Chinese Economics Thread

[taxiya]

-The SOEs in China the least efficient part of the economy. The micro/small companies, run by street smart chineses the ones that can generate real growth and increase in the level of living.
The SOEs needs foreign help to growth ,but the street smart chinese can create an economy that realy an be on the top - but of course it means that the director of the SOE can't send his daughter to Swiss private schools.

Seriously? SOEs are the least that you should attack IF you speak for China's good. To be honest, the reason that you attack SOE is to wish China's down turn which is natural as you are not Chinese???

I am not going to go into details of why. But I will only give you some life examples (both SOE and Collective Enterprises as they are the same in Chinese view "non-private") which is easier to understand.

1. C919, HSR, all the rockets and most of the satellites, CPUs, super-computers, J-20, Y-20 etc. etc. are made by SOEs.
2. Huawei is collective, in CCP's definition, it is another form of socialist enterprise.
3. All four commercial banks of China, and the No.1 bank of the planet are SOE.
4. Where is Russia now after USSR destroyed their SOEs?
5. Where is India now without SOEs?
6. All developing countries who fell into the middle income traps HAVE NO SOEs in the scale of China. When do you think they will get out of the trap?
7. Have these countries received ANY help from their western lecturers? No, their spines were broken by their "lecturer" and blood sucked dry.

Without these SOEs, China is nothing. You won't see China being what it is today. Is this your reason to denounce SOE so you can trick Chinese to dismantle Chinese own backbone? Just like the west convinced that stupid Gorbachev to kill USSR?

Yes, some corrupted directors can live beyond their lawful salary (which are already very generous). But that is not the fault of SOE. Should you kill yourself because you got a tumor on your arm? Of course not. BTW, China will chase those corrupted people including their daughters and sons all over the world and if necessary put them in a box or suite case back to China for their prison terms. They may have the chance to steal but may have to watch over their shoulder for the rest of their life. That is why president Xi is my hero.

 

[manqiangrexue]

Seriously? SOEs are the least that you should attack IF you speak for China's good. To be honest, the reason that you attack SOE is to wish China's down turn which is natural as you are not Chinese???

I am not going to go into details of why. But I will only give you some life examples (both SOE and Collective Enterprises as they are the same in Chinese view "non-private") which is easier to understand.

1. C919, HSR, all the rockets and most of the satellites, CPUs, super-computers, J-20, Y-20 etc. etc. are made by SOEs.
2. Huawei is collective, in CCP's definition, it is another form of socialist enterprise.
3. All four commercial banks of China, and the No.1 bank of the planet are SOE.
4. Where is Russia now after USSR destroyed their SOEs?
5. Where is India now without SOEs?
6. All developing countries who fell into the middle income traps HAVE NO SOEs in the scale of China. When do you think they will get out of the trap?
7. Have these countries received ANY help from their western lecturers? No, their spines were broken by their "lecturer" and blood sucked dry.

Without these SOEs, China is nothing. You won't see China being what it is today. Is this your reason to denounce SOE so you can trick Chinese to dismantle Chinese own backbone? Just like the west convinced that stupid Gorbachev to kill USSR?

Yes, some corrupted directors can live beyond their lawful salary (which are already very generous). But that is not the fault of SOE. Should you kill yourself because you got a tumor on your arm? Of course not. BTW, China will chase those corrupted people including their daughters and sons all over the world and if necessary put them in a box or suite case back to China for their prison terms. They may have the chance to steal but may have to watch over their shoulder for the rest of their life. That is why president Xi is my hero.

After reading your post, you know what struck me as amazing about China? Its balance between socialism and capitalism. Many purely capitalistic Western countries evaluate everything on money. If it doesn't make money, then it doesn't make sense to do it. If China had adopted this thought, it could never break through the middle income trap and would forever be a greedy, powerless manufacturer of low end exports, enslaved to the low level rat race. The Soviets, on the other hand, almost disregard money like it's not real (and in some ways, it's not) and focused everything on trying to forge ahead with technologies that advance national standing. If China had adopted this methodology, then China would end up a poor country, perpetually trapped investing all its meager resources into efforts to advance technologically but failing because of how meager those resources are.

But China doesn't fall victim to either trap; it shifts between them seamlessly for its own benefit. Sometimes, it makes mega corporations or economic entities that swallow up the competition and rake in money by the mountain-loads from its international markets while other times, it makes companies that use that money to fund world-leading projects that pull China ahead in entire sectors of highly technologically advanced fields without worrying at all about short or possibly even long term financial return. In a micro sense, China is like someone who really knows how to spend its money and allocate its resources; in a macro scale, it is like someone who bends the planes of "money is everything" and "money is not real" at his own will to his own benefit.

 

[taxiya]

After reading your post, you know what struck me as amazing about China? Its balance between socialism and capitalism. Many purely capitalistic Western countries evaluate everything on money. If it doesn't make money, then it doesn't make sense to do it. If China had adopted this thought, it could never break through the middle income trap and would forever be a greedy, powerless manufacturer of low end exports, enslaved to the low level rat race. The Soviets, on the other hand, almost disregard money like it's not real (and in some ways, it's not) and focused everything on trying to forge ahead with technologies that advance national standing. If China had adopted this methodology, then China would end up a poor country, perpetually trapped investing all its meager resources into efforts to advance technologically but failing because of how meager those resources are.

But China doesn't fall victim to either trap; it shifts between them seamlessly for its own benefit. Sometimes, it makes mega corporations or economic entities that swallow up the competition and rake in money by the mountain-loads from its international markets while other times, it makes companies that use that money to fund world-leading projects that pull China ahead in entire sectors of highly technologically advanced fields without worrying at all about short or possibly even long term financial return. In a micro sense, China is like someone who really knows how to spend its money and allocate its resources; in a macro scale, it is like someone who bends the planes of "money is everything" and "money is not real" at his own will to his own benefit.

Yes, we need both and everything anything that works for our purpose. We can do so because Chinese is moderate in philosophy culture, not dogmatic. The west and Russia are on the contrary dogmatic strictly sticking to an ideology (black and white), it is all rooted from their common monolithic religious history, they believe in either capitalism or communism like they worshiped God. As of today, I am not sure about Russians, but the west seems to continue that way. I think people will only truly learn until they break their head by hitting the wall. But that is not our business.

 

[Anlsvrthng]

Typical poison prescribed by western economists for China. No one had consumed their way to prosperity. By their logic, India would have become a super power long time ago

Japan and Korea overcame the middle-income trap thanks to their governments' generous support for quasi-SOE's and investment in education.

Anyone who attended business school would know it is nearly impossible for new players to break into a mature market because the incumbents will use various tactics such as price cuts and withholding supplies from firms that source materials from new entrants to kill off the new players. Many thirdworld companies able to compete and win against Western firms by being price competitive, but that are generally in the low-tech industries like garment or toys. High value-added products like DRAM, flash memory, high-end capacitors, carbon fibre, etc require huge amount of investment in R & D and capital expenditure. Private companies generally can't afford that cost, that's why most countries grew to middle-income level and stuck there. Government support is vital to move up the value chain and SOE's are in a good position to do that.

First, Japan was a developed industrial nation prior of 2nd world war. Example the

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is 128 years old.
Second, SK is in the same trap like China, with extremly low consumption supported by investment and trade balance.
To develop an industry you need trade barriers, that was the strategy of the USA in the 19th century .
IF the economy iss competitive and dinamics then in short notice it will develop the companies to make these things.

Maybe you can enlighten us mortals on the reason why?

I don't know. To carry coal with HD trucks sounds like crazy idea. But what else reason can be of the extreme ammount of truck sales?

 

[Anlsvrthng]

What's your point? And I do mean answer it in one sentence, not 500 words.

If you used Japan as reference for China, then China's GDP should still be 3 trillion. Japan 52%, China 52%, UK, 66%, USA 69%... looks like household gluttony isn't the key to having a prosperous economy, is it?

Japan 55.8%.
The consumption destroy things, the capital accumultaion generate paper wealth.
What do you think, why the Chinese(or Roman empires) household had so many hundred/thousand years sculptures?

The consumption based economy hard to make, the paper wealth economy easy to make.

You don't understand why you need upgraded railways and transport systems to make business smoother and to cultivate economic growth in remote areas? Nobody's talking about making 200 year old derelict rails that nobody uses; they're talking about making a modern and efficient transport system to access and invigorate underdeveloped areas such as western China.

This is the part where the natural growth of the country should dominate ,dictated by private consumption.
Maybe it is easier to move out the households from the underdeveloped parts of the coutnry rather than try to make roads.
And the other part, at the moment China makes 50% of the world steel and cement. I think it is a quite good indicator of that they have extrme amount of transport capacity, but practiacaly all of that tied up to low value transportation.

 

[Anlsvrthng]

Seriously? SOEs are the least that you should attack IF you speak for China's good. To be honest, the reason that you attack SOE is to wish China's down turn which is natural as you are not Chinese???

I am not going to go into details of why. But I will only give you some life examples (both SOE and Collective Enterprises as they are the same in Chinese view "non-private") which is easier to understand.

1. C919, HSR, all the rockets and most of the satellites, CPUs, super-computers, J-20, Y-20 etc. etc. are made by SOEs.
2. .....

Inefective means that they using up too much resources to make things.
Exactly like the CCCP SOEs, or the Korean/Japanese politicaly connected enterprises.
The existence of SOEs in china an indicator of that there is no effective ownership registering/transfering mechanism and market.

And the overal prosperity of a country is depending on that how effectivly it can using up / develop the human resources.
The market economy gives a tool to the society to kill the inefective companies, that can not improve/train/motivate the workforce, and keep the ones that can.

The most succesfull part of the US history was when all companies strugled to make money, and they had to fight to hire and keep workforce.
The most important parameter of the Chinese changes will be the point when the sum corporate profit collapse, and the wage inflation take off.
If that can stay for a few decade then China can transform to a developed nation.

 

[manqiangrexue]

Japan 55.8%.
The consumption destroy things, the capital accumultaion generate paper wealth.
What do you think, why the Chinese(or Roman empires) household had so many hundred/thousand years sculptures?

The consumption based economy hard to make, the paper wealth economy easy to make.

This is the part where the natural growth of the country should dominate ,dictated by private consumption.
Maybe it is easier to move out the households from the underdeveloped parts of the coutnry rather than try to make roads.
And the other part, at the moment China makes 50% of the world steel and cement. I think it is a quite good indicator of that they have extrme amount of transport capacity, but practiacaly all of that tied up to low value transportation.

52% was the figure you gave for Japanese consumption, not me. I don't know what it is and I don't care because the Japanese economy is nothing to be envied. So correct your own figure. Chinese/Roman households have many hundreds of thousands of years of sculptures?? LOL What the hell does that mean? No they don't. I've never seen a Chinese household with many artifacts like that before; what you're referring to is called a museum. This kind of BS is why you mess up every conversation you get into.

Your last paragraph makes no sense either; everything you said is either wrong or irrelevant. The stupidest part is moving families out of underdeveloped areas to avoid having to make roads. Are you out of your mind? The whole point is horizontal expansion of the country's developed parts into its rural parts to increase its overall capacity. The way to do that is to make more unused land turn into places that can support high GDP activity, which is gonna need improved transport and accessibility, above all else. This is how you turn your rural areas into metropolises in order to expand national GDP. What you're saying is forget about all those rural places; don't use 90% of your country's land and pile everyone into the cities that you already have so they become more crowded and unpleasant. Basically forget about making new cities altogether. The biggest reason that small countries like Japan and Korea have very limited growth potential is because they have too little land for expansion. You can only push a developed city's gdp so high before you encounter severe diminishing returns on your efforts.

Inefective means that they using up too much resources to make things.
Exactly like the CCCP SOEs, or the Korean/Japanese politicaly connected enterprises.
The existence of SOEs in china an indicator of that there is no effective ownership registering/transfering mechanism and market.

And the overal prosperity of a country is depending on that how effectivly it can using up / develop the human resources.
The market economy gives a tool to the society to kill the inefective companies, that can not improve/train/motivate the workforce, and keep the ones that can.

The most succesfull part of the US history was when all companies strugled to make money, and they had to fight to hire and keep workforce.
The most important parameter of the Chinese changes will be the point when the sum corporate profit collapse, and the wage inflation take off.
If that can stay for a few decade then China can transform to a developed nation.

I don't think Chinese SOEs use too much resources to make things; I think you talk to much about things you don't understand. If you think Chinese SOEs are ineffective, let's see some numbers on how much they use to make something versus how much you think they need to use to be considered effective.

SOEs exist in China because some technologies are too difficult, projects too large for private companies to undertake and accept the risks. You can wait until some rich genius finally comes along, or you can kick it off with some governmental leg strength. The latter seems to be working just fine since most people would agree that Chinese technological growth is the fastest in the world so I wouldn't knock it.

Plus, efficiency isn't everything. If you do something very small efficiently, it is a neat trick. But if you paid a huge price for a herculean task, it is a life-improving event. In other words, if you went to the gym once a week and were in good shape, you could argue that you have greater efficiency than Usain Bolt, who trains 7 days a week because Bolt doesn't run 7 times faster than you. But in the end, who do people remember? Your efficiency or Bolt's elite performance? So efficiency is "nice" (which you've yet to prove that Chinese SOEs don't have), but scale is where the money's at.

 

[Jura The idiot]

now I read
Commentary: Pushing China back to lead U.S. nowhere in pursuit of greatness
Xinhua| 2018-01-20 12:10:16

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In handling its relations with Beijing, Washington needs to overcome its narrowmindedness and think far and wide.

Ahead of his one-year anniversary of assuming U.S. presidency, Donald Trump is threatening to seek a huge fine against China over its alleged intellectual property theft.

Recently, his administration has also ordered a probe of what it calls China's meddling in U.S. internal affairs.

These moves came after several attempts by the United States to block China's investments from entering its market, including investments from China's e-commerce giant Alibaba and from leading Chinese phone maker Huawei Technologies.

These protectionist actions, which came just a month after the Trump administration labeled China a strategic competitor in its first National Security Strategy, are neither reasonable nor wise. More importantly, they could backfire.

Ever since the two countries normalized their relationship in the 1970s, their economic and trade cooperation has grown to become a strong adhesive that binds China and the United States ever tighter, and has yielded tangible benefits for the two peoples.

Statistics released by the U.S.-China Business Council in January last year show that the China-U.S. economic relationship supported roughly 2.6 million jobs in the United States across a range of industries, among which about 104,000 jobs were created by Chinese investment.

However, it seems that the Trump administration has not been quite impressed by these numbers.

Over the past year, Trump has on many occasions held Beijing responsible for Washington's huge trade deficits in two-way trade, fumed that his country has been taken advantage of, and vowed to retaliate.

The fact is that the U.S. trade gap with China is a rather complicated issue. Given America's low savings rate and high-flying consumption rate, Beijing's trade polices are hardly a major cause.

To solve the long-standing issue, Washington should look for more ways to restructure its economy rather than finding fault with its largest trading partner.

If the Trump White House decides to charge forward with its promised punitive measures against China, Beijing might be forced to take similar moves. A mutually destructive trade war might be ignited.

Despite the U.S. negative behavior, the two countries over the past year have proved that they can manage their disagreements and hold onto the spirit of cooperation.

Following a 100-day action plan, which was initiated during the Mar-a-largo meeting between Chinese President Xi Jinping and Trump last April, American beef has now been brought back to the dining tables of the Chinese consumers. And in November, deals worth 250 billion U.S. dollars were signed by the two sides during Trump's first state visit to China.

Differences are inevitable, but conflict is not. And any difference or contradiction can and will be addressed through dialogues as long as the two countries have goodwill to work together.

Trump has promised to make America great again. However, if pushing China back is his perceived way of delivering it, it could lead him nowhere near his purpose.

 

[taxiya]

Inefective means that they using up too much resources to make things.
Exactly like the CCCP SOEs, or the Korean/Japanese politicaly connected enterprises.
The existence of SOEs in china an indicator of that there is no effective ownership registering/transfering mechanism and market.

SOE is owned by the whole population through the state. Owned by an individual, a family dynasty or the whole population are all ownerships.

Today's SOE is very different from the past SOE in the USSR or China prior to 1980s. Today's SOEs are any enterprises that the state owns overwhelming shares through its "State Property Administration Bureau". A company where the state owns 90% share can be regarded as SOE. A company where the state owns 60% can be regarded as SOE or just an ordinary company depending on how you define SOE. A company where the state controls only 30% shares but having a clause in the cooperate charter that give a privilege voting/decision power to that 30% may not be a SOE in name but act just as a SOE. In essence, today's Chinese state control of a (SOE type) company is like Germany/Italy/France state control of Airbus. Airbus works just fine, doesn't it? You can find many other successful SOEs in western Europe.

The ownership in China is as clear as in anywhere else, so is the effectiveness.

And the overal prosperity of a country is depending on that how effectivly it can using up / develop the human resources.
The market economy gives a tool to the society to kill the inefective companies, that can not improve/train/motivate the workforce, and keep the ones that can.

Nobody denies the positive side of market. That is why China introduced it in the early 1980s. Your raising of this point that everybody agrees does not support your attack on SOE in any way.

The most succesfull part of the US history was when all companies strugled to make money, and they had to fight to hire and keep workforce.
The most important parameter of the Chinese changes will be the point when the sum corporate profit collapse, and the wage inflation take off.
If that can stay for a few decade then China can transform to a developed nation.

Until that point is reached (IF it ever happens) before your and our eyes, it is ONLY your wish or blind faith of "SOE is bad".

 

[taxiya]

Inefective means that they using up too much resources to make things.
Exactly like the CCCP SOEs, or the Korean/Japanese politicaly connected enterprises.

Today's Chinese SOE is exactly NOT like the USSR or China's own past since 1980s. I wonder where and when did you learn anything about today's China. To know anything and able to talk anything about China, you need to refresh yourself every year or every month. I as a Chinese citizen do that and still feel behind some times. I lost my way near my home some years ago, just give you a perspective.

Regarding the Korean and Japanese practice. I am sure if we are in the 1970s-1990s, you would be praising the Japanese model as biblical model of success, everyone back then use the term "Japanese miracle". People should not build their faith on something WITHOUT context (of time and place). Otherwise, the faith will be "crow is both black and white as the same time".