Chinese Economics Thread


Tam

Major
Registered Member
Why are SOEs so bad ? Because the "West knows Best" ? China has been "saddled" by "hugely inefficient" SOEs since before Deng Xiaoping's time. Why then China's economy has been growing at break neck speed yet to be matched by any post WW II economies ?

Below are my take on China's SOEs that most Western economists do not want to talk about.

Type 1 SOEs : China created certain SOEs for the main purpose of preserving employment. These are the genuine "inefficient" ones. Instead of laying off the people and pay them unemployment and other social hand outs like Western countries, it is the Chinese government's philosophy to offer them employment instead to preserve their dignity and Chinese's work ethics. You can see the same philosophy in China's foreign policy which rarely offers foreign aids like her Western counterparts. Instead, China helps other countries by offering investment in business and infrastructure projects with low interest loans. In doing so, Chinese treats them as equals. Back to those SOEs. Overtime, as China's per capita income improves, these type of SOEs will slowly disappear. But the priority is not on reforming them (i.e. make them profitable by laying off people), but on making people less dependent on them for employment (i.e. create other better paying job opportunities).

Type 2 SOEs : There are certain industries that will never be profitable, but are of great importance to China's economic development. A good example of those is the railroad. US's rail transport is essentially all privatized. At the other end of the spectrum, the Indian rail transport is part of the government's Ministry of Railways. How well both work is for all to see. China has chosen the middle approach via SOE and has the best result to show among the three. These SOEs are hardly "inefficient" and provide services to Chinese citizens that are the envy of the rest of the world.

Type 3 SOEs : There are certain industries that are strategic to China's survival as a nation. Example of these are the shipping, ship building, energy and energy services, defense and certain financial segments. These have to be state controlled and supported. Imagine a powerful foreign government put sanction on any company that ship goods for China and China has no strong shipping companies of her own. Like Type 2 SOEs, majority of Type 3 SOEs can hardly be called "inefficient" as Western media would want you to believe in.

A good example of a US Type 2 SOE is the USPS. Its a money loser, but its popular and essential to many of the smaller communities across the USA. You cannot imagine the importance of USPS and what the US will be without it.

A good example of a US Type 3 SOE is the pre-breakup AT&T. With it, the US lead in telecommuncations technology, and it helped birth breakthroughs such as the Unix operating system and the C programming language. Guess what happened with this entity was broken up? The US ceded its telecommunications lead to the Europeans and the Japanese and you have all sorts of shitty mobile and internet providers across the landscape.
 

Tam

Major
Registered Member
China is preparing itself to detach from the US dollar, partly because the US might weaponize the dollar, partly because the value of the US dollar might floor with massive printing resulting in hyperinflation. The key to that is accumulating gold in large amounts. China is the world's largest gold producer and has been for years, and it also has been buying gold mines all over the world.


 

supercat

Junior Member
This is really cool:

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View attachment 61365


We eat a lot of rice but China rice yields are not that good :(
Food security has been a problem for China since ancient times.

More than 95% of Chinese were covered by China's national basic health insurance program in 2019, which pays more than 60% of the expenses of hospitalization.
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10thman

New Member
Registered Member
Food security has been a problem for China since ancient times.

More than 95% of Chinese were covered by China's national basic health insurance program in 2019, which pays more than 60% of the expenses of hospitalization.
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More than 60% of a large expense is financial damage to most people
I guess it's better than 0%
 

ansy1968

Junior Member
Registered Member
Not sure if this is the correct thread for this, but it looks like Huawei is making adjustments to its supply chains. Hopefully SMIC get things working.
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hi SoupDumplings

thanks for the wonderful article, I think SMEE 28NM litho first customer is indeed SMIC. Huawei will collaboration with SMIC 7nm due this year with its EDA process, All is falling in places. Im excited HUAWEI ,SMIC and SMEE jiayou!!!! GO GO CHINA :D :D:D
 

Petrolicious88

New Member
Registered Member
hi SoupDumplings

thanks for the wonderful article, I think SMEE 28NM litho first customer is indeed SMIC. Huawei will collaboration with SMIC 7nm due this year with its EDA process, All is falling in places. Im excited HUAWEI ,SMIC and SMEE jiayou!!!! GO GO CHINA :D :D:D
US has just officially placed Huawei and 20 other companies as being controlled by the Chinese military. This opens up means for additional sanctions.

I think this was mentioned before under the semiconductor thread. So even if Huawei is able to produce chips without American equipment, America will still find ways to kill it. It has other tools to do so.
 

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