Chinese Economics Thread
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When people mention petroleum the first thing that comes to mind is always fuel. But it has a wide range of applications in plastics and other industries. If the amount of petro used as fuel is reduced, it’ll allow more of it to be used in a less polluting and destructive manner.
This is one of if not the most imporrant geopolitical checkmates in modern history.
US put everything in the fossile fuel basket, even going as far as to frack at losses just for national security reasons.
Meanwhile China spent the same time circumventing fossile fuels entirely, and it turns out China correctly predicted the future. EVs and rail are magnitudes more efficient than fracking.
US isn't just freaking out over not being able to catch up economically anymore, but because once China hits near 100% EV usage, and once they forces other countries to also go for EV, global personal transportation will depend on China.
The goal is to replace those also. They can take green methanol and create plastics. No need for Petrochemical factories for that. Also, they got coal to chemical factories. They need to get to a place where domestic demand from coal can be easily be met by domestic production + pipeline imports.
What is this supposed to mean? The U.S. has a highly developed manufacturing sector - most notably now in semiconductor capital equipment (U.S. export controls on manufactured products can’t cause much annoyance otherwise), specialty chemicals (electronic gases, fragrances, etc), machinery, pharmaceuticals, oil refineries, etc, etc. and manufacturing cannot be decoupled from finance - any manufacturing capital project requires money to construct before it starts generating sellable products and that requires debt and equity finance through the financial sector.
China simply has a very bank heavy financial sector (and very large banks - by far the largest in the world) and severely underdeveloped capital markets that allow for development of capital light corporates such as software publishers and biotech. It is not at all a coincidence that Baidu, Alibaba, and Tencent all grew alongside US venture capital firms that gave them best practices in risk management, financial controls, corporate management, and the ability to allocate capital efficiently.
The financial sector - whether insurance, banks, or capital markets - exist to allocate capital between savers and borrowers in where investments in physical capital provide returns (in the form of dividends and interest) can then be provided to the saver and the intermediary takes a cut. There are secondary financial market functions as well - fees for risk-management (derivatives and the like), payments, and consumption smoothing and those also improve real economy function (but are more tangential).
I am going to stop this discussion now since it’s going nowhere. This is a Chinese economy thread. Please treat it as such.
@tphuang @siegecrossbow
How many more threads does @chgough34 have to disrupt before you guys start applying the Sleepy rule and recognize that regardless of whether he is or isn't a Sleepy alt, the pattern of discussion is exactly the same, down to having the same narrative?
One is real while the other is made of aether that depends solely on the printing press.
China for ages did not consider services as gross domestic produce. In fact, services in China had always been severely undercounted because of this.**
Services are teritiary -- meaning they are "produce" that comes from processing, selling and servicing primary and secondary (manufactured) goods.
If you simply add print money to pay for more and more services on top of actual
goods you'll eventually tip into hyper inflation. The US has been (mostly) spared that because it had been a reserve currency. Global demand allows reserve currency to be back by less and less physical goods.
In the end, all primary and secondary goods are paired with services. There is no way China's massive goods are not pair with massive services. We know from Didi, Meituan, Alibaba, etc. that Chinese services are even greater than the US and by a wide margin. The only services in China smaller or missing vis a vis US ones are blood-sucking lawyers and adult entertainment (maybe.)
**
There won't be a single metric that'll tell you the whole story. Dismissing things like NGDP as "irrelevant" is just as dumb as people who use NGDP as a primary point of comparison/measure of development.
Sure, but that's generally what's been happening. Total US electricity consumption has been going up, but consumption per capita (efficiency) has been going down.
GDP unfairly favors non-value added transactions, while energy consumption unfairly favors heavy industry.
Ground truth is somewhere in between.
Imo it's just hair splitting going back and forth arguing whether China leads econonically by 20% or by 2x. When the more impactful factor is that raw economy size alone does not finish great power contests. US can still be a threat through things not measured economically, by having a much more mobilized society, having undermined international organizations, having geographic proximity through bases in some hot zones etc.
For example, US still has indirect control over much of global oil production, this might not help them reach China in GDP, but it makes them a real threat towards China's partners in the third world.
US is dangerous nearly never because of economical reasons, but because China has allowed them in the past to unfetteredly corrupt the UN, build up their military and collect colonies from weak countries. With these tools, US still represents a threat to Chinese security, despite their diminished home economy. It is misleading to brag how much larger the CN economy is, when it's not the most crucial battlefield anymore. Who really cares how much more electricity we can consume/make, more cars we can build or more valued transactions happen yearly, if these economic advantages are not used to directly curtail American influence?