Chinese Economics Thread

[AndrewS]

I used to be pretty active on there a few years back when semi-decent discussion could be had. It's just a chimpanzee enclosure now.

Oh, and let me know what you think about what I posted.

One point that struck me:

It is taken as axiomatic that only private enterprises are capable of acting in a market-rational manner, and as with all axioms its purveyors present it without evidence and expect it to be accepted without question. Yet we must raise the question here: why should this be accepted?

I think this is mostly an American way of thinking.

Developed Europe and Asia are far more accepting of mixed-ownership models, because the governments recognise that markets can fail to deliver the best outcomes for society.

 

[xiabonan]

Chinese market turning inwards towards domestic items and away from imports. Very very good.

Please, Log in or Register to view URLs content!

China's Middle Class Is Staying Home. So Is Its Money

(Bloomberg Opinion) -- The Chinese used to be an adventurous bunch. Last year, 170 million of them traveled internationally, threatening to tip the nation into a current account deficit. Now, scarred by anti-Chinese sentiment abroad amid the pandemic, and suspicious of many things foreign, consumers are turning inward.

Consider a CLSA Ltd. survey of 1,600 shoppers, conducted between June 30 and July 7. Three-quarters of respondents hold university degrees, so the study offers a good window into middle-class spending habits.

Even if Beijing loosened up and allowed travel with, say, Europe, two-thirds of those surveyed said they planned to wait at least another four months before heading abroad. This is a drastic change from February when, even at the peak of China’s outbreak, only 18% were willing to postpone their arrangements this long.

Sentiment about education is similar. Before the pandemic, about a quarter of parents planned to send their kids abroad for schooling. Now, 73% have delayed their preparations, while 20% canceled them outright.

Granted, international travel and schooling are expensive, and the middle class may no longer feel as financially secure. Only half of respondents said their employers were back to at least 80% of pre-coronavirus operating levels.

But geopolitics are also at play. Until recently, Chinese students’ top destinations included the U.S., Australia and the U.K. Now, their families prefer smaller education markets such as Singapore, Japan and Germany. No doubt, Beijing only added fuel to the fire by urging its citizens not to visit Australia, citing racism against Asians.

Meanwhile, Beijing’s second wave outbreak coincided with state media reports that traces of the virus were found on chopping boards used for imported salmon. Even though experts later said the fish was unlikely to have carried the disease, consumers nonetheless started to feel that goods produced and sourced locally would be more reliable. The shorter the supply chain, the better, they reasoned.

This newfound look inward is spilling over to many corners of household spending, giving domestic brands an edge and making China even more protectionist than before.

For starters, let’s look at medical treatment. Just as some Indians have faith in celebrity yogi Baba Ramdev’s Ayurvedic-inspired coronil tablets to fight the virus, the Chinese are reaching back to ancient wisdom, too. In February, 31% surveyed said they would use Western medicine only; now, the figure is 27%. More than half prefer a combination of Western and traditional Chinese medicine. In June, the latest data available, overall sales in this sector rose 9.7% from a year earlier, compared with a retail sales slump of 1.8%.

Cosmetics — a real bright spot, with a 20% sales jump in June — is another example. Domestic brands such as Proya Cosmetics Co. are on fire, propelled by livestreaming e-commerce, as my colleague Nisha Gopalan wrote.

Just like everyone else, the Chinese are also spending a lot of time at home, underpinning a 9.8% rise in household appliance sales in June. But even here, brands that have gained the most awareness since the pandemic, according to the CLSA survey, are all Chinese: Zhejiang Supor Co., Midea Group Co., Joyoung Co. and Xiaomi Corp., which makes mobile phones as well as small home gadgets such as hot pot makers, air purifiers and electric toothbrushes.

Global supply-chain disruptions, which started two years ago with the U.S.-China trade spat, were already benefiting Chinese players: They could take advantage of the vacuum and grab market share at home. Now robust consumer demand, triggered as much by fear as patriotism, is doing the other half of the job.

This is good news for Chinese stocks — consumer staples and discretionary sectors tracked by the CSI 300 Index both rose over 40% this year. But it’s an even greater one for a president who’s into self-sufficiency. Consumers, on the other hand, are missing out. They’re becoming even more isolated from international brands than before.

How are consumers missing out? Chinese consumers are very rational, they choose products if they are good, not because they're simply Chinese. In fact many Chinese people have a preference for foreign goods/imported good as they used to mean better quality.

 

[emblem21]

How are consumers missing out? Chinese consumers are very rational, they choose products if they are good, not because they're simply Chinese. In fact many Chinese people have a preference for foreign goods/imported good as they used to mean better quality.

Strangely enough, they seem to think that saving money and only by what is necessary is a bad thing. Now this is the reason why the Chinese government doesn't need to do a few trillion dollar stimulus to get the economy moving like the US, to which even then they still fail utterly despite having the world reserve currency status backing them up

 

[AndrewS]

How are consumers missing out? Chinese consumers are very rational, they choose products if they are good, not because they're simply Chinese. In fact many Chinese people have a preference for foreign goods/imported good as they used to mean better quality.

It's not just that.

If Chinese tourists are staying home, that disposable income is being spent inside China and supports the Chinese economy.

In 2018, China received $40 Billion from incoming tourists, whilst Chinese tourists spent $277 Billion abroad.

That's a difference of more than $200 Billion

 

[manqiangrexue]

How are consumers missing out? Chinese consumers are very rational, they choose products if they are good, not because they're simply Chinese. In fact many Chinese people have a preference for foreign goods/imported good as they used to mean better quality.

It's the author's weak attempt to present a double-sided argument. Like if Chinese people boycott Starbucks, they'll be missing out on that sweet aromatic coffee LOLOL. It's total garbage; the only thing foreign things worth buying for the Chinese is technology, and I don't mean consumer tech that competes with Chinese brands like Apple.

 

[Equation]

It's the author's weak attempt to present a double-sided argument. Like if Chinese people boycott Starbucks, they'll be missing out on that sweet aromatic coffee LOLOL. It's total garbage; the only thing foreign things worth buying for the Chinese is technology, and I don't mean consumer tech that competes with Chinese brands like Apple.

The American consumers and whatever "allies" left will be missing out on Huawei's advanced 5G tech that's for sure.

 

[horse]

It's the author's weak attempt to present a double-sided argument. Like if Chinese people boycott Starbucks, they'll be missing out on that sweet aromatic coffee LOLOL.

Yup, like we all know ... sour grapes tastes good ...

Real good ...

Real, real good!

 

[plawolf]

It's ok to be bearish on China, but Reddit/Twitter/Facebook FLG/Indian/HK/TW/CIA are wishing genocide on Chinese.

They really want the US to "punish" China.

Just nazis around the world showing their true colours. This is why it is important to be an independent and powerful nation, so your fate doesn’t get decided by scum like them.

 

[Laviduce]

Just nazis around the world showing their true colours. This is why it is important to be an independent and powerful nation, so your fate doesn’t get decided by scum like them.

These far right lunatics are showing their true colors but what will the rest of the world that has not gone insane do to counteract these maniacs and keep them in check. I have never seen so much Anti-China propaganda on Youtube ever, let alone from the Anglo-American steered trans-atlanticist western propaganda outlets.

The country that disappoints me the most is India. India rather makes a deal with the Neocon devil for short term gains instead of having a balanced approach that will benefit itself , the region and the world long term. Does India not know it would get the same "treatment" as China, Russia, etc. if it dared to "step out of line " by offering an alternative to neocon/neolib US hegemony?

If India dared to go against the will of the US we would suddenly hear about the horrible Indian caste system, how horribly Muslims and women are being treated on a daily basis. We would suddenly hear horror stories out of Kashmir and how evil India suppresses freedoms in Sri Lanka (the story does not have to make any sense anyway).

 

[2handedswordsman]

This Pandemic has really exposed the rotting core of America, which has been in decline ever since the end of the Cold War.

That is a reason why many in the US have always been keen to start a new Cold War with China. But that is, depending on their understanding and motivations, either hopelessly naive or outright delusional.

For the realist in America, they recognise that the key reason their once might house is crumbling around their ears is because the lunatics have taken over the asylum.

During the Cold War, the American government was firmly in charge, and they harnessed and directed the might of the American economy, industry and academia towards a simple but ambitious goal - economic, technological and social advancement to outdo the Soviets. Ironically, in a very similar fashion as to what China is doing now.

Where America succeeded and the Soviets failed was the degree of autonomy the state allowed firms and the economy. While the Soviets tried and failed to plan for every last minute detail of economic activity, America limited itself to the big picture and setting general aims and directions and leaving industry to figure out the best way to get there through natural selection via the market.

Part of the cause of the soviet failure was that their central planning apparatus sucked in more and more of their best and brightest minds and essentially wasted their talents and potential doing meaningless paper pushing and make work rather than truly productive and creative enterprises that might have created value.

If that sounds familiar, it is because America has fallen into the same trap with Wall Street.

Like the soviet central planning apparatus, Wall Street sucks in a disastrous proportion of the finest minds in the west, and allocated vast sums of money based on ever increasingly complex and convoluted models and formula that are ever more divorced from reality.

On the political front, the fall of the Soviets has meant that the American political classes have become way too pleased with themselves. Sitting on their laurels would not even come close to describing their excesses. No, they started almost immediately to re-write history to make America’s triumph seem almost divinely ordained and entirely down to the purity of their belief in their system of governance, and in doing so created a de facto new religion with themselves as the high priests.

Ideological purity is now the most important factor in determining the success of men and ideas in the west. Realists are not even given a chance while ideological zealots can be wrong in every one of their predictions yet still somehow have high profile jobs of their pick and endless appearances on TV and Radio.

So reverently do the priest believe in their new Gods of Democracy and Free Market that they have thrown themselves into their new holy task of stripping out the impure and fallible hands of men from governance. Hence all zealotry with which they try to strip away the powers of the state and leave it all to their god the ‘market’. In effect, this is like practicing ‘Jesus Take the Wheel’ on a national level.

But Jesus didn’t take the wheel, big business and powerful individuals did by first moving into the power vacuum the retreat of government left, and then using their newfound power and wealth to pure further and achieve state capture through ownership of the media, and the creation of the electoral campaign funding arms race.

On the technological front, America’s once unassailable technological dominance, built on the backs of British and German technological base, as well as its own vast R&D budgets, started to be systematically eroded by a triple whammy of: Wall Street stripping it of the best minds available; the retreat of government and slashing of government R&D budgets, and the major scientific breakthroughs thwhy produced which corporate America’s technological supremacy is based upon (the iPhone is my favourite case study for this, as of the 10 most critical technologies that made it, and all subsequent smartphones possible, every one was originally created by US government, usually military, R&D programmes); and finally, through state capture, major companies were able to ever expand patent protection even as government regulations and protections where being stripped away almost everywhere else. The result is an unmitigated disaster where ridiculously vague and broad patents were, and continue to be issued, allowing companies to monopolise critical technologies and processes which should have been industry standards, thereby allowing them to corner the market and extract excessive profits. This has massively misdirected America private R&D, as increasingly private R&D is becoming about re-inventing the wheel to do the same thing as what existing technology a rival firm has patented first can do, instead of pushing out the frontiers of what is possible.

The west loves to snipe at Chinese ‘copying’, but that is only because Chinese scientists don’t see the value or point in literally reinventing the wheel just to have a slightly different wheel that they can claim to be unique, but which only does what existing wheels already do.

China is taking existing technologies that works, and building upon that to make something better. That is why ‘knock-off’ Chinese products often have more features and capabilities then what they were supposed to have copied.

Rather than focus all their time and effort on the skin-deep differentiation that now passes for innovation in the west, Chinese industry are instead standing on the shoulder of giants and using existing technologies to leap onto new higher horizons. That is why it is increasingly Chinese companies that are bring out all the new ideas and cool features, while western products just seem like incremental improvements repackaged in a prettier and more polished shell.

And I think this is only just the start for Chinese Tech, because a large part of existing commercial tech are still living off the legacy of Cold War American military R&D. But as Chinese state directed R&D start to bear fruit (areas to watch are quantum computing, fusion, renewable power and next gen battery tech just for starters), we will start to see Chinese commercial tech turboboost ahead of western competitors, who will, ironically start to reverse engineer Chinese commercial products to boost their own tech base.

All of these factors have been brewing on the background for decades. It is only with the harsh light of the pandemic that we can actually see through all the western media spin and political lies to the underlying truth underneath.

In many respects, COVID19 is a turning point in history. But from China’s POV, it would have been better if it could have waited a decade or two, by which point Chinese dominance would have become all but unassailable. But now, if enough of Americans gets a wake up call from COVID to see how far they have fallen and how close China has gained on them, it could make for a much closer and harder race than what Chinese leaders were hoping for.

Some corrections, bit OT but to be historically, economically and politically fair. USSR didn't fail because of central planning but because of the flaws of planning and incorrect implementation of it. As you can see every major ( or not ) bussiness in the world is centralised and strictly planning their operation because simply it does't want its compartments to antagonize themselves. It's simply contradictory, non productive. When USSR introduced market oriented reforms in 60's Soviet economy started to slowdown and eventually stuck in the swamp during '80's. Don't forget that Soviet Union emerged from a semifeudal state, suffered a 5 years civil war just after WW1, suffered the most Nazi punches during WW2 but managed to rebuild itself in flash time and become a nuclear superpower, and leading in many aspects of science and tehnology in 40 years . PRC's last 40 years economic boom i dare to say cannot match the USSR's achievements till 1960. Without any Special economic zones etc. Keep in mind that those days weren't just about slapping tariffs and banning 2-3 enterprises. It was a total embargo DPRK's style.

America limited itself to the big picture and setting general aims and directions and leaving industry to figure out the best way to get there through natural selection via the market

Exactly that style of governance, led US corporations to fly away from US soil to gather bigger profits leaving space for golden boys to speculate and let US civil web to rot from the inside. (Unemployment, drug addiction, racism, wealth gap etc. ) Give me a good reason why a nowdays American student to prefer STEM instead of (fake) economics? Natural selection doesn't imply to human society and subsequently to economics. This is an exact neoliberal alt right rhetoric and argument !!!
These are higher states of ordnance and coscioussness, humans are not just monkeys. We are another species with our own special evolved characteristics. Social Darwinism is leaning to fascism , just like majority groups can impose their will to minority groups. Nazis did to Jews,Roma,Slavs,Gays,Disabled and more, so be careful of the selection of terms.