Chinese Economics Thread

[jli88]

Even in the 1800s, deflation was not necessarily bad for the economy.

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. This prolonged period of persistent deflation is exactly when the US grew from an relative economic backwater to become the most dominant industrial power in the world.

Agreed, deflation is not necessarily the problem. The problem is low income and consumption growth which is running at~3% currently. In fact the nominal gdp growth rate is around 3% and is getting a push from deflation which adds to get the real growths at 5%.

There would be no issue if the wages were growing, consumption increasing, and employment rising. But that is not the case, the economy is growing at around 3-4% nominal rates, which is too low for this stage of development.

Ultimately, nominal GDP (in USD) has been stagnant since 2021. This is somewhat like Japan, whose nominal GDP (USD) has been stagnant, or even declined, for the past 3 decades.

The currency appreciating is the solution, it's in fact required. A 20% appreciation in yuan, will increase GDP by 25%, bringing it to around 25 trillion USD.

 

[sunnymaxi]

Agreed, deflation is not necessarily the problem. The problem is low income and consumption growth which is running at~3% currently. In fact the nominal gdp growth rate is around 3% and is getting a push from deflation which adds to get the real growths at 5%.

There would be no issue if the wages were growing, consumption increasing, and employment rising. But that is not the case, the economy is growing at around 3-4% nominal rates, which is too low for this stage of development.

Ultimately, nominal GDP (in USD) has been stagnant since 2021. This is somewhat like Japan, whose nominal GDP (USD) has been stagnant, or even declined, for the past 3 decades.

The currency appreciating is the solution, it's in fact required. A 20% appreciation in yuan, will increase GDP by 25%, bringing it to around 25 trillion USD.

in 2024.

The country's per capita disposable income stood at 41,314 yuan, up 5.3 percent year-on-year in nominal terms

Median per capita disposable income nationwide was 34,707 yuan, a nominal increase of 5.1 percent year-on-year.

Incomes of rural residents, up 6.6 percent year-on-year in nominal terms, grew faster than incomes of city dwellers, who enjoyed increases of 4.6 percent.


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The overall urban unemployment rate across all age groups edged down to 5.1% in October, from September's 5.2%, reaching a four-month low.

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and what about real GDP growth.. which is consistent from past few years around 5%. and the gap between US-China keep widening when to comes to GDP in PPP..

you are right in this regards. government should let RMB to appreciate. but we literally don't care about Nominal GDP.

i m not defending deflation and overall problems regarding China's economy but your statement about wages and other parameters are completely wrong.

why you even comment if you don't know much about China or latest data published by the Ministry.

 

[CMP]

in 2024.

The country's per capita disposable income stood at 41,314 yuan, up 5.3 percent year-on-year in nominal terms

Median per capita disposable income nationwide was 34,707 yuan, a nominal increase of 5.1 percent year-on-year.

Incomes of rural residents, up 6.6 percent year-on-year in nominal terms, grew faster than incomes of city dwellers, who enjoyed increases of 4.6 percent.

View attachment 164905
*********************************************************************************************************************
The overall urban unemployment rate across all age groups edged down to 5.1% in October, from September's 5.2%, reaching a four-month low.

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and what about real GDP growth.. which is consistent from past few years around 5%. and the gap between US-China keep widening when to comes to GDP in PPP..

you are right in this regards. government should let RMB to appreciate. but we literally don't care about Nominal GDP.

i m not defending deflation and overall problems regarding China's economy but your statement about wages and other parameters are completely wrong.

why you even comment if you don't know much about China or latest data published by the Ministry.

"Deflation" from higher productivity and cheaper manufacturing inputs is good for real workers since it increases their ability to consume much more without creating excessive inflationary pressures. Not so good for rent-seeking capitalist predators though that want to gouge everyone and their mom, hiding profit growth embedded within overall cost growth. Which side one stands on for this question very clearly broadcasts one's identity as pro-worker or pro-capitalist.

 

[jli88]

in 2024.

The country's per capita disposable income stood at 41,314 yuan, up 5.3 percent year-on-year in nominal terms

Median per capita disposable income nationwide was 34,707 yuan, a nominal increase of 5.1 percent year-on-year.

Incomes of rural residents, up 6.6 percent year-on-year in nominal terms, grew faster than incomes of city dwellers, who enjoyed increases of 4.6 percent.

View attachment 164905
*********************************************************************************************************************
The overall urban unemployment rate across all age groups edged down to 5.1% in October, from September's 5.2%, reaching a four-month low.

Please, Log in or Register to view URLs content!

and what about real GDP growth.. which is consistent from past few years around 5%. and the gap between US-China keep widening when to comes to GDP in PPP..

you are right in this regards. government should let RMB to appreciate. but we literally don't care about Nominal GDP.

i m not defending deflation and overall problems regarding China's economy but your statement about wages and other parameters are completely wrong.

why you even comment if you don't know much about China or latest data published by the Ministry.

Can you please produce charts for wage growth rather than disposable income? Disposable income is the income earned minus inelastic expenses, so if the inelastic expenses decrease much faster, it would have a different effect.

According to National Bureau of Statistics:

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Employment Type	2024 Average Annual Wage	Nominal Growth	Comparable (“comparable calibre”) Growth*
Non-private urban units	124,110 CNY	+2.8%	+2.6%
Private urban units	69,476 CNY	+1.7%	+4.0%
Employees in “scale-above” enterprises (larger enterprises)	102,452 CNY	+4.4% nominal	+4.2% comparable

 

[sunnymaxi]

Can you please produce charts for wage growth rather than disposable income? Disposable income is the income earned minus inelastic expenses, so if the inelastic expenses decrease much faster, it would have a different effect.

According to National Bureau of Statistics:

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Employment Type	2024 Average Annual Wage	Nominal Growth	Comparable (“comparable calibre”) Growth*
Non-private urban units	124,110 CNY	+2.8%	+2.6%
Private urban units	69,476 CNY	+1.7%	+4.0%
Employees in “scale-above” enterprises (larger enterprises)	102,452 CNY	+4.4% nominal	+4.2% comparable

 

[jli88]

View attachment 164915

Your first 2 numbers are real terms not nominal, however they don't negate my point that wages are growing somewhere around 3-4%, since those are only 2 specific subsectors of employment.

 

[sunnymaxi]

Your first 2 numbers are real terms not nominal, however they don't negate my point that wages are growing somewhere around 3-4%, since those are only 2 specific subsectors of employment.

yes. even consumption grew only 5 percent overall in last 5 years. contributed 56 percent of total GDP growth.

During the 14th Five-Year Plan period (2021-25), China's consumer market remained firmly in second place globally. Total retail sales of consumer goods rose from 39.1 trillion yuan ($5.44 trillion) in 2020 to 48.3 trillion yuan in 2024, with an average annual growth rate of 5.5 percent. The figure for 2025 is expected to exceed 50 trillion yuan.

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you also said, Employment should rise.. look at the numbers

Chinese economy created 12.56 Million new urban jobs in 2024 year. well above their target of 12 Million.

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[Michael90]

During the 14th Five-Year Plan period (2021-25), China's consumer market remained firmly in second place globally.

I think at this stage China should be the worlds biggest consumer market globally. Afterall, its surprising that despite having almost 4 times US population China consumes less than the US?

 

[siegecrossbow]

I think at this stage China should be the worlds biggest consumer market globally. Afterall, its surprising that despite having almost 4 times US population China consumes less than the US?

When you spend four digit on ambulance ride it is hard to top in consumption.

 

[vincent]

I think at this stage China should be the worlds biggest consumer market globally. Afterall, its surprising that despite having almost 4 times US population China consumes less than the US?

Study this.

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