| I don't understand why people expect the Chinese economy to crash - they can basically make everything, a lot of which is internationally competitive, they can trade for the resources they don't have with the goods that they do - with basically the whole world dependent on them. They have a huge internal base of poor people, and lifting them to a middle class level will alone fuel domestic demand for years to come. Their biggest problem seems to be they're too good at building stuff, whenever a new category of product pops up, they quickly build up both volume and drive down prices through competition so that they saturate their internal markets (see: housing, EVs) |
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| ▲ | tim333 13 hours ago | parent | next [-] | | There were worries that they'd issued a lot of debt to build real estate that wasn't needed resulting in ghost towns and people thought prices would fall and the banks lending would collapse but they seem to have managed ok. The Chinese actually seem quite smart at managing their system. | | |
| ▲ | dmix 9 hours ago | parent [-] | | They managed okay up until now because the Chinese gov takes a ton of revenue directly from their industry. They have very low income taxes on the public and instead make a lot of money from their huge state companies and investments in their manufacturing, industrial, and tech businesses which are still booming. That helps offset the losses from real estate, which they also make money off from land sales. They act more like a giant bank than one that simply taxes and spends. But their fiscal deficits have been growing quite a bit, particularly their local governments and they've had some pretty bad deflationary issues recently. https://rhg.com/research/chinas-harsh-fiscal-winter/ | | |
| ▲ | tim333 27 minutes ago | parent [-] | | It seems to me there are two parts to the economy - physical stuff like like buildings, trains, factories, people working etc which you can see if you look around, and the financial side like bank balances, debt which are basically numbers in databases which you can only see on screens and paper. If the financial side goes wrong the government can kind of fix it overnight but printing/lending money, nationalizing bust banks and so on. But the physical takes a long time - you can't suddenly have a lot of high speed rail or trained engineers overnight - it takes decades. The Chinese seem to plan ahead on the physical stuff like houses factories universities and don't worry too much about the financial. The west seems more to worry about regulating the financial side and leave what to build to the market but that seems to have some aspects that can be inefficient. Not that it's just east - west. The US has built loads of infrastructure at times and socialists have had many screw ups. Still there may be something to be said for having some sort of long term plan on the physical side. |
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| ▲ | ahartmetz 14 hours ago | parent | prev | next [-] | | The Chinese economy is indisputably strong and real, but rumor has it that its reported growth numbers have been inflated in the last couple of years. And why wouldn't they be - there is an autocratic government whose justification is that what they are doing is increasing economic success. No success is not an option. | | |
| ▲ | edm0nd 6 hours ago | parent | next [-] | | Yeah basically every single academic and economist knows the Chinese government lies about its GDP numbers and pumps out fake stats. Its the Chinese way. | |
| ▲ | torginus 12 hours ago | parent | prev [-] | | Personally I'm less and less inclined to believe in capitalism and money as a concept - we've long past moved the concept of money as universal barter, and into strange and speculative theories about how things ought to be valued, with the most valuable things either emerging from immediately unclear value propositions (impossibly valued companies, high-paid jobs that seemingly dont contribute to society) or artificially created shortages (housing, overpriced infrastructure projects due to government regulation and meddling). If for example, BYD makes a car that's substantially similar between the China and Europe versions, and sells said car for $15k eqv RMB in China, but $30k in the EU, it makes double the revenue for the same 'value'. Even the argument of the EU being generally richer, and thus the car having higher monetary utility doesnt hold - a well-paid EU surgeon wont pay more for it than your average office worker. So I feel money is increasingly a poor proxy for actual value/wealth etc. | | |
| ▲ | xyzzy123 10 hours ago | parent | next [-] | | A bottle of water in the desert and a bottle of water in your fridge don't have the same value. | | |
| ▲ | torginus 2 hours ago | parent | next [-] | | You're describing gouging and gold rush pricing, which thankfully not a feature any major economic system relies on for everyday operation. It's entirely reasonable to expect logistical costs to inflate the price of a good, so the price should reflect the market equilibrium value of the service of bringing water into the middle of the desert, not the good. | |
| ▲ | hirako2000 10 hours ago | parent | prev | next [-] | | But politics isn't involved. The point of tender is to represent value. Your water in the desert costing 100 times what it costs where it rains is meant to represent its scarcity here vs over there. Take cuban dollars vs normal dollar. In there the two tenders aren't proxy for value. Proxy for a political control so that the wealthy visitor pays 10 times, for the same bottle of water on the same shelf. | |
| ▲ | komali2 6 hours ago | parent | prev | next [-] | | That's only because, for some reason, people have conflated the words "value," "price," and "cost" until the terms are indistinguishable. | |
| ▲ | theendisney 7 hours ago | parent | prev [-] | | We are hoarding money to buy many bottles. The chinese are making and filling it while drilling wells that dont seem financally viable. They spoiled their entire bottle buying budget on that? What dumb communist central planners. |
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| ▲ | JackFr 10 hours ago | parent | prev | next [-] | | Much of the difference in the BYD cost is accounted for by a 27% tariff on the cars, transport and increased costs for warranty and compliance certification costs, as well as likely subsidies in the domestic market. Of those, you’ll see that only transport costs are a function of “capitalism” the rest is government. | | |
| ▲ | torginus an hour ago | parent [-] | | If that were true, Euro and US models would cost the same in China as they do in Europe - after all they dont have import tariffs, and all the stuff you listed - but they're priced in accordance to the local market. As for subsidies, afaik the only difference between how the Chinese do them and the EU does them, is in China, the manufacturer receives them rather than the customer afaik. But I didn't want to get heavily into cars - its a clear and omnipresent feature of modern economics that things cost different amount of money between economic blocks in ways that's not explainiable by the fundamental cost of goods and services rendered. And not only economic blocks - prices of existing concrete (like an apartment that is just there, and been there) goods can increase wildly over time - which in industrial terms would mean society getting less efficient. I think it's an important thing to discuss, considering the current system's mandate to lead is based entirely around its ability to bring prosperity to the people. If it's objectively outperformed by other systems, perhaps the system has to at least face the pressure change or be replaced. |
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| ▲ | SpicyLemonZest 7 hours ago | parent | prev [-] | | Economists account for the divergence you're describing with a concept known as "purchasing power parity", which does indeed result in a 2x adjustment in Chinese wealth. The intuition is that market exchange rates combine a number of things beyond the purchasing power of comparable goods. For example, if you have a 30 year horizon it makes perfect sense to trade 1 car worth of RMB for 0.5 cars worth of GBP: with the GBP, you can buy a government bond at 5.29% instead of 2.26%, and even with no reinvestment you end up with 1.794 cars worth of GBP vs. 1.678 cars worth of RMB. |
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| ▲ | acuozzo 17 hours ago | parent | prev | next [-] | | > Their biggest problem[…] is demographic in nature. https://www.populationpyramid.net/china/2024/ | | |
| ▲ | torginus 15 hours ago | parent | next [-] | | Great website, not going to downplay the problem, but you can check out other countries, and see that a lot of places - particularly in the West - are f*cked. That China is too, is not much of an upside, Honestly its kinda shocking how bad things are going to get, and Im not sure what can be done if anything at this point. | | |
| ▲ | pphysch 11 hours ago | parent [-] | | China is probably the among the best countries in the world to handle so-called "demographic collapse". Elders are relatively healthy and multigenerational households more common. Leader in robotics. News flash: you don't need a billion hard-working peasants in 2026 to be productive. | | |
| ▲ | generativenoise 10 hours ago | parent [-] | | People in general don't seem to look at how much "productive" population you need in the real economy to support a given population. Things look pretty fine by those metrics and if the AI claims are to believed about to rapidly get even better. How to motivate and compensate that small number of people in the real economy that supports human welfare is a different question. Also people appear to be blind to the real material limits that really start to be pushed by large populations. You could end up making life materially worse by trying to "fix" the demographics by adding more humans. |
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| ▲ | chillacy 15 hours ago | parent | prev | next [-] | | Korea has a similar demographic shape, and Japan already passed its peak in 2005ish https://www.populationpyramid.net/japan/2024/ | | | |
| ▲ | PeterHolzwarth 8 hours ago | parent | prev [-] | | This is a profoundly important - central, even - issue that I am very surprised to not see widely understood or acknowledged. China is in a life-or-death race against time. A good number of their decisions are explained when viewed through this demographic implosion-bomb they are facing. | | |
| ▲ | acuozzo 4 hours ago | parent [-] | | The same can be argued for Russia. Many-- myself included --believe it's the #1 reason Putin decided to invade the Ukraine as its youth are seen by the Kremlin as "Russian enough". |
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| ▲ | 12 hours ago | parent | prev [-] | | [deleted] |
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