Chinese Economics Thread
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Yup no reason to disagree with these numbers over the long term, I would add Wind in too. However wind isn't an industry where China has cornered the market, Vestas, GE, Siemens Gamesa are all quite competitive as well.
I'm actually surprised you haven't brought up hydrogen because of how important it is to enable transportation via ammonia. I've met some Korean hydrogen players and they clearly stated that they believe the industry could be the "next semiconductor industry". Too early to tell when electrolysers and fuel cells become cost efficient though.
Now that you asked directly my answer is I do. I have investment too. And no unlike you I don't brag about it because it does not make my point any less or more valid.
And in a similar vein, I don't really care if you invest or not. Your argument is still the same and validity unaffected. If you were wrong and manage to earn more money I am not going to seeth like a loser. I am going to say good for you dude.
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Weren't you the first person who called me SleepyStudent? I had to ask someone what that meant and now I understand that is supposed to be an insult.
As far as I can observe, you're the first person here who devolved into 'character assassination' when presented with an argument that went contrary to your precious beliefs. I've gone back and forth with @AndrewS and we've been able to keep things quite cordial. Disagreements sure but never character attacks.
So it would really appear to me that you're the one seething like a loser.
Offshore wind is not yet competitive, plus the number of suitable locations on the Chinese coast is limited. So I don't see it becoming a trillion RMB industry.
Onshore wind is already cost-competitive, but suffers from the same problem of limited operating locations which are also far away from end demand.
But with solar, you can do smaller-scale installations. Yes, this works out as more expensive, but you can bypass all the grid costs and avoid the costs of upgrading the power grid to handle all the EVs that are coming. In the UK for example, if all cars are electric, it will roughly double electricity demand.
I just don't see enough opportunity for electrolysers and fuel cells to become more efficient, because these are essentially mechanical processes. Physics and chemical reactions place hard limitations on how much these can improve. You use electricity to split water into the components of hydrogen and oxygen. You compress it, transport it, then "burn" it in a fuel cell or engine to produce heat. So you can see how there is comparatively little room for improvement.
You have a similar thing with Ammonia, which is produced by industrial processes.
In comparison, solar panels are a type of silicon semiconductor, and there are many possible combinations of materials and design improvements (down to the atomic level) still to be tried out or implemented.
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Then you need batteries to store this intermittent electricity.
A similar situation exists with battery technology in terms of materials and design. Lithium too expensive? No problem, Sodium is available. How do we stop dendrites growing an atomic level which reduces the lifespan and charging speed of a battery? Dope with different elements or change the atomic thickness of various battery layers. How do we redesign the battery to ensure the Electro-magnetic flux (the electromagnetic field lines) transfer energy more efficiently inside the battery? It's not actually the electrons that transfer energy.
You can see there are so many more possibilities available to improve or drive down cost.
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So the rate of possible improvements with solar and batteries is much greater than with Hydrogen/Ammonia.
Plus solar and batteries are already competitive and deployed at scale, which further amplifies their advantage.
Can you walk through the math on electricity demand doubling? Norway has not seen its electricity demand grow significantly despite having the highest EV penetration in the world.
Also residential rooftop is suspect - the math breaks down quickly unless everyone can go fully off the grid. Majority of the cost of electricity is in grid maintenance. The natural answer is storage but I don't think there is enough space to put batteries in to allow buildings to go off grid. Whatever costs you get at a residential level, things are cheaper at an utility scale; which necessitates the maintenance of the grid and makes it tough public policy to allow people to go off grid.
I called you SleepyStudent not as an insult per se, more like I genuinely thought you were SleepyStudent coming back again (which he has many times). But mods and others called me out on it and I acknowledged I was mistaken earlier. I could go on about why you reminded me of him but that is off-topic and mods already warned me so I will not discuss it here further.
Back on topic. I actually do not believe that strongly about 4.5%/5.5%/6.5% gdp. There are many factors that affect my investments more than 2% of overall gdp growth. Real estate for example is almost entirely at the mercy of central government decision. It could grow back to 2021 in matter of weeks if government relax it, or tank even further if they put further restriction.
Once I realized you were not Sleepy I really don't have much against you. I just thought it was really odd how you are super confident about your assessment against the usual take here. I am not here to convince you otherwise. There is insufficient data for me to make such strong assessment. Time will tell who is right.
I'm confident against extreme outcomes. Your point on "real estate at the mercy of the central government" is a valid point....if this was 2013 as opposed to 2023.
I can tell you that the central government has been relaxing housing policy since middle of 2022, relaxing 2nd house purchase restrictions, allowing local governments to reduce down payment restrictions, *and* cutting LPR/RRR at the same time via PBoC. Meanwhile Liu He is at Davos telling everyone how important it is for housing to develop in a healthy manner.
Yet.....the sales data trend has not improved in aggregate. Based on what I see for the first 3 weeks of 2023 the YoY comparisons are still deteriorating in Tier 2/3 cities (like...-20% down YoY) and only turned positive in Tier 1 in the third week.
Soooo......
Either:
1) Things are really bad and they are really trying to make sure the real estate industry doesn't completely have the bottom fall out ("we went too far with bubble deflation we need you guys to not all go bankrupt")
or
2) Things aren't bad and they are trying to get the bubble going again in complete 180 to what they've done in the past 2.5 years...("sorry guys we are complete idiots we are going back to housing speculation days")
Which one is more likely?
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I was reading about the Chinese economy, and I saw some Western analysts saying that China's economic data isn't accurate because local officials falsify data to paint themselves in a better light, and that cascades all the way up to the national level. Is this true?
What's the proof?
Before you say satellite imaging, understand that China has half the world's ISR satellites, so if the US can see it, the national level government has seen it earlier since they not only have superior imagery with higher update frequency, they also have correlation with non imaging data that they can call up for an audit any time they want, providing for a far more accurate view.