Chinese Economics Thread

[Index]

I really like this guy's post. His main point is had China allowed yuan to free flow in the international market, the real nominal GDP has already surpassed USA. This is the first time I have ever seen someone break down the numbers.

"Do you know the Trade Surplus of China is $ 843 Billion a year

This means over the past 15 years, Chinas cumulative trade surplus is a whopping $ 8.28 Trillion

Yet their Foreign Reserves are around $ 3.32 Trillion

So where is the rest of the $ 5 Trillion

Let's take away $ 2.10 Trillion to pay off Chinas External Debts

That's still $ 3 Trillion of money that China has stashed away somewhere in some corner of the globe

It simply took this money into a CHINESE WALL so that tomorrow if it's official reserves are frozen, it still has nearly $ 3 Trillion worth reserves left

---

So now with such a trade imbalance between the Yuan and the Dollar

Why is the Yuan only at 7.07 to 1 USD?

That's because the Yuan is kept deliberately weak by China so that it's exports remain competitive

The real value of the Yuan is closer to 4.74 to 1 USD

By this number , the Nominal GDP of China rises to = 127.2 Trillion Yuan / 4.74 = $ 26.83 Trillion

So realistically the GDP of China in USD Terms must be $ 26.83 Trillion and should have already beaten the United States

So why doesn't China play this card and freely allow it's currency to peg at 4.74 to a Dollar?

Simple

That would make their exports expensive and suddenly the Export demand will be affected and China will begin to Stagnate and within five to seven years China may stop their GDP at $ 33–34 Trillion and stop there.

Instead if China keeps the Yuan weak, China can keep their exports high, manage to handle their huge production volumes and keep growing until maybe 2032–2033 and THEN RELEASE THE YUAN FOR A FREE CONVERTIBILITY

Maybe grow to $ 21 Trillion or so and then hit the peg at 5 to 1 USD and reach a Nominal GDP of $ 41 Trillion by 2050 which is the goal

---

So I strongly believe

• Chinas Economy has a nominal GDP closer to $ 25 Trillion than $ 18.50 Trillion
• Chinas Actual Net Reserves as closer to $ 4 Trillion than $ 1 Trillion"

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China's nominal GDP is always going to be in RMB terms. If you convert it to dollars, it would be 34 trillion $.

Exports only make up some 20% of Chinese GDP. In general, if deflation is combined with wage growth, the result is dramatic living standard improvement. Value of the yuan is micromanaged by the central bank to keep delivering prosperity. Hence we have gone from a situation 20 years ago where only a minority could get cars to today where most families can have at least 1. If you look even more closely in terms of time span, you can see that 5 years ago, few Chinese youth owned gaming pcs, and now there are enough to fund major AAA games.

Economically by itself US is not a match for China and has not been since the mid 2010s. Even in terms of gdp which arguably strongly inflates US economical size, they are not reaching up to China's level.

 

[tamsen_ikard]

Just wait to see USD to yuan exchange rate plummet when the Current Everything Bubble in US collapses due to high interest rates and the subsequent great Recession 2.0 starts. Current US economy is eerily similar to 2006-7 when the previous US bubble popped due to FED Interest rates. I think the next US recession is coming in the next 1-2 years. China is keeping its powder dry for the inevitable global recession that follows.

 

[Index]

Just wait to see USD to yuan exchange rate plummet when the Current Everything Bubble in US collapses due to high interest rates and the subsequent great Recession 2.0 starts. Current US economy is eerily similar to 2006-7 when the previous US bubble popped due to FED Interest rates. I think the next US recession is coming in the next 1-2 years. China is keeping its powder dry for the inevitable global recession that follows.

US economy could either collapse or keep "prospering" at 1.5% growth, neither still would let them threaten to overtake China.

 

[supercat]

Development and environment protection don't have to contradict with each other.

In China’s Yangtze industrial heartland, signs of growth without eco-damage​

• International team says its study of lake offers insights ‘for regions worldwide grappling with similar sustainability challenges’

Social and economic growth in China’s most economically vital lake basin no longer comes at the cost of the environment, a new international study has found.

The in-depth study by researchers in China, France, the Netherlands, Sweden, Italy, Britain and South Africa shows that signs of a decoupling, or separation, between economic growth and environmental degradation could be seen in China as early as the turn of this century.

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[Randomuser]

Development and environment protection don't have to contradict with each other.

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When it comes to China, many esp westeners are always slow to realize what the trends are. I bet a lot of them still think China is overpolluted, that they used unskilled child labour or whatever because they just cannot accept China has advanced while their predjudice has not.

It makes no sense for China to still do this stuff. It's not profitable enough. Form example, what value is there turning everything into a dessert?There's a reason why China has multiple top selling solar panel production companies because that stuff is now efficient enough to generate tons of energy without really having much cost or environmental impact. So if you had that stuff, why wouldn't you take advantage of it?

 

[henrik]

I really like this guy's post. His main point is had China allowed yuan to free flow in the international market, the real nominal GDP has already surpassed USA. This is the first time I have ever seen someone break down the numbers.

"Do you know the Trade Surplus of China is $ 843 Billion a year

This means over the past 15 years, Chinas cumulative trade surplus is a whopping $ 8.28 Trillion

Yet their Foreign Reserves are around $ 3.32 Trillion

So where is the rest of the $ 5 Trillion

Let's take away $ 2.10 Trillion to pay off Chinas External Debts

That's still $ 3 Trillion of money that China has stashed away somewhere in some corner of the globe

It simply took this money into a CHINESE WALL so that tomorrow if it's official reserves are frozen, it still has nearly $ 3 Trillion worth reserves left

---

So now with such a trade imbalance between the Yuan and the Dollar

Why is the Yuan only at 7.07 to 1 USD?

That's because the Yuan is kept deliberately weak by China so that it's exports remain competitive

The real value of the Yuan is closer to 4.74 to 1 USD

By this number , the Nominal GDP of China rises to = 127.2 Trillion Yuan / 4.74 = $ 26.83 Trillion

So realistically the GDP of China in USD Terms must be $ 26.83 Trillion and should have already beaten the United States

So why doesn't China play this card and freely allow it's currency to peg at 4.74 to a Dollar?

Simple

That would make their exports expensive and suddenly the Export demand will be affected and China will begin to Stagnate and within five to seven years China may stop their GDP at $ 33–34 Trillion and stop there.

Instead if China keeps the Yuan weak, China can keep their exports high, manage to handle their huge production volumes and keep growing until maybe 2032–2033 and THEN RELEASE THE YUAN FOR A FREE CONVERTIBILITY

Maybe grow to $ 21 Trillion or so and then hit the peg at 5 to 1 USD and reach a Nominal GDP of $ 41 Trillion by 2050 which is the goal

---

So I strongly believe

• Chinas Economy has a nominal GDP closer to $ 25 Trillion than $ 18.50 Trillion
• Chinas Actual Net Reserves as closer to $ 4 Trillion than $ 1 Trillion"

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What is the mechanism that should be carried out, if a country wants to keep its currency low? By keeping a lot of $US? But China's foreign reserves has been steady for years.

 

[bebops]

What is the mechanism that should be carried out, if a country wants to keep its currency low? By keeping a lot of $US? But China's foreign reserves has been steady for years.

Keep producing and printing money like there is no tmr. If you only print money and produce nothing, it will look like Venezuela or Zimbabwe.

Huge yearly trade surplus is a cash cow. As that guy pointed out, China has been stashing foreign reserve in other parts of the world namely BRI projects and other things.

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[didklmyself]

What does that chart indicate? I am dumb...

 

[LuzinskiJ]

Keep producing and printing money like there is no tmr. If you only print money and produce nothing, it will look like Venezuela or Zimbabwe.

Huge yearly trade surplus is a cash cow. As that guy pointed out, China has been stashing foreign reserve in other parts of the world namely BRI projects and other things.

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I am not sure if I buy that M2 figure of $34.4T, where is the inflation then? Or is all that money just sitting in saving accounts and doing nothing?

 

[Serb]

I am not sure if I buy that M2 figure of $34.4T, where is the inflation then? Or is all that money just sitting in saving accounts and doing nothing?

There might be a lack of inflation because an appropriate supply of goods is also present to meet that money supply, unlike in the US.

To me, that just proves how larger the Chinese economy is in actuality than America and how under-reported their GDP is.

Also, as you said, a lot is probably in a savings account as they save more.