Then their products will not be competitive outside of their borders, limiting their ability to innovate and produce things for cheaper, thus decreasing investment in that field thus making them further behind. That doesn't negate my premise
Chinese Economics Thread
- Thread starter Norfolk
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So when China was a net importer of these chemicals, some other countries had excess capacities? And that was totally fine?
The clown of clowns who made the story is still living in Beijing, Pettis you grifter, go back home.
Caixin is an indicator of export-oriented small and medium-sized enterprises. Even though these companies are supporting the Chinese economy, there is a limit to how much they can continue to cover the slump in real estate and retail, and the government needs to implement policies to expand domestic demand.
The Chinese economy is not dependent on exports, and there are many countries that depend on exports more than China does, but for most countries it is still domestic demand that is important, and we can only hope that the government will come up with a strong policy at the next Third Plenary Session.
My BIL who's in finance sometimes asks me questions about China. A couple years ago he asked me about how true the news about China, the property sector collapse, dampened consumer confidence, etc. I told him that the facts from Western news sources are generally all correct, but the interpretation is, at the very least, rather different from that of the Chinese leadership. While the Western sources see doom and gloom in it, China sees it as necessary pains when transitioning to a new phase for the economy. So I laugh at silly reports like how China's latest stimulus won't be enough to revive the property sector. China doesn't want to revive, it wants it to die a controlled death.
Part of the Western narrative is certainly driven by agenda, and assisted by seeing what one wants to see There are like what, 800 American students in China right now? Compared to some 300,000 Chinese students in the US. There simply aren't enough Americans who understand China,. If they understood China, they'd understand that the CCP communicates their directives rather clearly. When Xi said "houses are for living, not for speculating", that's a pretty strong and clear signal IMO. He intends to turn housing into something more like infrastructure, or an utility, not an asset of investment, kind of like Singapore. The private property sector will thus likely only be alive in the commercial and luxury realm in the future. Land is something that everyone needs to live on, yet no more can be created. In a society with increasing capital and no rules, land value will keep rising as capital is parked in this safe asset that cannot be destroyed yet always rise in value, and those without capital will have ever decreasing access to it.
Another part of the Western narrative is substituting projection for understanding. Without a good understanding, much of the Western leadership simply assume the Chinese leaders would want to do the same things they'd want to do. What Western leader would intentionally pop a bubble that makes up a quarter of the country's GDP and hurt their re-election chances? They'd try to delay it until it collapses under its own weight, or at the very least try to manage a "soft landing". Another example is with the BRI. The narrative is all about debt trap, how China's is using capital to make money on high interest rates, and failing that taking over hard assets. That's what they would do, use capital to make money, and let the capital-starved do the work or lose assets. The Chinese don't see it that way. Money is just digits in computers, and ownership is just words on papers. Without the backing of a global hegemonic military, money and assets can be taken away with a few keystrokes on a computer or a few words in a new law. What China wants to accomplish with the BRI is to integrate involved countries into its supply chain, so that just the act of cutting off China means collapse of entire industries or even the entire economy.
FriedRiceNSpice
Captain
This is the way forward. The efficiency and economy of scale enjoyed by Chinese industry literally breaks free trade/globalization. Even if Chinese products are the cheapest in every category, if everything is being produced in China, then who will have money left to buy from China?
I think it it would be more accurate to say, the US likes to accuse China of doing the things that the US is actually doing so that the US can maintain a monopoly on those things, ie accusing China of leveraging Huawei telecom infrastructure to spy on other countries, utilizing TikTok as a means of exerting influence, or your example of debt trap diplomacy. The property bubble issue is a little more sensitive, as Western elites would prefer to hide the fact that asset bubbles in the West are essentially orchestrated as a means for the financial elite to further increase the proportion of wealth that they own.
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The second strategy is not just the strategy China will be better at; it's the only strategy that makes rational sense long term.
In economics, as in all else, the way to be more successful than others is to be more competent than they are. If everyone was equally competent, then there's no fundamental reason why China should be more successful, and any excess wealth is justifiably lost with time. This is the principle of comparative advantage, which is at the basis of modern economic theory and explains why we should have trade at all.
Countries that attempt to abuse this principle, either through trade distortion or extortion, create inefficiencies that inevitably back fire at them. Sure, there will be short term pain for the countries whose industries are targeted by the tariffs, but unless Indonesia is actually competent enough to develop an equally efficient industry, it will just be throwing money into a hole, long term, which will become a drag on the rest of the economy, preventing it from challenging China in other, higher value industries.
The winning move - I agree - is not to play. China should focus on what it can do to make its own industries more competent and efficient. It should use tariffs and subsidies strategically to protect against the effects of trade distortion and extortion by others, but not to cause more of it. That implies not supporting domestic industries just because they're domestic, but because they are more competent or has the potential to be so.
This is why I've always advocated for a self-improvement strategy - fixing inefficiencies in Chinese industry and structural problems like demographics. In the end, the only reason China or any other country deserves to be more successful is because they are more competent. Do that, and the rest will follow.
Yes, anyone using this "overcapacity" argument is either stupid or malicious.
Business make as much as they can sell. If they can't sell, they go out of business.
Western countries using this fake excuse of "overcapacity" simply have companies who cannot sell their own products without putting Chinese products at disadvantage with tariffs and bans.
What's gonna attract customers IMO isn't just gonna be that they're low carbon, but that they may be generated via sources that do not require continuous imports like oil. If you build/import say solar panels and electrolyzers, you don't need to continually building/importing them to generate H2, you'd only need to get more to increase your production of H2. That's probably one of the big factors attracting China to green H2, NH3, and methanol right now.
there is a huge market internationally (think Europe) for green chemical products or green steel or green everything.