Chinese Economics Thread

[GiantPanda]

The USA economy only survived in 2008 thanks to China helping to buy US treasuries at a time when they desperately needed the help and after all the things the USA has done as thanks, don’t expect a second miracle to happen. Considering all those retail businesses going bankrupt as well as all those supply chains being messed Ip due to their trade wars, I wouldn’t simply write off a recession in the USA as being a mere bump in the road since that assumes that miracles can happen at random to delay the inevitable which to be honest doesn’t always

Also in regards to Switzerland, I wouldn’t bank on their banking industries remaining as competitive as before with the stupid stuff they tried to do with Russia assets, this only creates a bad precedent that will ensure that many of their global south clients will will looking elsewhere to store their wealth. It only takes one blunder like this to destroy one’s reputation and this is one area the Swiss cannot afford to screw up given how much their industry is tried to their banking

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Sure the USA won’t collapse in a day but if Biden doesn’t stop focusing on what doesn’t matter outside the country and instead focus more on the problems inside the country, things can go from bad to worse very fast, especially when the fundamentals have eroded so much already

The US came very close to collapsing in that proverbial "day" with Lehman Bros in 2008.

The thing with Finance is that it is a Service and all Services are tertiary. They are basically dependent on the goods provided by the Primary and Secondary sectors (agricultural/raw material and Manufacturing.) This is Economics 101.

If all you have is services then you will still starve or freeze to death if no one needs a haircut or believes in your currency to exchange for grain and clothing from a third party.

 

[GiantPanda]

So is it fair to say that china's real economy is larger

While US's financial economy is larger

The Chinese economy is simply larger. And by a wide margin.

The difference in PPP and USD-based nominal is the USD-based system gives higher weight to the exchange not the actual Gross Domestic PRODUCT.

Think about this, China's electricity usage increased every year and has gained more than doubled that of the US during the last 15 years.

There is no way in a real world where a country that consumes less than half of the electricity of China could have a larger national product unless you are arbitrarily assigning huge values to intangible things like the financial derivatives that turned out to be worthless and created the 2008 Financial Crisis.

 

[FriedRiceNSpice]

The US came very close to collapsing in that proverbial "day" with Lehman Bros in 2008.

The thing with Finance is that it is a Service and all Services are tertiary. They are basically dependent on the goods provided by the Primary and Secondary sectors (agricultural/raw material and Manufacturing.) This is Economics 101.

If all you have is services then you will still starve or freeze to death if no one needs a haircut or believes in your currency to exchange for grain and clothing from a third party.

US has one of the most productive and largest agricultural sectors in the world and is one of the largest exporters of agricultural products. US also possesses among the largest reserves of natural resources across all categories. The reason the size of the resource extraction and manufacturing sectors in the US is limited is because the value of the dollar allows it to purchase many categories of commodities and manufactured goods for much cheaper from the international market. The US has the capital and resources to easily scale up resource extraction and manufacturing long before the US dollar becomes worthless. Compared to China, it might seem the the US is not a manufacturing giant, but US manufacturing output still far exceeds that of any other nation apart from China (US manufacturing output is on par with Germany and Japan combined). As an economic entity, only the US is on the same scale as China, a country with x4 the population. The fact that the Chinese economy grows much faster doesn't negate the fact that the US is in fact one of the fastest growing and resilient high-income economies in the world. China just happens to enjoy much more competitive advantages when it comes to growth and is sitting right now in the comfortable sweet spot where the economy is already at a moderately high level of development yet still enjoys decent room for growth.

 

[GiantPanda]

US has one of the most productive and largest agricultural sectors in the world and is one of the largest exporters of agricultural products. US also possesses among the largest reserves of natural resources across all categories. The reason the size of the resource extraction and manufacturing sectors in the US is limited is because the value of the dollar allows it to purchase many categories of commodities and manufactured goods for much cheaper from the international market. The US has the capital and resources to easily scale up resource extraction and manufacturing long before the US dollar becomes worthless. Compared to China, it might seem the the US is not a manufacturing giant, but US manufacturing output still far exceeds that of any other nation apart from China (US manufacturing output is on par with Germany and Japan combined). As an economic entity, only the US is on the same scale as China, a country with x4 the population. The fact that the Chinese economy grows much faster doesn't negate the fact that the US is in fact one of the fastest growing and resilient high-income economies in the world. China just happens to enjoy much more competitive advantages when it comes to growth and is sitting right now in the comfortable sweet spot where the economy is already at a moderately high level of development yet still enjoys decent room for growth.

No argument on the intrinsic strengths of the US. But its real economy is much smaller than China by every measure from the amount of cars sold to tons of steel produced to the amount of electricity used. It is not close, the numbers are a factor of two in favor of China.

 

[FriedRiceNSpice]

No argument on the intrinsic strengths of the US. But its real economy is much smaller than China by every measure from the amount of cars sold to tons of steel produced to the amount of electricity used. It is not close, the numbers are a factor of two in favor of China.

Yes, the Chinese economy is absolutely bigger. But looking at a subset of metrics does not mean the Chinese economy is bigger by a factor of 2. Could it be x2 bigger? Maybe, but probably not - doesn't matter much anyways when population is larger by a factor of 4. China needs to keep growing at a consistent and moderately high rate in order to catch up to the development level of the US/Western Europe/Japan. Standards of living have improved drastically over past 3 decades, but there is still plenty of room for improvement. At the end of the day, what matters is the quality of live people living in China can enjoy, not by which metrics is China x times larger than the US. The end goal of continued economic development is being able to provide adequate resources, goods, and services for 1.4 billion people to enjoy a good life, not increasing some number on a piece of paper.

 

[Minm]

The US won't suddenly go away like the Soviet Union did. But the real danger for the West is the decline of Europe. We might actually see a collapse there. And one of the strengths of the Western system is that they have two large markets, the US and Europe, which can mutually reinforce each other. However, since the financial crisis the US has started consuming the European economy, making the US economy look very healthy in comparison. But once the European economy declines sufficiently, then the US is going to lose its greatest strength, which is to quickly scale tech companies at home and then send them to Europe to dominate the market and extract wealth.

Instead, ASEAN and maybe central and west Asia can grow to be China's Europe, nearby markets with dynamic economies that mutually reinforce each other

 

[TK3600]

Disagree.

The financial market/sector can crash very quickly, especially when it's not based on real economy (which is the case for US).

Overall, I say wait 10 years, and we see which of us will be right.

Crash is coming and it will take less than 10 years. The last money printing pushed finance to limits. They are 1 crisis away from catastrophic failure. Printing money can no longer fix things.

 

[TK3600]

The US won't suddenly go away like the Soviet Union did. But the real danger for the West is the decline of Europe. We might actually see a collapse there. And one of the strengths of the Western system is that they have two large markets, the US and Europe, which can mutually reinforce each other. However, since the financial crisis the US has started consuming the European economy, making the US economy look very healthy in comparison. But once the European economy declines sufficiently, then the US is going to lose its greatest strength, which is to quickly scale tech companies at home and then send them to Europe to dominate the market and extract wealth.

Instead, ASEAN and maybe central and west Asia can grow to be China's Europe, nearby markets with dynamic economies that mutually reinforce each other

US and EU are competitors. There is no synergy to be had. If they are trapped into only able to access each others market, they would sooner eat each other than develop synergy.

 

[Arij Javaid]

In war time, which economy will support the war better, industrialized or financialized?? There is obviously a one correct answer.

The 21st century economy will be heavily dependent upon technology. Whoever wins the technological race wins economical race.

 

[Chevalier]

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”if the U.S. tries to contain China, China itself will develop a counter containment strategy and demolish the U.S.” - Lee Kuan Yew (paraphrased).

It appears after the Huawei phoenix moment with Mate 60 and SMIC chips, China is now on the offensive, on all fronts.