Chinese Economics Thread

[AssassinsMace]

Even though Alibaba has no US presence, US retailers are using it to scare Congress into action against online retailing.

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China should take names and punish accordingly.

 

[solarz]

Even though Alibaba has no US presence, US retailers are using it to scare Congress into action against online retailing.

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China should take names and punish accordingly.

The phrase "庸人自扰" comes to mind. Alibaba has made no move toward establishing an online retail presence in the US, and indeed with the established presence of EBay and Amazon, it may never do so. It only had its IPO in NY due to financial considerations.

I don't think China needs to do anything. Let the American companies panic and pressure their politicians into doing something idiotic. It will only give China more leverage in future negotiations.

 

[broadsword]

So if Congress closes the tax loopholes in online retailing, then what? Online retailing will still cater to a segment of the consumers who prefer shopping online because how much can their govt tax to put them out of business?

If Alibaba sets up shop in America, brick and mortar retailers do not have to fear them more than their own existential online retailers like Amazon, Zappos and Williams-Sonomas. Vendors from Asia using Alibaba as the platform to sell in America direct to consumers face the transport cost issue of shipping from Asia. Compare buying a single LED tv from Alibaba with from Amazon. For most products, it will be more expensive to source from Alibaba, other than for bulk purchases. Many products seen on Amazon are cheaper than Aliexpress anyway. But once Alibaba starts in America, its own entrepreneurs can rent Alibaba's shop front to conduct their own online retailing, but then this is no different from the arrangement seen in Amazon and Ebay.

 

[delft]

Bits from NYT:

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In 2015, Technology Shifts Accelerate and China Rules, IDC Predicts
By Steve Lohr
December 2, 2014 2:00 am

In the year-end predictions game, most technology forecasts tend to be either blue sky or boring, flights of imagination or a firm grasp of the obvious.

For the last several years, IDC has published prediction reports that generally avoid the pitfalls of the genre, and offer a useful framework for thinking about the trajectory of trends in technology. The technology research firm’s predictions for 2015, published on Tuesday, come in a 17-page report that is rich in numbers and analysis.

Beyond the detail, a couple of larger themes stand out. First is China. Most of the reporting and commentary recently on the Chinese economy has been about its slowing growth and challenges.

“In information technology, it’s just the opposite,” Frank Gens, IDC’s chief analyst, said in an interview. “China has a roaring domestic market in technology.”

In 2015, IDC estimates that nearly 500 million smartphones will be sold in China, three times the number sold in the United States and about one third of global sales. Roughly 85 percent of the smartphones sold in China will be made by its domestic producers like Lenovo, Xiaomi, Huawei, ZTE and Coolpad.

The rising prowess of China’s homegrown smartphone makers will make it tougher on outsiders, as Samsung’s slowing growth and profits recently reflect.

More than 680 million people in China will be online next year, or 2.5 times the number in the United States. And the China numbers are poised to grow further, helped by its national initiative, the Broadband China Project, intended to give 95 percent of the country’s urban population access to high-speed broadband networks.

In all, China’s spending on information and communications technology will be more than $465 billion in 2015, a growth rate of 11 percent. The expansion of the China tech market will account for 43 percent of tech-sector growth worldwide.

Another theme in the IDC report is the quickening pace of the move from older technologies to new ones. Overall spending on technology and telecommunications, IDC estimates, will rise by a modest 3.8 percent in 2015. Yet the top-line numbers mask the trends beneath. IDC predicts there will be growth of 13 percent in what the research firm calls “3rd platform” technologies (cloud, mobile, social and big data). By contrast, older technologies will face a no-growth “near recession,” according to IDC, and “will shift fully into recession” by the second half of next year.

IDC’s 3rd platform is similar to what Gartner, another big research firm, has called a “nexus of forces” sweeping through the industry. (Gartner’s ingredients are virtually the same as IDC’s with slightly different labels — social interaction, mobility, cloud and information.) The 1st platform, in IDC’s taxonomy, was the mainframe era, running from the 1960s into the 1980s. The 2nd platform included personal computers and the Internet, and began in the 1980s and ran through the middle of the first decade of this century.

Cloud-computing data centers are the engine rooms of the other 3rd platform technologies of mobile, social and big data. Building these cloud power plants is increasingly a costly, high-stakes endeavor. In 2015, IDC predicts, there will be a winnowing.

The leading players will keep spending and growing, and IDC identifies the leaders as Amazon, Google, Microsoft and IBM. “But we’ll see a lot of dropouts, as companies pull back from cloud infrastructure and focus on what they’re good at,” Mr. Gens said.

Candidates to drop out of delivering computing resources as a cloud service, he said, include Hewlett-Packard and the telecommunications companies. Salesforce, a leader in cloud-based business software, may want to do a deal with one of the big builders of cloud data centers, Mr. Gens suggested. That way, he added, Salesforce could concentrate its resources on software — as the German software maker SAP did recently in a deal with IBM.

But while some retreat, China will likely produce a major cloud rival or two, IDC predicts. Alibaba, China’s dominant online merchant, Baidu, the Chinese search engine, or Tencent, China’s big social network, might well move beyond building data centers for their own use to supplying cloud computing as a service — the path taken by both Amazon and Google.

“Driven by their massive domestic market,” IDC predicts, “one or more of these Big Three cloud-based giants will challenge Amazon, Microsoft, IBM, Google” and others over the next three to four years.

China is doing well in an important sector of the economy. That compensates somewhat for the problems in the economies to which China exports.

 

[xiabonan]

Bits from NYT:

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China is doing well in an important sector of the economy. That compensates somewhat for the problems in the economies to which China exports.

China's problems are a part of her progress. Her economy is in a transition period. Whether or not she makes it will pretty much determine if China can really make it to the group of the world's most advanced economies and escape the middle income trap, and its success or failure at this transition will also likely determine the fate of CCP's rule in China.

The leaders know it well.

 

[broadsword]

Heck, it was under the radar.

China Overtook U.S. In Monthly Electric-Car Sales Two Months Ago


China has been the world's largest auto market for several years now, with 18 million passenger cars and another 4 million commercial vehicles sold there last year.

But until recently, sales of plug-in electric cars have lagged those in the U.S. (whose market seems likely to be around 17 million vehicles this year).

Now, according to an article on the Chinese news site Sina Auto (via Want China Times), in September the country's electric-car sales exceeded those of the U.S.--likely for the first time.

While U.S. plug-in sales vary from month to month, as do vehicle sales overall, this year's rate is roughly 10,000 electric cars a month on average.

In September, according to the article, Chinese buyers purchased 11,991 cars with plugs throughout the country, against 10,551 in the U.S.

Some of those Chinese electric cars would likely be deemed low-speed vehicles under U.S. law, and many would not pass North American crash-safety tests.

Still, given the hurdles to electric-car adoption in the country--including fierce price competition for lower-priced cars, and the prevalence of large apartment buildings against single-family homes--the total is a notable achievement.

Both national and regional governments in China are heavily pushing adoption of electric cars as one way to address the dangerous level of airborne emissions from vehicles and industry in most Chinese cities.

So-called "new energy vehicles" are increasingly mandated by government bodies for public fleets and public transportation, including a growing fleet of electric buses.

The definition of a new energy vehicle can vary from jurisdiction to jurisdiction, but in general it means a car that plugs in--whether battery-electric cars like the Kandi or plug-in hybrids like the BYD Qin.

 

[Equation]

It’s official: America is now No. 2 (in PPP TERMS)

Hang on to your hats, America.

And throw away that big, fat styrofoam finger while you’re about it.

There’s no easy way to say this, so I’ll just say it: We’re no longer No. 1. Today, we’re No. 2. Yes, it’s official. The Chinese economy just overtook the United States economy to become the largest in the world. For the first time since Ulysses S. Grant was president, America is not the leading economic power on the planet.

It just happened — and almost nobody noticed.

The International Monetary Fund recently released the latest numbers for the world economy. And when you measure national economic output in “real” terms of goods and services, China will this year produce $17.6 trillion — compared with $17.4 trillion for the U.S.A.

As recently as 2000, we produced nearly three times as much as the Chinese.

To put the numbers slightly differently, China now accounts for 16.5% of the global economy when measured in real purchasing-power terms, compared with 16.3% for the U.S.

This latest economic earthquake follows the development last year when China surpassed the U.S. for the first time in terms of global trade.

I first reported on this looming development over two years ago, but the moment came sooner than I or anyone else had predicted. China’s recent decision to bring gross domestic product calculations in line with international standards has revealed activity that had previously gone uncounted.

These calculations are based on a well-established and widely used economic measure known as purchasing-power parity (or PPP), which measures the actual output as opposed to fluctuations in exchange rates. So a Starbucks venti Frappucino served in Beijing counts the same as a venti Frappucino served in Minneapolis, regardless of what happens to be going on among foreign-exchange traders.

PPP is the real way of comparing economies. It is one reported by the IMF and was, for example, the one used by McKinsey & Co. consultants back in the 1990s when they undertook a study of economic productivity on behalf of the British government.

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Yes, when you look at mere international exchange rates, the U.S. economy remains bigger than that of China, allegedly by almost 70%. But such measures, although they are widely followed, are largely meaningless. Does the U.S. economy really shrink if the dollar falls 10% on international currency markets? Does the recent plunge in the yen mean the Japanese economy is vanishing before our eyes?

Back in 2012, when I first reported on these figures, the IMF tried to challenge the importance of PPP. I was not surprised. It is not in anyone’s interest at the IMF that people in the Western world start focusing too much on the sheer extent of China’s power. But the PPP data come from the IMF, not from me. And it is noteworthy that when the IMF’s official World Economic Outlook compares countries by their share of world output, it does so using PPP.

Yes, all statistics are open to various quibbles. It is perfectly possible China’s latest numbers overstate output — or understate them. That may also be true of U.S. GDP figures. But the IMF data are the best we have.

Make no mistake: This is a geopolitical earthquake with a high reading on the Richter scale. Throughout history, political and military power have always depended on economic power. Britain was the workshop of the world before she ruled the waves. And it was Britain’s relative economic decline that preceded the collapse of her power.

And it was a similar story with previous hegemonic powers such as France and Spain.

This will not change anything tomorrow or next week, but it will change almost everything in the longer term. We have lived in a world dominated by the U.S. since at least 1945 and, in many ways, since the late 19th century. And we have lived for 200 years — since the Battle of Waterloo in 1815 — in a world dominated by two reasonably democratic, constitutional countries in Great Britain and the U.S.A. For all their flaws, the two countries have been in the vanguard worldwide in terms of civil liberties, democratic processes and constitutional rights.

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[Equation]

Here's another story with a more optimistic view.

The Chinese Century has begun.

China's economy has surpassed that of the United States to take the title of the world's largest economy, according to recently released figures from the International Monetary Fund.

China has been long projected to eventually overtake the U.S. in terms of sheer economic might, although the timeline was unknown. Nobel Prize-winning economist Joseph Stiglitz noted that the World Bank projected it would happen in 2014, and the IMF agrees.

The chart below shows the purchasing power parity of the world's biggest economies. China's 2014 GDP is now estimated at $17.6 trillion, edging out the U.S. by around $200 billion. That gap is expected to grow.

But It's not all bad news. The U.S. economy is still growing, and Chinese growth adds to that.

"The world economy is not a zero-sum game, where China’s growth must necessarily come at the expense of ours. In fact, its growth is complementary to ours. If it grows faster, it will buy more of our goods, and we will prosper," Stiglitz wrote in a column for Vanity Fair.

The U.S. is still ahead by some other metrics, most notably patents, which can be an indicator of innovation. China, however, is gaining ground.

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[delft]

From the Yahoo article:

And we have lived for 200 years — since the Battle of Waterloo in 1815 — in a world dominated by two reasonably democratic, constitutional countries in Great Britain and the U.S.A. For all their flaws, the two countries have been in the vanguard worldwide in terms of civil liberties, democratic processes and constitutional rights.

Great Britain democratic in 1815? A century before universal sufferage.? Eighteen years before the changes of 1832, the abolishment of the rotten boroughs? LOL.
At the end of the 19th century the Tory party was formally opposed to democracy.
Can someone describe how democratic was US in 1815? from the wiki on Universal sufferage -

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The United States theoretically adopted full male suffrage with the Fifteenth Amendment to the United States Constitution in 1870, but this was not practically implemented in the South until the Voting Rights Act of 1965.

 

[Equation]

From the Yahoo article:

Great Britain democratic in 1815? A century before general franchise? Eighteen years before the changes of 1832, the abolishment of the rotten boroughs? LOL.

I...didn't wrote that, it came from the article.