Chinese Economics Thread

[Serb]

On a two-year smoothed basis, growth for 2022 and 2023 was 4.2%, which is nothing close to what China achieved in the 40 years before

Only in relative percentage terms. In absolute terms, this is still one of the highest growth values in the history of China (and of the world).

And that's with their intentional crushing of the real estate sector + Western and global economic slowdowns, leading to lowered exports.

China also released statistics on youth unemployment (age 16-24) excluding students, which is 14.9%. The rate for the U.S. of the same age group is 9.4%. This is still unacceptably high.

It doesn't matter that 14.9% are not working when those who work contribute more than enough to make China grow at a historic pace as a hyperpower in the making.

Unlike in the US, where only 11% of their economy (GDP) is in manufacturing. What value do they get from all those retail stores, flipping burgers, lawyers, government administration, and liberal arts jobs?

China can't print money out of thin air and then boost the economy artificially and give people to spend for basically "free", while all work structurally easier jobs.

It's easy for the US to have better youth employment when their younger can basically all work in those easy 80% service-based jobs.

Meanwhile, in China, there is a much higher focus on very demanding, high-productivity manufacturing in high-tech more and more.

As I already stated, you see that most of the fixed asset investment this year got into high-tech industries that not everyone could work in (not everyone is innately that intelligent), as opposed to low-tech production and service sector fixed asset investment.

Everything is a tradeoff, yes, they have higher youth unemployment but are much more technologically and industrially advanced and sturdier economically than America.

 

[antiterror13]

China has nearly caught up to Japan and Germany in terms of robot density in manufacturing as of 2022.

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Why there is no India in the chart?

 

[donjasjit]

Why there is no India in the chart?

Here it is.

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Not on the chart yet but growing fast.

 

[Serb]

It's ironic how rosy are this and the semiconductor threads as in the real world even Chinese are trying to escape their country, e.g.

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and mainland stocks are lower each year and hang seng now is at levels from year 1997 (and this is inflation unadjusted!), any explanation?

Here is the explanation: The stock market is basically 99% irrelevant to the real economy and to real life. To me, to you, to nearly everyone.

In the US around 1% of people own around 50% of shares listed there, and around 10% own 90% of shares also.

So, basically, outside of the rich oligarchy, that has no effect on the everyday life of ordinary people and the country's economic power.

That's all a virtual leaning concept mostly. But yes, it has some basis to be looked at, but as 30th in line of way more important indicators.

You see these articles popping up, like the one you linked, precisely because US oligarchs/fund managers can't make money in China, and suck their wealth off like they can do in the Wild West that is the US, so they get mad as hell.

Also, all the smartest people in the US basically go into overly developed and bloated finance sectors to make money for oligarchs in these virtual-like engineered finance markets (or they became lawyers to protect oligarchs' wealth, also overly bloated in the US, and also another virtual leaning sector),

Whereas the smartest people in China go into STEM, high-tech manufacturing, real economy, real industrial power, etc...

Also soon as all your capital goes into those useless bullshit virtual finance for oligarchs, instead of high-tech credit, and R&D, you lost.

The keys to a country's development and prosperity are both capital and human labor and if you mismanage those two, then you will lose.

 

[Wrought]

It's ironic how rosy are this and the semiconductor threads as in the real world even Chinese are trying to escape their country, e.g.

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and mainland stocks are lower each year and hang seng now is at levels from year 1997 (and this is inflation unadjusted!), any explanation?

The explanation is that economics at the macro level is highly abstract and cannot be translated into individual human stories without loss of generality. Or vice versa. You can always find anecdotes, good or bad, to push whatever narrative you want. You can always find statistics, good or bad, to support whatever argument you want. And they are, for the most part, all true. Someone will always be thriving, and someone will always be struggling. Your mistake is in thinking that different people cannot, for example, be succesful in semiconductors while failing in stocks. But of course they can. A billion people means a billion separate stories, and none of them show the whole picture.

The whole picture is only ever shown by time. Is the economy (howsoever defined) at this moment doing well, or not? Check back in ten years, or twenty, or fifty. Time won't give you a politically convenient cudgel to use right now, but it will give you the truth. Or at least, more truth.

 

[Serb]

See here how youth unemployment increased in China over the years as it got economically more prosperous.

It is not a negative indicator at all. After all, as a country rises technologically and economically,

The jobs get higher and higher barriers to entry, so fewer people can work on them,

And it takes time, for them to suddenly switch mayors or start higher education in the first place,

Or wait for the job in their own sector to come by, as it is not in demand anymore, like it was before.

But even though that less younger people work right away, those who do work create more value than before.

This to me looks like a "problem" of Chinese rapid growth and modernization, everything evolves so fast always.










In 2023, in China, high-tech fixed asset investment grew 10.5 percent year-on-year in 2023. But overall it grew only 2.9 percent year-on-year.

So, it tells you that there had to be a significant reduction in investment in other areas, like the low-tech or service sector, for it all to be dragged down like that.

People simply weren't prepared for such changes, so there needs to be more time until they manage to completely fit into the new framework.

But even without them entering the workforce straight away, the economy simply grew once again. I don't see how that can be a problem.

 

[Biscuits]

Only in relative percentage terms. In absolute terms, this is still one of the highest growth values in the history of China (and of the world).

And that's with their intentional crushing of the real estate sector + Western and global economic slowdowns, leading to lowered exports.





It doesn't matter that 14.9% are not working when those who work contribute more than enough to make China grow at a historic pace as a hyperpower in the making.

Unlike in the US, where only 11% of their economy (GDP) is in manufacturing. What value do they get from all those retail stores, flipping burgers, lawyers, government administration, and liberal arts jobs?

China can't print money out of thin air and then boost the economy artificially and give people to spend for basically "free", while all work structurally easier jobs.

It's easy for the US to have better youth employment when their younger can basically all work in those easy 80% service-based jobs.

Meanwhile, in China, there is a much higher focus on very demanding, high-productivity manufacturing in high-tech more and more.

As I already stated, you see that most of the fixed asset investment this year got into high-tech industries that not everyone could work in (not everyone is innately that intelligent), as opposed to low-tech production and service sector fixed asset investment.

Everything is a tradeoff, yes, they have higher youth unemployment but are much more technologically and industrially advanced and sturdier economically than America.

I don't think "easy" is the way I'd describe taking 2-3 shitty customer service jobs or having 1-2 jobs while going to classes, just to make ends meet on rent due to inflation. The jobs are low skilled maybe.

Realistically most 19 yr olds are not supposed to contribute that much to economy. What did you know how to do when you were 19? And how would that knowledge have contributed to an innovation based economy? Of course, by being a burger flipper or boba tea pourer, you could help enable the more advanced sectors of the economy, but I don't see evidence that there's too little of those in China.

 

[ansy1968]

It's ironic how rosy are this and the semiconductor threads as in the real world even Chinese are trying to escape their country, e.g.

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and mainland stocks are lower each year and hang seng now is at levels from year 1997 (and this is inflation unadjusted!), any explanation?

I think Eric Li explain it perfectly, those oligarch (tech parasite like Jack Ma) who can't compete evenly in the NEW SYSTEM created by Xi are the one complaining and are moving its money to Singapore and Japan while those remain will be the new champion as they adapt to the new reality and invest in new technology.

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In this lecture, a delegation from the Harvard Kennedy School (HKS) joined Eric Li from Chengwei Capital, as well as Dr Brian ...

 

[zbb]

It's ironic how rosy are this and the semiconductor threads as in the real world even Chinese are trying to escape their country, e.g.

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and mainland stocks are lower each year and hang seng now is at levels from year 1997 (and this is inflation unadjusted!), any explanation?

Ignoring the effects of speculation, stock market performance reflects the expected value stockholders will be able to extract from the economy. You can have a well functioning economy but underperforming stock market when the expected value extracted by the owners of capital is low or decreasing, e.g., if economic gains are distributed to workers and consumers instead of the owners of capital.

Your comparison of China and Japan is a good illustration of this point. While Japanese capital owners (stock market) have done well since 2008 (Nikkei nearly tripled), real wages of Japanese workers are lower today than back in 2008. In China, the opposite is true. The Chinese stock market is lower today than back at the start of 2008 while real wages of Chinese workers today is close to triple that of 2008.

Spoiler: In other related news

 

[Staedler]

>> ansy1968 "the NEW SYSTEM created by Xi"
I think the removal of Hu Jintao was an early indicator what this system might be. Do you think this was made in a civilized way? And if you are based in China, do you think you will be free to answer me honestly?
I've watched the part with Eric Li. He actually reminds me of Jack Ma. And most what he is saying are just best wishes. How can he speak in such way of Alibaba and Byd? Are there better electric cars worldwide? And ok, Alibaba might be an old lifestyle company but what about Amazon, or the magnificent 7 in us, are they not? And what is the alternative, CATL? where ppl work 16 hours a day and are busy to see that their company is down 30% last year? If they work voluntarily 16 hours a day and believe in their company why not buy some company shares? The biggest mistake he is making is believing that the economy can be managed from above. I've lived in eastern europe during USSR times and know exactly what planned economy is. And that's another reason ppl in Taiwan don't want to join the party. Plus, they can see what happened to Honk Kong, and speaking of that:

>> Serb "The stock market is basically 99% irrelevant to the real economy and to real life. To me, to you, to nearly everyone"
No, it's not. For example I have invested in Chinese companies which are now worth pennies compared to western analogues. A lot of ppl in Honk Kong have their pension plans ruined (especially the ones opting for more mainland stocks vs usa). My friends from China also invested in real estate and I don't want to ask them how they feel now. You might think that ruining people wealth is insignificant but that's one of the reasons why people go against their governments.

>>Wrought "Your mistake is in thinking that different people cannot, for example, be successful in semiconductors while failing in stocks"
On the contrary, they can be and I know it. But when stocks are annihilated and real estates down and some of them will never be finished this means that most of the people are not doing well. They will not spent money. And internal demand will slow. Money velocity will slow. Disinflation will come, then deflation, then depression and then there will be no one to buy the new Huawei phone, which btw have very bad support outside of China I still struggle to use NFC emulation on my Huawei watch 3 in EU while this is already released for other regions..

Eastern communism is not western communism and never shall the twain meet. Other than the window dressing on top, they come from totally different places historically, culturally, and economically. It's always the eastern europeans who lived in the twilights years of their own system who suddenly deem themselves enlightened enough to pass judgement on vastly different systems and situations.

Hong Kong's just fine thank you. In fact, it's been getting better ever since they started to kick out the idiotic types that would consort with Ukrainians. Same with the moronic sort that would "invest" in real estate a full 7 years after the government already warned about it being too much of a speculators market. Xi literally said houses are for living in, not speculation in 2017. Just like the morons' who "invested" in local banks with 17-20% rates in a 2% rate environment and threw a hissy fit and demanded government compensation when it turned out to be a scam. These are the type of people who would borrow money on a fixed rate and complain after the Fed cuts rates later this year.

Stock markets have never been a significant part of market activity in China; historically and currently. Stock market has next to no actual impact to people on the ground who are all glad to see house prices go down. There's just a very vocal and shrill section of money-grubs who aren't happy their speculation party is ending. The average person is spending money in the actual economy. That's buying food, cars, entertainment, going on vacation, etc. Not speculating and shuffling bits of money around.

Instead of talking about something you clearly have no idea about, as evidenced by your tirade of cliches, why not pay attention to your own deflating economy?