Chinese Economics Thread

[gelgoog]

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

It was the right choice for the USSR back then. Focusing on heavy industry. The alternative being serfdom or annihilation by the Nazis.
Russia had basically lost to the Germans in WWI, the country was carved into pieces, they spent a long time in a bloody civil war, they got invaded by their erstwhile allies in WWI, so yes they put the highest priority into defending themselves. Any other things were secondary.
Which was the right call.

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.

And you think people are doing that for real? Seriously?

 

[GiantPanda]

So Russia had no GDP growth 2003-2008?

View attachment 135682

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?

View attachment 135685

Your chart shows Russia's demand grew from a little over 200 gigawatts to 300 during that period.

Korea's chart looks right for a country that grew at 2.5% for that period.


India has a sharp growth slope in electricity which matches its GDP in those years:


You can't grow without using electricity.

 

[lube]

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



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.

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.

But they're saying the wheels have come off, and electricity demand growth being stable actually shows that the Chinese are 'faking' more economic activity to keep the line straight.

Issue with predicting when your pyramid scheme has collapsed, is if it really happened, then it takes increasing amounts of effort to fake the gap in observed output and real output.

People like Pettis are in this bucket, they claimed the 'real' GDP growth potential of China was what, 3-4% since 2010 or earlier, and their prediction of an imminent sharp drop in growth despite Chinese efforts to prop it up is their term for, "The jig is up". But of course, their numbers have to be wrong, or they don't understand how an economy can keep the 'scam' up for another 10+ years past their predictions.

 

[abenomics12345]

And you think people are doing that for real? Seriously?

The former (companies not making any profits while producing more of the same things) is absolutely happening - its literally the textbook definition of having negative PPI and deflation.

Please, Log in or Register to view URLs content!

The latter - as I said, is an extreme example - and I clearly stated I have no idea whether it's happening or not. But I know for a fact that in May 2020 companies in China were doing that because local officials wanted to show that they were getting the economy turned back on.

But they're saying the wheels have come off, and electricity demand being stable actually shows that the Chinese are 'faking' more economic activity to keep the line straight.

Issue with predicting when your pyramid scheme has collapsed, is if it really happened, then it takes increasing amounts of effort to fake the gap in observed output and real output.

People like Pettis are in this bucket, they claimed the 'real' GDP growth potential of China was what, 3-4% since 2010 or earlier, and their prediction of an imminent sharp drop in growth despite Chinese efforts is their term for, "The jig is up". But of course, their numbers have to be wrong, or they don't understand how an economy can keep the 'scam' up for another 10+ years past their predictions.

Nobody credible is saying the wheels are coming off and we are headed for an imminent disaster - even Japanification just meant stagnation and *growing below potential*.

But as for your pyramid scheme comment:

2023年中国全社会固定资产投资509708亿元，比上年增长2.8%。 固定资产投资（不含农户）503036亿元，增长3.0%。
2022年1—12月份，全国固定资产投资（不含农户）572138亿元，比上年增长5.1%。

The NBS would claim that there was an adjustment - but how? You tell me I've no clue. That's a 7 trillion adjustment without adjusting down historical FAI growth.

 

[FairAndUnbiased]

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

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.

It isn't sustainable to do so at scale unless they're being given free electricity, either to a single large enterprise or to multiple small enterprises.

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.

OK, can you explain how US has economic growth despite negative trends in:

1. life expectancy
2. age 65 survivorship
3. labor participation
4. electricity production
5. crime rates

which are all strongly correlated with poor economic growth in basically every country except, strangely, the US?

and furthermore, how these factors that result in US economic growth are unique, that do not exist in the rest of the world, and are of the appropriate magnitude to cause a 25% nominal growth in the US GDP in the past 5 years?

 

[canniBUS]

The former (companies not making any profits while producing more of the same things) is absolutely happening - its literally the textbook definition of having negative PPI and deflation.

Please, Log in or Register to view URLs content!

The latter - as I said, is an extreme example - and I clearly stated I have no idea whether it's happening or not. But I know for a fact that in May 2020 companies in China were doing that because local officials wanted to show that they were getting the economy turned back on.

That definition of value is the neoclassical definition which is just one school of economics. Its deceptive to treat it as the one truthful definition.

 

[lube]

The former (companies not making any profits while producing more of the same things) is absolutely happening - its literally the textbook definition of having negative PPI and deflation.

Please, Log in or Register to view URLs content!

The latter - as I said, is an extreme example - and I clearly stated I have no idea whether it's happening or not. But I know for a fact that in May 2020 companies in China were doing that because local officials wanted to show that they were getting the economy turned back on.



Nobody credible is saying the wheels are coming off and we are headed for an imminent disaster - even Japanification just meant stagnation and *growing below potential*.

But as for your pyramid scheme comment:

2023年中国全社会固定资产投资509708亿元，比上年增长2.8%。 固定资产投资（不含农户）503036亿元，增长3.0%。
2022年1—12月份，全国固定资产投资（不含农户）572138亿元，比上年增长5.1%。

The NBS would claim that there was an adjustment - but how? You tell me I've no clue. That's a 7 trillion adjustment without adjusting down historical FAI growth.

Wheels come off is, not a crash, but more like, everything that was fake all along has been revealed.
Same sentiment though.

Literally just means, people think China's growth is always X% under its reported rate, so that gap between reported GDP and real GDP has grown to the point it can't be hidden anymore despite the government pulling all the stops and failing because the gap is too big.

So for your anecdote, people are treating leaving empty factories running producing nothing as the default, not an exceptional outlier.

 

[GiantPanda]

But they're saying the wheels have come off, and electricity demand being stable actually shows that the Chinese are 'faking' more economic activity to keep the line straight.

Issue with predicting when your pyramid scheme has collapsed, is if it really happened, then it takes increasing amounts of effort to fake the gap in observed output and real output.

People like Pettis are in this bucket, they claimed the 'real' GDP growth potential of China was what, 3-4% since 2010 or earlier, and their prediction of an imminent sharp drop in growth despite Chinese efforts is their term for, "The jig is up". But of course, their numbers have to be wrong, or they don't understand how an economy can keep the 'scam' up for another 10+ years past their predictions.

Yes, the whole "faking" this that and the other thing line of spiel. With electricity in China, you are spending money to produce power at massive, massive level. You are talking about a country that eats up twice as much electricity as the US so faking 7% growth year after year after year after year takes tremendous resources.

Also the "subsidizes everything" spiel. How many trillions?

Also the HSR network which is a trillion dollar white elephant.

So how does a collapsing economy afford those trillions upon trillions?

All this bullshit magical thinking when comes to China.

In the real world money is unforgiving. You either have it or you don't. If you can fake development then every piss poor country would do it and end up with China's infrastructure and industry.

 

[abenomics12345]

It isn't sustainable to do so at scale unless they're being given free electricity, either to a single large enterprise or to multiple small enterprises.

Of course not, they're going to hire less and cutting costs. Meaning lower wages and less hiring in the future. See below:

Step 1: Companies not growing revenues/earnings:

View attachment 135434


Step 2: Companies drastically cuts hiring (impact to wage earners):

View attachment 135435

Step 3: Companies paying out more cash to shareholders (capital holders)
View attachment 135436

US has economic growth

It can sink ASML if it prevents ASML from using Cymer. It can shut down Wuxi Biologics if it prevents ThermoFisher from selling
bioreactors. And it can still cause riots/coups in smaller 3rd world countries if they do not play ball.

Meaning, the US is still the incumbent power, regardless of how they 'likely'/'may' lose it in a few years in the future.

So therefore it gets to print/financialize and fuck over poor people (foreign and domestic) - but so far poor people are willing (or have no choice) to take it. An argument of how this is unsustainable in the future, while credible, is not a statement to suggest it will implode tomorrow.

A more useful argument is to be specific about WHEN (specifically to 2-3 year range) you believe this is likely to change. We can talk about your assumptions. But bemoaning about the inequality of the US is....well...not useful? Since when has the US not been unequal? Since when has the US not been full of indentured servants (slaves or not)? This is obviously a feature of the country. Maybe you drank the koolaid as a kid about the shining beacon on the hill buts that's on you.

That definition of value is the neoclassical definition which is just one school of economics. Its deceptive to treat it as the one truthful definition.

Okay bro do educate us all on your alternative facts.

 

[tokenanalyst]

China inflation is heating up

Japan inflation is freezing up.