurate list.

That is however just wrong as well. You cannot cherry pick one random item and then claim it represents how well the entire economy is developed. There are a few cities in China that make 2nm chip, have electricity conductor materials better than those anywhere on the globe etc etc. Does that mean a single township in Guangdong now has a more developed economy than South Korea or France, since those countries don't have an individually cherry picked product as advanced as the Chinese town? No it doesn't.

The aggregate complexity is still a valid and interesting measure.

 

[tokenanalyst]

Nominal GDP is the only thing we can measure objectively. Everything else is just projection. Real GDP growth is nothing but a projection by taking price of previous year to this year, then calculating the inflation and then subtracting it from nominal growth to come up with real GDP growth.

But, price could have increased because quality of the product could be better. Quality of service could be better than last year. Is the hair cut in a poor salon equal to a hair cut done by trained professionals in a good environment? Ofcourse not. Real GDP growth does not take any of that account. So, having a solid nominal GDP growth is also important.

if you have 0% nominal growth but also also 5% deflation what is the real GDP growth? 5%. So, your economy actually didn't grow at all, but by manipulating the numbers you got 5% real GDP growth. That's not good for the actual economy.

As an economy get richer, it must have inflation cause the quality of goods will increase, quality of people are also increasing, their demand for wages for the same will be higher.

As China grows richer, it must also increase the wage of its people, and that will cause inflation. Chinese workers will not be happy with getting $1 for a haircut when the same workers can get $5 in Taiwan for example. So, inflation is extremely important to get rich.

Wrong, if that is the case by definition people in countries with hyperinflation should have the best quality of life, should have the fastest growth and people should be the richest, but i dont think is the case. You may say, well, when asset prices go up people get richer, that may be the case, but only a few people get richer in asset hyperinflation the majority, especially young people are just price out of the market, for example high home inflation limit and stress out young couples. In any case you look it inflation make normal people poorer so in order to counter that salaries need to keep up, if salaries don't keep up with regular inflation or asset inflation people and the country in general by default are going to be poorer.

It may be the case that when the economy is down inflation is lower BUT inflation could also be lower when there is oversupply, in that case people are not poorer in fact by definition they are richer because their money worth more, that is until supply overpass the demand and prices rise again then you are getting poorer again.​

 

[BlackWindMnt]

If established economic theory worked, how come it isn't working now and all sorts of exceptions and caveats have to be added?

People aren't coming up with exceptions and counterexamples to classical mechanics every other decade. If a rare event occurs that cannot be accounted for by classical mechanics, such as the mercury precession problem, classical mechanics was discarded for that situation, and we got general relativity.

If science functioned like "established economics" we would have coupled differential equations calculating relative spin rates of epicycles, think about the exact gear ratios of epicycles, and have detailed formulae for the fire/water/earth/air values of each element to try to do physics and chemistry, instead of discarding geocentrism and adopting classical mechanics, and discarding elemental theory for the periodic table.

The always forget to add this one paragraph when talking about modern western economic theory. Did you mfers plundered the world for centuries and used the loot to go through industrialisation and then transition into a service economy. So you can start doing economic manipulation with printing money, manipulating interest rates, using centralised stock market manipulation, eternal inflation and counting every kind of transaction as a sort of profitable economic activity.

Ooh dear eggs where $2 five years ago instead of the $5 dollars now. Good thing i just created $3 more of economic activity buying the same thing as five years ago. But i guess China wont beat us in GDP metrics this year and we don't have to lose face yet.

 

[tokenanalyst]

Ooh dear eggs where $2 five years ago instead of the $5 dollars now. Good thing i just created $3 more of economic activity buying the same thing as five years ago.

Eggs are no more expensive because you are buying better eggs they are more expensive because your money worth less, ergo people are poorer.

 

[Serb]

That nominal GDP measure they like so much have no influence or outcome on the real world whatsoever, outside of their bragging.

Someone who hypothetically produces 10 cars will always be more powerful than someone who produces only 1 car at prices of those 10.

And regarding the standards of living, their nominal per capita GDPs seemingly don't result in anything positive for them either.

Ok, so you have higher nominal GDPs than us? But what benefits do you extract from that exactly when you have these kinds of data?

Yes, you can import more products foreign products in international currency dollars and find more immigrants than others, but so what?

This doesn't result in any improvement on the happinesses of the people. It can only barely keep you afloat from not collapsing already.

 

[Staedler]

Now coming back to my earlier point that you didn't understand. What I mean is that since high cost of labor is must for an economy to be rich, so if China wants to be rich, if its workers want to make more money per for hour for cutting hair or flipping burgers for example, then China needs to have inflation each year. 0% inflation is not good thing for China if wants to get rich.

As China gets richer, all goods and services will get more expensive. Right now maybe you get can get bowl of Noodles for $1 dollar in China. But a rich China will not sell the same noodle for $1 because the workers will have more options and will demand more wages for that same restaurant job.


So, for that scenario to happen, you need solid inflation each year. In fact you need more inflation than the west. So, that eventually Chinese workers can have equal wages compared to US workers.

So more inflation is just good according to you. 0.5% is too low for you. 2% is better. According to the same logic, why not 10% or 20%. Hell according to this logic, Zimbabwe must have be the richest country in the world. After all they had 89.7 sextillion % inflation YOY back in 2008. My god, all their citizens must be living in 2900, having blown past the Cyberpunk era. Perhaps they're already the secret rulers of the universe and all we're seeing is their afterimages!

People spewing comments that have no basis in economics like deflation is good for the economy and if I try to argue against that using established economic theory and I become the troll. Sad to see the level of delusion from you. Anyways, if you don't like my arguments, you can argue against that using actual facts instead of making personal attacks.

Which broke-back school of economics did you get your degree from?

 

[BlackWindMnt]

Eggs are no more expensive because you are buying better eggs they are more expensive because your money worth less, ergo people are poorer.

Agree, but money being more or less worth is not important in the current western zeitgeist. Because we must make every dollar count when we want to calculate western nations GDP. no dollar can be ignored not even those used for illegal drug trade or other dark sectors of the economy.

That is why westerner like to use gdp as such a "strong" argument. I would bet once China becomes number one economy in gdp terms westerners will switch to gdp per capita. After that they will find something else to cope.

 

[GiantPanda]

its obvious you guys have not studied economics if you say deflation is good or 0% inflation is good. That's a sign of a an economy that is stuck and not moving forward.

Inflation is not just price growth, it is wage growth as well. It keeps economy moving and active. A low and positive inflation rate can encourage spending and investment. If people expect that prices will generally rise over time, they may be more inclined to spend and invest rather than hoarding money. This contributes to economic growth.

That's why you see in China that people are hoarding money instead of actually spending it for investment or consumption. They are too afraid to spend. That's not good for economic growth.

Government needs to step up and increase the money supply, raise people's greed for gains. That's when they will invest, start businesses and do stuff with their savings.

At its basic core, deflation means a quickening supply of goods that almost always comes from productivity gains pushed by increasing technological advancement which is most certainly in China's case.

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• Deflation is when the general price levels in a country are falling—as opposed to inflation when prices rise.
• Deflation can be caused by an increase in productivity, a decrease in overall demand, or a decrease in the volume of credit in the economy.
• Most of the time, deflation is unambiguously a positive trend for the economy, but it can also under certain conditions occur along with a contraction in the economy.

It is an unambiguously POSITIVE sign for an economy, especially a socialist like China and ESPECIALLY a developing country China that is climbing up the development ladder.

The cope is from the Western narrative that deflation or simply falling prices is unambiguously negative simply because it is China when even common sense tells you that an abundance of goods is unambiguously a positive sign.

Countries are destroyed by inflation (Weimar Germany) or lack of goods (USSR.)

No country fell from an abundance of goods with affordable prices.