Future PLAN orbat discussion

Richard Santos said:

The notion that private profit in the long run reduce productivity and efficiency while government price control and command allocation increases either reflects a very deep misunderstanding of the power of the market that can perhaps be traced to some remnant of the most flawed parts of Marxism.

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What we do see is that Chinese shipbuilding (both commercial and military) has a lot more competition than what we see in the USA.

Eg. In the military realm
Carriers: 1 US shipyard which has a monopoly versus 2 competing yards in China
Destroyers: China and the US both have 2 shipyards. But China has 7 destroyer contracts per year up for grabs, whilst the US only has 3 which have to be divided evenly to sustain the industrial base.
Frigates: China 3 shipyards versus US 2 shipyards. Again US orders have to be divided evenly because they don't have the volumes for orders to be redistributed.
etc etc

So whilst China has the shipbuilding volume to sustain multiple competing shipyards - the US military shipyards don't really face any competition.

Iron Man said:

I do hold both gold and silver, but try buying either in "PPP dollars". Again, the point is that commodities aren't much cheaper in China if at all. It's the labor, locality, and economies of scale. How much each of those contributes to a lower-costing radar, engine, or tank is anyone's guess. Certainly nobody on SDF is capable of making such an estimation, regardless of how many over-simplifications and gloss-overs are used.

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As with any advanced hi-tech good - the cost of raw materials is a lot less than the value added during the development/manufacturing process.

I think the Pentagon rule of thumb that a doubling of procurement results in a 20% cost decrease is valid enough.

And a comparison of published export costs for comparable warships and SAM costs (between US/China/Russia) is also valid in establishing approximate costs.

Iron Man said:

What I find to be unsupportable is the claim that China's economy is going to be twice as large as the US in 10-15 years and that somehow someway because of this China's navy is also going to be twice as large. Neither is true, at least not in the next "10-15 years".

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As was pointed out, China's economy is already 33% larger than America's and growing far faster. It will easily become twice as large as the US in 10-15 years. China's navy can be twice as large as America's (obviously there's a significant time lag as the investment must accumulate), whether it will or won't no one can speak to.

Iron Man said:

I do hold both gold and silver, but try buying either in "PPP dollars". Again, the point is that commodities aren't much cheaper in China if at all. It's the labor, locality, and economies of scale. How much each of those contributes to a lower-costing radar, engine, or tank is anyone's guess.

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Import costs are already factored into the PPP calculation. Producing the representative basket of goods and services certainly requires importation, and of course those imports aren't paid for in "PPP dollars". Certainly with an item like a tank the costs of labour and capital investment (amortized over each tank) far exceed the cost of importing the required iron ore from Australia as reflected in the steel. It's even more pronounced with technology, as capital and skilled personnel costs far outweigh commodity costs. Obviously the cost of each item will deviate from the pure PPP number, but if one wants to make the argument that the deviation is significant enough that the PPP approximation is invalid then one should present strong evidence, not idle conjecture.

AndrewS said:

As with any advanced hi-tech good - the cost of raw materials is a lot less than the value added during the development/manufacturing process.

I think the Pentagon rule of thumb that a doubling of procurement results in a 20% cost decrease is valid enough.

And a comparison of published export costs for comparable warships and SAM costs (between US/China/Russia) is also valid in establishing approximate costs.

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First, I think you have still been completely unable to demonstrate your unproven assumption that the Pentagon's rule of thumb for their acquisition costs has ANY application to PLAN's acquisition costs.

Second, China and US have no comparable warships. The 055 is not comparable to the Arleigh Burke or even the Ticonderga. Neither is the 052D comparable to the Arleigh Burke. Neither is the 054A comparable to the OHP or either of the LCS classes. Neither is 093XYZ comparable to Virginia. Neither is 016/017 comparable to Nimitz. Neither is 075 comparable to America. Neither is 071 comparable to LPD 17. You can see some of the external details like the electronics, but that will only get you 30-50% of the way to the total cost of a ship AT BEST. Many of the external systems don't even have known costs so you'd be totally shooting from the hip there. And if you're already shooting from the hip with external systems, the internals are a virtual black box for you. You have no idea what the cost or quality or milspec construction standards of the internals are, like the electrical system, damage control system, NBC system, redundancy, armoring, etc. etc. etc. This is so variable from class to class and from country to country that it is plain ludicrous to say that we can compare (e.g.) the 055 to the Arleigh Burke and make any meaningful cost comparisons, like somehow since the 055 costs less and packs more VLS cells that the 055 is therefore that much more cost-effective than the Arleigh Burke. Total nonsense. What would be more comparable are the Type 100 variants, including Hobart and Fridtjot Nansen, as well as the FREMM variants, the OHP variants, and in the future the Type 26 variants. They are almost the same ships and have mostly the same internals and virtually the same sizes. In the same vein, you're also comparing fleet sizes based on ships which, since they do not directly compare with each other, makes a navy-wide comparison based on ship numbers alone as clear as mud and as meaningful as counting traffic light changes. Not to mention the fact that the USN is top-heavy and the PLAN is bottom-heavy. In other words, "twice as many ships in X number of years" is almost as meaningless a statement as you can get.

ZeEa5KPul said:

Import costs are already factored into the PPP calculation. Producing the representative basket of goods and services certainly requires importation, and of course those imports aren't paid for in "PPP dollars". Certainly with an item like a tank the costs of labour and capital investment (amortized over each tank) far exceed the cost of importing the required iron ore from Australia as reflected in the steel. It's even more pronounced with technology, as capital and skilled personnel costs far outweigh commodity costs. Obviously the cost of each item will deviate from the pure PPP number, but if one wants to make the argument that the deviation is significant enough that the PPP approximation is invalid then one should present strong evidence, not idle conjecture.

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I don't think I need to be the one "presenting" squat to you, actually. PPP estimation is based on a "basket of goods" which would include things like (taken from Wikipedia):

• Food and Beverages (breakfast cereal, milk, coffee, chicken, wine, full service meals, snacks)
• Housing (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture)
• Apparel (men's shirts and sweaters, women's dresses, jewelry)
• Transportation (new vehicles, airline fares, gasoline, motor vehicle insurance)
• Medical Care (prescription drugs and medical supplies, physicians' services, eyeglasses and eye care, hospital services)
• Recreation (televisions, toys, pets and pet products, sports equipment, admissions)
• Education and Communication (college tuition, postage, telephone services, computer software and accessories)
• Other goods and Services (tobacco and smoking products, haircuts and other personal services, funeral expenses)

Do you see any 23mm autocannon rounds in that basket? No? How about a Z-10 rotor blade? No? How about a milspec gallium nitride MMIC? Or an HHQ-9B missile? Or a Type 99A tank? Or a Type 022 missile boat? Or a J-20 fighter? Or a Type 055 cruiser? Let's see, that would be no, no, no, no, no, and NO.

No, sport. It is up to YOU to present strong evidence that the basket of goods used to calculate PPP GDP has ANY significant relevance to military products, not idle conjecture.

China industrial output is the largest in the world in nominal terms, no ambiguity there. US overall GDP is higher soley based on services output, which any economist worth their salt will tell you can only be compared between large economies meaningfully on a PPP basis. GDP alone, either nominal nor PPP would only be a very rough measure for comparing the size of naval fleets a country can either build or support. Any two economies will enjoy comparative advantages relative to one another. Many variables and factors involved that none of us here is qualified to evaluate and assess.

FriedRiceNSpice said:

China industrial output is greater than the US in nominal terms, no ambiguity there. US GDP higher soley based on services output, which any economist worth their salt will tell you can only be compared between large economies meaningfully on a PPP basis.

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I'm not even sure what you're claiming here. The syntax of the two sentences do not add up to a coherent statement.

Chinese industrial output is greater than the US in nominal terms. Ok, fine. Maybe. Let's just assume you are correct for the moment. US GDP is higher than China's GDP based solely on services output. Ok, fine. Maybe. Then what? The latter half of your second sentence does not follow naturally from the first half. What item "can only be compared between large economies meaningfully on a PPP basis"? Do mean "services output"? "Industrial output"? Overall GDP? If so, what relevance does this have to do with this discussion so far, especially in regards to military hardware costs? Second, the basket of goods used to determine PPP estimates contains less than a third of categories which could be thought of as "industrial output", which would put the lie to your claim (are you even making this claim?) that PPP GDP is primarily determined by industrial output, because I guess that is where China beats the US??? LOL

Iron how would you know Type 055 "internals" to assert "Total nonsense." [in the context of price comparison to foreign large surface combatants] in this chunk:

Iron Man said:

... You have no idea what the cost or quality or milspec construction standards of the internals are, like the electrical system, damage control system, NBC system, redundancy, armoring, etc. etc. etc. This is so variable from class to class and from country to country that it is plain ludicrous to say that we can compare (e.g.) the 055 to the Arleigh Burke and make any meaningful cost comparisons, like somehow since the 055 costs less and packs more VLS cells that the 055 is therefore that much more cost-effective than the Arleigh Burke. Total nonsense. What would be more comparable are the Type 100 variants, including Hobart and Fridtjot Nansen, as well as the FREMM variants, the OHP variants, and in the future the Type 26 variants. They are almost the same ships and have mostly the same internals and virtually the same sizes. ...

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Iron Man said:

I'm not even sure what you're claiming here. The syntax of the two sentences do not add up to a coherent statement.

Chinese industrial output is greater than the US in nominal terms. Ok, fine. Maybe. Let's just assume you are correct for the moment. US GDP is higher than China's GDP based solely on services output. Ok, fine. Maybe. Then what? The latter half of your second sentence does not follow naturally from the first half. What item "can only be compared between large economies meaningfully on a PPP basis"? Do mean "services output"? "Industrial output"? Overall GDP? If so, what relevance does this have to do with this discussion so far, especially in regards to military hardware costs? Second, the basket of goods used to determine PPP estimates contains less than a third of categories which could be thought of as "industrial output", which would put the lie to your claim (are you even making this claim?) that PPP GDP is primarily determined by industrial output, because I guess that is where China beats the US??? LOL

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1) Total GDP = GDP from agriculture + GDP from industry + GDP from services. 2) China has the largest GDP from industry in nominal terms. Not "maybe", it's been a fact for the past 5+ yrs... 3) There is a rationale for using nominal figures for comparing GDP from industry, as inputs and outputs are generally tradable on global markets 4) GDP from services are by nature generally non tradable and there is consensus that PPP is more accurate measure for comparing economies that are predominantly service dominated. 5) A country with larger nominal industrial GDP can in general be inferred to be able to support a larger capacity for military production. 6) More accurate analysis would require looking at comparative advantages, which at least superficially favors China for shipbuilding and electronics, but giving a more accurate and deeper assessment is at least beyond my knowledge.