Chinese Economics Thread

[gelgoog]

Not really. US manufacturing is deep and broad but not energy intensive. Manufacturing biologic drugs is far less energy intensive than manufacturing rebar.

No. It is just that they do not need rebar because the US does not build anything of consequence anymore. So most steel plants closed.

Electricity use is simply not a good proxy for value added manufacturing. And it’s an even worse proxy for other substantial value added sectors - Nvidia and Cadence don’t use much of any electricity, after all, they are going to be a few thousand of the worlds foremost experts working under excellent management teams from home, yet GPUs and EDA software is incredibly valuable - computer systems design and software publishing are, after all, services

Nvidia should use a lot more electricity than a regular office company. You need to use a supercomputer to do circuit simulation for example.

US declines in electricity consumption reflect highly innovative advances that allow for the same amount of electricity to do more work.

Most US infrastructure was built before 1969. You seem to have never been to the US. They have rotten infrastructure. They never replace anything unless its totally broken. And they try to duct tape things over and over. China's infrastructure just by the benefit of being much more recent overall should be more efficient.

For the most part you will find buildings which don't even use double pane windows. Their houses typically have terrible insulation.

No: this is quite easy to resolve. You have greater efficiency in electricity usage - particularly in the household sector with more efficient air conditioners and lighting.

Actually, history proves that when you gain efficiency in electricity usage somewhere, people will just find other ways of using all the extra power. You might save on light, but you will spend more on high resolution TV screens, air conditioning, electric cooking, or in EVs.

 

[broadsword]

Manufacturing biologic drugs is far less energy intensive than manufacturing rebar.

Do you have data on energy use in the manufacture of drugs in the US over the years?

 

[gelgoog]

Do you have data on energy use in the manufacture of drugs in the US over the years?

Probably decreasing like he said. Since the US just buys APIs from China. Those are the essential ingredients for most common drugs which are made with chemical processes. Want Tylenol? The ingredient is imported from China.
Most "drug manufacture" in the US is putting chemicals in vials or making pills with chemicals they purchase elsewhere and putting those in shiny boxes.

 

[GiantPanda]

Not really. US manufacturing is deep and broad but not energy intensive. Manufacturing biologic drugs is far less energy intensive than manufacturing rebar. Electricity use is simply not a good proxy for value added manufacturing. And it’s an even worse proxy for other substantial value added sectors - Nvidia and Cadence don’t use much of any electricity, after all, they are going to be a few thousand of the worlds foremost experts working under excellent management teams from home, yet GPUs and EDA software is incredibly valuable - computer systems design and software publishing are, after all, services

1. I didn’t raise the NGDP growth claim (although it’s true)
2. US declines in electricity consumption reflect highly innovative advances that allow for the same amount of electricity to do more work.

No: this is quite easy to resolve. You have greater efficiency in electricity usage - particularly in the household sector with more efficient air conditioners and lighting.

I call BS on this entire spiel.

1) Electricity is the best proxy for economic activity. Bar none. US economists used the same measure until recently -- until, I think, it was (geo)politically expedient to drop it. ***

2) Infrastructure and especially the manufacturing base in China are much newer and efficient in China compared to the US.

3) Your so-called efficiency advantage can never account for 100% of another US economy anyways. Yes, China's electricity usage is equivalent to an economy that is in real terms twice the size of the US. Your older crumbling infrastructure and old manufacturing base is 200% more efficient than China's? BULL MANURE.

4) Your examples of industry in the US, pharmaceuticals and chips making (NVIDIA) are actually prime examples of production being offloaded elsewhere with China the primary producer of APIs and TSMC the actual maker of chips for NVIDIA.

No real economic activity can occur without electricity in a modern economy. An economy that grows cannot contract in electricity usage. Only in fairy tale sci-fi land can you imagine a company that is growing would pay lower electricity bills as it expands.

And if such efficiencies that do exist, it would definitely occur in China with its new infrastructure and more likely among Chinese companies like BYD (China's biggest auto maker) than in the US and GM (biggest American auto manufacturer.)

***

 

[tphuang]

https://twitter.com/i/web/status/1823995342762942880

this one is rather interesting. I think I need a deeper dive to see how antimony is used.

 

[siegecrossbow]

I call BS on this entire spiel.

1) Electricity is the best proxy for economic activity. Bar none. US economists used the same measure until recently -- until, I think, it was (geo)politically expedient to drop it. ***

2) Infrastructure and especially the manufacturing base in China are much newer and efficient in China compared to the US.

3) Your so-called efficiency advantage can never account for 100% of another US economy anyways. Yes, China's electricity usage is equivalent to an economy that is in real terms twice the size of the US. Your older crumbling infrastructure and old manufacturing base is 200% more efficient than China's? BULL MANURE.

4) Your examples of industry in the US, pharmaceuticals and chips making (NVIDIA) are actually prime examples of production being offloaded elsewhere with China the primary producer of APIs and TSMC the actual maker of chips for NVIDIA.

No real economic activity can occur without electricity in a modern economy. An economy that grows cannot contract in electricity usage. Only in fairy tale sci-fi land can you imagine a company that is growing would pay lower electricity bills as it expands.

And if such efficiencies that do exist, it would definitely occur in China with its new infrastructure and more likely among Chinese companies like BYD (China's biggest auto maker) than in the US and GM (biggest American auto manufacturer.)

***
View attachment 134205

Even AI requires huge amount of power generation.

 

[GiantPanda]

Even AI requires huge amount of power generation.

Correct. Along with Bitcoin mining which was kicked out of China into the US btw.

There is no way energy efficiency gains --which every real business owner knows would be small percentage gains and that too would need to come in form of new capital investment -- can even come close to making up for the 200% difference between China and the US in electricity usage. You can make a case if China's electricity usage was 10 or even 20% larger but not over 200%.

And there is no evidence that electricity usage in the US is any more efficient. In fact, the evidence are to the contrary. Gains in energy efficiency are done mainly through capital investment of new more efficient equipment and infrastructure. That is definitely happening far more in China than in the US.

All in all, this magical energy efficiency of the US is fairyland cope.

Think about how crazy this proposition is: these guys are trying to convince us that the US is growing faster than China recently.

When China's electricity usage in 2023 grew 7% while the US's usage went down 1%.

For the US to match China's growth in economic activity the past year, it needed to find an 800% efficiency advantage in one year to allow it to use less electricity and still produce more economic actitivies than China.

Obviously that is insanity if not an outright lie and cope in front of overwhelming evidence. You cannot beat an economy with surging electricity usage by reducing your own usage.

 

[MortyandRick]

Not really. US manufacturing is deep and broad but not energy intensive. Manufacturing biologic drugs is far less energy intensive than manufacturing rebar. Electricity use is simply not a good proxy for value added manufacturing. And it’s an even worse proxy for other substantial value added sectors - Nvidia and Cadence don’t use much of any electricity, after all, they are going to be a few thousand of the worlds foremost experts working under excellent management teams from home, yet GPUs and EDA software is incredibly valuable - computer systems design and software publishing are, after all, services

Do you even know how drugs are manufactured? Most compounded drug manufacturing are outsourced to India and China. Biologics are manufactured in Europe, Korea, some in the US and are quite energy intensive. So please don't make up stuff to fit your biases.

 

[pbd456]

Is there data for energy consumption per GDP unit in other countries like Japan or Germany?

 

[Eventine]

Services as a percentage of US GDP is nearly 80%, among the highest in the world. Energy usage isn’t a great proxy for the US economy in this scenario.

But nominal GDP is equally bad because it scales based on exchange rate meaning the US can easily up its GDP numbers in the near term by manipulating interest rates. Any long term negative effects of such policy will not be captured in year to year.

Bottom line is that the structural differences between the Chinese and US economies mean that they are subject to different dynamics. China is a manufacturing super power and its economy is dependent on demand for manufactured end products. The US by contrast is a financial super power and relies far more on the market & investment. It’s like apples & oranges - any comparison is to be taken with a grain of salt.