Chinese Economics Thread

[Blitzo]

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Public opinion in China shifting away from nakedly pro-capitalist mindset. Folks have to remember that China has higher inequality than the US. When the economy was growing extremely rapid, it was easier to forgive that. But now that 5% is the new normal, people will become more critical of a supposedly "communist" party tolerating very high inequality.

I think this is something Western analysts miss when they claim Xi is some kind of ideological Maoist. He is merely responding to public opinion and public opinion in China is shifting left on economics.

You are correct to say that The Chinese government has of course long recognized the issues with inequality, which is why in the last couple of years the CPC have been getting their common prosperity drive revved up.

But I'm not sure where your gini comparison is from. For example the world bank's comparison of the US and China shows that China's is still quite a bit below the US and if anything China's gini coefficient has been declining after peaking in the early 2010s.

 

[FriedRiceNSpice]

View attachment 132432

Public opinion in China shifting away from nakedly pro-capitalist mindset. Folks have to remember that China has higher inequality than the US. When the economy was growing extremely rapid, it was easier to forgive that. But now that 5% is the new normal, people will become more critical of a supposedly "communist" party tolerating very high inequality.

I think this is something Western analysts miss when they claim Xi is some kind of ideological Maoist. He is merely responding to public opinion and public opinion in China is shifting left on economics.

One unfortunate truth about human nature is that individuals tend to drastically overestimate their own talent/ability and work ethic and look for external factors to assign blame to rather than face their own shortcomings.

 

[siegecrossbow]

You are correct to say that The Chinese government has of course long recognized the issues with inequality, which is why in the last couple of years the CPC have been getting their common prosperity drive revved up.

But I'm not sure where your gini comparison is from. For example the world bank's comparison of the US and China shows that China's is still quite a bit below the US and if anything China's gini coefficient has been declining after peaking in the early 2010s.


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One other thing to keep in mind is that one reason Gini index was so high during the early 2010s is because of disparate state of development between different provinces. Poverty alleviation efforts have no doubt contributed to the decline in Gini.

 

[GiantPanda]

One other thing to keep in mind is that one reason Gini index was so high during the early 2010s is because of disparate state of development between different provinces. Poverty alleviation efforts have no doubt contributed to the decline in Gini.

Gini will go down even more in a few more years as the bursting of the housing bubble will eliminate much disparity in wealth created by the wealthy owning many empty units solely as investment.

It will take more years to see the effect but it will have a huge effect in equality.

It might also impact demographics and Chinese society's overall well being.

One of the main challenges in the East Asian demographic collapse is that homes are now so expensive that young families cannot afford them. That and the costs of education are probably the biggest economic reasons why births had plummeted in Japan, RoK and RoC (skipping the non-economic causes like young women postponing marriage and children and overall cultural changes between generations.)

China creating that RE bubble burst and also banning explicit profit-taking in private turoring which have had real painful economic consequences today might their positive social consequences manifest themselves in the future. Not sure these will definitely win over the non-economic causes creating the demographics collapse but at least Xi tried with home prices.

 

[fishrubber99]

I suspect that one of the sources that people will use to claim that China is more unequal than the US is to use the official Chinese NBS Gini coefficient (which is around 0.47), instead of the World Bank Gini coefficient (which is around 0.37 and showing a trend of decline).

You can see a debunking of this claim here:

https://twitter.com/i/web/status/1810950237932167497

Basically, the NBS Gini value comes from their narrow definition of "disposable income", which excludes sideline production (I assume "sideline production" measures produce/livestock that farmers grow/raise and consume themselves, without turning them into commodities and therefore doesn't translate well into disposable income) and household subsidies (which is obviously a way for the government to deal with inequality).

So comparing this higher Gini coefficient value to make China look bad and more unequal than the US is not accurate, since it becomes an apples to oranges comparison with the US Gini coefficient, which is measured differently.

 

[Index]

I suspect that one of the sources that people will use to claim that China is more unequal than the US is to use the official Chinese NBS Gini coefficient (which is around 0.47), instead of the World Bank Gini coefficient (which is around 0.37 and showing a trend of decline).

You can see a debunking of this claim here:

https://twitter.com/i/web/status/1810950237932167497

Basically, the NBS Gini value comes from their narrow definition of "disposable income", which excludes sideline production (I assume "sideline production" measures produce/livestock that farmers grow/raise and consume themselves, without turning them into commodities and therefore doesn't translate well into disposable income) and household subsidies (which is obviously a way for the government to deal with inequality).

So comparing this higher Gini coefficient value to make China look bad and more unequal than the US is not accurate, since it becomes an apples to oranges comparison with the US Gini coefficient, which is measured differently.

Gini in the first place is not even a measure of societal inequality, it's a measure of salary disparity.

It may shock you to learn this, but the richest people who in some countries own a majority share of the economy, are all not salary workers.

 

[abenomics12345]

For 2024, I would expect retail sales to be in-line with disposable income growth, which is somewhere in the 6% range. But again, given how much uncertainty there is going forward with respect to economic growth (policy questions I raised in my previous post) - this is to be taken with a huge grain of salt.

Half a year in, YTD retail sales running at *half* of what I predicted, despite disposable income growth coming in at 5.4% in 1H24 (which is in-line with what I expected at ~6%).

Anyone else want to call me negative nancy again?

Check your priors people. Search up your optimistic takes and look at how wrong you've been.

 

[Maikeru]

2024H1 data out:

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[Overbom]

2024H1 data out:

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Just use quarter.

GDP growth for Q2 was at 4.7%

 

[ismellcopium]

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