Chinese Economics Thread

[galvatron]

India is forcing international companies that want to sell in India to make them in India hence "Make in India". Saying that India is attractive for manufacturers because manufacturing is happening now because they have to in order to be allowed to sell in India is spin.

This is going to run afoul of US national security, since they are trying to reshore their industries. India is now target of tariffs and sanctions. Sooner or later they will realize that.

 

[galvatron]

Posted this in the Indian Economics thread, but thought it was relevant to China:

How likely do you think India will be successful in attracting manufacturing?

Apparently, they have already attracted over Foxconn, Pegatron, Samsung, etc for phone manufacturing with their recent PLI program. Knowing Foxconn's history (closed in Brazil, scammed Wisconsin, and they promised 1 million Indian workers back in 2015, what happened lol?), one can be skeptical.
Source:

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(Foxconn to build 12 factories, employ 1 million in India by 2020)

But I don't think China should take India lightly. Manufacturing is a sector for strategic geopolitical importance (look at how China has leverage over the US due to its immense supply chain capacity and electronics manufacturing), and its not something China should just give up and sacrifice for the misguided pursuit of a predominantly service economy (look how well that suited the US in this pandemic). In my view, China needs to do whatever it can to keep manufacturers away from India at all costs (toys, shoes and shirts can go, but electronics, cars, industrial equipment, and components must stay), whether thru increased subsidies or by providing mass automation infrastructure/investments, in order to keep as much of global manufacturing as possible within their borders. If Xiaomi can do it in China with fully automated smartphone assembly, Foxconn certainly can, and with the Chinese government's help, they can be less likely to leave en masse (although preferably, the government would sponsor and support Luxshare to the point it can dethrone Foxconn, which has gone lazy in the past several years being unwilling to invest in automation and industrial upgrading, preferring to fall back on cheap, exploitable workers)

How about BYD? Are they into contract manufacturing?

 

[machupicu]

Recently lots of news about China's investment in US Treasury bills, which is over $1 trillions, and that China plans to bring it down to $800 billions.. so it looks like,
. By the end of perhaps 2021, usd/CNY rate will go to around 6.0
. After reaching $800B, maybe they will sell some more to $600B
.by 2025, usdcny rate would be around 5.0??

 

[emblem21]

Recently lots of news about China's investment in US Treasury bills, which is over $1 trillions, and that China plans to bring it down to $800 billions.. so it looks like,
. By the end of perhaps 2021, usd/CNY rate will go to around 6.0
. After reaching $800B, maybe they will sell some more to $600B
.by 2025, usdcny rate would be around 5.0??

Well, the USA has made it self clear that they will not sell what China wants,, hence China is making it clear, why bother having a worthless currency in our nation that is going to buy nothing and hence is now slowly selling these bills which will obviously begin the process to the end of the US dollar as a reserve currency.

Unless the US wants to become a third world country in quick succession sooner and given that Trump doesn't seem to care about the consequences, it certainly will, they will need a miracle to help them in this situation. The USA will not be able to fund its wars or any other development in regards to innovation since the only reason they can live beyond its means is due to the world reserve currency. Also, China would then have no obligation to sell then rare earths then hence making things even worse (with regards to weapons development and also meaning that the USA would have to rebuild there own processing plants for rare earths will money they don't even have and no nation would be willing to lend them. Also, if there currency becomes trash officially, no nation would be bother paying for such liabilities that will drain there reserves hence these American solders would have to be sent away to avoid any further money drain. This will ultimately create a broken nation with no hope or a nation that is on fire literally burning itself to death like a crazy monk setting them self on fire.

Also with this in mind, China can continue its development as a way to weather the fallout, but the USA has never envisioned a situation where there dollars are going to lose its world reserve status under a president/government that has no planning capacity. This didn't have to be this way but now, America has finally signaled its own end, hence why the European nations refuse to sanction Iran again just recently at the UN since everyone can see how weak the US is right now (being grounded by a pandemic that they simply are trying to ignore reality to control. Once the US dollar dies, any loyalty that Europe has to the US will slowly die with it (I mean they are threatening many nations of any choices they don't like) and progressively the entire world as well (since is there a point in selling goods to a nation whose currency is backed by nothing by debt.

 

[localizer]

Recently lots of news about China's investment in US Treasury bills, which is over $1 trillions, and that China plans to bring it down to $800 billions.. so it looks like,
. By the end of perhaps 2021, usd/CNY rate will go to around 6.0
. After reaching $800B, maybe they will sell some more to $600B
.by 2025, usdcny rate would be around 5.0??

China can loosen capital flight rules to boost USD value.

 

[hullopilllw]

Posted this in the Indian Economics thread, but thought it was relevant to China:

How likely do you think India will be successful in attracting manufacturing?

Apparently, they have already attracted over Foxconn, Pegatron, Samsung, etc for phone manufacturing with their recent PLI program. Knowing Foxconn's history (closed in Brazil, scammed Wisconsin, and they promised 1 million Indian workers back in 2015, what happened lol?), one can be skeptical.
Source:

Please, Log in or Register to view URLs content!

(Foxconn to build 12 factories, employ 1 million in India by 2020)

But I don't think China should take India lightly. Manufacturing is a sector for strategic geopolitical importance (look at how China has leverage over the US due to its immense supply chain capacity and electronics manufacturing), and its not something China should just give up and sacrifice for the misguided pursuit of a predominantly service economy (look how well that suited the US in this pandemic). In my view, China needs to do whatever it can to keep manufacturers away from India at all costs (toys, shoes and shirts can go, but electronics, cars, industrial equipment, and components must stay), whether thru increased subsidies or by providing mass automation infrastructure/investments, in order to keep as much of global manufacturing as possible within their borders. If Xiaomi can do it in China with fully automated smartphone assembly, Foxconn certainly can, and with the Chinese government's help, they can be less likely to leave en masse (although preferably, the government would sponsor and support Luxshare to the point it can dethrone Foxconn, which has gone lazy in the past several years being unwilling to invest in automation and industrial upgrading, preferring to fall back on cheap, exploitable workers)

You are not stating anything which the Chinese government is not aware of/not taking actions to prepare for. They already foresaw it ages ago.

 

[galvatron]

Recently lots of news about China's investment in US Treasury bills, which is over $1 trillions, and that China plans to bring it down to $800 billions.. so it looks like,
. By the end of perhaps 2021, usd/CNY rate will go to around 6.0
. After reaching $800B, maybe they will sell some more to $600B
.by 2025, usdcny rate would be around 5.0??

Many other countries will start dumping the US$ when they see China is doing it.

 

[localizer]

Exports 9.5% increased, imports down. Great !! Hope that import spending when to domestic producers.

 

[j17wang]

Posted this in the Indian Economics thread, but thought it was relevant to China:

How likely do you think India will be successful in attracting manufacturing?

Apparently, they have already attracted over Foxconn, Pegatron, Samsung, etc for phone manufacturing with their recent PLI program. Knowing Foxconn's history (closed in Brazil, scammed Wisconsin, and they promised 1 million Indian workers back in 2015, what happened lol?), one can be skeptical.
Source:

Please, Log in or Register to view URLs content!

(Foxconn to build 12 factories, employ 1 million in India by 2020)

But I don't think China should take India lightly. Manufacturing is a sector for strategic geopolitical importance (look at how China has leverage over the US due to its immense supply chain capacity and electronics manufacturing), and its not something China should just give up and sacrifice for the misguided pursuit of a predominantly service economy (look how well that suited the US in this pandemic). In my view, China needs to do whatever it can to keep manufacturers away from India at all costs (toys, shoes and shirts can go, but electronics, cars, industrial equipment, and components must stay), whether thru increased subsidies or by providing mass automation infrastructure/investments, in order to keep as much of global manufacturing as possible within their borders. If Xiaomi can do it in China with fully automated smartphone assembly, Foxconn certainly can, and with the Chinese government's help, they can be less likely to leave en masse (although preferably, the government would sponsor and support Luxshare to the point it can dethrone Foxconn, which has gone lazy in the past several years being unwilling to invest in automation and industrial upgrading, preferring to fall back on cheap, exploitable workers)

To answer your question:

Cars: china doesn't export alot to the west anyways, its mostly to LATAM and AFRICA, but very small amount compared to china's domestic car industry. Even under the worst case scenario, Chinese exports of EVs will likely increase dramatically to more than offset declines in ICE exports, which arent that impressive anyways.

Industrial equipment: china will lose some sales of high-end equipment (robots/3d printers/CNC machines) back to the west which currently aren't that much discounted anyways in china compared to west, but africa/latam/SEA will need alot more of these in the future, as well as massive demand for import substitution in china's domestic market so industrial sector should remain flat.

Electronics: china will lose some, frankly i don't think china should have been assembling 60% of the worlds electronics and cell phones anyways -> china will be perfectly fine if this get cut in half, these aren't particularly high value products though, only marginally better than those shoes, shirts, and toys, perfectly reasonable to assume a couple million jobs will be lost here though.

Components: i think china can still use certain technological advantages to become component suppliers to india/vietnam/turkey... just the same way japan and south korea continues supply certain components like chips.

Overall view: China's future exports may decrease however its overall value added component will likely continue to increase. For example, even today you likely have much more stuff from china lying around, and it would be almost impossible to realize that by value german products are still equivalent to about 60% of china's overall exports (very impressive for a country of 80 million vs a country of 1.4 billion). China should't fight tooth and nail to keep foxconn and phones. If you look at consumer trends, china needs to maintain dominance in scooters, electric skateboards, VR headsets, augmented displays, quadruped toy robots... and then pass that off to the indians/Vietnamese once the margins are squeezed. We should be disappointed if china is still assembling most of the worlds cell phones and laptops in 5 years, thats nothing to be proud of.

 

[AndrewS]

Electronics: china will lose some, frankly i don't think china should have been assembling 60% of the worlds electronics and cell phones anyways -> china will be perfectly fine if this get cut in half, these aren't particularly high value products though, only marginally better than those shoes, shirts, and toys, perfectly reasonable to assume a couple million jobs will be lost here though.

Losing electronics assembly isn't the issue.
What is important is the actual R&D and production of electronics components, which is higher margin.