Chinese Economics Thread


lcompocida

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Much of the focus at this year’s upcoming National People’s Congress (NPC) will be on the final 14th Five-Year Plan (FYP). What could fly under the radar is the simultaneous release of China’s 2035 long-range plan, which
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just once before 25 years ago.
It is tempting to simply dismiss the 2035 plan as aspirational. But it could turn out to be more consequential because it aims to rearrange the global pecking order that has endured for more than a century: make China the world’s largest economy in 15 years.

Although this goal
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at all in the draft 2035 plan, implicit in its vision is a doubling of the Chinese economy to roughly $30 trillion (in 2020 US dollars) from 2020-2035. At that point, China would just edge out the United States in aggregate GDP, if assuming US average growth of 2% through 2035.

Of course Beijing would never publicly tout this goal, in part because of the optics and potential backlash. But more importantly, it is no guarantee that China will get to $30 trillion within that timeframe. China had just surpassed 70% of US GDP in 2020, only the second country to have done so after Japan hit that point in 1995. That also marked “peak Japan,” as the Japanese economy has now fallen to just a quarter of the US economy. In fact, simply climbing to this “70% of US GDP” threshold seems arduous and rare, since only two countries have done it in the last 100 years.

China is now exhibiting some of the similar symptoms that ailed Japan in the mid-1990s and 2000s, including rapidly declining growth from 10% to 6% over the last decade, property bubbles, stagnant productivity growth, and secular headwinds like an aging population. It is no surprise, then, that some analysts believe that China will repeat the Japanese economic malaise and end up never surpassing the US economy. Instead, it could stall out vis-a-vis the US economy in the coming decades after
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around 87% of US GDP by 2035, according to Capital Economics projections.

Avoiding Japan’s fate is the context in which the 14th FYP should be viewed, which is meant as the opening salvo to realizing the 2035 long-range vision. To do so, Beijing will likely have to make the difficult trade-off of sacrificing near-term growth, which will be concentrated in the upcoming FYP cycle through 2025, while laying the groundwork for more sustainable growth in the 2025-2035 decade.

Doubling the Chinese economy in 15 years requires growth to average at least 4.5% during this period. If this serves as a growth floor for China over the next five years, then it will be
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of 5%+ growth over the 14th FYP, according to International Monetary Fund projections.

The main message of the 14th FYP, then, is likely one that downplays short-term growth in order to focus on efforts needed to sustain future growth. One of the clearest indicators of the prioritization of long-term structural adjustments will be the fate of the growth target in the FYP.

There is a chance that Beijing completely eschews a growth target, which would send the most unambiguous signal to date about shifting priorities. But the more likely scenario will be that instead of ditching the target wholesale, it will be effectively modified into a growth floor. This may not sound like much, but there will be a meaningful difference in how local governments interpret this change. That is, instead of striving to hit and exceed some unrealistic target, the key is simply about avoiding going through the growth floor.

In reality this will mean that the growth target won’t be binding. Many local governments have already set their growth targets at around 6%, in contrast to market expectation of above 8% growth for the national economy. To put this in perspective, after adjusting for the impact of the Covid-19 lockdown in 1Q2020, a 6% GDP target in 2021 effectively translates into a very modest 3% growth. Moreover, Beijing will send clear messages to local officials to disincentivize them from pursuing growth that diverges wildly from the national average.

Watering down the growth target to the point that it barely matters implies that Beijing does not intend to spend much energy on supporting growth. Instead, it will likely focus on tackling longstanding issues like cutting excessive investment in construction and curtailing local debt. Both of those actions will come at the expense of near-term growth.

Getting the entire country onboard with this shift will be no easy task. But Beijing seems to recognize that the avoidance of structural problems for so long will end up costing the country the mantle of the world’s largest economy. Achieving that goal simply requires more significant changes to the Chinese economy, which would actually make it easier to sustain the average growth rate necessary to get to $30 trillion.

At a minimum, Beijing is prepared to forgo immediate growth to set up for the longer haul.
 

gadgetcool5

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The way I see it more billionaires reflects the success of China's companies and dynamism of its economy, which is a good thing. Especially now that China has finally reached parity with the U.S. in Fortune 500 companies.

At the same time, there needs to be more efforts to bring down the cost of housing, health care, education and child care for the middle class.
 

lcompocida

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Much of the focus at this year’s upcoming National People’s Congress (NPC) will be on the final 14th Five-Year Plan (FYP). What could fly under the radar is the simultaneous release of China’s 2035 long-range plan, which
Please, Log in or Register to view URLs content!
just once before 25 years ago.
It is tempting to simply dismiss the 2035 plan as aspirational. But it could turn out to be more consequential because it aims to rearrange the global pecking order that has endured for more than a century: make China the world’s largest economy in 15 years.

Although this goal
Please, Log in or Register to view URLs content!
at all in the draft 2035 plan, implicit in its vision is a doubling of the Chinese economy to roughly $30 trillion (in 2020 US dollars) from 2020-2035. At that point, China would just edge out the United States in aggregate GDP, if assuming US average growth of 2% through 2035.

Of course Beijing would never publicly tout this goal, in part because of the optics and potential backlash. But more importantly, it is no guarantee that China will get to $30 trillion within that timeframe. China had just surpassed 70% of US GDP in 2020, only the second country to have done so after Japan hit that point in 1995. That also marked “peak Japan,” as the Japanese economy has now fallen to just a quarter of the US economy. In fact, simply climbing to this “70% of US GDP” threshold seems arduous and rare, since only two countries have done it in the last 100 years.

China is now exhibiting some of the similar symptoms that ailed Japan in the mid-1990s and 2000s, including rapidly declining growth from 10% to 6% over the last decade, property bubbles, stagnant productivity growth, and secular headwinds like an aging population. It is no surprise, then, that some analysts believe that China will repeat the Japanese economic malaise and end up never surpassing the US economy. Instead, it could stall out vis-a-vis the US economy in the coming decades after
Please, Log in or Register to view URLs content!
around 87% of US GDP by 2035, according to Capital Economics projections.

Avoiding Japan’s fate is the context in which the 14th FYP should be viewed, which is meant as the opening salvo to realizing the 2035 long-range vision. To do so, Beijing will likely have to make the difficult trade-off of sacrificing near-term growth, which will be concentrated in the upcoming FYP cycle through 2025, while laying the groundwork for more sustainable growth in the 2025-2035 decade.

Doubling the Chinese economy in 15 years requires growth to average at least 4.5% during this period. If this serves as a growth floor for China over the next five years, then it will be
Please, Log in or Register to view URLs content!
of 5%+ growth over the 14th FYP, according to International Monetary Fund projections.

The main message of the 14th FYP, then, is likely one that downplays short-term growth in order to focus on efforts needed to sustain future growth. One of the clearest indicators of the prioritization of long-term structural adjustments will be the fate of the growth target in the FYP.

There is a chance that Beijing completely eschews a growth target, which would send the most unambiguous signal to date about shifting priorities. But the more likely scenario will be that instead of ditching the target wholesale, it will be effectively modified into a growth floor. This may not sound like much, but there will be a meaningful difference in how local governments interpret this change. That is, instead of striving to hit and exceed some unrealistic target, the key is simply about avoiding going through the growth floor.

In reality this will mean that the growth target won’t be binding. Many local governments have already set their growth targets at around 6%, in contrast to market expectation of above 8% growth for the national economy. To put this in perspective, after adjusting for the impact of the Covid-19 lockdown in 1Q2020, a 6% GDP target in 2021 effectively translates into a very modest 3% growth. Moreover, Beijing will send clear messages to local officials to disincentivize them from pursuing growth that diverges wildly from the national average.

Watering down the growth target to the point that it barely matters implies that Beijing does not intend to spend much energy on supporting growth. Instead, it will likely focus on tackling longstanding issues like cutting excessive investment in construction and curtailing local debt. Both of those actions will come at the expense of near-term growth.

Getting the entire country onboard with this shift will be no easy task. But Beijing seems to recognize that the avoidance of structural problems for so long will end up costing the country the mantle of the world’s largest economy. Achieving that goal simply requires more significant changes to the Chinese economy, which would actually make it easier to sustain the average growth rate necessary to get to $30 trillion.

At a minimum, Beijing is prepared to forgo immediate growth to set up for the longer haul.
Anyhow, I agree that the GDP growth targets will shift from an economic growth number provinces are supposed to reach to a number provinces should aim to keep growth above. As such, it makes sense that the "growth target" for the 14th 5-year plan, as being reported by Reuters, is around
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. This will represent a minimum growth floor that the country is expected to achieve, but it is likely real average growth between 2021-25 is closer to 5.5-6% per year. No longer is the growth target a reach-goal; rather it is a floor provinces should not fall under.
 

BlackWindMnt

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The way I see it more billionaires reflects the success of China's companies and dynamism of its economy, which is a good thing. Especially now that China has finally reached parity with the U.S. in Fortune 500 companies.

At the same time, there needs to be more efforts to bring down the cost of housing, health care, education and child care for the middle class.
The thing is with the internet one good service idea can almost instantly reach a couple of billion people, the reach of the network is so much bigger and faster. If you ask me its no wonder a lot more people became billionaires recently.
 

Kaeshmiri

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Well, the thing is, if billionaires don't exist in your country but they exist in other places in the world, you will lose the people with creative ideas to those places.
Capitalist propaganda that is often used in US to prevent taxing the rich. Various studies have debunked this myth.

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Secondly, there should definitely be laws in place to prevent exploitation of workers, and I think those laws can play a great role in improving China for the average citizen, however, there is a line. If a company makes enough money to pay all of its workers fairly and for them to have reasonable standards of living (as determined by their skills),
This is exactly opposite of socialistic practice. What is "fairly" ?. In most countries its what the Govt sets as minimum wage (which is pathetic ). You give enough so that he can eat 3 times a day and have a roof on his head and that counts as fair? Even a prison gives you that.
the owner keeps the rest. And if that makes him a billionaire, he deserves it.
No he doesn't deserve that, his workers do.
He doesn't have to divide up all his wealth to the point where janitors start earning 6 figures just because "billionaires shouldn't exist." This is exactly the type of socialism that doesn't work.
Why not? Is the work of a Janitor degrading and dehumanizing that he doesn't deserve to get paid 6 figures? Its the bourgeois through decades of propganda that has brainwashed the masses into believing that some jobs are degrading and shouldnt get paid more.

The very essence of socialism is that workers are the ones in charge. Bourgeoisie don't get to dictate what their workers should and shouldn't get. I get it that you're not a socialist but China can no way call itself one if workers don't get to keep what they produce.
A country should be focused on getting collectively wealthier and improving everyone's standard of living. As long as that continues, as long as there are less and less poor and more and more people living a sustainable and affordable lifestyle and as long as the median/modal standard of living is improving, it is perfectly fine that the uber rich are pulling up wealth even faster.
Marx would roll in his grave hearing this. So would Mao.
Social instability stems from having too many desolate people, not from the jealousy of those with growing wealth against those whose wealth are growing even faster.
Not true. Social instability happens when the standards of living stagnate which is exactly where China is heading towards. US is facing the same problem and its not because of desolate people.
Making your rich poorer in order to reduce the wealth gap is the most self-destructive way to go about it.
Too bad for the rich that will exactly happen when China transitions to a socialist society. Its either that or the Guillotine.

Understand that China calls itself a socialist country. If China called itself a free market economy i wouldn't care less. You don't get to call yourself Socialist without respecting the workers and allowing the Bourgeoisie to guzzle most of the wealth being generated. There is no debate on this. China is currently a capitalist economy and is seeing the effects of one.

But what matters is that its prepares ground for the inevitable transition to a socialist one.
 
Capitalist propaganda that is often used in US to prevent taxing the rich. Various studies have debunked this myth.

Please, Log in or Register to view URLs content!
There is a huge difference between some countries taxing a little less and some a little more vs wiping out billionaires altogether, which no country does. And to someone who can actually be a billionaire, that's talking about taking away 99% of his wealth, which he would get to keep if he just moved somewhere else.
This is exactly opposite of socialistic practice. What is "fairly" ?. In most countries its what the Govt sets as minimum wage (which is pathetic ). You give enough so that he can eat 3 times a day and have a roof on his head and that counts as fair? Even a prison gives you that.
Fairly means to make a livable wage, to own a house, bring up 2 kids, etc... without worrying deeply about money, on an average education. It's a term that the government should set after some very serious thought; my definition here doesn't matter. It's a balancing act. If you make life too rewarding for the poorly educated, you will have lack of educated and skilled individuals; if you make life too difficult for the poorly educated, you risk opening up the wealth gap and increasing social instability.
No he doesn't deserve that, his workers do.
They work at his instruction and his pay. If they don't like his pay and they feel they deserve more, they can work somewhere else. That principle in every country determines who deserves the wealth, not some defunct ideal of equality.
Why not? Is the work of a Janitor degrading and dehumanizing that he doesn't deserve to get paid 6 figures? Its the bourgeois through decades of propganda that has brainwashed the masses into believing that some jobs are degrading and shouldnt get paid more.
Because then you would have many many people wanting to be janitors since it pays almost equal to chief engineer. Who wants to do college then PhD, when you get paid the same as a floor sweeper out of elementary school? Who would take all the financial risk of developing his idea and forging a company around it if the reward is that he gets paid a sliver more than what he'd earn flipping burgers for someone else without a worry in the world? Another thing, if the company owner divides up all his wealth, what happens when the company hits a rough patch and has to operate at a loss? Are all the employees expected to spit the cash back up and work for free? What happens when the company needs to undertake expensive risky research? Are all the employees expected to put their cash together and shoulder the bill? Your society will have a fatal lacking of intellectual resources and developmental drive.
The very essence of socialism is that workers are the ones in charge. Bourgeoisie don't get to dictate what their workers should and shouldn't get. I get it that you're not a socialist but China can no way call itself one if workers don't get to keep what they produce.
China doesn't follow this principle; China is socialist in name only, and that is why it is thriving. If it follows these socialist and Marxist principles to the tee, China would fade like the Soviet Union.
Marx would roll in his grave hearing this. So would Mao.
I don't care about non-Chinese. Mao wants strength for China and that is what China is achieving. China's economy was retarded under Mao.
Not true. Social instability happens when the standards of living stagnate which is exactly where China is heading towards. US is facing the same problem and its not because of desolate people.
The standards of living are improving in China and whether stagnation causes instability depends on the level it stagnates at. If it is reasonably comfortable, there will be no instability.
Too bad for the rich that will exactly happen when China transitions to a socialist society. Its either that or the Guillotine.
That's not happening. Your definition of socialism doesn't work anywhere and China's success and divergence from the Soviet Union's failure was built on China understanding this.
Understand that China calls itself a socialist country. If China called itself a free market economy i wouldn't care less. You don't get to call yourself Socialist without respecting the workers and allowing the Bourgeoisie to guzzle most of the wealth being generated. There is no debate on this. China is currently a capitalist economy and is seeing the effects of one.
China can call itself anything it wants; I wouldn't waste time arguing over words. China's brand of unique capitalism/"socialism" is what brings it success.
But what matters is that its prepares ground for the inevitable transition to a socialist one.
I see no such doomed transition. China transitions from a cheap bulk volume producer into a high tech high value manufacturer and designer. It will never fall back to dysfunctional Marxist ways or it will be defeated by its rivals.
 
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2handedswordsman

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Look @manqiangrexue , you have to dissolve the fog in your understanding of political economy because you seem to fall into conceptional and methodological mistakes. From your writings i can see that you are a progressive minded person so i will tell you these as a friendly advice and request. And these goes to any other interested.

1) You can't say that you are anti-imerialist but pro-capitalist. Modern Imperialism is defined as the evolved stage, the final stage of capitalism. Looking back into ancient and medieval imperialism you will find the same patterns, stealing of resources by force, either military or political. Same roots, different forms of modes of production (slavery, feudal)

2) If you look back in Mao's era you will see that economy was expanding rapidly with GDP growth numbers matching 90's-2k's era. Are you interested in recent history of you motherland? Go check.

3) Economic boom after Deng's era realised at the exploitation of hundreds of millions of Chinese people, whom extracted value went back to USA and the West. Special economic zones were labour camps given to western monopolies a way to multiply their profits at the expense of the average Chinese worker. 2 generations wasted to build the foundations of the miracle of todays. Worth it? I say Soviet Union refused being hustled by US imperialists and managed to rapidly build their foundations without being exploited by others. BUT the huge rural population of PRC made this decision inevitable.

4) Marxism is the best tool to understand capitalism. Marx never wrote about socialist economics. He carefully dismantled capitalist economics and politcs and philosophy step by step. He set the foundation for the next generations to grow socialist economics. If you want to understand what PRC is doing and why in the field of political economy, you have to read Marx's Das Kapital. You have to care about Marx just to return the favour to a man who devoted himself to humanity, without any racial descrimination.

5) If you wish for CPC to be pro capitalist and turn right-wing and nationalist, there's nothing seperating you from a Taiwanese nationalist. Same qualities. You literally throwing to the garbage the sacrifices of millions of Chinese people for national dignity and social justice. You can't seperate PRC from CPC and it's history. The reason that PRC qualities are not like Taiwan, S. Korea, Japan, or India or the west, is because the governance of CPC which is Marxist in it's core.
 

quantumlight

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Registered Member
It is important to be able to accurately and objectively measure certain aspects of overall wellbeing of a nation and its people. You have things like subjective happiness index, and also things like GDP. But I think GDP doesn't measure what most people believe it does. What many people really want to know is the relative standard of living of the people of a nation; and GDP is not the best metric nor the most precise yardstick for doing this. And its also not as simple as just measuring electric usage or power consumption of a nation or per capita either...

For example consider two data centers... One is old 65nm arch and the other is chips that are state of the art say <3nm chips. The old technology data center with outdated chips can consume orders of magnitiude more power and produce more heat waste into the environment and yet not be able to compute as fast as the newer arch datacenter that uses far less power and pumps out far less heat. Just by measuring electricity usage or power consumption alone would give you misleading indicators of which data center was doing better....

Consider a car centric society in which everyone basically has to own a personal car just to survive and be able to function. So everyone buys cars, and car makers make a lot of money, and this all adds to the GDP of that society and makes it appear to be much more wealthy and well off vs a society that doesn't have a lot of personal car ownership. But if this alternative society actually had better technology in the sense of full autonomous self driving cars, infact a whole pool and continous fleet of them always available to the saturation point where no one in that society has to deal with the concept of personal car ownership and everyone can just hail a ride anytime anywhere for cheap (no need for insurance, car garages are a thing of the past, and significant reduction in road traffic, accident jams, the need for so much parking lots, etc etc) so in actually the society with autonomous swarm of intelligent vehicles are better off for its citizens yet on paper it would appear the first society is richer because it has a higher nominal GDP.

A certain country right now has a dissporportionate portion of its GDP expended in defense and healthcare, and thus is due to inefficies rather than innovations. Not to mention a tacked on 15% imputed rent and other funny money concepts to make the GDP appear larger than it actually is and GDP calculation itself where doesn't reflect actually the true standard of living, unless getting stuck in traffic 2 hour a day is consider some form of luxury meditation
 
Look @manqiangrexue , you have to dissolve the fog in your understanding of political economy because you seem to fall into conceptional and methodological mistakes. From your writings i can see that you are a progressive minded person so i will tell you these as a friendly advice and request. And these goes to any other interested.

1) You can't say that you are anti-imerialist but pro-capitalist. Modern Imperialism is defined as the evolved stage, the final stage of capitalism. Looking back into ancient and medieval imperialism you will find the same patterns, stealing of resources by force, either military or political. Same roots, different forms of modes of production (slavery, feudal)
All I'm saying is that China's system works and traditional socialism does not. Whatever has to be done to make it work for China, China has done it and it clearly did not result in a system that pays everyone equally regardless of qualifications and contributions as Kaeshmiri suggests. I have no philosophical attachments except that China needs to do whatever it can to be the strongest nation.
2) If you look back in Mao's era you will see that economy was expanding rapidly with GDP growth numbers matching 90's-2k's era. Are you interested in recent history of you motherland? Go check.
The economic growth during Mao's rule was highly unstable, sometimes growing by 20% and sometimes dropping by 16%. It is not healthy growth with strong momentum. Most of his economic policies, especially calling for the melting of existing items to make iron, did not make sense. He was known to be an excellent general but a poor economist.
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3) Economic boom after Deng's era realised at the exploitation of hundreds of millions of Chinese people, whom extracted value went back to USA and the West. Special economic zones were labour camps given to western monopolies a way to multiply their profits at the expense of the average Chinese worker. 2 generations wasted to build the foundations of the miracle of todays. Worth it? I say Soviet Union refused being hustled by US imperialists and managed to rapidly build their foundations without being exploited by others. BUT the huge rural population of PRC made this decision inevitable.
Once again, the Soviet tactic did not work while the Chinese one did in the long run. The result is clear and results always trump ideology.
4) Marxism is the best tool to understand capitalism. Marx never wrote about socialist economics. He carefully dismantled capitalist economics and politcs and philosophy step by step. He set the foundation for the next generations to grow socialist economics. If you want to understand what PRC is doing and why in the field of political economy, you have to read Marx's Das Kapital. You have to care about Marx just to return the favour to a man who devoted himself to humanity, without any racial descrimination.
I don't care about Marx; he might have meant well but his ideology doesn't work anywhere in the world. China borrowed some things from him but China did not actually follow him or the country would be ruined like every other one that did. China created its own system; it was not meant to spread philosophy or honor any man's ideals. China's system was designed to make China succeed and succeed it did.
5) If you wish for CPC to be pro capitalist and turn right-wing and nationalist, there's nothing seperating you from a Taiwanese nationalist. Same qualities. You literally throwing to the garbage the sacrifices of millions of Chinese people for national dignity and social justice. You can't seperate PRC from CPC and it's history. The reason that PRC qualities are not like Taiwan, S. Korea, Japan, or India or the west, is because the governance of CPC which is Marxist in it's core.
I wish for the CCP to use any way it can to bring China to the top of the world. To me, the main difference between the KMT and CCP is that the KMT were spineless and wanted to bow to the West and subject China to a future like that of Japan's for momentary comfort while the CCP dared to dream that China can rise on its own power and stand to eclipse all else. The CCP realized that this dream is possible and worth suffering for. That's my admiration for them as well as their flexibility in policy to create their own system rather than pick amongst the options presented to them. At the core, Chinese strength is all that matters; the economical politics used to achieve it are secondary/tertiary details compared to the core. Black cat or white cat, if it catches the mouse, it's a good cat.

In the end, your post doesn't address the points I raised, which describe why it doesn't work to strip wealth from corporation owners to give overwhelmingly high pay to those who perform menial tasks. Never sacrifice success for loyalty to ideology; this rigidity is a mistake made by defeated civilizations.
 
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