Chinese Economics Thread

[Autumn Child]

well a large part of China's economy is still state-owned, especially some its largest firms. so what you are gonna end up gettin is state-owned economy beating down privately-owned counterparts because these firms get backed by the government and they operate under market principles.
if you look at Guangdong, they wanna take this opportunity (as a lot of the low-end manufacturing firms are closing down) to accomodate for more advanced industries. that's a model that China seem to want to use, its similar to the Japanese model because the government is still doing the overall planning, but different in that the Chinese want more internal competition and innovation, which is actually borrowed from the US. but to synthesize these you need a Chinese way of doing things.

the Japanese model doesnt suck at all. afterall, toyota has been beating the big three's a** for quite a while now. some US firms tried to adopt the Japanese model but failed. the structure is a bit rigid that's their biggest problem,but its extremely effective.

the American is good but we have to remember that these guys are profit maximizers. but what is rational for individuals may not be rational for the whole, what you get is exactly what you see, firms (like enron and even the automakers) stopped making profits on producing actual goods and start gambling with derivatives. i wouldnt call that shady deal but i think its worse.

Toyota is not bad....but its similar to a state owned enterprise considering the huge govt support it enjoyed in the past. Can Japan produce google? amazon? ebay?

Notice that japan is not strong in new industry. why? because their culture does not promote entrepreneurship. they are good with technical details but lack the risk taking culture and motivation to be entrepreuneur. Their social system encourage their people to be professionals not entreprenor. Japan will be stuck with the electronic and car industry, which is rapidly losing its edge to new comers like chinese and korean companies. for example, byd took a risky move to produce electric car when other car giants still do not have a production model yet. Another example is Alibaba, Chinese entrepreunors are quick to exploit new technology for business gain. How about suntech or huawei? there so many example i can give you where japan could have dominant market share in certain industry by now. Instead, only their cars and electronic product made progress. This is part of the reason why japan will see an L shape gdp growth for a very looooong time.

 

[pla101prc]

China have enough check and balance, but very different than western countries. Some laws are intentionaly left porous because the govt either give the company transition time for change or its for the benefit of the "system". who make sure the law enforcement agency do their job? the citizens do. not through vote but through discontent and "Mass Incidents". If the chinese govt is a pure dictator, then they would not care about its citizen at all. Even within the communist party there are check and balance mechanism, so there is no real dictator in china. Its the system that runs China. The fact is that the govt fear the people. In the history of China, the citizen brings down the govt much more often than any outside forces.

My point is western democracy won't work with China and most asian countries...unless you want china to be like thailand and you want the whole world to experience another economic crisis. China has unique culture with strong/ancient traditions that cannot be changed easily. Any solutions must fit China not the other way around.

lmao that reminds me of this formal debate i had with this person over the universality of the western democratic system, i told him that the two most successful countries in Asia are Japan and Singapore...i won:roll:

 

[RedMercury]

I wouldn't say Japan is just autos and electronics. For one thing, Japanese robotics is leading edge.

 

[Engineer]

Bingo! All those bad things happenning in China is a result of lack of checks and balances. It is only human nature to find loop holes and shortcuts whenever possible. That's why lawyers make so much money in Western nations. In China, laws are incomplete. People can find much more loop holes to achieve their goals. I think it is a matter of making laws and enforcing them. But who makes sure law enforcement agencies do their job properly? Well, that is where democracy comes in handy.

The problem in China is that people are too quick when it comes to defeating regulations. For example, you'd think people would stop watering down milk when the government banned it. Nope, they used melamine to defeat the protein tests instead. And now that melamine is banned, you can be sure that they will be using even more deadly chemicals as subsitute.

If ballots have more power, then you can bet that plenty of people will find ways to make money off of those ballots, which means corruptions will only get worst.

There is a saying in Chinese that describe the situation perfectly:
"道高一尺，魔高一丈"
"People will always find an end-run around the rules."

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[crobato]

that might be the case at local level. on the national level, private firms wont be as influential as a state firms. most obvious case, Li Peng's daughter.

Not sure about that, considering Grace Semiconductor and China Mobile.

 

[crobato]

I agree that private company do not have as much advantage over large SOE. SOE are larger, ussually have large market share and can receive financial and policy support much more easily than private company. Most large private company are also obidient of govt orders. for example rescently the munciple govt "ordered/urged" some large private comapany in shanghai to help out with growing employment problem. The private company obeyed and recruited fresh graduates even though they do not need the extra work force. The cost of maintaining extra work force is worth it considering the potential policy "pay off" from the govt such as land rights, etc.

Its called "I'll scratch your back, you scratch mine."

When you do a favor, the other guy has an IOU on favors, which might come in handy when you collect at later date. This is a very Asian way in doing things.

However, the tough business landscape will benefit china as a whole since private company have more pressure to innovate, take risk and be cost efficient. Already we see emerging private company like huawei that can rival large SOE in term of their brand. In the next few years, there will be a huge wave on private enterprise that is on par with multinationals, but with unique chinese touch.

I would say these are the emerging brands from China.

Computing:
Lenovo

Telecom:
Huawei
ZTE

Appliances:
Haier
Greer
TCL

Car:
Chery

Battery:
BYD

 

[crobato]

lmao that reminds me of this formal debate i had with this person over the universality of the western democratic system, i told him that the two most successful countries in Asia are Japan and Singapore...i won:roll:

Success for me is poverty elimination. Both countries would be right in the spot, with Taiwan and S. Korea following up closely. Hong Kong isn't considered a country but as a political entity, it is held up as the Capitalist paradise---remember the very first episode of Milton Friedman's "Free to Choose"? This documentary became the economic bible of social conservatives and libertarians in the US during the Reagan era.

 

[pla101prc]

i would say Japan is gettin out of this L shaped recession if they can solve the problems that i stated regarding the leadership structure. they have a well educated population, well trained and disciplined labour force, highest commitment to R&D in the world, leaders in many fields...the biggest problem is that its structure is so rigid that younger generations simply lost motivation, they grew up in a comfortable environment but have lil hope of becoming successful. so the population is diligent but unmotivated. the US is the exact opposite, even if you are a gangsta you can still rap your way onto the rich ppl's list...they think. but yeah if the Japanese have the same kind of national morale as they once did during the meiji era (which they dont), economic recession aint a problem at all, they'll turn it around in 5 years.

 

[Autumn Child]

I wouldn't say Japan is just autos and electronics. For one thing, Japanese robotics is leading edge.

correct. I cannot comment on industrial robots because i don't know the market. However, I do know that American robots are far more practical than japanese robot. Americans are the leading nations that make use of robots outside manufacturing. we all know how the US use robot in the military, there are also robots that does house chores in the US. Japan's Asimo or similar robots are still not practical enough for cosumer or military use. Japan made a huge investment in complex robotic technology that have not payed off yet. Seems like they are fixated on making human-like robots...probably inspired by their robot animation culture.

 

[Autumn Child]

i would say Japan is gettin out of this L shaped recession if they can solve the problems that i stated regarding the leadership structure. they have a well educated population, well trained and disciplined labour force, highest commitment to R&D in the world, leaders in many fields...the biggest problem is that its structure is so rigid that younger generations simply lost motivation, they grew up in a comfortable environment but have lil hope of becoming successful. so the population is diligent but unmotivated. the US is the exact opposite, even if you are a gangsta you can still rap your way onto the rich ppl's list...they think. but yeah if the Japanese have the same kind of national morale as they once did during the meiji era (which they dont), economic recession aint a problem at all, they'll turn it around in 5 years.

I am not so sure about that. Having the bigest R&D does not equate with entrepreneurship. It seems to me that the japanese are doing mostly sustaining R&D for their established core products but not enough disruptive R&D that can target non-consumptions and displaced established tech.

The americans still have some "cowboy" mentality and some still willing to take risk and monetize their inventions. Entrepreneurs think differently than skilled workers. some cultures promote entrepreneurship while others subdue it. We can also see why overseas chinese are setting up business whereever they live. Take south east asia for example, overseas chinese are wealthier and have huge economic clout because the native south east asian do not have a culture that promotes entrepreneurship. as a result the natives are outcompeted and the seed of hatred/jealousy is sown.

My point is, culture plays a huge part in entrepreneurism, maybe more important than R&D. Without reforms and entrepreneurs, japan is doomed to an L-shape economy.