Chinese Economics Thread

[4Tran]

Yes, an underappreciated fact of Yuan's appreciation is that it makes imports cheaper. The Plaza Accords are a death knell because it hurts monetary sovereignty and artificially rebalances trade. Yuan's appreciation will come when it comes, and trade will likely "rebalance" for China at some point as well, but naturally. Trade frictions, rise in consumption, development of China's economy will gradually transform the economy internally.

The funny thing is that this still leaves Europe and US exporters fucked. I just don't see how they'll compete with middle economies like Vietnam, Indonesia, Mexico, or Turkey. Squeezed at the top by China and squeezed from the bottom by everybody else.

It's like how it works for addicts: they'll never get better until they admit they have a problem. Right now, the West thinks that they already have the best systems and policies in the world. So if anyone else is doing better, then that can only happen if they're cheating. Of course, the only way the West can fix itself is to make fundamental reforms to its instituions and core beliefs so that's not going to happen any time soon.

 

[HighGround]

It's like how it works for addicts: they'll never get better until they admit they have a problem. Right now, the West thinks that they already have the best systems and policies in the world. So if anyone else is doing better, then that can only happen if they're cheating. Of course, the only way the West can fix itself is to make fundamental reforms to its instituions and core beliefs so that's not going to happen any time soon.

I'm American. I just don't see our government being able to make any kind of... "hard" decisions that would actually set up the country for success. There is only one thing that can force the West to make some changes that will set up the future for a better tomorrow. A horrible, painful economic depression.

Right now, there are too many fat cows on the top, and too many scared people on the bottom. With good reason too, because for all the issues in the West, it can get much worse. A slow decline is preferable to a sudden massive drop in living standards. Once that happens anyway because of a recession or a massive bubble pop... that's when big changes can be made. One of the great tragedies of 2008 is that the West didn't take collective action to really purge the rot. They had enough juice in the tank to ride it out and patch the holes.

But to relate this to China, I don't think the central government will want to appreciate the RMB right now. There are a lot of painful bumps to get over internally. There's local government debts, which have been handled, but need time to be handled gracefully. The real estate sector hasn't finished bottoming out yet, and 15th FYP just started with "unification of the internal market." However, 2030-2035 we might see the start of RMB appreciation. Which could mark the start of China's "golden age".

 

[Wrought]

Would you look at that? Revealed preferences.

Citing the results of a survey of nearly 300 chamber members in January and February, Eskelund said Europe was seeing “the highest-ever share of European companies onshoring more into China”. Fifty-six per cent of respondents said they were increasing onshoring in China, while just 7 per cent said they were only increasing offshoring. That dependence was increasingly driven by cost, he said, with Chinese supply chains having become so competitive that integrating into them was often the only way to produce the best products at the lowest cost.

Eskelund said Beijing had also grown increasingly confident in its ability to push its agenda through, with “escalation dominance” – a term increasingly heard in China – encapsulating its ability to raise the costs of confrontation beyond what the other side was willing or able to bear.

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