Genuinely speaking, what should China do?
Chinese Economics Thread
- Thread starter Norfolk
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Jesus are you incapable of understanding that RMB in China and USD in US are not freely exchangable measures at an airport exchange rate???
China and US are not two entirely open and 100% integrated economies as you seem to erroneously believe, the vast majority of both countries have their economy generated by internal circulation.
Ive never said that China's gdp is undervalued, both it's nominal (in nominal RMB) and comparative (in USD adjusted for large scale exchanges) gdp should be exactly right valued, assuming China's data is correct.
What I said is that gdp isn't a good way to measure economic power because it makes highly stratified economies look larger than their actual economy size. Not just US is a beneficiary of this effect, India is also.
Let me answer this with a question - the biggest Chinese public companies that have grown the most in the past decade are the internet companies (Tencent, Alibaba, Bytedance, Meituan, Pinduoduo, Netease etc) - none of them are listed on a Chinese domestic stock market that domestic citizens can readily buy and enjoy their profits/dividends. Meanwhile, USG can fuck with them at a moment's notice (move Tencent into a Chinese military company list, threaten to delist them via PCAOB audits) and their stock prices are subject to the whims of foreign investors who have zero clue what's going on in China.
Is this not a problem?
That was the case a few decades ago. Now you started spreading pure disinformation. Now the majority of the production is concentrated on the domestic market > Global South > EU/US. It is GOOD to be a net exporter like I told you, but you ignored it. Every healthy great empire did so, the West developed in that way, and early capitalist ideologists from the West also supported that. China is not much different than Japan, South Korea, and Germany. Just on a much larger scale and without US democracy-type oligarchic negative influences over them. Domestic capital markets are an anthesis to development since they suck away capital from productive things that increase national power and real wages to unproductive things like share buybacks and useless speculation, endless algorithmic trading in some void. You are totally full of decades-old stereotypes about China, not only about the destination markets but also about value added. Not only is the gross production manufacturing share rising but also value added (high-end manufacturing where they take more and more profits). Just look at the recent tech news from there ffs. You are incapable of learning or updating your opinion. Now they innovate, cut costs, sell domestically since people there can afford many products now, and to the similarly structured Global South, squeezing Western manufacturers out in the process. They are not complementing them anymore by selling cheap things to the West that they are not involved in producing, instead, they are taking away their tech monopolies and high-value-added industries globally. And they didn't sacrifice their real wages or national power in the process by using this growth way.
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Look at the final demand and not the trade statistics between China and SE Asia. Is it so difficult for your to understand that Vietnam trade with China is simply Chinese companies assembling in Vietnam to send to the US?
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This is where I insert the Michael Jordan Stop it get some help meme.
Read what I wrote - I have never suggested it is BAD to be exporting - I simply said that it is BAD to export at a CHEAP price.
You're an absolute idiot if you believe that "domestic capital markets" are somehow automatically equivalent to "unproductive things like share buybacks and useless speculation, endless algorithmic trading in some void."
Thankfully the smart people at Zhongnanhai do not subscribe to your idiotic beliefs and made this an important element of the 3rd plenum in July 2024:
Buybacks are sooooo uNpRoDuCtIVe that....PBOC (under the direction of the Party Center & State Council) is supporting it with 300 bln of relending facility. Give me a fucking break from this amateur hour of deeply unserious commentary.
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That's 55% still with Taiwan, Japan, Singapore, and South Korea.
And that 55% is of the 40% of the value added that ends up outside in the first place.
So what's your point then if the Western countries can't sanction Chinese goods since they end up being assembled outside and sold through that way? What's the Western advantage here, I don't understand. The dependence on China that they can't rid of even with sanctions?
"Cheap price", lol. You know that higher value-added AUTOMATICALLY means higher profits for companies and higher wages for people?
That's mostly just a function of current or former communist systems. In Eastern Europe, home ownership rates upwards of 85 or even 90% is not unusual. Legacy of communism. Doesn't make them richer.
In some of the richest countries in Europe, like Denmark, the home ownership is much lower. Probably no more than 55-60%. Part of this is because their rental market is heavily subsidised. I like housing systems where the state has a bigger say, but using home ownership rate isn't really a good metric in of itself, because the state can subsidise housing in more ways than just ownership.
BTW, the function of an economy's welfare isn't GDP per se but consumption. Because China produces so much of what it also consumes, it is hard to compare to other, much more import-dependent economies.
2024年1—11月份全国规模以上工业企业利润下降4.7%
2023年1—11月份全国规模以上工业企业利润下降4.4%
2022年1—11月份全国规模以上工业企业利润下降3.6%
aUtOmAtIcAlLy hIgHeR pRoFiTs for companies.
The unseriousness of your commentary is approaching that of Noah Smith and Gordon Chang.
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On China's low inflation rate: I don't think the comparisons with Japan are relevant because Japan entered a long period of stagnation and industrial decline. Anyone looking at China today would be crazy to call the country stagnating in innovation or industry.
So what's going on? I think the best comparison would be America in the 1870-1890s, when it had a long period of stagnating prices but the economy was still very innovative. Having very low price growth for an extended period is a challenge and anyone who pretends otherwise is lying to you. But we have to move away from the Japanese comparison because Japan's lost decades were also marked by a drastic fall in innovation and/or competitiveness. That's clearly not what is happening here.
At the same time, there also differences with America. The US was a much younger country with an extraordinarily high birth rate and high immigration in the late 1800s. Population growth was booming like crazy, which is not what's happening in China. But if AGI really takes off and robots become commonplace, should we panic about falling birth rates? It's not clear to me that we should. We could also see more novel tech like artificial wombs, clones and even bioengineered babies. I'm not a doomer on demographics.
So what's going on? I think the best comparison would be America in the 1870-1890s, when it had a long period of stagnating prices but the economy was still very innovative. Having very low price growth for an extended period is a challenge and anyone who pretends otherwise is lying to you. But we have to move away from the Japanese comparison because Japan's lost decades were also marked by a drastic fall in innovation and/or competitiveness. That's clearly not what is happening here.
At the same time, there also differences with America. The US was a much younger country with an extraordinarily high birth rate and high immigration in the late 1800s. Population growth was booming like crazy, which is not what's happening in China. But if AGI really takes off and robots become commonplace, should we panic about falling birth rates? It's not clear to me that we should. We could also see more novel tech like artificial wombs, clones and even bioengineered babies. I'm not a doomer on demographics.
Is your brain incapable of registring various correlations?
| Monthly Growth in Manufacturing Added Value | |
| Month | Year-on-Year Growth (%) |
| Nov 2024 | 5.4 |
| Oct 2024 | 5.3 |
| Sep 2024 | 5.4 |
| Aug 2024 | 4.5 |
| July 2024 | 5.3 |
| Jun 2024 | 5.5 |
| May 2024 | 6 |
| April 2024 | 7.5 |
| Mar 2024 | 5.1 |
| Jan to Feb 2024 | 7.1 |
| Source: National Bureau of Statistics |
| Urban Annual Average Wages in Private and Non-Private Manufacturing Sector | ||||
| Private | Public | |||
| Year | Salary (RMB) | Growth Rate (%) | Salary (RMB) | Growth Rate (%) |
| 2023 | 71,762 | 6.5 | 103,932 | 6.6 |
| 2022 | 67,352 | 5.3 | 97,528 | 5.5 |
| 2021 | 63,946 | 10.4 | 92,459 | 11.7 |
| 2020 | 57,910 | 9.6 | 82,783 | 5.9 |
| Source: National Bureau of Statistics |
| Growth in Manufacturing Fixed Asset Investment | |
| Month | Percent Growth (%) |
| Nov 2024 | 9.3 |
| Oct 2024 | 9.3 |
| Sep 2024 | 12.3 |
| Aug 2024 | 9.1 |
| July 2024 | 9.3 |
| Jun 2024 | 9.5 |
| May 2024 | 9.6 |
| April 2024 | 9.7 |
| Mar 2024 | 9.9 |
| Jan – Feb 2024 | 9.4 |
| Source: National Bureau of Statistics |
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