Chinese Economics Thread

AndrewS

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Overall view: China's future exports may decrease however its overall value added component will likely continue to increase. For example, even today you likely have much more stuff from china lying around, and it would be almost impossible to realize that by value german products are still equivalent to about 60% of china's overall exports (very impressive for a country of 80 million vs a country of 1.4 billion). China should't fight tooth and nail to keep foxconn and phones. If you look at consumer trends, china needs to maintain dominance in scooters, electric skateboards, VR headsets, augmented displays, quadruped toy robots... and then pass that off to the indians/Vietnamese once the margins are squeezed. We should be disappointed if china is still assembling most of the worlds cell phones and laptops in 5 years, thats nothing to be proud of.

When you look at the direction that "scooters, electric skateboards, VR headsets, augmented displays, quadruped toy robots" are taking, these fields are going to leverage the same industrial supply chain that currently supplies smartphones/laptops.

So it is helpful to have a large smartphone/laptop assembly industry.

And given the rate of improvement we see in industrial robots and machine learning, it is feasible to see China continuing to assemble most of the world's smartphones and laptops, because of its entrenched supply chain which compensates for the higher costs.

Also remember that consumer product development only takes 3 months in Shenzhen due to all the hardware and electronics companies being in the same city, whereas it would take 9-12 months elsewhere. In the field of fast-changing consumer electronics, that is a huge advantage.
 
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Deleted member 15887

Guest
When you look at the direction that "scooters, electric skateboards, VR headsets, augmented displays, quadruped toy robots" are taking, these fields are going to leverage the same industrial supply chain that currently supplies smartphones/laptops.

So it is helpful to have a large smartphone/laptop assembly industry.

And given the rate of improvement we see in industrial robots and machine learning, it is feasible to see China continuing to assemble most of the world's smartphones and laptops, because of its entrenched supply chain which compensates for the higher costs.

Also remember that consumer product development only takes 3 months in Shenzhen due to all the hardware and electronics companies being in the same city, whereas it would take 9-12 months elsewhere. In the field of fast-changing consumer electronics, that is a huge advantage.

Exactly, which is why Beijing should not give up on manufacturing and let it leave. China has had crucial benefits from this arrangement. Do you want China to end up like the deindustrialized, decaying West? How stupid is that? Look at the pandemic, it just shows the immense self-own by the US to virtually deindustrialize the past 40 years. Its dumb to suggest China should follow this same, self-destructive path that the West has followed. I seriously recommend to, and hope that the CCP does whatever it can to keep is manufacturing dominance
 

emblem21

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View attachment 63274
Greatest economic ever lived.
I think that if he does decouple and ends up sinking the US economy and drives the US into a true depression, I think I am going to enjoy watching Trump taking to get out of this one. The American people are surprisingly resilient, Trump can rape a 4 year old girl and his supporters and by extension the rest of the population might just let him get away with it because it pisses out the liberals, so to speak
 

emblem21

Major
Registered Member
I think that if he does decouple and ends up sinking the US economy and drives the US into a true depression, I think I am going to enjoy watching Trump taking to get out of this one. The American people are surprisingly resilient, Trump can rape a 4 year old girl and his supporters and by extension the rest of the population might just let him get away with it because it pisses out the liberals, so to speak
Please forgive if I went a bit too far there, the point I was trying to make is that currently Trump seems to be quite capable of getting away with almost every crime in the book from voter fraud, outright treason and so on.
 

manqiangrexue

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China's exports rise the most in nearly 1-1/2 years as economies reopen; imports slip
Gabriel Crossley,
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September 6, 2020

BEIJING (Reuters) - China's exports rose for the third consecutive month in August, eclipsing an extended fall in imports, as more of its trading partners relaxed coronavirus lockdowns in a further boost to the recovery in the world's second-biggest economy.

Exports in August rose a solid 9.5% from a year earlier, customs data showed on Monday, marking the strongest gain since March 2019. The figure also beat analysts' expectations for 7.1% growth and compared with a 7.2% increase in July.

Imports however slumped 2.1%, compared with market expectations for a 0.1% increase and extending a 1.4% fall in July.

The strong exports suggest a faster and more balanced recovery for the Chinese economy, which is rebounding from a record first-quarter slump thanks largely to domestic stimulus measures

"China’s exports continue to defy expectations and to grow significantly faster than global trade, thus gaining global market share," said Louis Kuijs of Oxford Economics.

China's trade surplus with the United States widened to $34.24 billion in August from $32.46 billion in July.
 
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Deleted member 15887

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A response to decoupling by seething Reddit armchair neckbeards:
Recently there was this article that came out:
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Response: Eh, we'll have to see. Previous efforts at supply chain diversification haven't really worked. India and Japan have signed FTA's previously, but that still didn't stop China's growing market dominance (
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)
"However, the tripartite move is likely to have a limited impact."We have seen in the past that India and Japan have signed various [free trade agreements] and lowered the tariffs with the partner countries [while denying] the same privilege to China. But it did not achieve the intended objective. Goods continued to flow from China disturbing the trade balance," Khan said."
Also, here's a refutation for previous many other popular misconceptions regarding attempts at decoupling from China (copied form another post):
"Point 1: The company that manufactures Apple products is aggressively building plants in India."
Response: Foxconn had also
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, coupled with their failures in
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(which they had to close Brazillian factories due to their competitiveness). Look how that turned out. Foxconn in general is a company that doesn't have a perfect track record living up to its over-hyped promises. Foxconn's current planned investment in India pales in comparison the amount of investment that it had conducted in China to build up their manufacturing base over there (only $1 billion so far to create a couple thousand more jobs in India, versus current 1.3 million workers in China). Besides Foxconn knows
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.
"Point 2: Samsung has pulled out of China almost entirely and Japan is offering incentives for its companies to move out of China."
Response: Why would Samsung manufacture in a country they have ~0% market share in? They've been continuously outcompeted by Chinese phone-makers and LCD TV makers they've been forced to close their China-based plants. Also, Samsung is
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(Samsung's old model of direct factory ownership seems to be not working great for them, so they're going to the newer model of outsourcing production to an OEM)

As for Japan, $2 billion USD won't go far will it? That's less than the cost of 1 Tesla factory. Besides,
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. Same goes with
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"Point 3: The US and Australia are partnering on several rare-earth ventures."
Response: Past efforts at decoupling have not greatly worked, with the failure of the Mountain Pass mine anyhow (due to the lack of REM processing capacity outside China, meaning even if you mine REMs outside of China, you still need to send them to China for processing). Unless there is an extremely strong political will to invest billions into REM processing (as well as tolerate immense environmental costs), these measures will probably fall flat.

Overall, I just don't see efforts to shift supply chains out of China succeeding overall. You might be able to move a few companies, but by in large, I predict the supply chain is still going to stay in the country. Supply chains are concentrated where they are because they are that is the most efficient, effective setup for companies, and setting up fractured supply chains lowers efficiency and raises expenses inevitably overall (while companies with singular, centralized supply chains can outcompete you on price.)
 

free_6ix9ine

Junior Member
Registered Member

Pretty insightful analysis into what dual circulation probably means, instead of the usual "China will fail" narrative. Tldw:

1) Dual circulation has been an idea that was floated around for decades. Only now, has the leadership taken it seriously. Liu he who was the trade negotiator is the driving force.

2) Dual circulation means focusing on domestic consumption as opposed to export for economic growth. This means that there will be a restructuring of manufacturerers to produce products which are in demand domestically. Diversifying what is being supplied. And also restructuring the tax or social welfare system to increase demand and spending.

3) Import substitutions for crucial technology like semi-conductors. Double down on made in China 2025.

4) Strengthening RMB to increase purchase power

5) Refocus on developing advanced manufacturing instead of a service based economy. Germany vs UK/US

It all seems pretty vanilla to me. Nothing super new. The major take away is that this time the central government is taking it seriously.
 
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