Chinese Economics Thread

[manqiangrexue]

https://twitter.com/i/web/status/1828177826052288878

Ah, another Tweeted opinion from a random dude instead of an article published by a reputable source. It's the last limb of fringe economists who want to paint their own version of the story.

No, actually, China's economy is heavily underestimated by the traditional methods due the the enormous gray market (you wouldn't know what I'm talking about because you've never went shopping in China because you think you don't need to know anything about China to discuss China) while America's is puffed up due to its very unusual and overblown definition of imputed rent as well as the swelling of the largely self-cancel-out sectors such as healthcare and education.

COVID has caused far more permanent scarring of China’s economy than of any other large economy and due to behavioral changes surrounding capital investment, consumption, etc -

Oh, that's what you were trying to get at? LOLOL So many things happening including the move up the tech value chain, the end of fast and dirty, the housing market readjustment and you blame COVID? What is the impact of a virus that's over? Other than the deaths that it has caused, which are magnitudes higher in the US and West than in China, how does it "last?"

has sent China’s trend growth path permanently lower

Permanently... is that a word that Western economists like to use when looking at a developing chart? Or is it just something a pretend economist with a boyish anti-China glee says because he wants it to be true? Cus that's a really stupid word in that context.

Even if was due to China’s severely underdeveloped financial sector leading to all kinds of allocative distortions, that would also result in China’s trend growth to be pushed down permanently. COVID or financial distortions or both -> they point in the same direction

"Financial distortions" are the development of the country. Making tons of cheap low end goods has to end and the next phase to orient towards high quality high tech has to begin even if the numbers have to go down a bit. The financial sector is purposefully pushed down in China because it is largely a tool for the rich to get richer keeping the poor poorer without actually making anything for anyone.

Eh. Both aggregate consumption and GDP both point to the same story

That China continues to grow faster than the US despite going from a manufacturer of cheap items to a manufacturer of tech that the US can't make.

Housing readjustment just reflects China’s severely underdeveloped financial markets in which there is no other channel for household savings (and related, a lack of financial intermediaries that are capable of allocating between savers and borrowers on valuable projects)

Housing readjustment is the CCP ensuring that the real estate sector serves the people instead of just the elite. "Houses are for living in, not for speculating on," is the CCP's attitude towards housing, something that would be greatly welcomed in many parts of the US where complaints of predatory rent/real estate markets threaten the common people's financial wellness.

Both the housing and financial market situations show that China's economy is one made for the purpose of advancing the nation and serving the people while America is completely lost in the numbers and victim to the rich... all that yet in the end, the numbers still heavily favor China.

 

[doggydogdo]

It's true that China's slowdown this decade is more about the housing slump than Covid per se, and the housing slump was likely going to happen sooner or later anyway; however it's also true that Xi needs to get over his hangups over "welfarism" and enact some stimulus in the form of transfer payments to boost domestic demand. Heck, they can even through in some pro-natalist bias such as national-level payments for marriage and childbirth. Such policies aren't in conflict with promoting new productive forces; on the contrary, they support them.

This is just veiled anti-China propaganda. China does not have that type of money, especially for stupid policies that would not fix anything.

 

[Index]

It's true that China's slowdown this decade is more about the housing slump than Covid per se, and the housing slump was likely going to happen sooner or later anyway; however it's also true that Xi needs to get over his hangups over "welfarism" and enact some stimulus in the form of transfer payments to boost domestic demand. Heck, they can even through in some pro-natalist bias such as national-level payments for marriage and childbirth. Such policies aren't in conflict with promoting new productive forces; on the contrary, they support them.

You wouldn't want to drive GDP up based on welfarism though. It straight up doesn't achieve anything tangible. It's broken window fallacy.

The elephant in the room people aren't talking enough about is how wounded the US and EU economies became, from the trade war and then from Ukraine. With both no2 and no3 (if you count EU as 1 entity) in recession spiral, how exactly is China gonna eat up their growth to enhance it's own?

Like it or not, China does not exist in a vacuum, poor performing major economies also slow down China.

But Beijing has developed the correct plan under these circumstances. For the past year, high tech and electrical use have grown more rapidly than gdp, meaning that China now turns inward and focuses on product development.

China's economy remains unrivalled, no other country have the industrial output to compete or are slated to catch up in gdp with China, despite some resorting to empty low quality bubble juicing. And once or if US/EU repairs themselves, China will be waiting for them with a new round of advanced products developed from China's inward focus during this slump.

In the new round of products such as EVs, high capacity energy storage, personal robotics etc, Beijing will again both eat the lunch and take the lunch money from uncompetitive countries, keeping China on top, permanently.

 

[Valentine]

https://twitter.com/i/web/status/1828177826052288878

COVID has caused far more permanent scarring of China’s economy than of any other large economy and due to behavioral changes surrounding capital investment, consumption, etc - has sent China’s trend growth path permanently lower

A very strange analysis regarding the Chinese economy. If you look exponentially, 5 years after I got married, I was supposed to have 12 more wives, so in my first marriage I bought 13 cakes. Yes, this is exactly what this analytics looks like. The usual manipulation with numbers and mathematical models, I can generally make an analysis of GDP in geometric progression, and thus, after 5 years, the indicator should be 2045% of GDP growth, and then say how bad everything is. But that would be foolish.

 

[tphuang]

https://twitter.com/i/web/status/1828177826052288878

COVID has caused far more permanent scarring of China’s economy than of any other large economy and due to behavioral changes surrounding capital investment, consumption, etc - has sent China’s trend growth path permanently lower

alright, clearly you are not providing anything of use on this thread and just causing problems. You are banned from posting on this thread, since I do pretend to have a life and don't want to spend rest of my life responding to complaints about your posts on this thread. To everyone, please just report any further posting by him on this thread and it needs to be deleted.

 

[SanWenYu]

Impact on the west showing up from the export control by China on semiconductor base materials including germanium, gallinum and graphite. According to FT, the export volumes of germanium and gallium have been halved since the new control in place. The price of gallium in Europe has doubled.

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《金融时报》援引数据称，中方去年对锗和镓实施出口限制后，欧洲的锗和镓价格在过去一年里上涨了近一倍。自6月以来，中国锗价已飙升52%，至每公斤达2280美元。

西方受影响公司的人士表示，中国仍在大量出口镓，但自管制措施实施以来，整体出口量已下降了约一半。他们担忧地表示：“如果中国像今年上半年那样减少镓出口，我们的储备就会被消耗，出现短缺。”

 

[proelite]

Estimating the impact of several hundred billion USD being put back into the Chinese economy on real GDP growth is complex, as it depends on several factors including how the money is invested, the current state of the economy, and multiplier effects. However, I can provide a rough estimate to give you an idea of the potential impact.

Key Assumptions:​

1. Amount: Let’s assume the amount repatriated is $500 billion USD.
2. Exchange Rate: For simplicity, assume an exchange rate of 7 yuan per USD, which means $500 billion would equate to approximately 3.5 trillion yuan.
3. China's GDP: China’s nominal GDP in 2023 was around $19 trillion USD, which at the exchange rate of 7 yuan per USD, is roughly 133 trillion yuan.

Estimating the Impact:​

1. Direct Addition to GDP:
   • If all 3.5 trillion yuan were directly added to GDP (which is unlikely, but for a rough estimate), this would represent approximately 2.6% of China's GDP (3.5 trillion / 133 trillion).
   • However, not all of this money would be directly reflected in GDP, as it depends on how it’s used. For example, if it’s invested in infrastructure, business expansion, or consumer spending, it could have a multiplier effect, amplifying the impact on GDP.
2. Multiplier Effect:
   • The multiplier effect refers to the additional economic activity generated by the initial spending. In China, the fiscal multiplier might range from 1.5 to 2, meaning that for every yuan invested, GDP could increase by 1.5 to 2 yuan.
   • If we assume a multiplier of 1.5, then the 3.5 trillion yuan could potentially boost GDP by about 5.25 trillion yuan.
3. Impact on GDP Growth Rate:
   • To determine the impact on the GDP growth rate, divide the increase in GDP by the previous year’s GDP.
   • If the 5.25 trillion yuan increase were to materialize, this would be an increase of about 3.9% of GDP (5.25 trillion / 133 trillion).

Realistic Estimate:​

However, the actual impact on GDP growth might be smaller because:

• Not all the money would be spent or invested immediately.
• Some might go into savings or be used to pay off debt.
• The actual multiplier effect might be lower depending on economic conditions.

Considering these factors, it’s reasonable to estimate that the inflow could contribute a fraction of a percent to a couple of percentage points to GDP growth, depending on how effectively the capital is deployed.
Fraction of a Percent: In a scenario where only part of the money is invested effectively or if the multiplier effect is lower, the bump might be closer to 0.5% to 1% of GDP growth.
1% to 2%: If the funds are used efficiently with a higher multiplier, the impact could potentially add 1% to 2% to the real GDP growth rate.

Conclusion:​

A repatriation of several hundred billion USD could provide a significant, but not overwhelming, boost to China's real GDP growth rate, likely in the range of a fraction of a percent to up to 2%, depending on the circumstances and effectiveness of the capital deployment.

What chatgpt 4o is saying about the yuan carry trade completely reversing.
I am surprised that I am not reading opinion pieces about this. Western media loves to go for the structural imbalance angle.

 

[didklmyself]

Source? What are you posting about?

 

[TK3600]

Impact on the west showing up from the export control by China on semiconductor base materials including germanium, gallinum and graphite. According to FT, the export volumes of germanium and gallium have been halved since the new control in place. The price of gallium in Europe has doubled.

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It has been a while since rare earth ban. Only now does effect show due to stockpile depletion. It is just the beginning. 50% cost increase? Make it 200%. China supplied 90% of these, it will go higher.

 

[Overbom]

actually in the first few months exports were heavily suppressed but soon afterwards they recovered to about half of pre-export control action.

almost like some sort of understanding and/or deal was made behind the scenes after Americans realised that they actually depend on Chinese imports more than what their think tankers said they do .