Chinese Economics Thread

[AndrewS]

Around 90% of existing cars run on petrol. Government have no choice but to put a ceiling price.

Plus companies/consumers need some time to adjust to higher oil prices and start using alternatives.

 

[bsdnf]

Exactly what I said. I really don’t understand the Chinese government game plan in this sector . They spent decades and hundreds of billions of dollars to overtake the West and Japan/Koreas dominance on gas car industry . Yet now that Chinese companies are now finally ahead and dominant in this industry, they cut EV by half(too early by every account, they should learn from
norways example where 98% of car sales are now EVs due to strong government support and subsidies which is only now being reduced , since overwhelming majority of people who drive and EV never look again at a gas car ) and they still want to keep subsidizing gas prices to keep gas cars more competitive in China, but this will be helping western/Japanese companies more since they still dominate this sector more .
I really can’t think of one single reason for China to keep supporting the gas car industry . I understand perfectly E.U’s reason for backtracking on their 2035 deadline banning all gas cars in Europe, since their car makers are still not dominant enough in EVs and that will only benefit Chinese EVs and battery makers more . I’m sure that if Europe was in Chinas position and was dominating EV/battery sector (which was their thinking when they came out with all this laws) they would have probably sped up their target to get rid of gas cars even earlier to be honest and transition faster and get an even bigger head start over the word . Yet China seems to be moving slower despite their advantage .
anyway. Let’s see how EV sales will fare this year compared to last year.

Because the government has focused on reducing the cost of using NEVs rather than directly raising the cost of using gasoline vehicles over the past 10 years. The most financially relevant thing they've done is require automakers to pay carbon credits, never directly impacting the wallets of end users.

88% of the existing cars are still gas car, they cannot promote NEVs at the expense of the living standards of most car owners. Such blatant discrimination will cause discontent.

 

[tphuang]

Around 90% of existing cars run on petrol. Government have no choice but to put a ceiling price.

that may be the case, but the % of distance driven on NEVs is higher than that since they cost less to drive. Chinese gov't totally has a choice here. There is a difference between excessively taxiing ICE cars vs just not distorting market with subsidies.

Because the government has focused on reducing the cost of using NEVs rather than directly raising the cost of using gasoline vehicles over the past 10 years. The most financially relevant thing they've done is require automakers to pay carbon credits, never directly impacting the wallets of end users.

88% of the existing cars are still gas car, they cannot promote NEVs at the expense of the living standards of most car owners. Such blatant discrimination will cause discontent.

they are not discriminating ICE car owners. They are discriminating NEV owners by subsidizing ICE cars right now. How many oil importing countries around the world are actively subsidizing gasoline consumption?

 

[AndrewS]

they are not discriminating ICE car owners. They are discriminating NEV owners by subsidizing ICE cars right now. How many oil importing countries around the world are actively subsidizing gasoline consumption?

I don't disagree, but I think give companies/individuals a few weeks to adjust and make new plans, issue new quotes based on higher gasoline prices etc etc.

Then increase prices again to reflect the actual price increases.

Note that China should still be working off oil stocks purchased at pre-war prices, so I don't think they are at the stage of actively subsidising gasoline yet.

Plus I think NEVs are still receiving a higher level of overall subsidies than gasoline, due to the infrastructure buildout and subsidised manufacturing.

 

[TPenglake]

Speaking of Chinese car brand competitiveness over Japanese brands.

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It's all about timing, opportunity, and playing your cards right when the stars align.

 

[vincent]

My point is China is nowhere near Japan when it comes to overseas sales of its branded cars compared to Japanese brands. Its just starting up. Japanese brands are ubiquitious and extremely popular. If we look at combined sales of the world then yes Chinese brands are selling well, but that's because the vast majority of it is coming from China's own domestic market. They need to go a long way before they can match Japan's global brand recognition and soft power when it comes to Cars.

Cars manufactured outside of China brings far less benefits to Chinese people than ones manufactured inside China. The ones benefits the most from cars manufactured outside of China are the capitalists.
Cara manufactured outside of China also don’t pay taxes to the Chinese government.

 

[Michael90]

Because the government has focused on reducing the cost of using NEVs rather than directly raising the cost of using gasoline vehicles over the past 10 years. The most financially relevant thing they've done is require automakers to pay carbon credits, never directly impacting the wallets of end users.

88% of the existing cars are still gas car, they cannot promote NEVs at the expense of the living standards of most car owners. Such blatant discrimination will cause discontent.

This is nothing. China has had far more tuburlrnt times than this. However at the end of the day the government looked at the bigger long term picture since they knew the benefits will far outdo the pitfalls of their decisions. Do you know how many state owned companies went bankrupt and how many had to shut down laying hundreds of thousands of Chinese workers when China opened up its market and set up favorable conditions for foreign companies ? There were also many interests groups and people in China protesting against such actions since it affected them but the government pressed on since they had a long term plan and strategy for the country and they knew it will be good to make such tough decisions for the country (reason I admire Deng a lot), the rest is history .
Change is always difficult in the beginning but but humans eventually adapt despite the initial challenges. So the pain of some consumers is nothing compared to Chinas ambitions of dominating and taking a huge lead over such a critical industry that will shape our whole life/century. That’s what we call creative destruction. Else might have as well just remain with gas cars and stay with the status quo if they are worried about change and some challenges.
if the current government can’t even make such little tough decisions , then it shows just how less bold they are compared to the Chinese leaders in charge of the troublesome radical/risky reform eras of the 80s. China was very fortunate to have a leader like Deng who forced through reforms despite stiff opposition, India by contrast wasn’t lucky enough to have one , so their manufacturing never really took off and they still maintained their protected markets and phobia for free trade agreements/opening up their economy . It has slowed their performance a lot compared to what could have been.

 

[vincent]

On Ammonia, China has already made a strategic choice to produce ammonia with domestic coal, which is somewhat more expensive than using natural gas in normal times. But these aren't normal times, so coal is likely the lowest cost and most secure option for Chinese ammonia production, whilst green ammonia production (using electricity) is further developed and made lower cost.

Ammonia produced using green hydrogen is a thing.

 

[madhusudan.tim]

Ammonia produced using green hydrogen is a thing.

I don’t understand why these people are chest thumping based on experimental technologies. Never seen an scalable green hydrogen based ammonia production. You need Copper, Nickel, Bauxite, Lithium to electrify everything. And where is the any evidence that those supply sources or routes are going to remain intact? On the contrary, I am seeing large number of countries selling themselves out ( their resources for security) to other than China. Very soon, these feedstocks which power the New Economy will be on the chopping block. Very soon.

 

[bsdnf]

This is nothing. China has had far more tuburlrnt times than this. However at the end of the day the government looked at the bigger long term picture since they knew the benefits will far outdo the pitfalls of their decisions. Do you know how many state owned companies went bankrupt and how many had to shut down laying hundreds of thousands of Chinese workers when China opened up its market and set up favorable conditions for foreign companies ? There were also many interests groups and people in China protesting against such actions since it affected them but the government pressed on since they had a long term plan and strategy for the country and they knew it will be good to make such tough decisions for the country (reason I admire Deng a lot), the rest is history .
Change is always difficult in the beginning but but humans eventually adapt despite the initial challenges. So the pain of some consumers is nothing compared to Chinas ambitions of dominating and taking a huge lead over such a critical industry that will shape our whole life/century. That’s what we call creative destruction. Else might have as well just remain with gas cars and stay with the status quo if they are worried about change and some challenges.
if the current government can’t even make such little tough decisions , then it shows just how less bold they are compared to the Chinese leaders in charge of the troublesome radical/risky reform eras of the 80s. China was very fortunate to have a leader like Deng who forced through reforms despite stiff opposition, India by contrast wasn’t lucky enough to have one , so their manufacturing never really took off and they still maintained their protected markets and phobia for free trade agreements/opening up their economy . It has slowed their performance a lot compared to what could have been.

The government isn't freezing oil price increases, so what's the rush? An average increase from 7 yuan to nearly 10 yuan is already enough to drive the sales up.

Extreme measures are no longer popular under this administration, especially given the current turbulent international situation. The development of new energy policies to this point is due to long-termism and interest-driven approaches, rather than a blanket ban on old energy sources; that would only lead to the situation seen in Germany. If you really like extreme measures, just raise prices to 30 yuan per liter and see if smuggled oil or NEV sales increase then.

And don't bring up Deng Xiaoping; there were many higher-ups more radical than him politically and economically back then. Don't assume he was the most radical just because he purged conservatives.