Chinese Economics Thread

[GiantPanda]

In order to buy the (high-value) products China makes, the global south will first have to make money. And to make money they have to create and then sell high-value products themselves. Being an intermediary or a mere assembler is not enough.

China went through that phase and graduated to making its own stuff, often cheaper and better than the West. That hasn't happened so far for the rest of the "global south" and I doubt it will happen in the future.

Agree with your points that a Chinese supply-chain could be an opportunity for some of them, but would Chinese businessmen really prefer Nigeria over South-East Asia?

It is not the high end final goods. It's the capital equipment. The machinery and processes that makes stuff.

ALL countries have things to trade. Especially Africa and its primary resources. "Money" is just pieces of paper representing IOUs that people prefer to trade with today. What's actually being traded are stuff. China is already building out infrastructure in Road and Belt countries for access to raw material.

Businessmen, Chinese and otherwise, can buy Chinese capital equipment (say, the future EUV) at far cheaper prices than the West and use that to build things far quicker especially when starting out with a supply chain from China.

Nigerians can buy Chinese capital equipment and the initial Chinese supply chain to kickstart building things for Africa. Maybe eventually they can get efficient enough to compete with SE Asia. But what matters is they've started to industrialize locally. If successfully then they get wealthy and maybe buy high-end final goods from China.

Again, it is the capital equipment and infrastructure that Global South countries could buy in form of giving access to primary goods for China that will drive this transformation.

This is actually the crux of BRI.

 

[proelite]

In order to buy the (high-value) products China makes, the global south will first have to make money. And to make money they have to create and then sell high-value products themselves. Being an intermediary or a mere assembler is not enough.

China went through that phase and graduated to making its own stuff, often cheaper and better than the West. That hasn't happened so far for the rest of the "global south" and I doubt it will happen in the future.

Agree with your points that a Chinese supply-chain could be an opportunity for some of them, but would Chinese businessmen really prefer Nigeria over South-East Asia?

Global South can make money through commodities, energy, produce, services (tourism), and low-end manufacturing. China can enable the global south to skip the environmental, human, and capital costs of industrialization.

 

[Michael90]

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Dont think any chinese social media App will be as successful as Tiktok though. Not anytime soon

 

[Jiang ZeminFanboy]

Dont think any chinese social media App will be as successful as Tiktok though. Not anytime soon

There might be some very short period of honeymoon between Xi and Trump, like on the first presidential term when things like current growth of 小红书 is possible in the west, and then escalation will begin. My gut tells me that apps ban will be wide and fast, from Xiaohongshu, Shein to Wechat, I have the feeling everything bigger and popular will be banned.

 

[BlackWindMnt]

There might be some very short period of honeymoon between Xi and Trump, like on the first presidential term when things like current growth of 小红书 is possible in the west, and then escalation will begin. My gut tells me that apps ban will be wide and fast, from Xiaohongshu, Shein to Wechat, I have the feeling everything bigger and popular will be banned.

If the Americans can drag global south/BRICS country users with them to Xiaohongshu that would be a massive win tho for Chinese commerce and "soft power".
I didn't had this on my 2025 bingo card, Americans being the first over the finish line into the Chinese social media space.

 

[supercat]

I think I’m starting to understand why exports constantly keep rising sharply even with the global economy in such a slump.

It turns out that when Western economies take a hit and interest rates go up like now, global buyers feel the pressure.

With tighter budgets, they stop caring so much about brand prestige or flashy marketing and focus more on what’s affordable and reliable. And more often than not, that means they turn to products from China, and then they also learn that those don't lack anything.

This is why China manages to stay steady during tough times, still casually contributing about a third of global growth. If you dig a little deeper, though, you’ll probably find that their share is even bigger in real terms. Others may buy less in total, but more from China.

It’s also why, no matter how hard the West tries, they just can’t seem to move away from relying on Chinese products more.

This economic crisis in the West is actually beneficial for China, it makes it easier to grab some permanent market shares.

Two words: Global South. Here David P. Goldman talks about the rise of China's exports to the Global South:

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Another article endorsed by David P. Goldman: in this one, "Han Feizi" talks about "deflation" in China.

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[Michael90]

There might be some very short period of honeymoon between Xi and Trump, like on the first presidential term when things like current growth of 小红书 is possible in the west, and then escalation will begin. My gut tells me that apps ban will be wide and fast, from Xiaohongshu, Shein to Wechat, I have the feeling everything bigger and popular will be banned.

Yeah agree. Trump might turn out to be worse since he can be very unpredictable and sporadic sometimes .
China will have to create its own ecosystem globally like the US has done for decades now. Since relying on the US not targeting China has not worked. So China will have to assume.the worse case scenerios. There is no resson for Chinese leaders to hope the US wont even ban Chinese companies from listing on US stock exchanges so China needs to urgently sort out its own capital markets so Chinese companies can find it viable to raise capital and list in China instead of always going to the US since thry find a better more open capital market therre which is favourbale for their companies and raising funds. This is long due. Similarly China also has to try and expand her own social media networks globally instead of thinking mostly local. Since there is no resson that even Chinese authorities/people have to rely on US social media networks like YouTube/ twitter etc for example to reach global audiences or for global media exposures they jave to be able to rely on Chinese networks to fo that etc etc. So China also needs more networks like tiktok(which funny enough has little to no Chinese presence) in use globally.

 

[tygyg1111]

Yeah agree. Trump might turn out to be worse since he can be very unpredictable and sporadic sometimes .
China will have to create its own ecosystem globally like the US has done for decades now. Since relying on the US not targeting China has not worked. So China will have to assume.the worse case scenerios. There is no resson for Chinese leaders to hope the US wont even ban Chinese companies from listing on US stock exchanges so China needs to urgently sort out its own capital markets so Chinese companies can find it viable to raise capital and list in China instead of always going to the US since thry find a better more open capital market therre which is favourbale for their companies and raising funds. This is long due. Similarly China also has to try and expand her own social media networks globally instead of thinking mostly local. Since there is no resson that even Chinese authorities/people have to rely on US social media networks like YouTube/ twitter etc for example to reach global audiences or for global media exposures they jave to be able to rely on Chinese networks to fo that etc etc. So China also needs more networks like tiktok(which funny enough has little to no Chinese presence) in use globally.

Ironically, if the US does go ahead with widespread bans and/or expanding censorship it may encourage more users globally to explore Chinese equivalents

 

[tygyg1111]

It will bring the REST of the world into the Golden Age. The West will put down a tariff curtain.

I see a day when Chinese EUVs are churning out cheap 1nm chips in Nigeria while the US and Western countries are still sourcing TSMC at four times the price (more if from a TSMC plant in US or EU.) A phone made in Ethiopia with a Chinese supply chain will be 10 times cheaper than Apple but with a better chipset and better OS.

Chinese EVs with 1000 miles per charge built in Mexico will be smuggled into Texas and California.

West will survive for decades behind that tariff wall but Chinese products, especially capital equipment and infrastructure, will make the rest of the world, the Global South, wealthy and advance which in turn will create more business for China.

Unlike the Western dominated world order where a select few like Japan or Taiwan are given a chance at advancement, the Chinese one because of the affordability and availability of Chinese capital and supply chains will be infinitely wider in scope.

In Soviet America...

 

[Staedler]

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.

An estimate can be obtained via median income x population vs stated total GDP to see what portion is invisible to the average Joe.

$42,220 for the US at 333.29 million people is $14 trillion. This vs the stated $27.7 trillion nominal GDP.

The median income in China is around 116,274 RMB per household (avg size of 3). So for 1417.57 million people and a PPP factor of 3.64, that is $15.1 trillion. This is vs $17.8 trillion nominal and supposedly $41 trillion by PPP.

India's "deprived" class is roughly half of the country's population so the break-off point can roughly approximate the median income. It is 150,000 rupees per household (avg size of 4.8), 1457.95 million total population, PPP factor of 20.2 for a resulting $2.3 trillion. This vs $3.6 trillion nominal and $21.9 trillion by PPP.

Japan is at 3.6 million yen for 125.12 million people with PPP factor of 94.68 resulting in $4.8 trillion. Again, $4.3 trillion nominal and $6.2 trillion by PPP.

Germany has a median of 51,876 euros for 84.29 million people and PPP factor of 0.7 resulting in $6.2 trillion vs $4.5 trillion nominal and $5.9 trillion by PPP.

You can see, India (like the US) has the majority of it's "GDP" captured by the upper section of society. And given producer power comes from mass affluence, not elite affluence, I would say India isn't anywhere close to Europe or Japan. This is before accounting for any possibility of cooking the books.