Chinese Economics Thread

[Franklin]

Is the editor of The Economist's China Desk on leave? There's a surprisingly positive article on Chinese smartphone and product innovations that's missing its usual condescending flair.

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This relates to the fact that the media has almost completely ignored China's economy moving up the value chain. China's growing technical and scientific capabilities are almost never being taken into account when people are talking about the Chinese economy. They maybe slowly catching on. But I still think it will take them some time before they can connect all of the dots. I guess we as military fanboys have a better insight or at the very least a better appreciation of China's growing scientific and technological prowess compared to journalists or economists.

 

[Equation]

This relates to the fact that the media has almost completely ignored China's economy moving up the value chain. China's growing technical and scientific capabilities are almost never being taken into account when people are talking about the Chinese economy. They maybe slowly catching on. But I still think it will take them some time before they can connect all of the dots. I guess we as military fanboys have a better insight or at the very least a better appreciation of China's growing scientific and technological prowess compared to journalists or economists.

Or maybe that the media are just in denial and still stuck on stubbornness of their own ignorance.

 

[Blackstone]

Looks like The Economist's China Desk editor is back from leave, as indicated by their preachy, condescending, and at times near-racist views. Here's the latest stones from those that live in glass houses- unusually fragile glass too.

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WHEN two security guards in Dalian in north-east China got their first month’s pay packet earlier this year, they questioned why each received different amounts for identical work. The company responded that one man was 5cm (two inches) taller than his peer. Workers over 180cm earn more, they said, because bigger guards make people feel safer.

Stature is often a desirable attribute of guards, but in China height requirements are routinely specified for jobs which seem to have no need of them. To study tourism and hotel management at Huaqiao University in Fujian province, men topping 170cm are favoured, and women over 158cm. A post as a female cleaner in Beijing is advertised to women of at least 162cm. Many companies are less explicit about such demands than they used to be, but candidates often list height (and weight) on their curricula vitae.

The height premium is most pronounced for women, according to a study from Huazhong University of Science and Technology. It found that each centimetre above the mean adds 1.5-2.2% to a woman’s salary, particularly among middle- and high-wage earners. A group at China University of Political Science and Law is working on a draft law against employment discrimination for height and other physical characteristics.

Ever more Chinese are rising above such constraints, however. A 45-year-old man in China today is around 5cm taller than 30 years ago, according to the RAND Corporation, a think-tank. Soldiers are growing too tall for the diminutive tanks favoured by the People’s Liberation Army; in 2010 the government raised by 10cm the height under which children in China travel free on trains (a rare scheme that benefits the small).

Greater heights mostly reflect greater incomes. Richer people tend to eat more and live in cleaner, better homes. Meat consumption per person has increased more than fourfold since 1980. Infant mortality is less than a tenth of what it was 60 years ago. Household size has also helped. Historically people from big families have been shorter (not just in China) because food supplies must stretch further. In China the birth rate fell sharply from the 1970s nationwide.

But there are differences across the country which partly reflect the uneven benefits of the economic boom. Eighteen-year-olds from the richest cities are on average 7-8cm taller than those from the poorest ones. The height gap between prosperous and impoverished rural areas is similar. Southerners have long been shorter than northerners. Although the difference between rural and urban heights has narrowed since 1975, other discrepancies persist. The World Health Organisation says around 20% of children in poor rural areas are “stunted”, a common indicator of chronic malnutrition. This compares with 2.5% of city children. Employers’ preference for high and mighty staff exacerbates that inequality. It is time they grew up.

 

[xiabonan]

Looks like The Economist's China Desk editor is back from leave, as indicated by their preachy, condescending, and at times near-racist views. Here's the latest stones from those that live in glass houses- unusually fragile glass too.

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I have observed the trend that anything Economics related on Economist is rather well written--or at least relatively better.

The rest of the stuff is just meh

 

[getready]

Sounds like some middle man in India is hording all the Xiaomi Redmi 1S smartphones to be resold later at higher prices of course.

Strange. I only saw on Al Jazeera news tht India is boycotting Chinese products. Example during deepali they are reading to buy Chinese made firecrackers or something. Only made in India ones. Something about china ones are inferior. Any excuse to go for protectionism I guess

 

[broadsword]

There is a major Chinese firecracker manufacturer engaged in a joint manufacturing with an Indian counterpart in India.

 

[Blackstone]

PRC fake export invoices to HK is increasing, and it'd be interesting to find out if SOEs or private corporations do more of it, in RMB terms.

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The gap between China’s reported exports to Hong Kong and the territory’s imports from the mainland widened in September to the most this year, suggesting fake export-invoicing is again inflating China’s trade data.

China recorded $1.56 of exports to Hong Kong last month for every $1 in imports Hong Kong registered, leading to a $13.5 billion difference, based on government data compiled by Bloomberg. Hong Kong’s imports from China climbed 5.5 percent from a year earlier to $24.1 billion, figures showed yesterday; China’s exports to Hong Kong surged 34 percent to $37.6 billion, according to mainland data on Oct. 13.

While China’s government has strict rules on importing capital, those seeking to exploit yuan appreciation can evade the limit by disguising money inflows as payment for goods exported to foreign countries or territories, especially Hong Kong. The latest trade mismatch coincided with renewed appreciation of China’s currency, leading analysts at banks and brokerages including Everbright Securities Co. and Australia & New Zealand Banking Group Ltd. to question the export surge.

“This is definitely another important piece of evidence of over-invoicing exports to Hong Kong to facilitate money inflow into China,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong. “So we shouldn’t be too optimistic about recent export data from China.”

Doubts over the data raise broader concerns, as a surge in exports was believed to have underpinned economic growth in the third quarter. Shen said the economic outlook is “challenging” and more easing is “necessary.”

China’s government noticed the rapid increase in trade of some merchandise with Hong Kong, Shen Danyang, spokesman of the Ministry of Commerce, said at a briefing on Oct. 16. The spokesman said the ministry will step up scrutiny and analysis.

A fax sent yesterday to the State Administration of Foreign Exchange of China questioning the quality of the data wasn’t immediately replied to.

 

[Equation]

This is why the naysayers and doom-mongers about China economy will always be wrong.

By Noah Smith
Larry Summers and Lant Pritchett have written a paper predicting a Chinese growth slowdown. In 2013, Barry Eichengreen, Donghyun Park, and Kwanho Shin wrote a paper with much the same message, which accurately predicted the recent Chinese slowdown from about 10 percent annual growth to about7.5 percent. In fact, the most basic model of economic growth, the Solow Model, predicts that a country's growth slows as it gets richer. Yes, the case for a Chinese slowdown is pretty incontrovertible at this point.

According to many pundits, this means that, like the Soviet Union and Japan before it, China doesn't threaten to supplant the U.S. as the world’s biggest economy. For example, here is Neil Irwin of the New York Times:

[P]ut aside the challenges China faces this quarter, or next year, and there is one view that is overwhelming: China is a long-term economic juggernaut that will stand astride the global economy in another generation’s time...

[F]or years now, major magazines and editorials and books have told me about the Chinese Century, in which we are apparently now living. Leading foreign policy journals have devoted copious ink to exploring what China’s rise will mean for global economics and politics, often taking as a given that China will be the dominant power of the coming century...

Analysts predicted that the Soviet economy would soon surpass the American economy in the 1960s, that Japan’s would do the same in the 1980s and that the United States had achieved a new era of perpetual speedy growth in the late 1990s. None of these have come to pass.

China will definitely slow down, but the analogy to the Soviet Union and Japan is a bad one, for one incredibly simple reason: size. China is so enormously huge that it would take a calamity far worse than what happened to Japan, or even the USSR, to stop it from becoming the world’s largest economy.

China’s population in 2013 was 1.357 billion while the U. S.'s was 316 million. That’s a ratio of 4.29 to 1.

Just to help the reader understand this size disparity, imagine that the U.S. was an average American man, weighing 191 pounds. If population were weight, then China would weigh the same as an 819-pound adult male grizzly bear.

To put it another way, imagine that the U. S. were the JPMorgan Chase headquarters in New York, which is 707 feet (215 meters) tall. If population were height, then China would be 316 feet taller than the Burj Khalifa, which at 2,717 feet is the world’s tallest building.

Of course, population and gross domestic product are'n't weight or height, so let’s put it in slightly more realistic terms. Here is a fact: If every Chinese person of working age had a job for 40 hours a week, 50 weeks a year, those workers would only need to make $9.15 an hour for the Chinese economy to be larger than that of the U.S.

How about those comparisons to the USSR? If China’s per-capita GDP were the same level as that of Russia today, China’s economy would be 20 percent larger than that of the U.S.

In other words, even a Soviet-style collapse would present no obstacle to China becoming the world’s dominant economy. The one simple reason is that China is mind-bogglingly huge.

For China not to become the world’s largest economy, it would not take just a slowdown -- it would take a collapse on a bigger scale than anything we’ve seen in recent world history, short of Zimbabwe or North Korea. That isn't impossible, but it seems unlikely.

In fact, it’s arguably true that China is already the world’s largest economy. It’s the biggest in purchasing-power parity terms, which is arguably a better measure of how much stuff China as a whole can buy. It’s the world’s largest trader and largest manufacturer.

So those who argue that China’s economic dominance isn't inevitable are either A) quibbling about a technicality, or B) forgetting the overriding yet simple fact of China’s enormous size.

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[Blitzo]

To be fair, if growth really does somehow slip to 1% then obviously it would be a disaster.

And obviously, overall large national GDP doesn't necessarily mean the population has a contented GDP/capita or wealth distribution.

 

[Equation]

To be fair, if growth really does somehow slip to 1% then obviously it would be a disaster.

And obviously, overall large national GDP doesn't necessarily mean the population has a contented GDP/capita or wealth distribution.

Perhaps, but the main point is that the majority of China's GDP are export and investment base right now, meanwhile the US is domestic base from consumer spending that propels it to the top of the world. NOW, imagine once China reach to that domestic consumption base economy stage with a population of that size....it would be mind boggling in which the world has yet seen. And China hasn't even touch that area of consumption spending yet and they're still 2nd largest economy in the world.