Chinese Economics Thread

[Bellum_Romanum]

You know, now that you've started attacking me personally, let's dig up the evidence and discuss what's been said in the past and whether what I've said has been accurate or not. But first, lets start with your statements.


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Act of God pandemic, or negligence of duty? Make up your fucking mind.

People don't give a fuck if it was the local government or the central government that f'd up as they are all part of the same Party. Xi has consolidated so much power that, he's got to own the wins and the losses.



The government totally did not let COVID restrictions loose when people started protesting all over the country.

If anyone here is interested, I've pretty much stuck to this thread as it is my areas of expertise - I spend half my time in China and have visited over 200 companies/factories and about a dozen cities in the past year and half. I challenge anyone else who's done as much on the ground research as I have in this thread to come forward and debate me. Otherwise if your knowledge base consists of a diet of Globaltimes or Guancha then you're really drinking the propaganda coolaid - as much as I think some of the Guancha stuff is decent, there are idiots like Sima Nan, to whom 'patriotism' is simply a business to be monetized and his

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Now, if you believe he is more credible, you do you, all the power to you.

Now, with some assessment of your statements out of the way, let me remind you what I've said in this thread and whether I've been correct in my assessments - as it seems you haven't really participated in this thread all that much in the past year or so.



This was one of my first 'predictions' on this thread - you can check the data yourself to see whether I was accurate. 2022 GDP was *exactly* 3% - in the middle of what I said.







The second major prediction I made on this thread was the infamous 8% retail sales growth where I had @vincent say the following to me. The good news is that someone here indeed did bet against me with @AndrewS suggesting retail sales as high as 15% IIRC. Kindergarten math would indicate that 8% is a lot closer to 7.6% than 15%.

And yes, I'm dunking on these two - because they were so wrong and that deserves a dunking if we are having an intellectual pissing contest.



Here's another prediction that was 1.3% too optimistic for 2023.



Considering that retail sales growth in 2023 was 7.6% - meaning that I was overoptimistic; and that @vincent has not come out to offer a mea culpa - I believe that he was, in fact, not ready to face the reality of the situation.



Contingent on an 8% retail sales growth and a slightly negative export growth expectation, I stated that 5.5% GDP growth was my best guess for 2023 - with 2023 growth coming in at 5.2% - yet again I was 'overoptimistic' - but @TK3600 should also remember the way he attacked me for being 'pessimistic' about a 5.5% growth expectation in 2023.

I don't know @Bellum_Romanum seems like I've just been been attacked for...being correct?

But sure, I'm the echo chamber and

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.

At the same time I do want to commend @Jiang ZeminFanboy for evolving his views as he's appreciated the gravity of the difficulties today.



@Blitzo I do recall you 'questioning the validity' of my sampling - go check what YUMC has been saying about 'traffic' vs. 'ticket' in the past 12 months.

Credibility comes from being accurate about expectations - you of all people should know this.



Finally, this offer stands - thus far nobody has had the stones to actually do this trade with me. Bueller! BUELLER?! If @Bellum_Romanum you are quite confident about this - put your money where your mouth is.




This is good to know - but lack of updated data is certainly...not ideal for tracking purposes.

Are you one of those private V.C. that's losing a shit ton of money in the mainland and that's why you're this upset on the approaches or in your estimation a lack of urgency from the government.

But as an ardent practitioner of capitalism, you have been thoroughly educated well enough both in theory and experience that the current struggles that you're finding yourself in is just a part and parcel of the system. Yet, you seem to come off like a whiny b..ch and high on your well regarded but self-appointed expertise and soothsaying that you're on a mission to prove you have been right all along and people who differed greatly with you (based off on the aforementioned individuals) owe you a great deal of what exactly?

You sound like a gambler who's had a good run but is now facing successive losses that's putting you over the edge and is lashing out at anyone and anything sans the actual culprit which is in your case the CPC. But since you have no army and essentially no credible power to get your money back, this ret con job is cathartic therapy for you.

Hang in there man, despite your grim prognostication and prognosis to the Chinese economy, I am quite confident that it's growth rate will be more than alright, but f..ng tastic.

 

[HighGround]

Yes, it is. It is absolutely a proxy for growth in the real economy which is the production of physical consumerables. In fact, China did not consider services as part of the Gross Domestic Produce until very late. And then only reported it as an cursory effort.

But let's do a logical exercise:

China's demand grew at 7% in 2022 and 2023. (The US grew by 2.6% in 2022 and loses 1% in the 2023.)

There is no production into the Gross Domestic Produce that doesn't take some form of electricity even when doing services. Writing a report or blow drying hair takes electricity.

So if China's electricity demand is growing 7% every year then what accounts for it besides an increase in economic activity?

You're going to tell me that people are just being more and more wasteful every year but the economy is bad? If the economy is bad why wouldn't people and corporation do their best to save money by turning electricity off?

We know that when economy activity is bad electricity demand goes down too. Again look at 2008 (sank 3.8%) in the US. And look at 2019 (down 1.2%) and 2020 (collapsed 3.3%) during the pandemic.

So why isn't it a proxy when the economy goes up? Especially when a country like China is expanding year after year -- not a fluky one off?

So Russia had no GDP growth 2003-2008?



South Korea had virtually no growth in the last 10 years?


Oh and India is a super healthy and super fast growing economy?



No. Electricity isn't a proxy for economic growth and it shouldn't be used to make qualitative analysis of a country's economy. It is merely one of the indicators we should consider when making an analysis. I don't really care if India's electricity generation doubles in the next 3 years, that country has incredibly deep structural issues that they cannot fix by consuming lots of electricity.

Furthermore, different countries are at different development points in their history and will have different consumption patterns, different growth patterns. It's not binary like you imply. I mean this is silly. I don't why you keep belaboring this point. Nobody disputed that manufacturing is developing well in China.

 

[abenomics12345]

Are you one of those private V.C. that's losing a shit ton of money in the mainland and that's why you're this upset on the approaches or in your estimation a lack of urgency from the government.

Short selling makes money when companies are going down - so no I've been making money on shorts. That being said I'd much rather make money as the Chinese equity markets go through a 10 year bull market in which every Chinese citizen gets to participate - directly or indirectly through their pension plans.

But as an ardent practitioner of capitalism, you have been thoroughly educated well enough both in theory and experience that the current struggles that you're finding yourself in is just a part and parcel of the system. Yet, you seem to come off like a whiny b..ch and high on your well regarded but self-appointed expertise and soothsaying that you're on a mission to prove you have been right all along and people who differed greatly with you (based off on the aforementioned individuals) owe you a great deal of what exactly?

If you're interested in self masturbatory messages of "everything is going fine" despite deteriorating data, you could continue to Ostrich yourself head-in-the-sand. But I take intellectual honesty seriously so I'm just competing with myself to be more correct. You're the one who attacked me first but it seems like you can't finish?

You sound like a gambler who's had a good run but is now facing successive losses that's putting you over the edge and is lashing out at anyone and anything sans the actual culprit which is in your case the CPC. But since you have no army and essentially no credible power to get your money back, this ret con job is cathartic therapy for you.

Lol. Its okay to be wrong and be pointed out. Don't take it personally. Your ego can survive it.

 

[lube]

Perhaps shifting the economy to export-led growth uses more electricity but generate less economic growth.

I mean, that's the MSM consensus, consistent electricity demand growth, but since we know the Chinese economy is doing bad, they must be doing some shady stuff to keep the numbers up instead of just admitting their priors weren't that accurate. Like, anecdotes on the economy isn't a 1-1 relationship with electricity growth, or gdp growth in general....

And when the opposite happens, as an example.
When someone claims electricity goes down (suddenly after years of slow increases), gdp goes up faster.
You better be able to point to a very specific reason instead of giving vague reasons like structural changes showing immense productivity growth and unparalleled manufacturing efficiency.

 

[gelgoog]

So Russia had no GDP growth 2003-2008?

Installed electric capacity (your chart) is not the same thing as generation or consumption. It just means they have not built new power plants in that period. Not that surprising since after the Soviet collapse a lot of industrial production vanished, they were left with spare generation capacity, and the recovery only began for real in like mid 2000s.



As you can see electric consumption is growing in Russia. In fact because of the new regions this has led to power shortages in southern Russia. Because of the higher levels of economic activity (war spending, import substitution) other regions in Russia are also close to their generation limit including Moscow region.

 

[lube]

So Russia had no GDP growth 2003-2008?

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South Korea had virtually no growth in the last 10 years?

View attachment 135683
Oh and India is a super healthy and super fast growing economy?

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No. Electricity isn't a proxy for economic growth and it shouldn't be used to make qualitative analysis of a country's economy. It is merely one of the indicators we should consider when making an analysis. I don't really care if India's electricity generation doubles in the next 3 years, that country has incredibly deep structural issues that they cannot fix by consuming lots of electricity.

Furthermore, different countries are at different development points in their history and will have different consumption patterns, different growth patterns. It's not binary like you imply. I mean this is silly. I don't why you keep belaboring this point. Nobody disputed that manufacturing is developing well in China.

If South Korea grows at X% rate despite having low but consistent electricity growth, then it establishes a baseline and future trendline. Regardless of how efficient they're utilizing electricity, or making structural changes in their economy etc.

The issue is people claiming the Chinese economy has worsened significantly, and the only reason it's not showing up in electricity demand is stable is because of even (greater) artificial distortions that hides Y level of Chinese economic weakness. So there're really calling electricity growth fake economic activity, and it should be lower, or negative. So yes, people are absolutely using electricity as a proxy for something...

 

[HighGround]

Installed electric capacity (your chart) is not the same thing as generation or consumption. It just means they have not built new power plants in that period. Not that surprising since after the Soviet collapse a lot of industrial production collapsed, they were left with spare generation capacity, and the recovery only began for real in like mid 2000s.

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As you can see electric consumption is growing in Russia. In fact because of the new regions this has led to power shortages in southern Russia. Because of the higher levels of economic activity (war spending, import substitution) other regions in Russia are also close to their generation limit including Moscow region.

Yet even this does not properly reflect economic growth. Electricity consumption may have grown relatively marginally, but the real economy more than doubled really.



I have family living in Russia and I myself visited it when Putin just came to power and a few years after. Electricity consumption is not a proxy for economic growth. It's just one of the indicators. It's a copletely different country today electricity consumption only being 30%-50% larger.

 

[abenomics12345]

Stalin made people live in communal wooden sheds. The Soviet economy still grew impressively under his rule. Mining, steel production, vehicle production, electricity generation, etc grew mightily. He took an agrarian society destroyed by civil war and turned it into a superpower with nukes and ICBMs. Color me not impressed with your idea that residential real estate is the end all be all in economics.

I just saw this. Lol. If you believe that the USSR is a desirable outcome / future model for the Chinese economy......

If South Korea grows at X% rate despite having low but consistent electricity growth, then it establishes a baseline and future trendline. Regardless of how efficient they're utilizing electricity, or making structural changes in their economy etc.

The issue is people claiming the Chinese economy has worsened significantly, and the only reason it's not showing up in electricity demand is stable is because of even (greater) artificial distortions that hides Y level of Chinese economic weakness. So there're really calling electricity growth fake economic activity, and it should be lower, or negative.

If a company loses money (or makes zero profits) by producing extra things (using electricity) - that can very well explain why GDP growth and electricity demand is no longer relevant. This is exactly how deflation manifests itself.

As an extreme example (meaning I have no idea this is actually happening or not but is definitely a possibility of explaining why GDP growth decouples from electricity demand growth):

You can take ingots of steel and repeatedly melt them in an electric arc furnace - that drives significant electricity usage but zero value added.

 

[Maikeru]

What does this signify?

https://twitter.com/i/web/status/1834424271441191414

And this?

https://twitter.com/i/web/status/1834409360686207442

 

[abenomics12345]

What does this signify?

https://twitter.com/i/web/status/1834424271441191414

Deflation expectations in China are increasing and inflation expectations in Japan are increasing.