Chinese Economics Thread

[localizer]

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Smartphone shipments in China plunge 35% in July: government data


SHANGHAI (Reuters) - Smartphone shipments in China plunged 35% in July compared with a year earlier, government data released on Tuesday shows.

The numbers suggest handset demand in China remains weak despite indications of a recovery after coronavirus cases peaked, boding poorly for companies like Apple Inc (AAPL.O) and its local rivals such as Huawei Technologies Co Ltd.

Phone makers shipped 21.3 million handsets in July, versus 33 million a year earlier, according to the China Academy of Information and Communications Technology (CAICT), a state-backed think tank.

That marks a steeper decline than in May and June, when shipments dropped 10% and 16%, respectively.

In April, after a slump in the previous months due to the health crisis, CAICT reported smartphone shipments grew an unexpected 17% annually.



From this data, western economic analysis said that China retail recovery is stalled

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$100 billion stimulus, probably won’t do shit to help consumers.

The key is to liberalize the economy. Remove import barriers for things like food so that poor don’t spend 1/2 their income on food. Make people want to transact with each other. Especially from top to bottom.

 

[grulle]

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[supercat]

Low birth rate is indeed a huge problem for China or any country. With low birth-rate you get to a death spiral of ever decreasing population and lower GDP as a result. What China did with One Child Policy was overkill in my opinion. They could have gone for 2 child policy which leads to replacement level birth-rate.

Now that Chinese people have gotten used to having only one child, they are not naturally not having a second child even after replacing one child policy with 2 child policy. As China gets richer, its birth rate will be even lower. Just have a look at Hong Kong, Taiwan or even Singapore to see how bad the Birth rate is in a developed Han Chinese society.

So, China is indeed in huge trouble.

But, there is something China has that these places don't have. The brute force and organization capability of the CCP. If the CCP thinks that low-birth rate is a huge threat, it will forcefully increase birth rate. There will be a mandatory 2-3 child policy. CCP can use heavy taxes on Childless people or put penalty on who gets promoted in workplace based on how many children they have. These are the exact policy China used to enforce one Child policy. They can be again used to enforce mandatory 2-3 child policy.

I think there is still inertia about how bad the situation is in terms of birth rate. But it will hit slowly in the next decade or two. Then there will be enough political pressure to enact such tough policies. CCP will also have to do heavy propaganda campaign to make it almost a taboo to not have children. It should be something that makes people embarrassed if they don't have children. Only then there will be a change in the birth rate.

In the modern day, having a child is considered a burden. So, positive policies will not work. It never worked anywhere. There will need to be penalties for not having children for things to change.

I think China's demographic problem is greatly exaggerated. First of all, China has a huge base of population with 1.4 billion people, unlike the countries in East Asia, West Europe, Russia, and the white population in the U.S. Second, China's economy is transitioning into a capital-intensive one, it no longer requires as many manual labors as before. Finally, with 10% of the world's arable land, China has to support 20% of the world's population, it already bears a heavy burden of population as of now.

 

[KenC]

But, there is something China has that these places don't have. The brute force and organization capability of the CCP. If the CCP thinks that low-birth rate is a huge threat, it will forcefully increase birth rate. There will be a mandatory 2-3 child policy. CCP can use heavy taxes on Childless people or put penalty on who gets promoted in workplace based on how many children they have. These are the exact policy China used to enforce one Child policy. They can be again used to enforce mandatory 2-3 child policy.

Please, seems that your understanding of today's China is far from reality as if China is still a harsh authoritarian society like North Korea. Coercion cannot be achieved with generations that are born after 1990s. At best the CCP can only persuade or encourage nowadays. That is why many urban families are considering having two children nowadays.

Anyway, population dividend from large population growth is a thing of the past. Limited resources, particularly water is one driving factor. Technology, i.e automation, robotization and AI will drive the future.

 

[BMEWS]

Low birth rate is indeed a huge problem for China or any country. With low birth-rate you get to a death spiral of ever decreasing population and lower GDP as a result. What China did with One Child Policy was overkill in my opinion. They could have gone for 2 child policy which leads to replacement level birth-rate.

Now that Chinese people have gotten used to having only one child, they are not naturally not having a second child even after replacing one child policy with 2 child policy. As China gets richer, its birth rate will be even lower. Just have a look at Hong Kong, Taiwan or even Singapore to see how bad the Birth rate is in a developed Han Chinese society.

So, China is indeed in huge trouble.

But, there is something China has that these places don't have. The brute force and organization capability of the CCP. If the CCP thinks that low-birth rate is a huge threat, it will forcefully increase birth rate. There will be a mandatory 2-3 child policy. CCP can use heavy taxes on Childless people or put penalty on who gets promoted in workplace based on how many children they have. These are the exact policy China used to enforce one Child policy. They can be again used to enforce mandatory 2-3 child policy.

I think there is still inertia about how bad the situation is in terms of birth rate. But it will hit slowly in the next decade or two. Then there will be enough political pressure to enact such tough policies. CCP will also have to do heavy propaganda campaign to make it almost a taboo to not have children. It should be something that makes people embarrassed if they don't have children. Only then there will be a change in the birth rate.

In the modern day, having a child is considered a burden. So, positive policies will not work. It never worked anywhere. There will need to be penalties for not having children for things to change.

is this tidals fifth or sixth account on here??

 

[localizer]

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Hmmmmm, I guess Trump did some damage?

I wish they would show the actual dollar values lost instead of %.

 

[tamsen_ikard]

is this tidals fifth or sixth account on here??

Who is that?

Please, seems that your understanding of today's China is far from reality as if China is still a harsh authoritarian society like North Korea. Coercion cannot be achieved with generations that are born after 1990s. At best the CCP can only persuade or encourage nowadays. That is why many urban families are considering having two children nowadays.

Anyway, population dividend from large population growth is a thing of the past. Limited resources, particularly water is one driving factor. Technology, i.e automation, robotization and AI will drive the future.

Ha ha, well if you believe that then I have nothing to say. I would just say that, being authoritarian is China's biggest advantage. They can take unpopular, tough but ultimately necessary decisions that are beneficial in the long term. One Child policy is one such example. Uyghur integration policy is another. Then there is also how Covid lockdown was implemented including locking people in their homes if necessary. No one did it the way China did, now they are benefitting because of this. I get that in this western dominated world, you have to window dress and wear a mask not to get sanctioned into oblivion. But times are changing and will change as the western order dies and China rises. I can assure you, in the future, China won't have to wear a mask to justify its governing system.

China will try positive policies in the beginning most certainly. But if the problem is serious and directly impacts China's national well-being, then it will not hesitate to be harsh. I would define China's governing model as, weighing cost vs benefit. They will always try policies that cost the less in terms of enforcement and coercion. But if those does not work, and if the problem is serious enough not to ignore, they will try slightly harsher policies. Slowly they will ramp it up weighing cost vs benefit every time. If the issue is serious enough to cause the nation's survival to be at stake, well then you get Tiananmen at home or war outside.

 

[tamsen_ikard]

I think China's demographic problem is greatly exaggerated. First of all, China has a huge base of population with 1.4 billion people, unlike the countries in East Asia, West Europe, Russia, and the white population in the U.S. Second, China's economy is transitioning into a capital-intensive one, it no longer requires as many manual labors as before. Finally, with 10% of the world's arable land, China has to support 20% of the world's population, it already bears a heavy burden of population as of now.

Anyway, population dividend from large population growth is a thing of the past. Limited resources, particularly water is one driving factor. Technology, i.e automation, robotization and AI will drive the future.

I will address both arguments here. Large population is the biggest advantage China has. China is bigger than US and EU and all its client states in East Asia Combined, this is a huge advantage towards its rise as a Superpower. This is what allows China to be close to US in GDP while being just 10K USD in GDP per capita. China can easily become bigger than US+EU GDP combined all while catching up in terms education, urbanization, tech and so on.


Population is important because only people can consume. Robots cannot consume. With automation you might have better productivity, but you will still lose GDP every year if your consumer base is shrinking due to shrinking population. Who will buy houses, eat at restaurants and buy insurance policies?

GDP shrinkage might not happen now because China is still poor and catching up. But in 30-40 years from now, when China is as rich as Europe or Japan, population decline will cause its GDP to stagnate or shrink. People is the basis of economy.

There is a second problem with shrinking population which is even worse. With a shrinking population, you always have a society that is aging. Each new generation will be smaller than the last and will have to support a larger cohort of older people. You cannot rely on increase in productivity to compensate for that long term. It is much easier to raise the birth-rate or accept immigration.

I do expect China to be a very popular destination for migrants in the future. The more wealthy China gets, the more attractive it will be. But whether China will accept migration in large numbers is something I don't know. People's mindset do change when the need arises. Right now, Chinese people only think about their huge population and how crowded every thing is. But if the population starts to shrink and GDP stagnates, they might change their minds.


My point is, low birth rate is a huge issue for all rich countries now and future rich countries. Its like Climate change. Its slow and almost invisible. But when you look at the trend for 100+ years, it will cause huge problems. Harsh policies to increase the birth rate seems unthinkable now because of the population boom we have seen in the last 200 years. But a shrinking population over 50-100 years will cause even nations to disappear and no country will ever allow it. Immigration is also not a long term viable solution either as it will change the ethnic, racial make-up of a country. So, harsh policies will become more and more acceptable in the future.

I expect that raising a children will be seen as a national duty in the future in many countries. It will be like mandatory military service or paying taxes. No one likes it, but everyone has to do it.

 

[j17wang]

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View attachment 62598
View attachment 62599

Hmmmmm, I guess Trump did some damage?

I wish they would show the actual dollar values lost instead of %.

Im more curious if china's share of global imports has also fallen... I presume alot of heavy machinery (think construction tractors) or high tech (industrial robots) china has likely also reduced imports? Either way, its obvious supply chains are shortening throughout the world.

 

[emblem21]

Im more curious if china's share of global imports has also fallen... I presume alot of heavy machinery (think construction tractors) or high tech (industrial robots) china has likely also reduced imports? Either way, its obvious supply chains are shortening throughout the world.

Yeah, its quite obvious that global imports has gone down everywhere, at least China can export to other countries at a reasonable standard given the current state of things in China but in the western world, it is harder given the decrease in GDP growth across the board meaning less growth and hence less product need atm given that certain countries that want the imports cannot pay for them and also cannot export because of covid (USA for example has a sharp drop in both imports and exports). While it is expected that China would take a hit given the current climate, other countries are going to take a far worse of a hit but the only reason you would hear about China is because they are that desperate in blame shifting