Being disingenuos are we? Anyone can go to my post and read that I said 'much of the economy...' not what you selectively quoted. Want to contiinue?
Chinese Economics Thread
- Thread starter Norfolk
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You must have conveniently forgotten your claim that the Chinese economy in PPP is "easily 100% larger" than that of the US and you blamed it on counties and townships not reporting. By your logic, for the real PPP number to be 60 trillion dollars instead of 40 trillions, China's published economic data must have been off by 50%. Do you honestly believe that the official numbers and rankings from the governments are such useless garbage? Whether or not I included the "much of" in my quote does not change how bogus your claim is.
There is ample evidence that China’s GDP is significantly underestimated.
For example, when comparing nominal sales of consumer goods between China and the U.S., they are nearly the same, with China slightly higher.
Yet, in GDP statistics, U.S. personal consumption is more than three times that of China.
This is far too abnormal.
Furthermore, China’s e-commerce market has nominal sales twice that of the U.S.
Experts unconvincingly explain this unnatural difference by claiming that in the U.S., most sales occur in physical stores with little e-commerce, while in China, people avoid physical stores and rely heavily on e-commerce and digital services, thus causing this reversal. This is clearly a stretch.
It is hard to believe that Chinese people, living in densely populated cities, rely far more on e-commerce than Americans, who are spread across a vast continent.
Additionally, even though the U.S. has a traditionally strong movie-loving culture, its film market is only slightly larger than China’s.
Where exactly is this threefold difference in personal consumption?
Moreover, China’s fixed capital investment, in nominal terms, far exceeds that of the U.S.
No matter how active China is in investment, if there is a significant difference in economic scale, why can China overwhelmingly surpass the U.S. in investment amounts?
Of course, much of this issue stems from the fact that the U.S. government inflates its GDP to an abnormal degree.
For example, when comparing nominal sales of consumer goods between China and the U.S., they are nearly the same, with China slightly higher.
Yet, in GDP statistics, U.S. personal consumption is more than three times that of China.
This is far too abnormal.
Furthermore, China’s e-commerce market has nominal sales twice that of the U.S.
Experts unconvincingly explain this unnatural difference by claiming that in the U.S., most sales occur in physical stores with little e-commerce, while in China, people avoid physical stores and rely heavily on e-commerce and digital services, thus causing this reversal. This is clearly a stretch.
It is hard to believe that Chinese people, living in densely populated cities, rely far more on e-commerce than Americans, who are spread across a vast continent.
Additionally, even though the U.S. has a traditionally strong movie-loving culture, its film market is only slightly larger than China’s.
Where exactly is this threefold difference in personal consumption?
Moreover, China’s fixed capital investment, in nominal terms, far exceeds that of the U.S.
No matter how active China is in investment, if there is a significant difference in economic scale, why can China overwhelmingly surpass the U.S. in investment amounts?
Of course, much of this issue stems from the fact that the U.S. government inflates its GDP to an abnormal degree.
I stand by my claim that the real Chinese economy is easily 100% bigger than the reported economy meaning that there is a vast economy that is not reported. What leads me to think this is I have family and friends who live in China who either do side gigs to earn income that is not reported or live entirely disconnected from the 'official economy'. China's black market is massive and is bigger than some countries GDP. Also, check out this:
It is never disputed that Chinese economy has been underestimated. What's in contention is by how much and where.
It's okay to boast about China's real economic power being greater than commonly thought. But it does not have to resort to the narratives that it is because there is a massive underground economy unaccounted by the government. If the Chinese governments were missing the mark by 50% in their economic data, China would have been a failed state.
The discrepancy between China's nominal GDP and PPP is largely a methodology issue. It is well known that the Chinese authorities still weight more on production than consumption in their economic statistics. It has also been exaggerated by the weaker RMB compared to the USD which is due to geopolitics more than economics.
Last but not the least, macro economy observations should rely on quality data from trusted sources instead of anecdotal evidences.
It's okay to boast about China's real economic power being greater than commonly thought. But it does not have to resort to the narratives that it is because there is a massive underground economy unaccounted by the government. If the Chinese governments were missing the mark by 50% in their economic data, China would have been a failed state.
The discrepancy between China's nominal GDP and PPP is largely a methodology issue. It is well known that the Chinese authorities still weight more on production than consumption in their economic statistics. It has also been exaggerated by the weaker RMB compared to the USD which is due to geopolitics more than economics.
Last but not the least, macro economy observations should rely on quality data from trusted sources instead of anecdotal evidences.
These two things are needed as soon as possible
1. Increase the minimum wage bigly
2. Monthly payments for raising a child directly from central government
Why preference for cash payments?
Why not, raise taxes for households/individuals with no children, lower taxes (or raise the standard allowance) for households with children?
I don't have an opinion on minimum wage. IMO, minimum wage should be a lagging indicator, specifically targetted at the bottom 2-3% of the population to raise the income floor.
Because cash is from printing machine, so direct transfer from government (government deficit is a private sector surplus), and rising/lowering taxes and giving subsidies is just transfer from one side of households to the other side.
In Europe we have minimum wage at 50% of average wage, that's usually 20% of people on minimum wage and another 20% close to minimum wage. It flattens the salary in the economy, cashier or hairdresser doesn't earn that much less than some white collar bro in the office.
China needs inflationary impuls in the services and other businesses and the easiest way of doing it is do the two things I said. If the cost for running businesses raises they won't be able to fight to the lowest margin possible. Another thing is people will have more money from increases of salaries and cash hangouts and they will buy more things businesses produce. That's exactly what happened in Poland 2016-2025.
China needs more socialism not less, that's where current problems in China are, too much capitalism.
In Europe we have minimum wage at 50% of average wage, that's usually 20% of people on minimum wage and another 20% close to minimum wage. It flattens the salary in the economy, cashier or hairdresser doesn't earn that much less than some white collar bro in the office.
China needs inflationary impuls in the services and other businesses and the easiest way of doing it is do the two things I said. If the cost for running businesses raises they won't be able to fight to the lowest margin possible. Another thing is people will have more money from increases of salaries and cash hangouts and they will buy more things businesses produce. That's exactly what happened in Poland 2016-2025.
China needs more socialism not less, that's where current problems in China are, too much capitalism.
Not saying the currently low minimum wages are satisfactory in China. But in Poland, you had the other, usually stronger, European economies like Germany that could absorb your redundant workers until things turned around for good. China will not have such luck if higher wages kill jobs.
It all boils down to the fact that a big portion of the Chinese labour force do not have the required skills to make themselves less "disposable" when competing with those of other developing countries.
Yeah this is going to sound crass, but 600m left behind by modernization, stuck in manual agriculture/informal economy. Their disposable income per year is ~2000 USD. That's 40% of population reduced to 5% of consumption (incidentally also grossly drag down per capita figures, i.e. new generations of high skilled already well above high income). But this cohort skews old (hence undereducated/undertrained), so that's also potentially 300/400m+ elders to sustain in coming decades. IMO most sensible thing to do is keep their wage/consumption lowish so cost to sustain this cohort into old age is not onerous. Keep rural wages/COI low, but higher ppp vs developed regions so future transfers from wealthy regions stretch further, like internal remittance system. Basically current two-track sytem. Ultimately state is going to be in charge of pensions for this cohort, I think big reason reluctance to give cash/increase minimum wage, because these are cohorts whose COI ans savings (old - with limited / no time left in workforce) that gov does not want to inflate. I haven't followed PRC developement economics in a while, but they talk about concepts close to dual sector model and low-level equilibirum trap, i.e. its cheaper/stabler to keep cohort who can't integrate with modern economy in seperate economic bubble, so presumably they can be managably uplifted by wealthier/developed economic track with more resources. This does mean continued hukou (even with reforms) and maintaining value-engineered manufacturing sector with low margins that can build products at low-income price points. Incidentally will also synergize with maintaining export to ~40% / 3b people with that level of consumption which is useful geopolitical card.