4 ms·

In 2010 China will become the world’s second-largest economy

38 points by pg 17y ago

cperciva 17y ago
So... when does YC China launch? :-)
- pg 17y ago
  We're still trying to grow YC within the US before we think about expanding to other countries. We're still learning.
  - toisanji 17y ago
    I would apply to yc china if it existed. I would also be extremely interested in helping set up yc china if given the opportunity.
    - newhouseb 17y ago
      YC China may not, but Innovation Works (http://en.innovation-works.com/ http://en.innovation-works.com/) does. It's a slightly different model than YC (more of an incubator), but it's as close as you'll come. Its claim to fame is that it was founded by KaiFu Lee, founder of MSRA and Google China. He's pretty much the Bill Gates of China. On the first day of applications, they had something crazy like 30,000 resumes for 30 slots. So I'd say it's slightly competitive :)
      - rms 17y ago
        That looks like it. Do you know if the Chinese Government has a stake in it? I tried doing research on the investors, but it's hard to know if the various arms of the CCP are actually limited partners in the VC firms with just a quick google.
  - stanley 17y ago
    Do you feel it's likely for developing nations to spur homegrown incubators or is it too early?
  - msort 17y ago
    I think it'd be great if YC can go to China. The growing economy and market, the huge talent tool, super low cost of labors and office. It works very well with YC philosophy. One downside is Chinese government's tight control on internet.
    - liuliu 17y ago
      The downside you mention becomes a central issue these days. The recent launched cntv.cn is a good example when the national TV in China attempt to take a big share from Internet VOD business (hulu model). To launch the site, they first use their popularity to fire bullets on other video sites for reasons such as adult content, copyright content or unauthorized content (every imported video has to be censored or it is illegal in China, the rule actually causes recent trouble in WTO). Under this pressure, many sites are closed. The argument is, like what China did to its steel/telecom/coal business (FYI, are controlled by the nation itself). It tries to gain control on Internet, not only in management standpoint but actual business (nationalization). A more interesting view is that as most children of China's high level officials are in their 20s. They are likely to do Internet related business. Well, powerful parents bring benefits. It is not bad or unfair and it is understandable worldwide. But using your parents' money and relations to build business is millions light years far from what they do today in China. For example, Li Hehe, the son of Li Zhaoxing (former foreign minister of China) established a SNS website called 99sushe (http://99sushe.com http://99sushe.com). He actually uses his father's relation to have everyone who attend national English test (known as CET-4, required for college graduation) to register on his site in order to review their scores (http://cet.99sushe.com/ http://cet.99sushe.com/). I see it as a classic abuse of their power. Far worse, to my knowledge, it is only a beginning. YC is a institution which only provides a little money, good atmosphere, relations and access to first tier VC and law firms. Good lawyer, enough money and a brilliant you, that is the only things you need for doing "free" business in open countries (EU or U.S.). But in China, you need to build relations with high level officials. For a UGC site, you have to hire a person to delete contents immediately when the Internet cops phone you. It is just not economical for startup. But unfortunately these are crucial for your business success in China, and these are something YC China (in my imagination) cannot provide.
    - garply 17y ago
- 8plot 17y ago
  Would China even allow a YC?
  - rms 17y ago
    Sure, but I think the most likely way it will happen is that one of the universities (probably Tsinghua) starts an incubator and the Chinese government owns shares in all of the incubated companies, per socialism with Chinese characteristics. http://en.wikipedia.org/wiki/Socialism_with_Chinese_characteristics http://en.wikipedia.org/wiki/Socialism_with_Chinese_characte...
- est 17y ago
  Kaifulee is working on something like YC
artpop 17y ago
It's already the largest non-democratic economy, for what that's worth.
- deleted 17y ago
  [deleted]
Volscio 17y ago
What I find interesting about this is how China is predicted to have almost double the US's GDP by 2050, but GDP per capita tells a different story: US GDP/capita will be double China's in 2050. Then some good debate on whether an authoritarian mixed economy can allocate its GDP more effectively than the US's democratic mixed economy. Which will define the next 40 years? Aggregate or per capita GDP?
- ardit33 17y ago
  one implication of the above is: by 2050 china will be able to spend twice more than the us in military spending, and afford having four times more soldiers/manpower than the US (as costs of personel would be twice lower). hmmm.... new superpower indeed, in paper at leas
r_u_i 17y ago
I'm extremely worried about China's real estate bubble. Chinese labourers are working their asses off, while factory owners crop most of the profit. These money is pours into real estate market. Today an apartment is worth 30X anual income of an average worker(my estimation). Hope when I finish grad school in US and go back, I don't have to pay this much.
- trevelyan 17y ago
  Not until China relaxes its exchange controls. As long as the RMB can't get out of the country to investments offering higher return, there's nowhere else for it to go.
- barredo 17y ago
  A devaluation of its currency should mitigate that (all that debts their citizens will have) afaik.
- garply 17y ago
  I sympathize. I run a wholesale / delivery bakery in Beijing. I've been looking for a storefront for over a year, but am convinced that most people who've signed rental contracts to do retail within the past year or so are currently losing money. That is to say, I think the cost of commercial real estate (and likely residential) is currently too high. But that seems to indicate that it will eventually go down - if enough people start realizing they can't turn a profit with the property they're looking to rent, demand will sag, and prices should follow. But maybe not in the near future - we've been seeing some serious inflation over the past couple of months.
patrickgzill 17y ago
In the USA, a (somewhat) free country where open debate and some level of government transparency is maintained, the "official" government numbers are 10% unemployment. Actual unemployment is closer to 22% (according to shadowstats.com, using the pre-Clinton Administration formula). Aside from this article referencing their own "Economist Intelligence Unit" - how do we know the numbers are not similarly fudged by the Chinese government? Are there not billions of dollars of loans marked as "good" on state-run banks that are in fact, never going to be repaid?
iamelgringo 17y ago
According to the Telegraph: http://www.telegraph.co.uk/finance/economics/6890189/Chinese-economy-overtakes-Japan.html http://www.telegraph.co.uk/finance/economics/6890189/Chinese... , China's statistics bureau recently revised their economic growth statistics for the past year. That would mean that China already overtook Japan as the world's second largest economy at some point in the last 6 months.
fauigerzigerk 17y ago
There's a pretty interesting analysis of China's current investment boom: http://www.pivotcapital.com/reports/Chinas_Investment_Boom_the_Great_Leap_into_the_Unknown.pdf http://www.pivotcapital.com/reports/Chinas_Investment_Boom_t... It argues that China's investment boom is not going to continue and that private consumption cannot possibly fill the void. They think the bubble is going to burst in 2010/2011 and they have pretty convincing numbers. I'd love to hear why they are wrong.
- garply 17y ago
  I don't have the data to respond to this entire paper, especially on big stuff like GDP ratios, etc, but an important part of their argument stuck out as shaky to me. The paper argues that China's urbanization rate is already much higher than is commonly believed, due to China's definition of an urban centers. It notes that Houston or Brisbane would not be counted as cities, due to low population density. But, as a Chinese resident, I don't find it unreasonable at all that Houston wouldn't be counted as a city here - Houston, w/ a population of 2.2m and a density of 1375 people / square kilometer, is dwarfed when you compare it to a dense city of 11+ million like Tianjin, which is considered a bit of a hick town here in Beijing. It seems unreasonable to use American standards for the definition of a city when China's population to usable land ratio is much higher than is frequently encountered in the West.
  - fauigerzigerk 17y ago
    I didn't find the population density comparison very convincing either. But the main point they are making is that not as many people as expected by the financial community are going to move to more urbanized centers in the years to come. Their argument would be more convincing if it was based on economic opportunity instead of population density though.
Arun2009 17y ago
Congrats! About time too! They're nearly 1/6th of mankind. It's just amazing how such a large number of people can pull themselves out of the most wretched kind of poverty. Indias and Africas of the world should take note.

38 points by pg 17y ago

cperciva 17y ago

So... when does YC China launch? :-)

pg 17y ago
We're still trying to grow YC within the US before we think about expanding to other countries. We're still learning.
- toisanji 17y ago
  I would apply to yc china if it existed. I would also be extremely interested in helping set up yc china if given the opportunity.
  - newhouseb 17y ago
    YC China may not, but Innovation Works (http://en.innovation-works.com/ http://en.innovation-works.com/) does. It's a slightly different model than YC (more of an incubator), but it's as close as you'll come. Its claim to fame is that it was founded by KaiFu Lee, founder of MSRA and Google China. He's pretty much the Bill Gates of China. On the first day of applications, they had something crazy like 30,000 resumes for 30 slots. So I'd say it's slightly competitive :)
    - rms 17y ago
      That looks like it. Do you know if the Chinese Government has a stake in it? I tried doing research on the investors, but it's hard to know if the various arms of the CCP are actually limited partners in the VC firms with just a quick google.
- stanley 17y ago
  Do you feel it's likely for developing nations to spur homegrown incubators or is it too early?
- msort 17y ago
  I think it'd be great if YC can go to China. The growing economy and market, the huge talent tool, super low cost of labors and office. It works very well with YC philosophy. One downside is Chinese government's tight control on internet.
  - liuliu 17y ago
    The downside you mention becomes a central issue these days. The recent launched cntv.cn is a good example when the national TV in China attempt to take a big share from Internet VOD business (hulu model). To launch the site, they first use their popularity to fire bullets on other video sites for reasons such as adult content, copyright content or unauthorized content (every imported video has to be censored or it is illegal in China, the rule actually causes recent trouble in WTO). Under this pressure, many sites are closed. The argument is, like what China did to its steel/telecom/coal business (FYI, are controlled by the nation itself). It tries to gain control on Internet, not only in management standpoint but actual business (nationalization). A more interesting view is that as most children of China's high level officials are in their 20s. They are likely to do Internet related business. Well, powerful parents bring benefits. It is not bad or unfair and it is understandable worldwide. But using your parents' money and relations to build business is millions light years far from what they do today in China. For example, Li Hehe, the son of Li Zhaoxing (former foreign minister of China) established a SNS website called 99sushe (http://99sushe.com http://99sushe.com). He actually uses his father's relation to have everyone who attend national English test (known as CET-4, required for college graduation) to register on his site in order to review their scores (http://cet.99sushe.com/ http://cet.99sushe.com/). I see it as a classic abuse of their power. Far worse, to my knowledge, it is only a beginning. YC is a institution which only provides a little money, good atmosphere, relations and access to first tier VC and law firms. Good lawyer, enough money and a brilliant you, that is the only things you need for doing "free" business in open countries (EU or U.S.). But in China, you need to build relations with high level officials. For a UGC site, you have to hire a person to delete contents immediately when the Internet cops phone you. It is just not economical for startup. But unfortunately these are crucial for your business success in China, and these are something YC China (in my imagination) cannot provide.
  - garply 17y ago
8plot 17y ago
Would China even allow a YC?
- rms 17y ago
  Sure, but I think the most likely way it will happen is that one of the universities (probably Tsinghua) starts an incubator and the Chinese government owns shares in all of the incubated companies, per socialism with Chinese characteristics. http://en.wikipedia.org/wiki/Socialism_with_Chinese_characteristics http://en.wikipedia.org/wiki/Socialism_with_Chinese_characte...
est 17y ago
Kaifulee is working on something like YC

artpop 17y ago

It's already the largest non-democratic economy, for what that's worth.

deleted 17y ago
[deleted]

Volscio 17y ago

What I find interesting about this is how China is predicted to have almost double the US's GDP by 2050, but GDP per capita tells a different story: US GDP/capita will be double China's in 2050. Then some good debate on whether an authoritarian mixed economy can allocate its GDP more effectively than the US's democratic mixed economy. Which will define the next 40 years? Aggregate or per capita GDP?

ardit33 17y ago
one implication of the above is: by 2050 china will be able to spend twice more than the us in military spending, and afford having four times more soldiers/manpower than the US (as costs of personel would be twice lower). hmmm.... new superpower indeed, in paper at leas

r_u_i 17y ago

I'm extremely worried about China's real estate bubble. Chinese labourers are working their asses off, while factory owners crop most of the profit. These money is pours into real estate market. Today an apartment is worth 30X anual income of an average worker(my estimation). Hope when I finish grad school in US and go back, I don't have to pay this much.

trevelyan 17y ago
Not until China relaxes its exchange controls. As long as the RMB can't get out of the country to investments offering higher return, there's nowhere else for it to go.
barredo 17y ago
A devaluation of its currency should mitigate that (all that debts their citizens will have) afaik.
garply 17y ago
I sympathize. I run a wholesale / delivery bakery in Beijing. I've been looking for a storefront for over a year, but am convinced that most people who've signed rental contracts to do retail within the past year or so are currently losing money. That is to say, I think the cost of commercial real estate (and likely residential) is currently too high. But that seems to indicate that it will eventually go down - if enough people start realizing they can't turn a profit with the property they're looking to rent, demand will sag, and prices should follow. But maybe not in the near future - we've been seeing some serious inflation over the past couple of months.

patrickgzill 17y ago

In the USA, a (somewhat) free country where open debate and some level of government transparency is maintained, the "official" government numbers are 10% unemployment. Actual unemployment is closer to 22% (according to shadowstats.com, using the pre-Clinton Administration formula). Aside from this article referencing their own "Economist Intelligence Unit" - how do we know the numbers are not similarly fudged by the Chinese government? Are there not billions of dollars of loans marked as "good" on state-run banks that are in fact, never going to be repaid?

iamelgringo 17y ago

According to the Telegraph: http://www.telegraph.co.uk/finance/economics/6890189/Chinese-economy-overtakes-Japan.html http://www.telegraph.co.uk/finance/economics/6890189/Chinese... , China's statistics bureau recently revised their economic growth statistics for the past year. That would mean that China already overtook Japan as the world's second largest economy at some point in the last 6 months.

fauigerzigerk 17y ago

There's a pretty interesting analysis of China's current investment boom: http://www.pivotcapital.com/reports/Chinas_Investment_Boom_the_Great_Leap_into_the_Unknown.pdf http://www.pivotcapital.com/reports/Chinas_Investment_Boom_t... It argues that China's investment boom is not going to continue and that private consumption cannot possibly fill the void. They think the bubble is going to burst in 2010/2011 and they have pretty convincing numbers. I'd love to hear why they are wrong.

garply 17y ago
I don't have the data to respond to this entire paper, especially on big stuff like GDP ratios, etc, but an important part of their argument stuck out as shaky to me. The paper argues that China's urbanization rate is already much higher than is commonly believed, due to China's definition of an urban centers. It notes that Houston or Brisbane would not be counted as cities, due to low population density. But, as a Chinese resident, I don't find it unreasonable at all that Houston wouldn't be counted as a city here - Houston, w/ a population of 2.2m and a density of 1375 people / square kilometer, is dwarfed when you compare it to a dense city of 11+ million like Tianjin, which is considered a bit of a hick town here in Beijing. It seems unreasonable to use American standards for the definition of a city when China's population to usable land ratio is much higher than is frequently encountered in the West.
- fauigerzigerk 17y ago
  I didn't find the population density comparison very convincing either. But the main point they are making is that not as many people as expected by the financial community are going to move to more urbanized centers in the years to come. Their argument would be more convincing if it was based on economic opportunity instead of population density though.

Arun2009 17y ago

Congrats! About time too! They're nearly 1/6th of mankind. It's just amazing how such a large number of people can pull themselves out of the most wretched kind of poverty. Indias and Africas of the world should take note.