Chinese Economics Thread

Blitzo

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The relevance of my point were to both, the accuracy of the official statistics as well as whether it was stalling, slowing down or not meeting target.

Right, though if we start talking about the accuracy of the declared growth rate that is a whole other complicated topic of discussion.

It is one which I personally am not too interested in discussing because it'll end up as everyone trying to find all the different economists who believes the declared growth rate is accurate and those who do not... and we'll have to look at how the growth rate of other countries are calculated as well and whether they are all accurate relative to each other. It's adds another large layer of complexity to the previous topic.

That said I'd be interested in what you have to say about this, if you have any opinions.
 

broadsword

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Right, though if we start talking about the accuracy of the declared growth rate that is a whole other complicated topic of discussion.

It is one which I personally am not too interested in discussing because it'll end up as everyone trying to find all the different economists who believes the declared growth rate is accurate and those who do not... and we'll have to look at how the growth rate of other countries are calculated as well and whether they are all accurate relative to each other. It's adds another large layer of complexity to the previous topic.

That said I'd be interested in what you have to say about this, if you have any opinions.

The rate of increase in total electricity generation has slowed this year. Other than that, I tend to rely on Andy Xie. He, being an economist, should know more. This is something I want to follow up next week. Will revert.
 

Blitzo

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The rate of increase in total electricity generation has slowed this year. Other than that, I tend to rely on Andy Xie. He, being an economist, should know more. This is something I want to follow up next week. Will revert.

Yeah, I've read that too, but I've also read that it's because energy intensive manufacturing has decreased while less energy intensive services sector may have picked up the slack.

There's a lot of data and sometimes omission and including different data changes the view, and many perspectives. Being an economist must be tough.
 

SamuraiBlue

Captain
Yeah, I've read that too, but I've also read that it's because energy intensive manufacturing has decreased while less energy intensive services sector may have picked up the slack.

There's a lot of data and sometimes omission and including different data changes the view, and many perspectives. Being an economist must be tough.

There are figures within economy that can't lie one being energy consumption, second is amount of logistics since "things" needs to move for it to be traded, last being consumption of natural resources.
How are the other two doing?
 

Equation

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Yeah, I've read that too, but I've also read that it's because energy intensive manufacturing has decreased while less energy intensive services sector may have picked up the slack.

Especially true in the Architecture and Engineering drafting and rendering fields. Lots of small, medium, and large architecture firms from the US and Europe had used this services lately to save on costs. Wait until 3D building printing becomes even more mature.

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Blitzo

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There are figures within economy that can't lie one being energy consumption, second is amount of logistics since "things" needs to move for it to be traded, last being consumption of natural resources.
How are the other two doing?

I understand what you're saying, but as China is trying to move from a manufacturing economy to one where services plays a bigger role, would we not expect those things to drop or grow less fast, relative to the past?

I don't know enough about what indicators the various economists are looking at to really make a statement beyond that, and I think it's beyond the scope of my knowledge to comment about the detailed methodology of specific groups or economists.
 

SamuraiBlue

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I understand what you're saying, but as China is trying to move from a manufacturing economy to one where services plays a bigger role, would we not expect those things to drop or grow less fast, relative to the past?

I don't know enough about what indicators the various economists are looking at to really make a statement beyond that, and I think it's beyond the scope of my knowledge to comment about the detailed methodology of specific groups or economists.

True but that doesn't occur over night in which PRC will still require to rely on traditional industry to maintain growth for another decade or so. It may show a gradual decline but a spike is a symptom of something else.
As for energy consumption it really doesn't fall even if it transfer to a more service oriented society. Whether it be the US, Japan or any European nation energy consumption has always been and always be an indicator same with logistics.
 

Blitzo

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True but that doesn't occur over night in which PRC will still require to rely on traditional industry to maintain growth for another decade or so. It may show a gradual decline but a spike is a symptom of something else.
As for energy consumption it really doesn't fall even if it transfer to a more service oriented society. Whether it be the US, Japan or any European nation energy consumption has always been and always be an indicator same with logistics.

Yes, all true -- but this has been occurring for a while now. I'm not sure what passes for gradual in economics terms.
I also agree that energy consumption will continue growing in the long term even as the services sector starts to overtake the manufacturing sector. But I'm not sure if we would expect a short term drop in growth rate and/or overall energy consumption as manufacturing starts to close down and services grow.

I don't know enough to make a strong case that I'm completely confident in either way.
 

Blitzo

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A bit of an interesting take on things. More about the Japanese economy than China's, but still kind of interesting. No idea if it's a very reliable inference though.


Japan's Central Bank Is China's Biggest Cheerleader


9 Aug 27, 2015 6:00 PM EDT
By William Pesek

Bank of Japan Governor Haruhiko Kuroda has a new strategy to support his country's listing economy: talking up China's.

It's a marked break with what other Japanese officials are saying. Finance Minister Taro Aso and economy czar Akira Amari have been eager to blame China's slowdown for Japan's woes. It's somewhat surreal to see them urge Beijing to implement economic reforms when they've done nothing of the sort in Tokyo -- and with more time on the job than their Chinese counterparts.

Kuroda, however, is guilty of taking things to the opposite extreme. Speaking in New York, he challenged the negativity shrouding Asia's biggest economy, saying he's "reasonably sure" China will grow between 6 percent and 7 percent this year and next -- a prediction that hardly anyone else has endorsed. Kuroda has effectively lashed his credibility, and his legacy, to China's trajectory. It's not hard to understand why he might have felt he had no choice.

Kuroda has to contend with three big problems. The first is demographics. Just as his predecessor Masaaki Shirakawa warned, Japan's consumer prices are bound to fall as its population ages. The second is a dearth of confidence: Monetary policy has been rendered comatose by the public's hesitance to borrow and banks' hesitance to lend. The third is China's slowdown -- a variable far beyond Tokyo's control, but no less critical for Japan's fate.

Prime Minister Shinzo Abe's revival program has three parts -- monetary stimulus, fiscal spending and deregulation -- but China's boom has always been the unofficial fourth. Until now, that is. China's outlook is deteriorating faster than most investors expected, causing an existential crisis for Abenomics.

The world needs to regain some perspective on China. As Nicholas Lardy of the Peterson Institute wrote in the New York Times, the data on China's economic fundamentals -- growth in wages, non-agriculture job growth, disposable income and household expenditures -- belie the ongoing meltdown hysteria. Naysayers, Lardy says, are making the mistake of interpreting China's data through the lens of its industrial sector. Yes, China's electricity rates are plummeting. But that's only because China is shifting to a services-based economy that's less power intensive than steel production or garment manufacturing.

The fact that China isn't crashing should put most of the world at ease. But even a moderate slowdown could prove a lethal blow for Japan. China's combination of deflation and currency devaluation is reducing the odds that the trillions of dollars of monetary stimulus Kuroda has pumped into markets since April 2013 will ever gain any traction.

The yen's 22 percent drop since Kuroda unleashed his quantitative-easing experiment pumped up profits at Toyota and Sony and fueled a rally in the Nikkei. It has failed, though, to encourage executives to increase wages or invest in new businesses.

Arguments for another dose of QE must be weighed against the costs. Rather than make Japan more resilient and competitive, Tokyo's weak-yen policy is increasing its dependence on exports -- in other words, China -- at the very worst time. The $5 trillion dollars of wealth that Shanghai-listed equities have erased since June is already more than Japan's annual output.

The better solution would be for Aso and Amari to stop bellyaching and get to work. If they'd spent the last 975 days loosening labor markets, building a pro-growth tax system, encouraging innovation and lowering trade tariffs, they wouldn't be so shaken by a spell of bad economic news in Beijing or tumbling stocks in Shanghai.

It stands to reason Kuroda is doing -- and saying -- everything he can to pierce the negativity fogging China. After all, a stable and vibrant China would do more for Japan than another QE jolt. Kuroda's happy talk about China goes hand-in-hand with his insistence, contrary to all evidence, that Japan is on pace to meet its 2 percent inflation target, and BOJ officials' excuse-making about how weak oil prices are to blame for their policy failures. But these kinds of statements pose risks of their own; if they prove to be illusory, they will put a serious dent in the BOJ's credibility.

The simple fact is that unless Japan tends to its own problems, it will inevitably get dragged ever deeper into China's. And in that case, Japan's leaders will have no one to blame but themselves.

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