Chinese Economics Thread

[tphuang]

https://twitter.com/i/web/status/2056745086000517165

So, China's energy demand was up 6% YoY in Apr (with just 2.5% of consumption from Data center and EVs). But of course, China is collapsing according to all the experts. Now, I don't think retail sales figures are good at all, but China is a big and complicated economy. Probably more than your average Twitter crowd understands.

 

[jli88]

https://twitter.com/i/web/status/2056745086000517165

So, China's energy demand was up 6% YoY in Apr (with just 2.5% of consumption from Data center and EVs). But of course, China is collapsing according to all the experts. Now, I don't think retail sales figures are good at all, but China is a big and complicated economy. Probably more than your average Twitter crowd understands.

Parts of the economy are doing good (April exports rising 20%, industrial production at 4+%), coupled with electric transition where electricity displaces fuel as form of energy (EVs, NEV trucks etc.), the electricity consumption can keep increasing, despite clear stress in various significant parts of the economy.

Just imagine, if the other parts of the economy were doing well-> i.e. the youth unemployment rate was modest, retail sales were growing robustly, consumption was increasing, births were rising. In this scenario, the electricity consumption would be increasing at double digits.

Since the economy clearly has so much potential to do even better, why waste it?

Chinese economy can still grow at high single, or even double digits if the other parts of the economy also fire.

 

[tphuang]

Parts of the economy are doing good (April exports rising 20%, industrial production at 4+%), coupled with electric transition where electricity displaces fuel as form of energy (EVs, NEV trucks etc.), the electricity consumption can keep increasing, despite clear stress in various significant parts of the economy.

Just imagine, if the other parts of the economy were doing well-> i.e. the youth unemployment rate was modest, retail sales were growing robustly, consumption was increasing, births were rising. In this scenario, the electricity consumption would be increasing at double digits.

Since the economy clearly has so much potential to do even better, why waste it?

Chinese economy can still grow at high single, or even double digits if the other parts of the economy also fire.

I'm not sure what your point is. Economy is never going to grow linearly. You are going to have higher point of growth and lower point of growth. I don't see how China can get back to 8-9% annually. People have to readjust their expectations accordingly.

 

[fishrubber99]

Just imagine, if the other parts of the economy were doing well-> i.e. the youth unemployment rate was modest, retail sales were growing robustly, consumption was increasing, births were rising. In this scenario, the electricity consumption would be increasing at double digits.

If my mother had two wheels she'd be a bike. What's been point of this comment exactly? Do you think the China's leadership doesn't want retail sales to grow briskly and youth unemployment to fall? The Chinese government has to deal with material reality in order to make economic decisions, not make believe. The issues of a massive and incredibly complicated economy like China's can't be solved with "just print more money and do more stimulus", otherwise they would just do that.

 

[jli88]

If my mother had two wheels she'd be a bike. What's been point of this comment exactly? Do you think the China's leadership doesn't want retail sales to grow briskly and youth unemployment to fall? The Chinese government has to deal with material reality in order to make economic decisions, not make believe. The issues of a massive and incredibly complicated economy like China's can't be solved with "just print more money and do more stimulus", otherwise they would just do that.

The point of the comment is to point out precisely that a stimulus is needed, desirable, and feasible.

1. Stimulus is needed:
   To handle the high youth unemployment rate, the births crisis, the sagging internal demand, tech hurdles, low inflation and the overall negative sentiment in the economy.
2. Stimulus is desirable
   These problems of high youth unemployment rate, births crisis, and sagging internal demand risk becoming permanent features of the economy/country if some major step is not taken. This is demonstrated by China's own experience post 2008 financial collapse, when a stimulus laid the foundation for current China.
3. Stimulus is feasible
   China has extremely high savings rate, enough capital, low inflation, currency appreciation pressure, huge trade surplus. All macro economic indicators allow a major stimulus. Any country would have done it in China's place.
4. Stimulus should be targeted
   I am not asking money to be printed and just distributed randomly. I am more of the thought that money should be printed and distributed primarily to:
   1. Capitalize industry funds and VCs so that they can put more risk money in China's tech ecosystem
   2. Launch major industrial policy akin to the New Energy industrial policy that ran from 2005-2020 which made China a world leader in EV, batteries, solar, etc.
   3. Money for supporting childcare and births to mothers to handle the births crisis
   4. Put a floor to property collapse, buy property at scale and distribute it to mothers/families who are giving births
   5. Launch new age SOEs that cover missing niches in the industry. Like you need a firm to compete with Thermofischer for example.
   6. Improve pay massively for employees

I'm not sure what your point is. Economy is never going to grow linearly. You are going to have higher point of growth and lower point of growth. I don't see how China can get back to 8-9% annually. People have to readjust their expectations accordingly.

I am not as concerned about the growth rate, as much as I am concerned about the lagging areas of the economy. Attention needs to be paid to handle the youth unemployment issue, address the negative sentiment that is brewing in China's population today, and handle the sagging domestic demand. Along with that it's high time to urgently deal with the births crisis, which is going to become an even bigger issue in near term, because 50% of Chinese young females surveyed don't want any children at all!

My estimate is that with a properly targeted stimulus, these issues can be handled, along with a rise in growth rates.

 

[tphuang]

I am not as concerned about the growth rate, as much as I am concerned about the lagging areas of the economy. Attention needs to be paid to handle the youth unemployment issue, address the negative sentiment that is brewing in China's population today, and handle the sagging domestic demand. Along with that it's high time to urgently deal with the births crisis, which is going to become an even bigger issue in near term, because 50% of Chinese young females surveyed don't want any children at all!

My estimate is that with a properly targeted stimulus, these issues can be handled, along with a rise in growth rates.

I don't know why you think it's appropriate to bring birth rate to this thread, but we've had plenty of threads de-railed on similar discussions.

So, as a whole, I always tell people to stay on topic and that's what you should do.

 

[siegecrossbow]

https://twitter.com/i/web/status/2056745086000517165

So, China's energy demand was up 6% YoY in Apr (with just 2.5% of consumption from Data center and EVs). But of course, China is collapsing according to all the experts. Now, I don't think retail sales figures are good at all, but China is a big and complicated economy. Probably more than your average Twitter crowd understands.

1) they are not serious Econ experts.
2) they prescribe to the Milton Freeman model on economics that’s actually causing immense harm to everyday people at the expense of billionaire portfolios.
3) physical goods and services consumed is always a better measure of real economic activities than hyped valuation.

 

[bsdnf]

The central government is unlikely to implement large-scale stimulus measures; it hasn't done so even in the 2024-25, so how could it possibly be now?

 

[tokenanalyst]

The point of the comment is to point out precisely that a stimulus is needed, desirable, and feasible.

1. Stimulus is needed:
   To handle the high youth unemployment rate, the births crisis, the sagging internal demand, tech hurdles, low inflation and the overall negative sentiment in the economy.
2. Stimulus is desirable
   These problems of high youth unemployment rate, births crisis, and sagging internal demand risk becoming permanent features of the economy/country if some major step is not taken. This is demonstrated by China's own experience post 2008 financial collapse, when a stimulus laid the foundation for current China.
3. Stimulus is feasible
   China has extremely high savings rate, enough capital, low inflation, currency appreciation pressure, huge trade surplus. All macro economic indicators allow a major stimulus. Any country would have done it in China's place.
4. Stimulus should be targeted
   I am not asking money to be printed and just distributed randomly. I am more of the thought that money should be printed and distributed primarily to:
   1. Capitalize industry funds and VCs so that they can put more risk money in China's tech ecosystem
   2. Launch major industrial policy akin to the New Energy industrial policy that ran from 2005-2020 which made China a world leader in EV, batteries, solar, etc.
   3. Money for supporting childcare and births to mothers to handle the births crisis
   4. Put a floor to property collapse, buy property at scale and distribute it to mothers/families who are giving births
   5. Launch new age SOEs that cover missing niches in the industry. Like you need a firm to compete with Thermofischer for example.
   6. Improve pay massively for employees

I am not as concerned about the growth rate, as much as I am concerned about the lagging areas of the economy. Attention needs to be paid to handle the youth unemployment issue, address the negative sentiment that is brewing in China's population today, and handle the sagging domestic demand. Along with that it's high time to urgently deal with the births crisis, which is going to become an even bigger issue in near term, because 50% of Chinese young females surveyed don't want any children at all!

My estimate is that with a properly targeted stimulus, these issues can be handled, along with a rise in growth rates.

Manufacturing and service indexes looks solid, exports and import also are solid, high tech sectors like semiconductor, AI, IT, EVs are growing and solid, new orders are solid, consumer confidence looks solid, electricity consumption is solid, Inflation is increasing but not too high in the case of the energy crisis get worse, the country will be able to cope with inflation better than the Europe or the US.
Retail sector has been up and down since Covid but also more people are buying online after 2020. consumer debt is decreasing thanks to lower inflation.
There no reason why the country should use a bazooka to stimulate the economy, they are focus more on quality grow rather than quantity grow, making that the interior grow to catch up with coastal provinces, poverty alleviation and moving the up industrial and service value chain.

A bazooka stimulus will not accomplish non of that. We probably are heading to a GLOBAL economic crisis that will be bigger the 2008 financial crisis, bazooka stimulus should be let to those moments because once you use your weapons prematurely you will have nothing left.

 

[tokenanalyst]

I don't see how China can get back to 8-9% annually. People have to readjust their expectations accordingly.

Neither they should. The grow was coming at the cost of heavy imbalances and environmental damage. 5% of quality growth is better than 9% of imbalance low quality growth.