Chinese Economics Thread

Janiz said:

That NBS isn't independent body and will write whatever the party wants. Enough?

And yeah. They accept bribes as well.

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I asked your reasoning for skepticism of China's National Bureau of Statistics, and you listed two important items. Both are true, but on their own misleading without proper context. So, here are some context.

The NBS isn't an independent body, and that's a fact, but it doesn't actually impede its ability to carry out the primary mission of providing relatively accurate and reliable data/information to the ruling elites. The reasons are 1) Chinese leaders need accurate facts and figures to make decisions that keep them in power; 2) reporting accuracy is now part of career evaluations for all CCP officials; 3) independent, non-China based studies show aggregate national numbers are relatively accurate, but province and municipal figures are less so; and 4) sophisticated financial algorithms that flagged the Greek government for false reporting gave passing grade to China's official numbers.

As for accepting bribes, it should be smitten wherever found, and Xi Jinping is doing just that. Also, graft by Wang Baoan doesn't necessarily mean NBS bureaucrats provided inaccurate reports to the CCP leadership. To imply it does is to promote guilt by association.

Spain's Zetta iPhone killer is a rebranded Xiaomi.

Spanish phonemaker Zetta is selling rebranded Xiaomi phones as its own ‘iPhone killer’
by MIX — 20 hours ago in MOBILE

Spanish high-end smartphone brand Zetta has taken an interesting approach to selling phones. The company has been accused of passing off rebranded Xiaomi devices as its own, boastfully marketing them as the ‘iPhone killer’, Spanish publisher El Pais reports.

Zetta’s trickery was brought to light over the weekend when users of popular Spanish forum Forocoches tore down one of the company’s devices only to discover it was actually a Xiaomi phone.

The vigilante tech investigators came across a mysterious sticker placed beneath the battery of the Zetta device; when they peeled it off, it revealed another sticker – one with Xiaomi’s logo.

Since then numerous users have pointed out that most of Zetta’s models are carbon prints of Xiaomi models.

More suspiciously, Forocoches members also dug up a certain phone case specifically designed for Xiaomi smartphones that was also being sold by the Spanish phonemaker.

Zetta’s devices initially hit Spanish stores back in 2015, quickly winning consumers over with its high-end build quality and cheap prices. As it turns out, the company was merely rebranding Xiaomi phones and selling them at higher prices.

As the IB Times points out, the €90 Xiaomi Redmi 2 was repurposed as the Zetta Conquistador 4.7 SE with a retail price of €185 in Spain; similarly, the €160 Xiaomi Redmi Note 2 sold as the Zetta Conquistador 5.5 Plus for €235.

Zetta has denied the accusations, claiming it has been working closely with Asian manufacturers in order to bring better technology to the European market.
However, Xiaomi has since responded to the Spanish phonemaker with its own

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, denying any relation to the Spanish company whatsoever.

Shortly after the story went viral, Zetta’s website – along with its

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and Twitter accounts – went offline for a brief window of time over the weekend, but is now up and running.

While the website was down, Spanish consumer association

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tweeted that Zetta owners are entitled to receive a refund. The agency also encouraged government organs to take action against the company.

At present, Facua is

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on Spanish authorities in Extremadura and Madrid, where Zetta is located, to open an investigation and prosecute the company for fraud.

We’ll update this piece accordingly as the story develops.

Meanwhile, go check out this interview (in Spanish) with Zetta’s founder as he details (and straight-up lies about) how the company designed and built its phones.

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PanAsian said:

Supply and demand is a drastic oversimplification of the topic here as is usually the case when that concept is thrown about as the answer to real life situations. Nor does applying that concept automatically mean the answer must be more supply.

Why would a developer build more to the point of reducing their profit margins below their expectation? Development includes much more infrastructure than just the housing itself i.e. additional power, water, services... etc. how would all of these be afforded? There is skewed competition between short term non-utility demand (investors) and long term utility demand (owner occupiers), how will this be addressed?

Anyways my point here is that the Hong Kong opposition is focused on sabotage and politicking rather than finding solutions to the problems they highlight. Methods used by the mainland to cool housing speculation such as limiting ownership per individual if used by the HK government is guaranteed to be condemned and opposed by the opposition as "undemocratic" or "Beijing extending its control". That said the local government does need to get a backbone and pursue policies for the common good even if it means offending powerful special interests and fueling nonsensical opposition, it's all in a day's work for any government.

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In the end, housing costs are high because people are willing to pay high prices. There would be no speculation if there were no demand.

High property prices also mean high taxes, so there should be plenty of money for the government to provide infrastructure.

In today's modern world most facts cannot be hidden. As for trade & the economy, nations have to be guided by the WTO rulings to ensure a balanced & justifiable trade. It is no point of blaming any country for the dilemma of economic/trade problems like the US presidential candidate, (billionaire non-paying taxes for 18 years) Trump had done. We know that similar diatribes have be made for domestic political reasons by others. But my take is what the hell is the country (especially the developed ones) doing? With their expertise in technology etc. have they the foresight to educate and train their people for the future job requirements? Singapore, a small nation has the foresight of preparing their people for the future. Jobs will be lost with advancements of technology (robotics, IT etc,), but nations should have the gumption to prepare and create new ones. Updated education for the young and training of workers are a must, and ways must be examined and created to help unemployed workers. I believe China can and will succeed even with its large population and challenges, as the Chinese are known for their resilience and determination. In an inter-dependent globalised world, the cooperation among countries are priorities. China's "One belt one road" is a good example, but other big countries should also contribute with other solutions/ideas to maintain progress and peace in the world, NOT the belligerency and hostilities we see happening today in the ME and elsewhere.

I think many in the developed world have been misled into believing that manufacturing jobs should be and can be taken back home. That is a gross misunderstanding.

It is absolutely impossible for developed nations to compete against developing nations in manufacturing. Because of one thing: low labor cost in the developing nations. Based on the fundamental principle of captalistic free economy, any business' goal is to minimize cost and maximize profits. That's why throughout the history of mankind, business owners have been attempting to find ways to lower cost (including many unethical and illegal ways). How can you (making $10/hour) compete against someone who is making $50 a year?

China is fast becoming a developed country and manufacturing cost in China is going up by the day. Even companies in China are coming out and seeking manufacturing bases elsewhere, mainly in Southeast Asia and Africa. Before long, the US won't be able to blame China for stealing their jobs. It will be some dirt poor countries in Africa. There are always poor countries with plenty labor.

The only way for manufacturing to survive in a developed country is government help: heavy tariffs and heavy subsidies. That's not healthy to economy. With heavy government involvement, the government will eventually want to protect its investment, hence government intervention. Before long, all these factories become half government owned. Bam! You get socialist.

If a factory wants to survive on its own, it will need to find other ways to lower cost. One obvious advantage in a developed country is technology, hence automation. Then you get the same thing: factory workers get laid off because their jobs are now done by machines.

If you want capitalistic free economy (free competition) and minimal government intervention, you have only two choices: (1) find low cost labor elsewhere; (2) automation. Either way, human labor in manufacturing can't survive in a developed country.

The only solution is creating new industries, which takes full advantages of the scientific and technological lead in the developed countries. Thais has actually happened many times in history. During industrial revolution, many were worried that 80-90% of people would be without jobs because of all the machines. Laid off workers burned down factories and destroyed machines in an attempt to take their jobs back. several hundred years have passed and the population on earth has jumped up many many folds. And surprise surprise! Almost all industries are now heavily automated. Any time when you go to visit a modern factory, you see a couple people controlling huge amount of machines. Any farm would have one farmer taking care hundreds of acres of land. Yet, most of us still have jobs even though most factories have been heavily automated. Why? Newly created industries.

The US should stop trying to "bring jobs back". Instead, create new industries. High tech industries fully utilizing the advantage of developed countries.

Blackstone said:

Looks like more and more westerners are grudgingly coming to the same conclusion Nicolas Lardy did in his 2015 China economic study: China's official financial and economic numbers are relatively accurate, and have been so for a long time. Lardy also said China's Bureau of Statistics is staffed by highly competent professionals that collect and normalize (adjust) data for accuracy, often in difficult conditions.

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Sorry if I mistaking you for someone else but I believe you were the one that also do not believe PRC officially announced economic figures except for the amount of cargo transportation by train and electricity usage which I believe are both steadily going down for sometime now.

vesicles said:

I think many in the developed world have been misled into believing that manufacturing jobs should be and can be taken back home. That is a gross misunderstanding.

It is absolutely impossible for developed nations to compete against developing nations in manufacturing. Because of one thing: low labor cost in the developing nations. Based on the fundamental principle of captalistic free economy, any business' goal is to minimize cost and maximize profits. That's why throughout the history of mankind, business owners have been attempting to find ways to lower cost (including many unethical and illegal ways). How can you (making $10/hour) compete against someone who is making $50 a year?.......snip

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Actually for some industry you can since automation had come a long way where some factories instead of 500 workers you only need 50 to operate.
There is also the high skilled type labor which can place a high profit margin to compensate the cost.
That is why there are still many small scale high skilled manufacturing facilities striving in Japan.
Basically your narrative applies to low skilled hard to automate manufacturing but not to the ones I had mentioned.

SamuraiBlue said:

Actually for some industry you can since automation had come a long way where some factories instead of 500 workers you only need 50 to operate.
There is also the high skilled type labor which can place a high profit margin to compensate the cost.
That is why there are still many small scale high skilled manufacturing facilities striving in Japan.
Basically your narrative applies to low skilled hard to automate manufacturing but not to the ones I had mentioned.

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I wasn't responding to your comments. In fact, I had no clue that you actually had a post on such topic when I constructed my post. I was simply stating my own view of manufacturing jobs in general in developed countries.

I do agree with your view on highly skilled labors, like blade smith. The ability of a Japanese blade smith to forge a katana is nothing short of amazing. However, these high skill labor would be considered a niche area. Vast majority of the manufacturing is still low skill labor like textiles. And when politicians in the US talk about "bringing manufacturing jobs back", they mean the low skill jobs.

SamuraiBlue said:

Sorry if I mistaking you for someone else but I believe you were the one that also do not believe PRC officially announced economic figures except for the amount of cargo transportation by train and electricity usage which I believe are both steadily going down for sometime now.

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It's true I held that view, and I still have healthy skepticism about anything from the opaque authoritarian state. Nevertheless, there are good reasons to take another look at Chinese financial numbers. I say that for four main reasons.

First, China is transforming from a manufacturing/export economy to a service/consumption one, and past analysis based on transportation and electricity usage are no longer the most accurate measures of the changing economy. Second, studies like Broken Abacus by Daniel Rosen and Markets over Mao by Nichloas Lardy provide facts and data that show numbers from China's National Bureau of Statistics are, on balance, accurate. Daniel Rosen said, if anything, China under-reported its GDP by quite a bit. Third, China has been working with the IMF to improve its reporting and making them more aligned with other major IMF members. And fourth, Nicolas Lardy said several groups, including the IMF, used sophisticated financial algorithms to check GDP and other reporting, and while the algorithms flagged serious problems by some banking/investment institutions and by the Greek government, China's reports passed the muster.

The bottom line is we live in a dynamic world where things change all the time, and it's reasonable to reexamine and change our believes based on new data and facts.

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solarz said:

In the end, housing costs are high because people are willing to pay high prices. There would be no speculation if there were no demand.

High property prices also mean high taxes, so there should be plenty of money for the government to provide infrastructure.

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That's not an accurate or complete description of the situation, problem, or solution.

Some people are able to pay high prices while others are not. Those who can afford high prices do not use housing for its intended purpose, which is as a home, while those who cannot afford high prices would do so.

High real estate prices need high tax rates to translate into high tax revenues, which may or may not be sufficient to cover related infrastructure needs. Tax revenues also come as small amounts over time after development while infrastructure has to be built before development costing a large lump sum right away in addition to continuous maintenance costs afterwards.

There are a lot of factors, a lot of politics, and a lot of actual work cut out for the often unduly underappreciated government, especially the bureaucracy, to figure out and get done.

PanAsian said:

Supply and demand is a drastic oversimplification of the topic here as is usually the case when that concept is thrown about as the answer to real life situations. Nor does applying that concept automatically mean the answer must be more supply.

Why would a developer build more to the point of reducing their profit margins below their expectation? Development includes much more infrastructure than just the housing itself i.e. additional power, water, services... etc. how would all of these be afforded? There is skewed competition between short term non-utility demand (investors) and long term utility demand (owner occupiers), how will this be addressed?

Anyways my point here is that the Hong Kong opposition is focused on sabotage and politicking rather than finding solutions to the problems they highlight. Methods used by the mainland to cool housing speculation such as limiting ownership per individual if used by the HK government is guaranteed to be condemned and opposed by the opposition as "undemocratic" or "Beijing extending its control". That said the local government does need to get a backbone and pursue policies for the common good even if it means offending powerful special interests and fueling nonsensical opposition, it's all in a day's work for any government.

Click to expand...

Yep, and that is why the US has such a horrible housing bubble burst experience back in 2007 and we STILL haven't fully recover from it either.