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    Economy of China:

    GarryB
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    Post  GarryB Wed Feb 14, 2024 2:15 am

    Typical, a Chinese company has become very successful and the west is starting to look for ways to limit or ban its operations in western markets.

    The funny thing is that it just means less competition in western markets... western consumers pay more or get less choice...

    And the really funny thing is that it never works... ask Huawei. Look at Russian companies.

    They find a way to continue... and cutting out the west limits their markets but actually makes them pull their finger out and do some real work in the rest of the world which is actually a much much bigger market than the west.
    lancelot
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    Post  lancelot Wed Feb 14, 2024 9:47 am

    Kiko wrote:BYD's meteoric rise has sparked interest while also raising questions about the Chinese government's subsidy policies and the impact of these practices on global trade. BYD's rapid expansion in Europe is also under scrutiny, leading to the European Union's investigation into the possibility of tariffs on the Chinese company's products. So while celebrating its successes, BYD also faces the challenge of responding to the concerns and criticisms that accompany its breakneck growth.
    Pathetic. How come Tesla isn't being investigated?

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    Kiko
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    Post  Kiko Thu Feb 15, 2024 4:45 pm

    Ford considers Chinese electric vehicles a "colossal" competitive threat. 02.15.2024.

    Ford considered inexpensive Chinese electric cars a colossal competitive threat.

    American automaker Ford Motor Company sees low-cost Chinese electric vehicles as a “colossal” competitive threat. Bloomberg reports this with reference to Marin Gyadzha, chief operating officer of Ford Electric Vehicles.

    “They [China] are ahead of us in this technology,” he said. With Chinese electric vehicles coming to market in the US soon, Gyage said Ford needs to "get in shape" and start doing a better job on its models. “Otherwise we have no future as a company,” he emphasized.

    According to Bloomberg , Ford has decided to change its strategy regarding electric vehicles as the bulk of US consumers turn away from expensive models. Chief Executive Officer Jim Farley previously said the company was working on low-cost electric vehicles to compete with Chinese rivals.

    https://www.rbc.ru/rbcfreenews/65cdd8d79a794794e7a95909

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    Kiko
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    Post  Kiko Sun Mar 03, 2024 8:39 pm

    West Braces for New ‘China Shock’ as Beijing Brings Back Export-Oriented Development Strategy, by Ilya Tsukanov for Sputnikglobe.com. 03.03.2024.

    The People’s Republic was anointed the global ‘workshop of the world’ in the 2000s following its accession into the World Trade Organization in 2001, with its manufacturing exports edging out the US and European competition thanks to a combination of Western corporate executives’ greed and a shrewd Chinese play to promote exports through subsidies.

    America’s leading business newspaper is urging countries around the world to prepare for a second ‘China Shock’ as the Asian manufacturing giant ramps up the exports of competitively priced, high-value manufacturing goods after satiating its home market.

    The Wall Street Journal fears the 'sequel' to the early 2000s Chinese export boom, which came at the cost of manufacturing jobs in the US and Europe, could be even more extensive than its original iteration, with the Asian nation now accounting for a much larger share of the world economy.

    According to the World Bank, China accounted for ‘just’ 10 percent of global manufacturing output and 5 percent of all goods exports two decades ago – compared with 31 percent and 14 percent in 2022, respectively.

    “The result” of a China Shock 2.0 “could be a world swimming in manufactured goods, and short of the spending power to buy them – a classic recipe for falling prices,” according to WSJ.

    The newspaper expects the US, the European Union and Japan to put up a stiffer resistance to China’s manufacturing export boom this time around, with governments erecting tariff and other barriers and committing billions of dollars in subsidies to ‘strategic’ domestic industries.

    US President Joe Biden has largely continued the tariff war against Chinese goods launched by his predecessor, Donald Trump, in 2018, and Trump has gone further, warning that he might to target Chinese goods with tariffs of 60 percent or higher if he wins in November.

    “It won’t be the same China shock,” MIT professor David Autor, one of the authors of the original China shock concept, said. “The concerns are more fundamental” this time around, he warned, pointing out twenty years on since the original phenomenon, when the Asian nation produced things like toys, clothing, and furniture, China has learned to develop and manufacture vehicles, machinery and computer chips which rival their Western competitors.

    China has poured hundreds of billions of dollars into industrial and consumer research and development in recent years, with R&D as a percentage of GDP hitting around 2.5 percent in 2022, and the country making impressive strides into the presumed technologies of the future, from computing and aerospace to vehicles and renewable energy – with an eye to export surpluses abroad, all while maintaining its status as a leading manufacturer of lower-cost goods as well.

    The coming Chinese boom may help explain the urgency with which Washington has moved to siphon major industries from Europe beginning in 2022 after passing the Build Back Better Act in late 2021, with the legislation providing producers lavish subsidies for relocating their manufacturing operations to the United States. European producers have seen their competitiveness vis-à-vis the US and China shrivel over the past two years thanks to the crisis in Ukraine, including Brussels’ self-defeating restrictions on Russian pipeline energy in favor of more expensive liquid natural gas from overseas.

    https://sputnikglobe.com/20240303/west-braces-for-new-china-shock-as-beijing-brings-back-export-oriented-development-strategy-1117106302.html

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    Kiko
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    Post  Kiko Sun Mar 03, 2024 10:54 pm

    US war on Chinese electric cars has begun, by Timur Fomenko, political analyst, for RTNEWS. 03.03.2024.

    American industries are trailing behind, but Biden will leverage protectionism to win the 2024 election.

    The Biden administration has announced that it's launching a probe into Chinese “smart cars,” vowing to protect the American automobile industry. As is conventional, the White House branded the cars a “national security threat” and claimed, baselessly, that they can transmit data back to China.

    Of course, any seasoned and good-faith observer should know that the rhetoric of “national security threats” is always used as a justifying premise, often without evidence, in order to blacklist a given Chinese product or service and merit its exclusion from the American market. Hence Huawei among other Chinese companies has also been treated similarly.

    This rhetoric has often been borderline hysterical, one of the recent examples being Florida Senator Rick Scott saying that Chinese-exported garlic was a national security threat. That may be an outlier, but when it comes to technology, anything and everything from China is usually accused of espionage, with the political consensus of paranoia being used to justify such harsh policy measures.

    In reality, the Biden administration’s foreign policy is to attempt to block China’s technological and industrial advancements in order to stop Beijing moving up the global value chain and eroding American dominance of key industries, and thus undermining the hegemony of the US. Most prominently, the White House has been focused on attempting to crush the Chinese semiconductor industry, weaponizing an ever-growing scale of export controls to try and deprive Chinese companies from access to advanced semiconductors and associated manufacturing equipment. US National Security Advisor Jake Sullivan has called this a “small yard, high fence” strategy.

    The US is famously protectionist about its automobile industry on all fronts, and is tough on both friends and foes alike over it. In the past few years, there has been a political push to advance the renewable energy industry, which has led to a surge in demand for electrical cars, batteries, solar panels, and other goods throughout the world. As it happens, China has positioned itself as the largest single manufacturer and exporter of renewables on the planet by a mile, and has overtaken Japan to become the world’s largest car exporter. Demand for Chinese electric cars is booming.

    Although Chinese-made cars are subject to a 25% tariff in the US already, the competitive and cheaper prices of such models mean this serves as little deterrent and their numbers are growing. Not only that, but China has been able to exploit loopholes by initiating manufacturing of its vehicles in Mexico, allowing the cars to get inside of the North American Free Trade Agreement (NAFTA) and thus experience even less of a tariff. This is putting political pressure on the Biden administration, which, with an election coming up, will naturally be inclined to demonstrate toughness against China in the coming months.

    This is because he will face a political opponent who is calling to be even tougher on China and has already, in his previous presidency, changed the conversation of American economic policy towards protectionism. In other words, Biden will be politically pressured to pay lip service to Trumpist economic ideas in order to offset Trump himself. To get the votes of American workers, he needs to show that he is fighting for American jobs, therefore targeting Chinese electric vehicles is going to be on the agenda. You might add that key automobile manufacturing states, such as Michigan, can win or lose the election for him, and this cost Hillary Clinton the 2016 election.

    Of course, because of that, the White House is also diving into anti-China hysterics, including by saying that Beijing will remotely control electric and smart cars to shut down US roads and systems, among other things. It is the characteristic of American politics to utilize smears, fear and hysteria in order to manufacture consent for policies, especially in today’s polarized environment. So, even though things have been calm on a high level between the US and China in the first quarter of 2024, we can expect this year to become turbulent and unpredictable, as it did in 2020, albeit without the even more chaotic situation of the Covid-19 pandemic. But either way, on a macro level, the US also doesn’t want China to dominate global industries or, as Biden put it, “the technologies of the future.” Therefore, while the US trails China immensely in the manufacturing of electric vehicles, it is likely to take measures in order to protect its own markets.

    https://www.rt.com/news/593552-us-china-electric-cars/

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    GarryB
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    Post  GarryB Sun Mar 03, 2024 11:38 pm

    According to Bloomberg , Ford has decided to change its strategy regarding electric vehicles as the bulk of US consumers turn away from expensive models. Chief Executive Officer Jim Farley previously said the company was working on low-cost electric vehicles to compete with Chinese rivals.

    I seem to remember the Europeans going apeshit over cheap Chinese electric vehicles too and at the time the Chinese official said they had a triple markup on price in western markets so they could be selling these vehicles at 1/3 rd the price and still make money.

    The funny thing is the west is going to sanction China over this, especially the batteries, yet it will be cheap chinese car and vehicle batteries and their recycling that would actually make electric cars more viable in the west. Their problems are mainly expensive batteries and no recycling capacity. China is offering solutions to both problems.
    higurashihougi
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    Post  higurashihougi Sun Mar 17, 2024 12:32 pm

    https://thenextrecession.wordpress.com/2024/03/08/chinas-next-decade/?fbclid=IwAR2P8t127JmeoKp528XinJpsdVGOKAeIPNYryTTaFX8qxBageTuirtv32fM

    This year, there is a new premier, Li Qiang.  But Li’s speech was very much in line with last year’s by the previous premier Li Keqiang.  As last year, Li Qiang set a target for real GDP growth in 2024 of “around 5%” and said that China would be looking to “transform” China’s economic growth model.

    The NPC will also be considering the annual budget.  Defence spending is expected to rise by 7.2%, while public security spending is slated to rise by 1.4%, no doubt necessary given the military surrounding of China by the Western powers. Central government expenditures are expected to rise by 8.6% to reduce the burden somewhat on the highly indebted local governments. Other targets announced by Li include the creation of 12m new urban jobs and increasing consumer prices by about 3% (apparently to avoid deflation – see below).  Li said these targets would “not be easy” but that “high quality development” remained the priority.

    All this is pretty much in line with the targets set in China’s last five-year plan.  The 14th plan agreed in 2021 was a comprehensive document covering all aspects of the Chinese economy in detail.   But it had some key targets.  In particular, China aimed at becoming a “moderately developed” economy by 2035 and to reduce inequality between urban and rural areas.  The plan was based on the dual circulation model, where expanding manufacturing exports – the past key to China’s miracle growth -is combined with developing the domestic economy and reducing reliance on foreign imports and investment. The objective is that China can continue to grow and increase living standards despite attempts by Western governments to curb or strangle such growth.

    Can China succeed in achieving both its growth target for this year and reach the longer-term objectives over the next ten years or so, taking nearly 1.4bn people up to living standards only enjoyed by a small group of nations in Europe, North America and East Asia?

    If you were to read the Western press and their economists, you would conclude that the chances of China doing that are no better than a snowball surviving on being thrown into the sun.  It is the almost unanimous cry of Western economists, particularly the ‘China experts’, that the China ‘miracle’ is over, and worse, China is heading into a debt deflation spiral that will mean growth targets will not be met at best, and more likely there will be a major slump.  This is despite the fact that in 2023 China had an official growth rate of 5.2%, more than double that of the ‘booming’ US economy, and five times the rate of growth in the rest of top capitalist economies of the G7.  (Don’t get me into the argument that China’s growth figure is fake and growth is much lower.  Those that argue this have little supporting evidence.)

    Ah, but you see, manufacturing is in recession (as measured by official surveys), consumption is weak (still below pre-pandemic levels) and foreign investment, seen as the life-blood for the Chinese economy has dried up. And even worse, prices of goods and services are falling.  Readers may be surprised to hear that Western economists, who spend much of their time demanding that inflation rates in their countries be reduced to no more than 2% a year after the post-COVID inflationary spiral of the last three years, see no merit in the lack of any rising prices (and therefore rising real wages) in the Chinese economy: it’s ‘inflation bad for the US; but no inflation bad for China’.

    In a recent article, John Ross has shown that to achieve China’s Plan GDP target for 2025 ie a doubling GDP from 2021, it would require an average annual growth of 4.7% a year. So far, China is ahead of this goal with annual average growth in 2020-2023 of about 5%.  Indeed, since the beginning of the pandemic, China’s economy has grown by 20.1% and the U.S. by 8.1%—that is China’s total GDP growth since the beginning of the pandemic has been two and half times greater than the US.

    Yes, China’s annual growth rates have slowed from the breakneck pace of the 1990s onwards and the Chinese workforce is declining. But just look at the increase in GDP per person that China has achieved compared to the G7 economies since 2019, some of which have even contracted (IMF data). The rise on per capita basis is even higher against the US (nearly four times).

    Yes, increasingly China cannot rely on an expansion of a cheap workforce from rural areas to achieve more output, but instead must raise the productivity of the existing labour force, especially through investment in technical innovation.  And it is doing so.  The Federal Reserve Bank of Dallas shows that ‘total factor productivity’ (which is a crude measure of innovation) is growing at 6% a year, while it has been falling in the US.

    Despite this evidence, every year the Western ‘China’ experts (and even many in China itself) predict stagnation, given the huge debt levels in all sectors. China is going to stagnate like Japan has done in the last three decades.  The only way to avoid ‘Japanification’, say these experts, is to ‘rebalance’ the economy from ‘over-investment’, ‘excessive savings’ and exports to a domestic consumer-led economy as in the West and reduce the state control of the economy so that the private sector can flourish.

    This year on the occasion of the NPC, Martin Wolf, the Keynesian guru of the Financial Times, returned to this theme, echoing the arguments of other Keynesian China experts like Michael Pettis.  According to Wolf, China’s growth will now slow to a trickle as in Japan because it overloaded with excessive debt and because it has not rebalanced the economy towards “the consumer”. China needs to get its consumption share up to Western levels or it will not be able to grow and so stay locked in a ‘middle income’ trap.

    China generated 28 per cent of total global savings in 2023. This is only a little less than the 33 per cent share of the US and EU combined.  This is all wrong, say Wolf and Pettis.  What is needed is a shift from ‘excessive savings’ to consumption.  There is over-investment in property and infrastructure, instead of handouts to households.  China will only grow from here if consumption leads, not investment.

    But how can anybody claim that the mature ‘consumer-led’ economies of the G7 have been successful in achieving steady and fast economic growth, or that real wages and consumption growth have been stronger there?  Indeed, in the G7, consumption has failed to drive economic growth and wages have stagnated in real terms over the last ten years, while real wages in China have shot up.  Moreover, these consumer-led economies have been hit by regular and recurring slumps in production that have lost trillions in output and income for their populations.  The irony is that China’s consumption growth rate is way higher than in the G7 economies.

    China has not had a contraction in national income in any year since 1976, while the consumer-led G7 economies have had slumps in 1980-2, 1991, 2001, 2008-9 and 2020.  Much has been made of China’s ‘disastrous’ zero COVID policy.  But apart from saving millions of lives, China still did not enter a slump in 2020, unlike all the G7 economies in 2020.

    Yes, China has the highest ratio of gross investment to GDP among the major economies.  But this supposedly ‘over-invested’, ‘excessive savings’ economy has grown more than four times faster than the consumer-led OECD economies and 40% faster than India as a result.  What this suggests that if China were to ‘rebalance its economy towards the consumer and reduce investment; and reduce the public sector and ‘free up’ the private sector (the sector that provides most consumer goods in China), growth rates would fall even more than they have done in recent years.

    Moreover, the arguments of the Western experts that China is stuck in an old model of investment-led export manufacturing and needs to ‘rebalance’ towards a consumer-led domestic economy where the private sector has a free rein are just not empirically valid.  Is China’s weak consumer sector forcing it to try and export manufacturing ‘over capacity’?   Not according to a recent study by Richard Baldwin.  He finds that the export-led model did operate up to 2006, but since then domestic sales have boomed, so that the exports to GDP ratio has actually fallen.  “Chinese consumption of Chinese manufactured goods has grown faster than Chinese production for almost two decades. Far from being unable to absorb the production, Chinese domestic consumption of made-in-China goods has grown MUCH faster than the output of China’s manufacturing sector.

    Western experts go on about the size of China’s export surplus, namely that the current account (the balance of receipts from abroad against payments), claiming that the surplus is as high as 4% of China’s GDP.  And China’s exports are 15% of the world total.  And just in the last month exports rose over 7% so that China’s balance of trade with the rest of the world reached an all-time high of $125bn in February.

    But what that shows is that Chinese manufacturers remain highly competitive in world markets, despite all the efforts of the West to impose tariffs and other protectionist measures.  China is doing particularly well in electric vehicle production, solar energy and other green technologies. But as Baldwin points out, this export success does not mean that China depends on exports for growth.  China is growing mainly because of production for the home economy, like the US.

    It is true is that ‘productive’ investment growth has fallen back in China.  In my view, successive Chinese governments made a big mistake in trying to meet the housing needs of its burgeoning urban population by creating a housing for sale market, with mortgages and private developers being left to deliver. Instead of local governments launching housing projects themselves to house people for rent, they sold state assets (land) to capitalist developers who proceeded to borrow heavily to build projects.  Soon housing was no longer for living but for speculation (Xi quote).  Private sector debt rocketed – just as in the real estate bubble in the West.  It all came to a head in the COVID pandemic as developers and their investors went bust.

    What the Chinese government now needs to do is take over these large property developers and bring them back into public ownership, complete the projects and switch to building for rent.  The government should annul the developers’ debt to foreign investors and only meet obligations to small investors; and end the mortgage and private finance system permanently.  The unproductive real estate sector has got so large in China as a share of investment and output that it has seriously degraded growth.  This is where the economy does need rebalancing.  There needs to be a switch to productive investment in technology and knowledge industries.  If the words of the Five-Year Plan mean anything, it seems that the current Chinese leadership is aware of that.

    Previous CP leaders also relied too much on foreign investment and a rising capitalist sector to grow the economy.  But China’s capitalist sector has experienced falling profitability (just as in the West) and so has cut back on productive investment.  The state sector has had to step up to the plate. What flows from that is, contrary to the views of the Western experts, it’s not less investment and more consumption, not less public and more private investment, not more foreign and less state investment that China needs to sustain its previous economic success, but the opposite.

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    lancelot
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    Post  lancelot Sun Mar 17, 2024 3:43 pm

    higurashihougi wrote:Defence spending is expected to rise by 7.2%, while public security spending is slated to rise by 1.4%, no doubt necessary given the military surrounding of China by the Western powers. Central government expenditures are expected to rise by 8.6% to reduce the burden somewhat on the highly indebted local governments. Other targets announced by Li include the creation of 12m new urban jobs and increasing consumer prices by about 3% (apparently to avoid deflation – see below).  Li said these targets would “not be easy” but that “high quality development” remained the priority.
    Overall Chinese defence spending is still quite low. They still spend less than 2% of their GDP on defence. It should probably be double that. If they want to raise consumer prices they can either stimulate demand or reduce production. For example I expect them to put some measures into place to tighten up vehicle production eventually. And they might put back subsidies to get people to scrap their older cars for new EVs. Which would also have the effect of reducing oil imports. There were also claims of possible subsidies to get people to buy new consumer appliances.

    higurashihougi wrote:In particular, China aimed at becoming a “moderately developed” economy by 2035 and to reduce inequality between urban and rural areas.  The plan was based on the dual circulation model, where expanding manufacturing exports – the past key to China’s miracle growth -is combined with developing the domestic economy and reducing reliance on foreign imports and investment. The objective is that China can continue to grow and increase living standards despite attempts by Western governments to curb or strangle such growth.
    This is all correct. The US is likely going to hit them with further embargos in the future so they should be as self-reliant as possible. Urbanization of lower tier cities in China is also still quite a way from being done since it has barely started.

    higurashihougi wrote:Can China succeed in achieving both its growth target for this year and reach the longer-term objectives over the next ten years or so, taking nearly 1.4bn people up to living standards only enjoyed by a small group of nations in Europe, North America and East Asia?

    If you were to read the Western press and their economists, you would conclude that the chances of China doing that are no better than a snowball surviving on being thrown into the sun.  
    ...
    Ah, but you see, manufacturing is in recession (as measured by official surveys), consumption is weak (still below pre-pandemic levels) and foreign investment, seen as the life-blood for the Chinese economy has dried up. And even worse, prices of goods and services are falling.
    There are multiple factors leading to the deflation in China. They basically solved their pork shortage after they lost most herds to the swine flu. New facilities with high level containment capabilities were built and they have new swine herds. Unlike in the US in China they did not provide that bloated stimulus so people are more careful with expenses. And the Western consumer markets are in depression because of lower real salaries and higher interest rates. The housing bubble in China also burst. Frankly I think most of those things are good for the average Chinese citizen which has seen his purchasing power increase.

    higurashihougi wrote:Yes, China’s annual growth rates have slowed from the breakneck pace of the 1990s onwards and the Chinese workforce is declining. But just look at the increase in GDP per person that China has achieved compared to the G7 economies since 2019, some of which have even contracted (IMF data). The rise on per capita basis is even higher against the US (nearly four times).
    These economists are pretty retarded. Of course as the low hanging fruit gets picked the rate the Chinese economy will grow will decrease. But since the Chinese economy is much larger overall than it used to be decades ago even a 5% growth rate will be huge in absolute terms.

    higurashihougi wrote:Yes, increasingly China cannot rely on an expansion of a cheap workforce from rural areas to achieve more output, but instead must raise the productivity of the existing labour force, especially through investment in technical innovation.  And it is doing so.  The Federal Reserve Bank of Dallas shows that ‘total factor productivity’ (which is a crude measure of innovation) is growing at 6% a year, while it has been falling in the US.
    China is currently like 60% urbanized. Japan and South Korea are respectively 92% and 81% urbanized. The US is 80% urbanized. If China moves another 20% of their population from the rural areas into cities that will be close to 300 million more people moving into cities. This population pool which still needs to move into cities is similar to the entire population of the US.

    Chinese electricity consumption and use of robots in industry also keeps increasing. They already have a similar amount of industrial robots per worker to Germany. So the idea that Chinese industry is based on menial labor is also bogus.

    higurashihougi wrote:Despite this evidence, every year the Western ‘China’ experts (and even many in China itself) predict stagnation, given the huge debt levels in all sectors. China is going to stagnate like Japan has done in the last three decades.  The only way to avoid ‘Japanification’, say these experts, is to ‘rebalance’ the economy from ‘over-investment’, ‘excessive savings’ and exports to a domestic consumer-led economy as in the West and reduce the state control of the economy so that the private sector can flourish.
    What a bunch of baloney. The Japanese economy stopped growing because of the Plaza Accords. The US forced Japan to double the value of their currency the Yen overnight. Their products became way too expensive to be competitive, because of the high salaries, and production of consumer electronics started moving elsewhere to South Korea and China. Japan used the inflated value of the Yen to build factories outside Japan and still reap some kind of benefit but it was too little too late. The US also slapped mandatory import quotas for certain US products that Japan had to buy regardless if they needed their crap or not. And finally they forced Japan to reduce funding from their banks to their industry. Japan got stuck producing the same products, with an inflated cost structure losing in competitiveness to other Asian countries, and they hit a ceiling. Even then this only happened when their economy was quite developed.

    higurashihougi wrote:This year on the occasion of the NPC, Martin Wolf, the Keynesian guru of the Financial Times, returned to this theme, echoing the arguments of other Keynesian China experts like Michael Pettis.  According to Wolf, China’s growth will now slow to a trickle as in Japan because it overloaded with excessive debt and because it has not rebalanced the economy towards “the consumer”. China needs to get its consumption share up to Western levels or it will not be able to grow and so stay locked in a ‘middle income’ trap.
    Hah. Such blatant lies. If the Chinese stopped investing into new markets, like they are currently doing, that is actually how they would get stuck into a middle income trap. If the Chinese wasted all their money on rampant consumption of imported goods like they were Venezuela they would never move up the economic ladder.

    higurashihougi wrote:China generated 28 per cent of total global savings in 2023. This is only a little less than the 33 per cent share of the US and EU combined.  This is all wrong, say Wolf and Pettis.  What is needed is a shift from ‘excessive savings’ to consumption.  There is over-investment in property and infrastructure, instead of handouts to households.  China will only grow from here if consumption leads, not investment.
    The Chinese will start spending more again eventually. Real salaries have risen and people have a decent level of savings since they got back to work.

    higurashihougi wrote:Yes, China has the highest ratio of gross investment to GDP among the major economies.  But this supposedly ‘over-invested’, ‘excessive savings’ economy has grown more than four times faster than the consumer-led OECD economies and 40% faster than India as a result.  What this suggests that if China were to ‘rebalance its economy towards the consumer and reduce investment; and reduce the public sector and ‘free up’ the private sector (the sector that provides most consumer goods in China), growth rates would fall even more than they have done in recent years.
    China's urbanization rate is still too low and they still depend too much on certain technological imports which they could produce themselves. It is way too early to reduce investment.

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    higurashihougi
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    Post  higurashihougi Sun Apr 07, 2024 5:29 pm

    https://twitter.com/RnaudBertrand/status/1776486765463048674?fbclid=IwAR3MONuJfoPJpkIwFYOLzNPtC6kDAg1mwJnnOrDF0gwNfRDPXwpTBySsP8w_aem_AeGOrsWdEoGgmax5o410dpcUHjHico4YpbWGJpewfnMRxuU_kDCoG2RkfrrfWWg5ap85laKvYrW_N88TGlFQXWZy

    Arnaud Bertrand wrote:It’s interesting to think through what Yellen [U.S. Treasury Secretary Janet Yellen] is actually saying when she asks China to address its “industrial overcapacity”, particularly in fields like solar panels or EVs.

    [...] What are the key metrics to assess if a country has “industrial overcapacity”? [...]

    Let’s start with capacity utilization rates. Look at the graphs: it’s crystal clear they’ve been pretty much constant in China for the past 10 years, standing at roughly 76% right now, which is in the same ballpark as America’s own utilization rates at about 78%. So no issue there.

    Now let’s take a look at inventory levels. As of the beginning of 2024, China’s finished good inventory PMI index stood at about 49 (https://en.macromicro.me/collections/25/cn-industry-relative/5728/china-pmi-new-order-and-stock-index ) vs the US at 48 for manufacturing inventories (https://en.macromicro.me/collections/8/us-industry-relative/40/ism-inventory ). An index of over 50 is a sign of growing stock levels: this is not the case here for either country, so there is no issue with inventory levels.

    Lastly, let's check profit margins. China’s industrial profits rose 10.2% in the first 2 months of the year (https://bloomberg.com/news/articles/2024-03-27/china-s-industrial-profits-rise-in-sign-of-stabilizing-economy?embedded-checkout=true ), consolidating a gaining streak since August last year. So no issue there either.

    So what gives? No matter how you look at it, there is just no sign of industrial overcapacity in China.

    Could the US maybe mean that China is breaking WTO rules by practicing “dumping”, meaning the practice where companies export products at  prices lower than what they charge in their home market, or below the cost of production? No, this is not what China is accused of doing here: despite the very low prices for its EVs or solar panels, the companies involved still make a profit (heck, as we just saw, industrial profits are rising at double digit growth), and they DO charge higher prices abroad than at home.

    No, the real issue here is in fact not one of industrial capacity but one of competitiveness. What is crystal clear is that the competitiveness of Chinese companies is overwhelming: today, in scores of industries - like solar or EVs - there is simply no way for American or European companies to compete with Chinese ones. This is the real issue: Yellen and Western leaders are afraid that if things keep going, China will simply eat everyone’s lunch.

    Contrary to popular belief, this competitiveness isn’t thanks to Chinese "cheap labor". One guy who explained this extremely well is Apple’s Tim Cook (https://inc.com/glenn-leibowitz/apple-ceo-tim-cook-this-is-number-1-reason-we-make-iphones-in-china-its-not-what-you-think.html): “There's a confusion about China. The popular conception is that companies come to China because of low labor cost. I'm not sure what part of China they go to, but the truth is China stopped being the low-labor-cost country many years ago. And that is not the reason to come to China from a supply point of view. The reason is because of the skill, and the quantity of skill in one location and the type of skill it is.” He credits the Chinese education system for this: “I give the education system a lot of credit for continuing to push on that even when others were de-emphasizing vocational [...] China called that right from the beginning.”

    Having a huge depth of skills is one thing, but there is also control of the entire supply chain since China is the only country in the world that produces all categories of goods classified by the World Customs Organization (WCO). This gives it a key advantage when it comes to end prices: when you want to build something in China you can literally find the entire supply chain for it at home.

    Energy prices is another thing: for instance the International Energy Agency highlights that "low-cost electricity is key for the competitiveness of the main pillars of the solar PV supply chain" (https://iea.org/reports/solar-pv-global-supply-chains/executive-summary ) and "around 80% of the electricity involved in polysilicon production today is consumed in Chinese provinces at an average electricity price of around USD 75 per megawatt-hour (MWh)". For comparison, in 2023 energy prices for industrial customers in Germany averaged 251.21 USD per megawatt-hour (MWh) (https://statista.com/statistics/1346782/electricity-prices-commercial-industrial-customers-germany/ ): that's an incredible 234.94% more expensive!

    Lastly, China has become an innovation powerhouse. In 2023 it filed roughly as many patents as the rest of the world combined (https://brevettinews.it/en/patents/wipo-annual-report-2023-more-patent-applications-but-less-trademarks-and-design/ ) and it’s now estimated to lead 37 out of the 44 critical technologies for the future (https://aspi.org.au/report/critical-technology-tracker ). All this too has implications when it comes to the final prices of its products. To take the example of solar panels again, the IEA notes that "continuous innovation led by China has halved the emissions intensity of solar PV manufacturing since 2011" (https://iea.org/reports/solar-pv-global-supply-chains/executive-summary ), which means that not only does China have raw electricity prices which are immensely cheaper than in the West, but it's innovated in such a way that it uses way less electricity in the production of its solar panels...

    So “the threat of China’s industrial overcapacity” is a buzzword that actually means that China is simply too competitive, and by asking it to address this, what Yellen is truly asking of China is akin to a fellow sprinter asking Usain Bolt to run a less fast because he can’t keep up.

    Now I’m not saying there isn’t some merit in this ask. At the end of the day, it’s understandable that when you see a competitor continuously gaining in strength, you grow quite anxious as to your own future and that of your people. But it needs to be framed the right way: framing it as if China was doing something malign with deliberate “overcapacity” is just a very unfair characterization. China played the game right: as Tim Cook explained, it first and foremost invested in its people, in their education. They also invested big time in innovation and they didn’t shoot themselves in the foot when it comes to energy prices the way Europe did, among many other policies.

    Demonizing this is just not right, and it’s certainly not the right way to ask China for what’s an incredibly big favor: running less fast so the West can keep up… Especially when the West running slow is the result of catastrophic leadership for the past few decades: first and foremost choosing to waste trillions of dollars in killing people abroad instead of investing in its own progress…

    I’m afraid this “overcapacity” framing is just another illustration of this poor leadership: when you prefer to blame others for your own failures rather than face reality.

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    Post  kvs Sun Apr 07, 2024 6:38 pm

    Chinese producers have the largest economies of scale of all economies. This makes western producers intrinsically non-competitive. This
    is why NATzO wants to wage war on China and remove this existential competitive threat.

    I recall the retarded copium how Chinese products were junk. But we see that over time they become better and no worse than the
    "quality" western ones. This copium was funny because the west offshored its production to China. So all of its products were junk as well.
    But even for electric cars and other products produced in the west, Chinese version have either caught up, surpassed or will soon catch up
    to the western versions. And the prices are better.

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    Post  GarryB Mon Apr 08, 2024 4:54 am

    The Chinese will make what you want them to make... if you want cheap they could probably make an AK for $50... and it will probably be reliable, but wont be very accurate.... but if you need to arm an army and don't have much money it is a start... a basis.

    If you want a decent AK then they can make those too.

    I find it funny that the west is complaining that things aren't fair... I suppose next they will claim they have had to waste trillions of dollars keeping the planet safe and without wars or famine instead of investing in their own economies and technologies so China and Russia and the BRICS countries actually owe them money for their services... Twisted Evil

    They are talking about expanding the Asian HATO AUKUS to make it more effective and to reduce the chance of war in the region... I guess it will be about as corrupt and destabilising in Asia Pacific as it was in Europe.

    They are selling it as a way of developing new technologies because they want to add Japan and South Korea and other countries in the region to fund new military projects and new technologies... but really they saw how effective the war in the Ukraine was at emptying out countries stockpiles of old cold war weapons and equipment that has been sitting there for 60 years or more and the money to be made replacing that with new stuff is going to make US companies rich, and now they want to repeat that in the Asia Pacific region.

    The ruthless enemy wanting concessions and good will from countries they have been hounding and bullying and putting sanctions on for the last few decades is funny.

    Why help them out... they would certainly not do the same for China or Russia or Iran or North Korea or Syria or Libya or Cuba or a big long list of other countries...

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    Post  higurashihougi Mon Apr 08, 2024 11:16 am

    Meanwhile...

    https://www.rt.com/business/595569-china-growth-forecast-raised/

    China’s growth forecast raised
    The country’s economy is projected to expand by 5.3% next year, according to a macroeconomic research agency


    The Chinese economy is expected to grow by 5.3% this year as the property sector recovers and external demand improves, the ASEAN+3 Macroeconomic Research Office (AMRO) said on Monday.

    In its latest report, the Singapore-based group noted that stabilization in China’s property sector along with ongoing policy support will boost real estate investment and drive growth in the ASEAN+3 region, which consists of Southeast Asian nations plus Japan, China, and South Korea.

    AMRO’s projection is higher than China’s official growth target of about 5% and Bloomberg’s forecast, which expects the country’s economy to grow 4.6% this year.

    “China will continue to be a powerhouse in the region and the main driver of growth,” AMRO chief economist Hoe Ee Khor told Bloomberg. Weakness in the real estate sector “will take a bit of time to overcome, but it will happen and we expect the drag on growth will bottom out maybe this year.”

    Within ASEAN specifically, its six major economies will continue to anchor growth. Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam are expected to contribute an average of 10% to global growth between 2024 and 2030, experts said.

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    Post  higurashihougi Yesterday at 4:06 pm

    You can hate china, but you can't stop buying china's stuffs.

    https://www.rt.com/business/595981-scholz-open-european-market-chinese-cars/

    German leader backs open EU market for Chinese cars
    Speaking in Shanghai, Olaf Scholz has said the only prerequisite is that “competition must be fair”


    He is being accompanied by several German chief executives, including the bosses of carmakers Mercedes-Benz and BMW and the chemical giant BASF.

    “There are Japanese cars now in Germany and German cars in Japan,” Scholz stated, adding that “at some point there will also be Chinese cars in Germany and Europe.

    According to the chancellor, “the only thing that must always be clear is that competition must be fair… [that] there is no dumping, that there is no overproduction, that copyrights are not infringed.”

    Scholz also stressed the importance of a “level playing field,” clarifying that German companies should be allowed to establish production facilities in China and vice versa with as little red tape as possible.

    Beijing remained Berlin’s top trading partner for the eighth straight year in 2023.

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    Post  kvs Today at 12:44 am

    The NATzO west is never about fair competition. It is "genetically" colonialist.

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    Post  GarryB Today at 1:25 am

    Hahahahahahahahahaha... that is hilarious....

    So Germany wants to start car production again and they can't do it in Germany because energy is too expensive and of course they can't do it in Russia where the energy is cheap, and of course they can't do it in America because American terms and conditions will mean they get screwed.

    They want to do it in China where the energy is cheap and they think they can screw China.

    How do they screw China?

    Well the wording above gives some hints.

    When they say it must be fair, we need to make rather more money than you do and you will get all sorts of limitations and restrictions.

    We will claim ownership of lots of technologies and any of your vehicles with such features will be claimed to be stolen technology which you must pay royalties on... to further boost our profits and reduce your profits.

    No dumping has never happened, the Chinese car companies are charging three times more for their cars sold in Europe than they charge on the domestic market in China.

    Over production is a bullshit term to say you are making more than we can compete with... it is a myth the west is trying to create to stop Chinese cars from taking over the market and dominating the way they dominate markets like Microsoft and Apple and Coke cola. But it is bad when other countries do it.

    The level playing field is to set up cheap production for German car makers because there is no chance they could set up cheap production in Germany now they don't get cheap energy and cheap raw materials, they are going to China to continue to get cheap materials and energy from Russia...

    Perhaps Russia should say to China that any gas or raw materials going to German factories in China need to have 200% tariffs added because Germany hates Russian energy and loves freedom gas.

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