Chinese Economics Thread

[lych470]

It will never not be funny how many supposedly sane and sober American analysts fell for the "China's economy has stopped growing" on the basis of the limited devaluation of the RMB since 2022.

I'm glad at least Campbell didn't fall for it.

I've seen a lot of people on Zhihu sprouting the GDP ratio comparison - how China's nominal GDP in USD as a ratio to the US nominal GDP in USD is falling, and arriving at the conclusion that China will never eclipse the US.

It makes me wonder if it's a smart talking point cooked up by the 1450s and somehow found its way into Western discourses.

 

[GiantPanda]

I've seen a lot of people on Zhihu sprouting the GDP ratio comparison - how China's nominal GDP in USD as a ratio to the US nominal GDP in USD is falling, and arriving at the conclusion that China will never eclipse the US.

It makes me wonder if it's a smart talking point cooked up by the 1450s and somehow found its way into Western discourses.

There is no real world where the smaller economy uses up 230% more electricity than the so-called "bigger" economy.

 

[Wrought]

I am absolutely amazed when anyone ever talks about the collapse of China. In a way, everyone who talks about this is expecting a Chinese disintegration like the Soviets, thinking that the economy will collapse like the Soviets.

These people have no idea how absurd this is. The scale of Chinese industry alone is something that the Soviets could never achieve, much less reach the kind of technological level that is comparable.

In general terms:
In PPP terms, it is already the largest economy in the world, reaching 27% larger than the US
China continues to grow at an average of 5.2% after the pandemic - more than double the US
China exports US$3.3 trillion and manages to have a surplus of US$1 trillion
Foreign exchange reserves of US$3.2 trillion
Invests more in global infrastructure - US$680 billion - than all Western powers combined
42% of its GDP is gross fixed capital formation, a higher value in % relation to GDP and in absolute nominal value compared to the US
China registers millions of patents - in 2022 they registered almost half of what the entire world registered
Investment in R&D increasing compared to the US in absolute value

The Chinese economy in the past really had three pillars:
Infrastructure
Real estate market
Export market

The return on infrastructure is increasingly lower on the economy as China gets richer and modernizes. The real estate market is now under government efforts to contain the damage caused by the bursting bubble, but it is still manageable. The export market has not only increased but has also specialized in high-tech products. In a way, China has transformed itself from a low-value-added export market to export high-value-added products, and this in less than 15 years.

Factors that can increase China's GDP:

Workforce leaving the countryside for urban areas, which adds productivity; there are still 171 million Chinese in this condition, which is the total of the US labor force, which is 168 million.

Expanding middle class representing 800 million consumers - this represents double the current Chinese middle class, which is 400 million.

Framing the issue in economic terms is missing the forest for the trees. Certainly the Soviet model had many economic problems, but that in and of itself does not guarantee a collapse. Nations with far less resources than the USSR have nonetheless managed to avoid collapse—just look at North Korea. Material capabilities are merely a contributing factor, not the determinative factor.

XJP: “The CPSU had 200,000 members when it seized power; it had 2 million members when it defeated Hitler; it had 20 million members when it relinquished power. Why? For what reason?”

XJP: “Because the ideals and beliefs were no longer there.”

我们常说，基础不牢，地动山摇。信念不牢也是要地动山摇的。苏联解体、苏共垮台、东欧剧变不就是这个逻辑吗？苏共拥有20万党员时夺取了政权，拥有200万党员时打败了希特勒，而拥有近2000万党员时却失去了政权。我说过，在那场动荡中，竟无一人是男儿，没什么人出来抗争。什么原因？就是理想信念已经荡然无存了。


习近平指出：历史和现实都告诫我们：全党理想信念坚定，党就拥有无比强大力量；全党理想信念淡薄，党就会成为乌合之众，风一吹就散。

Please, Log in or Register to view URLs content!

 

[SinoAmericanCW]

Framing the issue in economic terms is missing the forest for the trees. Certainly the Soviet model had many economic problems, but that in and of itself does not guarantee a collapse. Nations with far less resources than the USSR have nonetheless managed to avoid collapse—just look at North Korea. Material capabilities are merely a contributing factor, not the determinative factor.

XJP: “The CPSU had 200,000 members when it seized power; it had 2 million members when it defeated Hitler; it had 20 million members when it relinquished power. Why? For what reason?”

XJP: “Because the ideals and beliefs were no longer there.”

Please, Log in or Register to view URLs content!

I would go further and suggest that the most likely outcome for the late-stage USSR wasn't even collapse, but rather continued stagnation. What precipitated the collapse wasn't so much structural problems, but rather Gorbachev's haphazard attempt at reforming the system - a situation not wholly unlike that of the U.S. under Trump II.

 

[SinoAmericanCW]

There is no real world where the smaller economy uses up 230% more electricity than the so-called "bigger" economy.
View attachment 150055

In fairness, China's electricity demand is partly driven by its large industrial/manufacturing sector, whereas the U.S. economy is mostly services, a less electricity-demanding sector.

I do agree with the general point, however: China's economy, in real terms, is already larger than its U.S. counterpart.

 

[broadsword]

In fairness, China's electricity demand is partly driven by its large industrial/manufacturing sector, whereas the U.S. economy is mostly services, a less electricity-demanding sector.

I do agree with the general point, however: China's economy, in real terms, is already larger than its U.S. counterpart.

Don't forget the EVs.

 

[GiantPanda]

In fairness, China's electricity demand is partly driven by its large industrial/manufacturing sector, whereas the U.S. economy is mostly services, a less electricity-demanding sector.

I do agree with the general point, however: China's economy, in real terms, is already larger than its U.S. counterpart.

Try conducting a service -- cutting hair, writing code or launching a lawsuit -- without electricity.

Even an all service economy would grow its electricity usage if it is indeed growing.



China is a much larger economy that is also growing much much faster. US electricity consumption had plateaued for the past 20 years.

Services are tertiary -- meaning they are not tangible goods unlike primary (mining, agriculture) or secondary (manufacturing.) In pure economics, it is unproductive work (produces no products.) An all service economy cannot survive unless it is able to import primary or secondary goods.

China had traditionally been very reluctant to add services into its GDP because of this. China's service sector is severely undercounted. Anyone who've been to China can tell you that there are FAR more services in China than the US. From delivery to hair saloons to ear wax cleaning to massages to restaurants and street food, karaoke, etc. there are many times more services available in China.

What's more, China's government provides top level transportation (a major tertiary service) that if counted would be many folds that of the US. China's HSR network, subways and roads are consumed on a scale several times that of the US at the very least.

Using a "service-based economy" as an explanation is pretty silly when China has far more and better services to be perfectly honest. The public transportation alone is worth many times that of the US.

 

[Sinnavuuty]

Framing the issue in economic terms is missing the forest for the trees. Certainly the Soviet model had many economic problems, but that in and of itself does not guarantee a collapse. Nations with far less resources than the USSR have nonetheless managed to avoid collapse—just look at North Korea. Material capabilities are merely a contributing factor, not the determinative factor.

XJP: “The CPSU had 200,000 members when it seized power; it had 2 million members when it defeated Hitler; it had 20 million members when it relinquished power. Why? For what reason?”

XJP: “Because the ideals and beliefs were no longer there.”

Please, Log in or Register to view URLs content!

This XJP article is clear enough:

Xi Jinping is clearly an old-school guy, he was in Deng Xiaoping's core group, he participated in all these debates, he saw all these events, he saw the Heavenly Peace crisis, he saw Endaka and what happened with Japan capsizing, he saw the Soviet Union imploding.

 

[Sinnavuuty]

https://twitter.com/i/web/status/1903523556685963358

I took this comment from X to help us understand how big Chinese growth has been in the last decade, even compared to India.

China had a much higher GDP base compared to India, but the difference in total growth was small in the last decade, because China was slowing down while India was accelerating in growth.

 

[Sinnavuuty]

https://twitter.com/i/web/status/1911789513799508191

Others:

Please, Log in or Register to view URLs content!

China’s Trade War Leverage Over US Becomes Clearer

Please, Log in or Register to view URLs content!

The Art of Not Dealing: Inside China’s 3-Ring Strategy for a Prolonged Trade War

Beijing is executing a three-layered plan: shoring up its domestic front, tightening the screws on the U.S., and repositioning itself on the global stage.