People are basically still dreaming that China is in high economic growth. However, all indicators indicate that China is moving toward stable growth. In this context, continued urbanization and rising income levels are expected to fuel sustained consumption growth over the medium to long term. Of course, to achieve this, CCP will need to expand domestic demand through all kinds of demand-side support, including social security reform.
Chinese Economics Thread
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People are basically still dreaming that China is in high economic growth. However, all indicators indicate that China is moving toward stable growth. In this context, continued urbanization and rising income levels are expected to fuel sustained consumption growth over the medium to long term. Of course, to achieve this, CCP will need to expand domestic demand through all kinds of demand-side support, including social security reform.
Technically, China can achieve 10% if no sanction and tariff imposed on them by countries around the world as well as being flooded with new FDI. Right now, they have to settle for 5%/year which is fine.
With that rate, it is still able to surpass U.S in nominal GDP in the future. In terms of PPP, no need to question about that. If China and U.S has the same nominal GDP, China's PPP would most likely be 2-3 times greater than U.S
From an economic and societal perspective, I think it's actually pretty reasonable to acknowledge if the average Chinese consumption of protein is actually at a level where it approaches or even exceeds that of average American consumption of protein. That's not a chest thumping contest, but a recognition that globally the US ranks fairly high in terms of protein consumption and for China to be in the same ballpark is indeed a milestone worthy of academic interest.
Given the constituent diet that is common in the US, it should naturally follow to wonder how the breakdown of Chinese protein consumption compares simply because naturally people wonder if a similarly unhealthy diet trajectory is occurring in China as well.
Or to paraphrase you -- it's not so much that America lives rent-free in people's heads, but in this specific case in terms of population level food intake, I can't see how a normal person would not automatically think about the notorious American diet (at least in the popular imagination) and the health consequences it has yielded at a population level.
From a healthcare perspective, the breakdown of the protein is probably the first or second followup question I would naturally have as well when presented with the information that Chinese protein consumption is now greater than that of the US (as well as how the data was measured).
So something along the lines of "hopefully China doesn't become as unhealthy as Americans are due to an increase in unhealthy food consumption (of which meat is a major constituent of)" is pretty reasonable, assuming it's someone who is wanting better health outcomes for China as a whole. If not, then go figure.
FriedRiceNSpice
Captain
What happened to the Luddites?
Capitalism and socialism are not mutually exclusive and it is incorrect to view the two as a dichotomy. Both Chinese and Western nations institute a mix of socialism and capitalism. While the US system might be the least socialist when compared to Chinese or most other Western nations, even the US has some mix of socialist policies in place. Many European nations implement socialist policies to an even greater extent than China. Rather than being viewed as a binary decision, picking between capitalist and socialist policies and institutions should be viewed as making tradeoffs and balancing different sets of objectives. During the first 3 decades of growth since 1980, China has leaned heavily on capitalist policies to maximize economic growth. In China's current stage of development, it makes sense to implement an increasing number of socialist policies. The level of state involvement in the economy also has nothing to do with capitalism vs socialism, but presents another set of decisions and tradeoffs revolving the scope and degree of the involvement in the state in the economy. Looking at the Chinese and Western economic systems through the lens of statist vs neo-liberal provides a much clearer (albeit still incomplete) picture of the meaningful differences between the two. China along with Japan and Korea cluster together on one end of the spectrum, the US on the other end, and most other Western nations somewhere in between. No economic system can be characterized by a single word or ideology, but rather as a set of points along multiple spectrums/axes.
The standard of living for upper levels of the middle class in tier-one Chinese cities are already among the highest in the world. Focus should be on addressing regional disparities in wealth and opportunity, particularly in tier-three and below cities and inland regions and aiming to decrease income and wealth inequality. Distribution of growth rather than maximization of growth should be focus for the next decade or two.
You are overestimating the impact of sanctions/tariffs on Chinese growth. No amount of FDI is going to support 10% growth. No industrialized nation in history has even been able to sustain 5% growth, so it would be a great achievement if China can sustain even 5% growth for another decade. People place too much emphasis on surpassing the US in nominal GDP which is a meaningless metric. Yes, it will happen within a decade or so, and sure, it might be a "feel good," moment, but frankly it just doesn't matter.
China has basically exhausted all cheap/easy growth options since obliterating poverty rates. It's easy to achieve 10% when all the youth is jobless and live in mud huts. It's incredibly hard to do the same when a large portion is living in high-rises and drive electric cars.
GDP is not a good representation of the well being of a average person anyhow, there is no need to hyper-fixate on it, I'd rather they crack down on 996 and improve worker conditions rather than chase some abstract figure.
GDP is not a good representation of the well being of a average person anyhow, there is no need to hyper-fixate on it, I'd rather they crack down on 996 and improve worker conditions rather than chase some abstract figure.
Growth potential cannot be measured this way. In reality, if you look at the example of Asian countries that have relatively the same type of culture in common, China is still below its growth potential. The best indicator for this is productivity and per capita income, which is still low. China's slowdown while still failing to reach the high-income level is problematic, many economists in the West believe that China could still fall into the middle-income trap, which would be detrimental to the CCP's plans for the country's economic development.
There isn't enough economic activity in the world to do that by normal methods.
Let's say that China controls every single high tech market. That is, China has its own ASML, Airbus, etc. What are their yearly sales?
ASML has yearly sales of $27 billion.
That accounts for all activity at ASML suppliers as ASML cannot pay suppliers without these sales.
What is another $27 billion to the Chinese GDP?
All downstream effects like the electronics, chip design, etc industries are already in China and maxed out.
Airbus sales are $70 billion.
China already has an airline and aerospace supplier industry so the net gain of having an Airbus equivalent is just the sales of Airbus.
Name a market and China can take the entire thing while adding little growth to GDP.
The only markets China has not taken are ones with regulatory barriers or ones where price and product are both decoupled from reality like NFTs.
FriedRiceNSpice
Captain
Anyone stating that China will fall into a middle income trap is either not a real economist or deliberately lying. 5% may be less than the 8-10% China grew at when it was at a much lower level of development but 5% growth is still very impressive for an industrialized economy. Neither Korea nor Japan, the two major Asian nations to industrialize before China, sustained growth rates higher than 5% when they reached a similar level of development. And South Korea and Japan were small enough that there was sufficient global demand to absorb their exports.
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But this situation was comfortably followed by China's leadership in making the country the largest exporter of consumer goods at the expense of what could be the biggest driver of lasting economic growth: the domestic market.
The problems arising from this type of trade strategy and economic development are now taking their toll, as several countries are already resisting more competitive Chinese products in the quest to save their national industries.
The politicians who manage the Chinese government have determined that it is good for China to sell all the valuable goods they produce to foreigners, thus reducing the supply of these goods to the Chinese themselves and, therefore, depriving their population of enjoying a higher standard. of life. Obviously, this is a bad deal for most Chinese citizens, but a great deal for the sheltered export tycoons.
Furthermore, this mercantilism has worked until now, making it possible to create these numerous trade surpluses and the huge international reserve but at the cost of restricting the potential of the domestic market, the consequence of which has been an artificial growth of the real estate market which is now taking its toll on bill for this entire period, creating economic uncertainties that can have repercussions in the long term and negatively impact economic growth.
I am not and do not dare to say what the Chinese should have done, I will not be arrogant to the point of thinking that I know better than Chinese economists about their economy, but there were much better alternatives for China to grow stable, enhancing that market that would be your greatest ally: the domestic market.
China became, at the same time, a super industrial and super exporting nation, this boosted China's GDP at a time when globalization was the universal path of world economic development, but the return of protectionism puts this export strategy in doubt. As more countries are included in this tariff campaign against Chinese products.
Furthermore, no matter how much China seeks to expand consumption in the domestic market now, it will be quite complicated to achieve this when there is a drop in the real estate market that is affecting the wealth of Chinese people whose main economies are invested in this type of investment. of assets, no one increases their consumption when their wealth is falling, although there are alternatives for China to stimulate consumption at this delicate moment, there is not much that can be done to change this situation, the Chinese will have to save.
I don't know if this is true, let's check.
South Korea:
1995: GDP per capita US$12,500
Growth GDP -
1995: 9.6%
1996. 7.9%
1997: 6.2%
1998: -5.1%
1999 - 11.4%
2000 - 9.6%
2001 - 4.8%
2002 - 7.7%
2003 - 3.1%
2004 - 5.2%
2005 - 4.3%
GDP went from US$566 billion in 1995 to US$934 billion in 2005. GDP per capita went from US$12,500 in 1995 to US$19,400 in 2005. It was a growth of 5.88% in these 11 years when South Korea's GDP per capita had the same level as China today.
Japan:
1985: GDP per capita US$11,800
Growth GDP:
1985: 5.2%
1986: 3.3%
1987: 4.6%
1988: 6.7%
1989: 4.9%
1990: 4.8%
GDP went from US$1.4 trillion in 1985 to US$3.1 trillion in 1990. Note that Japan is a unique case here, because the Plaza Agreement forced Japan to appreciate the yen against the dollar and this strongly explains the considerable increase in GDP as per capita GDP, even though the average growth for the period was 4.9%, with per capita GDP rising from US$11,800 in 1985 to US$25,800 in 1990.
The Japanese case only applies here if the yuan appreciates against the dollar, going from 7.27 yuan for each dollar to a lower exchange rate, for example, if each dollar were 5 yuan, China's GDP would jump from the current US$18 trillion to US$25.2 trillion. This won't happen even if the dollar fell, China would have to devalue the yuan because of the trade policy I mentioned in the previous comment.
Singapore:
1990: GDP per capita - US$11,800
Growth GDP:
1990: 9.8%
1991: 6.7%
1992: 6.6%
1993: 11.5%
1994: 11.1%
1995: 7.2%
With the exception of the 2008 crisis period, Singapore has been growing at a rate above 3% even though it is already an ultra-high income economy. GDP per capita in 1990 was US$11,800 to US$24,900 in 1995, generating an average GDP growth of 8.8% per year.
Note that the three cases apply to small countries, with a few million inhabitants, but they are countries that have left the middle income category while still maintaining high economic growth. The case of China is more interesting because it is a country of continental dimensions with the second largest population in the world, its GDP would grow almost by inertia, but it could have found ways to grow even more depending on what type of trade policy it implemented.