Chinese Economics Thread

[CMP]

I'm completely against cash handouts. Instead, there should be rebates for electronics, household goods, consumables, etc.

 

[TK3600]

I'm completely against cash handouts. Instead, there should be rebates for electronics, household goods, consumables, etc.

Which is already happening in some industry yes. The e bike example for one.

 

[FriedRiceNSpice]

Chinese government obviously want to boost consumption but it is harder to do cash stimulus in China compared to some countries like US. The Chinese has way higher saving ratio compared to the American. A lot of stimulus will just sit in banks or in real estate rather than go into the economy.

While I do believe that at some point in the future, UBC will be necessary in China, I don't think we are close to that point yet. Rather than cash handouts, I think a better idea would be to distribute special government sponsored coupons for purchasing certain goods (subsidized by the government): in effect a negative consumption tax. The coupons can be tailored to support consumption of targeted categories of goods/services, and be based on income and geographic location (to generally favor lower-income citizens and citizens living in relatively underdeveloped regions).

Just tax anyone childless to pay for these subsidies. If you aren't raising your own children, then you will help raise other people's children.

Yes, but needs to be done in a gradual and careful manner to prevent causing demographics to swing too much in the other direction. Demographics should be targeted towards gradual decline in population, with target TFR of 1.6-1.8. The lessons learnt from the one-child policy should be remembered.

 

[vincent]

You guys should know the government has been handing out discount coupons for lots of products for about a year already, including automobiles.

 

[fatzergling]

I'm completely against cash handouts. Instead, there should be rebates for electronics, household goods, consumables, etc.

Experimental Labour vouchers is another way to replace cash handouts. Ensure that the toilers get their fair share of comsumption while ensuring their compensation doesn’t go towards say real estate speculation. Given the price war and razor thin margins, diverting extra products to such voucher markets would help the manufacturers as well.

 

[Dolcevita]

Which is already happening in some industry yes. The e bike example for one.

And smartphone also.

 

[madhusudan.tim]

And smartphone also.

Another way to build demand could be gradual relaxation of the rules to allow for private possession of land and property and promote suburbs in the regions where there is surplus land . A detached house owning family will spend much more than a apartment dwelling family in a long term.

 

[SanWenYu]

allow for private possession of land

No way until CPC is overthrown.

 

[tygyg1111]

Another way to build demand could be gradual relaxation of the rules to allow for private possession of land and property and promote suburbs in the regions where there is surplus land . A detached house owning family will spend much more than a apartment dwelling family in a long term.

Absolutely not - this will "Indianize" China and hamper future development beyond imagination, and would funnel resources back into real estate.

 

[horse]

Raising incomes in underdeveloped regions will stimulate a far greater increase in aggregate demand due to higher marginal propensity to consume. This in turn will create more jobs in tier 1 and tier 2 cities as well, leading to the creation of a virtuous cycle. This is the polar opposite to the "trickle down economics" bullshit that contributed to the ruin of the American economy.

The way I see it, it is the same thing. What they do in China is trickle down economics and what they do in America is trickle down economics.

The idea is the same, that someone, usually someone big, gets some money which is getting into debt, then stimulate the economy, and from the multiplier effect that means the people in the economy will benefit sooner or later, that that initial investment trickles down to the rest of the masses.

The only difference is probably just structural.

In China, the SOE or the big company gets a loan from the state bank. Then they increase production, hire more workers, and get it going.

In America, the Fed might loosen credit, so the big money center banks start lending again to the big Wall Street firms the brokerage houses and investment banks. Then money circulates inside Wall Street, before some of that trickles down to the rest of the country.

America does not see the trickle down to big companies building more factories, because America de-industrialized according to many people. So trickle down has to happen predominantly in Wall Street before fly-over country gets any crumbs.

(Got totally off tangent, just thought about how advanced America really is. They do not even need the Fed or money center banks. Just get venture capital to invest into start ups. Of course, there is hardly trickle down, but that is another potential source of funding. Over the long run, probably not a stable system, but that is America! Everyone is a potential millionaire in waiting!)

Chinese trickle down economics is more direct and textbook like. If the factory is hiring to increase production, then the workers benefit.

Guess that is the moral of the story. Chinese trickle down economics, goes to the factory then the workers then the workers spend their money in the general economy, just like the textbook said. American trickle down economics, goes to Wall Street and the 1% then the rest of the country does not know what happened, do not understand it, feel resentful, confused, helpless, so they elect Trump.

Haha!

That is so funny.

We can even argue that in economics, that this is an externality of some sort, that the plebs suffer disproportional more taxes due to the regressive tariff regime, bought about by the person they voted for!

That is why people hate economics!