Jura The idiot
General
Hendrik...
Xinhua| 2018-07-12 20:29:33
China's central SOEs deliver strong performance in H1
Xinhua| 2018-07-12 20:29:33
Chinese Economics Thread
- Thread starter Norfolk
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plawolf
Lieutenant General
Careful, that’s the kind of short-term profit obsesses thinking that put the west on its current path of decline.
Yes, private companies are more profitable, but there are a phonebook’s worth of reasons for that, and not every one (hell, maybe not even the majority) are good reasons.
Private companies typically cherry pick to run only the most profitable services. They have zero or very minimal sense of social responsibility.
A lot of the time, SOEs are less profitable because they run loss making services that a lot of people (often the poorest and most disadvantaged in society) benefit from and depend on.
What is never captured in company profitability figures is the positive social and economic impact a lot of these loss making services have on the local economy and country as a whole.
A lot of the time, Chinese SOEs are used as engines of renewal for deprived areas and a means to address inequality and inflation.
Just look to the UK for the damaging distortion market forces will create if left unchecked.
London is bloated and the whole of the UK suffers because it effectively creates a two tier country.
Without SOEs leading the way to open up and develop China’s western hinterlands, you will have a similar situation as London developing along China’s coastline.
A lot of the social and economic problems of the last couple of decades, which were initially created as a result of the rapid development of the eastern coast, has been greatly reduced by China’s go west policy.
Fewer migrants are going to the coast to work because China’s development strategy is bringing money and jobs closer to home for them.
That helps to address the personal costs to migrant workers and their left behind children, but also help to defuse the social tensions in the eastern provinces from so much internal migration.
You also need to look to technology.
Left to market forces, all of China’s companies would be like ZTE, that puts profits above all other concerns, leaving themselves vulnerable to blackmail and disruption by foreign powers since its more profitable to buy off the shelf components rather than invest to develop them yourself.
It’s not just Chinese companies that are so inclined. a key reason western technology seems to have plateaued in recent years is because western governments have massively cut back on R&D spending after the end of the Cold War.
Private R&D just cannot match the scale and depth of government R&D. And as the endless lawsuits between Apple and Samsung shows, even when private companies do invest in R&D, they guard th fruits of those investments jealousy and rigorously.
The 10 key technologies that makes the iPhone possible were all initially developed by government funded (mostly military) R&D programmes.
It’s not like there was any western government restrictions on what private companies could research. So it’s pretty telling that all those 10 core technologies were delivered by government R&D and not private.
Indeed, since the iPhone, Apple and other western firms are struggling with the next big thing on their own.
Private R&D funding has only increased in that time, yet the likes of AI, self driving cars, quantum computing and communications, private space flight etc are all still based overwhelmingly on the initial fruits from government funded military programmes.
There are all these factors and so many others I don’t have time to get into to consider when judging the true worth and effectiveness of SOEs.
Judging their performance and worth purely on profits is about as insightful as Trump judging who is ‘winning’ a trade war based on how who can levy tariffs on the most value of imports.
Hendrik_2000
Lieutenant General
Nice that they have profit But where is the total asset(including loan)? So that we can ratio it to get true picture of profitability.
I have no problem with SOE as they have their function as Plawolf clearly explained.But they are not the engine that create the prosperity On the other hand without the infrastructure developed by SOE there is no prosperity either. In the early year of PRC the government initiate many large project mostly concentrated in the north east and Mongolia(SOE) The southern province has minimum number of those project
Yet over the last decades It is the southern provinces that drive the Chinese economy like this example. Initiative,hardwork,Good infrastructure,good government, infusion of capital and talent from Taiwan,Hongkong and other diaspora create wealth
I have no problem with SOE as they have their function as Plawolf clearly explained.But they are not the engine that create the prosperity On the other hand without the infrastructure developed by SOE there is no prosperity either. In the early year of PRC the government initiate many large project mostly concentrated in the north east and Mongolia(SOE) The southern province has minimum number of those project
Yet over the last decades It is the southern provinces that drive the Chinese economy like this example. Initiative,hardwork,Good infrastructure,good government, infusion of capital and talent from Taiwan,Hongkong and other diaspora create wealth
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I agree with your concern, that is why I don't like him too. But then, he is just one of many 忽悠, there are many such people in China (乱集资), so from a overall perspective, he is not specially worse. Chinese investors have to grow mature regardless who is the 忽悠。
I don't understand why you keep on claiming that private company's superior efficiency and contribution over SOE ignoring the fact. Are you ideologically obsessed to capitalism against communism/socialism? I don't demand you to love Communists, it is personal belief, but at least you should be willing to face the fact.Here is the story of Jinjiang formerly poor village that got rich by manufacturing shoe. And it is dirt poor in the past hundred of thousand were forced to migrate at the end of Qing dynasty mostly to SEA. Quanzhou dialect is prominent in Penang and Medan, Manila.Located close to Quanzhou. It is one of the oldest dialect in Fujian. Nowadays it attract migrant from all over China But they treat them as their own no difference they got social welfare benefit the same as local.
Thing will be better in the future because Jinjiang is selected as one of three memory chip fabrication
Fujian Jin Hua equips Jinjiang fab
China DRAM start-up, Fujian Jin Hua Integrated Circuit, is moving fab equipment into its Jinjiang fab (pictured) with the intention of running first silicon in Q3 2018, reports Digitimes.
The fab is to make DRAM on a 32nm process supplied by UMC. It is being initially equipped to run 60k wpm. It is spending $5.3 billion to get to that point. The intention is to spend more, later, to expand the fab or build another.
With Samsung currently ramping up DRAM on an 18nm process, Jin Hua has a long way to go before it becomes competitive in the world market, but the China government is expected to find customers for its production whatever the yield, cost or timing of the eventual output.
Here is the fact behind your "good" example of private better than SOE.
First main investor is SOE
福建省电子信息（集团）有限责任公司
The second main investor is SOE
(Home page)
it's capital source
I think Hendrik's main point is that Chinese economic growth from 1980 to 2010 was overwhelmingly driven by private investment in the coastal southern provinces. These provinces were economically neglected in the time of Mao. Very little in the way of positive economic benefits were derived as a result of central planning policies in Guangdong, Fujian, Zhejiang, and Jiangsu. Land reform was pointless since the rural landownership system in the south was different than that in the north, or even in Taiwan (landlords participated in production and did not own expansive plots due to the nature of the terrain.) Cities like Guangzhou and Shanghai were largely economic backwaters until the 1990s. It's no wonder that people in these provinces have very few kind words to say about Mao.
I don't think anyone is disputing that state investment is more necessary than ever before now that China is increasingly being driven to climb up the economic value chain through innovation.
I don't think anyone is disputing that state investment is more necessary than ever before now that China is increasingly being driven to climb up the economic value chain through innovation.
By saying "Cities like Guangzhou and Shanghai were largely economic backwaters until the 1990s", I am sure you are not from Mainland China. (please don't take offence.
)The contribution of private investment in the coastal region is undeniable.
BUT, the southern provinces have been economically advanced than the north for a long time since the Song dynasty 1300s till today. For most time after 1300s, south has been the main source of grain which is the foundation of an agricultural empire. The Sui dynasty (500 AD) dug the Grand canal to transport grains from Zhejiang and Jiangsu to feed the capital in the north. Shanghai and Guangzhou had been the commerce and financial centers during the Qing dynasty. Shanghai has been the very first industrial hub of China since 1900s. Up till 1980s, "Made in Shanghai" is the prestige's products to buy for Chinese, only to be replaced by "Made in Shenzhen" later. There is no disadvantage or negligence by Mao and central government of the south. If one want to pick the very disadvantaged corner of some southern provinces, one should not ignore the equally "neglected" economic backwaters in the deep west, such as Sichuan, Gansu, Qinghai, Tibet and northern Shaanxi.
Once again, I object any regionalism that somehow claim being victimized or superior or deserving more credit/privilege or contributing more than others. There is only one people, that is Chinese, no other sub entities/identities should be encouraged or advanced.
P.S.
The true economy backwater in the south is surely not Zhejiang, Jiangsu. Guangdong is only partially, the north-west part. Fujian was somehow held back because its close distance to Taiwan, being the main trade and immigration source to Taiwan, it was held back in early Qing before the reunification in late 1600s due to the economical blockade of Taiwan, then it was held back from 1949 to 1970s when there were artillery shootings between Jinmen (Taiwan) and mainland, nobody would build serious industry in a battle field. Resenting that arrangement is wrongfully placed.
The true backwater in the south is Guizhou, Guangxi, north-west Guangdong, Yunnan, Jiangxi, Hunan and part of Hubei not along the Yangtze River. And I will skip the backwater in the west and north as this should not be a competition of being the victim.
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It should've been obvious from the context that I was only referring to the economic history of the PRC.By saying "Cities like Guangzhou and Shanghai were largely economic backwaters until the 1990s", I am sure you are not from Mainland China. (please don't take offence.
The contribution of private investment in the coastal region is undeniable.
BUT, the southern provinces have been economically advanced than the north for a long time since the Song dynasty 1300s till today. For most time after 1300s, south has been the main source of grain which is the foundation of an agricultural empire. The Sui dynasty (500 AD) dug the Grand canal to transport grains from Zhejiang and Jiangsu to feed the capital in the north. Shanghai and Guangzhou had been the commerce and financial centers during the Qing dynasty. Shanghai has been the very first industrial hub of China since 1900s. Up till 1980s, "Made in Shanghai" is the prestige's products to buy for Chinese, only to be replaced by "Made in Shenzhen" later. There is no disadvantage or negligence by Mao and central government of the south. If one want to pick the very disadvantaged corner of some southern provinces, one should not ignore the equally "neglected" economic backwaters in the deep west, such as Sichuan, Gansu, Qinghai, Tibet and northern Shaanxi.
Once again, I object any regionalism that somehow claim being victimized or superior or deserving more credit/privilege or contributing more than others. There is only one people, that is Chinese, no other sub entities/identities should be encouraged or advanced.
P.S.
The true economy backwater in the south is surely not Zhejiang, Jiangsu. Guangdong is only partially, the north-west part. Fujian was somehow held back because its close distance to Taiwan, being the main trade and immigration source to Taiwan, it was held back in early Qing before the reunification in late 1600s due to the economical blockade of Taiwan, then it was held back from 1949 to 1970s when there were artillery shootings between Jinmen (Taiwan) and mainland, nobody would build serious industry in a battle field. Resenting that arrangement is wrongfully placed.
The true backwater in the south is Guizhou, Guangxi, north-west Guangdong, Yunnan, Jiangxi, Hunan and part of Hubei not along the Yangtze River. And I will skip the backwater in the west and north as this should not be a competition of being the victim.
The majority of the south was economically neglected until the 1980s. I stand by the "economic backwaters" statement. Shanghai contributed a large portion of national tax revenue for the PRC, yet received little in the way of favorable development policies until the 1990s. Yes, the inland provinces are still largely backwaters today, but this does not negate the fact that the coastal provinces were as well until the 1990s.
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Had the central government not suppressed the commercial culture of China during the 1950s and 1960s, we would not be having this discussion. As you noted, the south has a propensity for commercial achievement due to its relatively advanced level of economic development since the Southern Song. This is a low-hanging fruit that was not picked until the 1980s. What a shame. The Republican-era government during the Nanjing decade did a better job of allowing the south to prosper than Maoist China did.