Chinese Economics Thread

[Biscuits]

It goes beyond that.

Like I said before, the US dollar is not just used by China. Your argument would make sense in a world where only the US and China exist, but that's not the case.

If the yuan were in the dollar's position, China would gain a number of capabilities. It would, for example, be able to enact powerful sanctions regimes against actors it doesn't like - ones that could isolate and crush their economies, depending on the actor.

But China can already do this. It has utterly annihilated much of its rivals industries in a way no other country could.

What's the point of bullying a nobody like NK? In fact I guess China is bullying India at the moment, and it's working, life is shit in India and India continues to be the same in 2025 as in 2015, 2005 and so on. India is a hell lot more powerful than NK. And unlike NK who is still raring for a fight as ever, India is actually forced now to make amends.

Taiwan could be turned into a pariah state over night, with international commerce effectively cut off.

That's not desirable without a follow up plan to actually get rid of the separatists.

There is no substitute for clearing the hostiles with arms.

All China would need to do is indicate it won't transact with any country that does business with Taiwan. Taiwan would become like North Korea, and its pampered population would flee or riot. This same power does not exist right now, since the threat of Chinese sanctions isn't sufficient to get the rest of the world to stop doing business with Taiwan, as long as the US allows it.

No, although China has the ability to enact these sanctions (even with something as simple as diverting shipment to other provinces), what it would do is to make tons of Taiwanese lose their money, become homeless etc and so on. Resulting in a robust class of ruined lives whose only hope to for normalcy or even glory is to fight for separatism.

That's what we saw with the Donbass people after Ukraine enacted these "tough" policies on them. It only made things much worse for Ukraine.

Of course, these capabilities also come with costs - loss of export competitiveness prime among them, since the yuan would have to appreciate against every other currency until it is effectively over valued. The US has found loop holes around this - subsidies, unequal tariffs, and monopolistic take overs of foreign competitors - but it'd have to be targeted. You can't, fundamentally, operate an exports based economy with a reserve currency.

Historically, the US has played its role to its advantage by doing a lot of the right things you'd want to do with an over valued currency. For instance, enacting brain drains on the rest of the world, and weaponizing its consumer and financial markets to force its vassals into submission. It created powerful and vast dependency chains where governments simply could not imagine extracting themselves from the US, lest they crash their economies and are overthrown. The emphasis on "democracy" and "popular will" - supported by sophisticated intelligence and media operations - are all components of this larger strategy, and it worked.

But the US made - or was forced to make - a key mistake: it got soft. Not in the military sense, not in the sense of being ruthless, but as the inevitable consequence of abundance and prosperity. As they say, great times create weak men; and weak men indulge in decadence. When the entire culture of a country shifts towards decadence, it is difficult to keep any strategy - no matter how sound - running effectively. After all, at the end of the day, policies are executed by people, and if the people executing these policies are corrupt and incompetent, then nothing can be done.

That is the situation the US finds itself today - Americans have become too complacent, ignorant, and generally incompetent to run the system their fathers created. They have become sheep, and winter is coming. It is precisely this aspect of American culture that people like Trump and Elon are trying to change. Too late, probably, but it won't stop them from trying.

All of which is to say, pretending that the US strategy is terrible and that China is right to focus on devaluing its currency - and thus the value of its people's labor

This is an insidious cope but quite hilarious on close examination by countries stuck in income traps that aren't progressing.

"devaluing people's labor" yeah, that's what happens when a society advances.

A shirt used to be made by a seamstress over dozens of hours and therefore represented valuable labor which could be sold for maybe a week or a month's wage. When Britain invented textile mills, the same shirt can be made in huge bulk and anyone can get the shirt for maybe a day's wage at most.

Thus, the labor value of the British seamstress was devalued compared to the artisan foreign (say Qing or Maharati) seamstress handmaking everything.

You see it sounds good for propaganda when you say people's labor is devalued, but what it really means is that people are getting more of everything, at a greater value than ever before. When formerly expensive products are "devalued", it lets a civilisation advance towards new top tier products. And in turn, that gives them time to focus on building/researching the flashy stuff, like rifled cannons and dreadnoughts for Britain and J-36s, robotics or whatever for China.

- is missing the forest for the trees. China's strategy may prove to be the better strategy, long term, but the verdict is still out. End of the day, the US economy is objectively larger based on global market value, and this allows it to do a number of things, like attract global talent and investment in a way that China never can, threaten/sanction countries into submission, gather vast quantities of vassals, buy / hollow out other countries' most valuable sectors, and out bid China in the global resources trade. But it also does come with draw backs, like not being able to run a manufacturing-based economy and creating import dependencies.

China is still objectively larger if we're speaking gdp. And while government budgets are hard to measure, it's fairly obvious which one conducts greater spending and can outbid the other. China has a restrictive immigration policy, so comparing this is pointless, they don't want a ton of H1B walking mouths, no matter how high iq or what prestigious third world universities they are from on paper, China has confidence that it's own workers/engineers/inventors are far better.

And who are we to argue with that? Economy size speaks for itself. Science publications speaks for itself. Dominance in so many market sectors speaks for itself.

 

[bebops]

Historically, the US has played its role to its advantage by doing a lot of the right things you'd want to do with an over valued currency. For instance, enacting brain drains on the rest of the world,

First thing came to my mind is Indians. U.S wants to quickly revised their H1-b visa policy to allow more of them to study, work and stay in the US permanently.

As for the weakening currency between US and the World, India's currency has weaken far more than Chinas.

 

[GiantPanda]

Historically, the US has played its role to its advantage by doing a lot of the right things you'd want to do with an over valued currency. For instance, enacting brain drains on the rest of the world,

First thing came to my mind is Indians. U.S wants to quickly revised their H1-b visa policy to allow more of them to study, work and stay in the US permanently.

As for the weakening currency between US and the World, India's currency has weaken far more than Chinas.

Most currencies had weakened against the USD since the interest rate hike to combat inflation in the US.

The Yuan has weakened less than everyone else. This actually hurts China exports pricewise versus Japan and South Korea:







So it is absolutely amazing that China's exports expanded (and are still expanding) so much during the last five year despite all the bans and tariffs from the West AND a major devaluation from its chief competitors in East Asia.

But China's advantages isn't just price anymore.

 

[MortyandRick]

The historical US advantage in technology was absolutely huge. Sure, it didn't anticipate China being able to catch up as quickly as it did - and in many industries, China still hasn't - but the rest of the world most certainly did not catch up. I mean, we need to maintain perspective here. Outside of China, which country is even close to the US in technology? If your answer is South Korea or Japan, I'd advice you to look at how much of their companies rely on US technology before making that comment, as they are absolute dependencies.

This is 100% the key point! I think many don't realize.
Technology dominance is the most important.
China has made amazing progress that the west never expected but most of the progress has been revealed in the last decade or less.
The US still has a lot of technological dominance.

I doubt china would want to increase Yuan's value or try to be the reserve currency until china has comprehensive tech dominance! There's just too many downsides otherwise.

They are planning to use they low currency to continue to take market share while progressing to full tech self sufficiency first. And us sanctions are helping with that immensely.

 

[Michael90]

But even PPP GDP might not do
this fact justice because Chinese consumption levels are in multiples of the US and point to a real economy that might already be twice as large if not more than the US -- especially if you leave out nonsensical stuff like inputed rent in US and counting Chinese services correctly:

Hmmm..so Indias economy is larger than japan, Germany, and France combined? Lol and India economy is only abit less than half that of China's ? Lol

 

[Biscuits]

Hmmm..so Indias economy is larger than japan, Germany, and France combined? Lol and India economy is only abit less than half that of China's ? Lol

Gdp strongly favors having a lot of billionaires, India is practically EU level on that.

US is also significantly less effective as the 80% of China as gdp implies.

Both fraudulent economies with bullish stock markets but bearish median income/goods consumption, I.e. the so called income trap - country is a heaven for international rich seeking to avoid taxes and/or park money with favorable investments that only remain favorable as long as the money stays bound up. Meanwhile, the government's spending programs and the people are not seeing any of that on paper prosperity.

 

[GiantPanda]

Hmmm..so Indias economy is larger than japan, Germany, and France combined? Lol and India economy is only abit less than half that of China's ? Lol

GDP by PPP is not perfect but it is far better than nominal where it states the US is the larger economy when China consumes at least twice as much across a variety of major goods and energy!

The keys are China's consumption numbers proving it is larger than the US.

As for India, the numbers are definitely skewed. Their consumption figures on cars and electricity are 1/7th and 1/6th of that of China. So from the consumption standpoint the India's economy is around 5 or 6 times smaller.

That said, electricity usage is third after China and the US. All economic activity results from energy usage:

 

[doggydogdo]

Hmmm..so Indias economy is larger than japan, Germany, and France combined? Lol and India economy is only abit less than half that of China's ? Lol

China's economy definitely is over 2x bigger than India's but being bigger than Japan, Germany and France combined isn't that surprising considering India has more people than the entire OECD.

 

[Dante80]

Sharing this one from NYT.

VVVVVVVVVVVV

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China’s vast exports in 2024 exceeded its imports on a scale seldom seen anywhere except during or immediately after the two world wars.

China announced on Monday that its trade surplus reached almost $1 trillion last year as its exports swamped the globe, while the country’s own businesses and households spent cautiously on imports.

When adjusted for inflation, China’s trade surplus last year far exceeded any in the world in the past century, even those of export powerhouses like Germany, Japan or the United States. Chinese factories are dominating global manufacturing on a scale not experienced by any country since the United States after World War II.

The outpouring of goods from Chinese factories has drawn criticism from an ever-lengthening list of China’s trade partners. Industrialized and developing countries alike have erected tariffs, attempting to slow the tide. In many instances, China has

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in kind, bringing the world closer to a

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that could further destabilize the global economy.

President-elect

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, who will take office next week, has threatened to escalate already aggressive American trade policies aimed at China.

On Monday, China’s General Administration of Customs said that the country exported $3.58 trillion worth of goods and services last year, while importing $2.59 trillion. The resulting surplus of $990 billion broke China’s previous record, which was $838 billion in 2022.

Strong exports in December, including some that may have been rushed to the United States before Mr. Trump can take office and start raising tariffs, propelled China to a new single-month record surplus of $104.8 billion.

While China ran a deficit in oil and other natural resources, its trade surplus in manufactured goods represented 10 percent of China’s economy. By comparison, U.S.

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on trade surpluses in manufactured goods peaked at 6 percent of American output early in World War I, when factories in Europe had mostly stopped exporting and shifted to wartime production.

Many countries seek trade surpluses in manufactured goods because factories create jobs and are important for national security. A trade surplus is the amount by which exports exceed imports.

China’s exports of everything from cars to solar panels have been an economic bonanza for the country. Exports have created millions of jobs not just for

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, whose inflation-adjusted wages have about doubled in the past decade but also for high-earning engineers, designers and research scientists.

At the same time, China’s imports of factory goods have slowed sharply. The country has pursued national self-reliance over the last two decades, most notably through its

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policy, for which Beijing pledged $300 billion to promote advanced manufacturing.

(...)

 

[Michael90]

GDP by PPP is not perfect but it is far better than nominal where it states the US is the larger economy when China consumes at least twice as much across a variety of major goods and energy!

The keys are China's consumption numbers proving it is larger than the US.

As for India, the numbers are definitely skewed. Their consumption figures on cars and electricity are 1/7th and 1/6th of that of China. So from the consumption standpoint the India's economy is around 5 or 6 times smaller.

That said, electricity usage is third after China and the US. All economic activity results from energy usage:
View attachment 143182

That obviously means that PPP is not a good metrics either then. Its even worse then nominal. Lol