Chinese Economics Thread

[gelgoog]

The funny part is that this if done 2 decades ago would have spent doom for China but would have also run yahoo for the USA as well. But now if they really did this, not only will China be able to whether the storm with more countries willing to fill the gap (South America and Africa and even other nations in Europe) but this will spell doom for the USA for real as there system can only function due to being able to print money. If that was to be taken away and if they lose the chance for future investment (since how are they going to find employment for 50million unemployed) well the USA can’t be saved and it will not be in the best interest for other countries to bother saving them since that will help to open new pathways for there nations instead if they let the USA go down

The power of the US dollar as a medium of exchange comes from the Petrodollar i.e. the fact that oil is priced in USD. That is vigorously enforced by the US Navy basically controlling access to the Persian Gulf and occupying strategic nations in the Persian Gulf.
That is also part of the reason why the US is so insistent on putting one of their own puppets in Venezuela another nation with large oil reserves.

So the guarantee of the value of the USD is US military power. To break this you would need to either replace the US on that part of the equation or you would need to come out with some other more fungible energy source and use that for global energy trade.
Some people have proposed using hydrogen for this but that is unviable for several reasons. Others have proposed ammonia, which is more viable, but ammonia is highly toxic, corrosive, explosive, and expensive to manufacture. I personally think the best alternative is to switch to electric transportation as much as possible. Then you can use multiple energy generation sources and the energy market will be a lot more diverse as a result making it less easy to corner the world economy like this. One issue is this would require a much more advanced energy transmission infrastructure but we are on the cusp of having this technology ever since ballistic conductors were invented (basically you can use carbon nanotube wires to transmit electricity at high voltage and they will have a lot more capacity than copper even can). Even without that with a decent public transportation network and reduced personal car usage even the existing electric grid would be good enough.

The US would still likely try to enforce their power by controlling the sea lanes much like other earlier sea empires did. The only way to prevent this is to have your own navy which is what China is doing right now.

 

[ougoah]

My girlfriend's parents are really poor farmers that always lived in a small house without a pipe system, in very modest conditions – my girlfriend is a satellite engineer. That's China; a nation of intelligent farmers that became engineers and scientists. A nation with opportunities for hardworking people, no matter the background or the status. I will leave it at that. Mao would have been proud.

This is good and has been the case to be honest for a while perhaps not to the same extent. But this has been the case for basically all nations that can be considered meritocratic (as much as realisitically reasonable)- so all of the west.

 

[vincent]

Which is impossible. The current global supply chain placement is a natural result of decades of production/resource allocation refinement tuned to the max under a globalised world village post WW2. Capital will seek place that maximise their profit margin. Factory will be located in region that offer them competitive labour and a market that is setting the trend.

dude, who’s the current Hegemon?

I said this before
There are many good reasons why companies produce their products in China, the chief reason is Chinese manufacturing allows them to stay competitive in the world. If they produce their products anywhere else, those products will compare less favourably to ones made in China. The Hegemon can use tariff to force companies to move parts of the companies’ manufacturing out of China, but the likely outcome is the companies will move only enough capacity to other countries to produce for the American market. If some companies are stupid enough to move their entire operations out of China, they will become less competitive compare to the ones that stayed in China and over time may be force out of the markets outside of the US

 

[Deleted member 15887]

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China better have a fucking counterplan for this. For every subsidy and pressure the US places on manufacturers to leave China, China should respond reciprocally to keep them in the country and further encourage more inward investment into China. Once major assembly manufacturers leave, say goodbye to any hope of high-value advanced component manufacturing and industrial upgrading, since they will naturally follow out. Even if this scenario is unlikely, China should still adopt a bottom-line contingency plant o address this worst-case scenario.

Guys, this is exactly how Japan and South Korea lost their manufacturing prowess. First the assembly companies left, then left the chassis makers, then left the camera component suppliers, then the display panel manufacturers, then the PCB manufacturers, then the battery manufacturers, so on and so forth. Manufacturing assembly is not valuable in of itself, but the high-value component manufacturing is. Japan and South Korea must have thought, "oh don't worry, even though we lose assembly we still retain manufacturing of high-end inputs and components!" Now look at them, they've lost vast amounts of their industry do to this shortsightedness! If and when China achieves semiconductor and robotic manufacturing prowess, South Korea and Japan are done as relevant industrial countries. They are done for, and would be completely reliant on China for all their manufacturing, thus maintaining China's geopolitical strength and leverage.

If you are so short-sighted as to want all these vast, incredibly productive manufacturing ecosystems to leave China, you're only shooting yourself in the foot, then prepare for the day when Vietnam or India has China by the balls in another pandemic when China can't manufacture for itself due to this de-industrialization some of you foolish people so desperately want. Go wank off in your idealized office job, it'll hurt when India cuts off your supply of computers and phones, which you viewed as "low-level" and "should be phased out". You're making the exact same mistake Americans elites did 40 years ago! Did you not learn a single damn thing?

 

[emblem21]

The power of the US dollar as a medium of exchange comes from the Petrodollar i.e. the fact that oil is priced in USD. That is vigorously enforced by the US Navy basically controlling access to the Persian Gulf and occupying strategic nations in the Persian Gulf.
That is also part of the reason why the US is so insistent on putting one of their own puppets in Venezuela another nation with large oil reserves.

So the guarantee of the value of the USD is US military power. To break this you would need to either replace the US on that part of the equation or you would need to come out with some other more fungible energy source and use that for global energy trade.
Some people have proposed using hydrogen for this but that is unviable for several reasons. Others have proposed ammonia, which is more viable, but ammonia is highly toxic, corrosive, explosive, and expensive to manufacture. I personally think the best alternative is to switch to electric transportation as much as possible. Then you can use multiple energy generation sources and the energy market will be a lot more diverse as a result making it less easy to corner the world economy like this. One issue is this would require a much more advanced energy transmission infrastructure but we are on the cusp of having this technology ever since ballistic conductors were invented (basically you can use carbon nanotube wires to transmit electricity at high voltage and they will have a lot more capacity than copper even can). Even without that with a decent public transportation network and reduced personal car usage even the existing electric grid would be good enough.

The US would still likely try to enforce their power by controlling the sea lanes much like other earlier sea empires did. The only way to prevent this is to have your own navy which is what China is doing right now.

That is true that the USA still has one of the strongest navies in the world currently, but should the USA dollar go under and if the country really does go down into a civil unrest period following the election, not only with those navies will have difficulty in being maintained (not easy to pay for such a expensive navy when the nation is bankrupt) but also when the opportunities arrive, Russia, Iran and China will capitalize on them since trying to maintain such a navy is actually helping to not only to bankrupt the nation further (causing inflation to increase and make like much harder for the American people) but it will also help to kill the dollar which is the real source of power that the US has still in use. Given that the USA is literally printing money to survive at this point, all this money printing is going to come back to bite hard and the over the top military costs is one of the reasons why.

 

[gelgoog]

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China better have a fucking counterplan for this. For every subsidy and pressure the US places on manufacturers to leave China, China should respond reciprocally to keep them in the country and further encourage more inward investment into China. Once major assembly manufacturers leave, say goodbye to any hope of high-value advanced component manufacturing and industrial upgrading, since they will naturally follow out. Even if this scenario is unlikely, China should still adopt a bottom-line contingency plant o address this worst-case scenario.

Guys, this is exactly how Japan and South Korea lost their manufacturing prowess. First the assembly companies left, then left the chassis makers, then left the camera component suppliers, then the display panel manufacturers, then the PCB manufacturers, then the battery manufacturers, so on and so forth. Manufacturing assembly is not valuable in of itself, but the high-value component manufacturing is. Japan and South Korea must have thought, "oh don't worry, even though we lose assembly we still retain manufacturing of high-end inputs and components!" Now look at them, they've lost vast amounts of their industry do to this shortsightedness! If and when China achieves semiconductor and robotic manufacturing prowess, South Korea and Japan are done as relevant industrial countries. They are done for, and would be completely reliant on China for all their manufacturing, thus maintaining China's geopolitical strength and leverage.

If you are so short-sighted as to want all these vast, incredibly productive manufacturing ecosystems to leave China, you're only shooting yourself in the foot, then prepare for the day when Vietnam or India has China by the balls in another pandemic when China can't manufacture for itself due to this de-industrialization some of you foolish people so desperately want. Go wank off in your idealized office job, it'll hurt when India cuts off your supply of computers and phones, which you viewed as "low-level" and "should be phased out". You're making the exact same mistake Americans elites did 40 years ago! Did you not learn a single damn thing?

A lot of these companies would leave China eventually once labor costs rose. Same thing happened in Japan and South Korea. This is just accelerating that trend. They were already moving to Vietnam and other places in case you did not notice. It is the nature of these businesses.

In the case of Japan they lost a lot of their business to South Korea but I would say the same is less true in the case of South Korea.
Semiconductors is a viable business to go into because a) you need buckets of capital b) one factory alone can produce millions of chips.
I don't know why you think Japan is in that much of a situation. I think the government and the private sector in Japan failed in the 1990s in a lot of critical sectors including semiconductors and computers but they still have a quite large economy. Their living standards are arguably better than in the US. Life expectancy is higher and public services are better.

Google is a non-entity in China for all intents and purposes and Apple sells overpriced crap. What China needs to have is local champions and they are doing precisely that. They need to ensure the US can't torpedo its local champions, be it Huawei or whatever.
They also need to ensure the US doesn't use its USD money printer to further its reach into other strategic sectors. One example: Chinese regulators should ban the Nvidia acquisition of ARM from Softbank. Another example: China shouldn't allow the US government to force the sale of Tiktok to a US company. Even if Tiktok have to move their operations to Singapore and pay their creators with Bitcoin.

 

[Deleted member 15887]

A lot of these companies would leave China eventually once labor costs rose. Same thing happened in Japan and South Korea. This is just accelerating that trend. They were already moving to Vietnam and other places in case you did not notice. It is the nature of these businesses.

In the case of Japan they lost a lot of their business to South Korea but I would say the same is less true in the case of South Korea.
Semiconductors is a viable business to go into because a) you need buckets of capital b) one factory alone can produce millions of chips.
I don't know why you think Japan is in that much of a situation. I think the government and the private sector in Japan failed in the 1990s in a lot of critical sectors including semiconductors and computers but they still have a quite large economy.

Google is a non-entity in China for all intents and purposes and Apple sells overpriced crap. What China needs to have is local champions and they are doing precisely that. They need to ensure the US can't torpedo its local champions, be it Huawei or whatever.
They also need to ensure the US doesn't use its USD money printer to further its reach into other strategic sectors. One example: Chinese regulators should ban the Nvidia acquisition of ARM from Softbank. Another example: China shouldn't allow the US government to force the sale of Tiktok to a US company. Even if Tiktok have to move their operations to Singapore and pay their creators with Bitcoin.

Thing is China is in a pivotal moment in history, whereby automation is on the cusp of being able to easily offset high labour costs, while the country still has its manufacturing industry. Do everything they can to retain their manufacturing ecosystem, while automation gradually catches up, and China arguably has their manufacturing advantage and dominance set for the foreseeable future. Shift manufacturing out to Vietnam or India now, and automation will take place there, not China. Once that's occurred, it'll be very hard for China to rebuild and reassume its dominance in global manufacturing. Which is why I'd argue they should seek to retain it now.

 

[Deleted member 15887]

For me, articles like these always make me wonder (or lament) why the hell China doesn't have counter initiative or policy, as if China is a statue, not a living country. Furthermore, all initiatives that are presumably used to counter China almost always depicted as rose-colored glasses while China's initiatives if any are depicted as some dumpster fire.

China very much should be making contingency plans to counteract this very clear effort at trying to whip away at China's manufacturing dominance. IDK why they aren't, or if its simply not being reported.

 

[gelgoog]

India? A lot of companies have tried that and failed. They don't have the infrastructure and the bureaucracy is a mess. They are also far from all the other component manufacturers. Why do you think China succeeded where Mexico did not in the first place? It's right next to Taiwan, Japan, and South Korea. Vietnam might do, but India won't.

We're always on the cusp of automation of something or another. Japan had the same issue. South Korea had the same issue. That's why I said. China needs to manufacture its own machine tools so they can go up the ladder of production faster than anyone else. But automation for automation's sake doesn't work. As even Elon Musk discovered to his dismay. Repeating the lessons Toyota learned decades ago. China needs its own champions, not just be someone else's factory.

With regards to Google, what do they manufacture anyway? Trinkets no one cares about. As for Apple they already tried to move to India years back. I mean, after the Indians slapped taxes on smartphone imports and they figured out it was the only market they didn't penetrate properly, what would you expect? It still went nowhere though. The infrastructure isn't there.

 

[Wangxi]

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China better have a fucking counterplan for this. For every subsidy and pressure the US places on manufacturers to leave China, China should respond reciprocally to keep them in the country and further encourage more inward investment into China. Once major assembly manufacturers leave, say goodbye to any hope of high-value advanced component manufacturing and industrial upgrading, since they will naturally follow out. Even if this scenario is unlikely, China should still adopt a bottom-line contingency plant o address this worst-case scenario.

Guys, this is exactly how Japan and South Korea lost their manufacturing prowess. First the assembly companies left, then left the chassis makers, then left the camera component suppliers, then the display panel manufacturers, then the PCB manufacturers, then the battery manufacturers, so on and so forth. Manufacturing assembly is not valuable in of itself, but the high-value component manufacturing is. Japan and South Korea must have thought, "oh don't worry, even though we lose assembly we still retain manufacturing of high-end inputs and components!" Now look at them, they've lost vast amounts of their industry do to this shortsightedness! If and when China achieves semiconductor and robotic manufacturing prowess, South Korea and Japan are done as relevant industrial countries. They are done for, and would be completely reliant on China for all their manufacturing, thus maintaining China's geopolitical strength and leverage.

If you are so short-sighted as to want all these vast, incredibly productive manufacturing ecosystems to leave China, you're only shooting yourself in the foot, then prepare for the day when Vietnam or India has China by the balls in another pandemic when China can't manufacture for itself due to this de-industrialization some of you foolish people so desperately want. Go wank off in your idealized office job, it'll hurt when India cuts off your supply of computers and phones, which you viewed as "low-level" and "should be phased out". You're making the exact same mistake Americans elites did 40 years ago! Did you not learn a single damn thing?

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The problem is that 80% of electronics manufacturing company are Taiwanese (Pegatron, Foxconn, Wistron)