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(disclaimer: I am Chinese; living in Beijing). Since this presentation made it to the front page of HN, I was curious to take a look. I rarely found similar pre
by fhe 16y ago
(disclaimer: I am Chinese; living in Beijing). Since this presentation made it to the front page of HN, I was curious to take a look. I rarely found similar presentations (by consulting/investment firms) having a clarifying effect on my thinking. They show an impressive array of facts and arguments, but often after reading it I fail to be able to summarize the main ideas in a couple of sentences (the way I often can, say, after reading a paul graham essay).
to begin with, why "grey swan"? no doubt, it's a reference to Taleb's book. but what exactly do they mean? that what's happening in China is not completely foreseeable, but more foreseeable than the blackest of black swans?
let's simplify things -- if we define growth as growth in wealth, and examine if the chinese are able to pull off creating something like 10% more wealth every year than we did last year. there are two variables to this: how many people are working this year than last, and how productive are they.
I don't have time to research on this, but I am guessing workforce size reduction if it happens is going to be more than offset by China simply copying mature technologies from the West and increase the productivity of its people, as it has been doing. the wild card is projects like centrally planned bridge to no where, which looks productive but doesn't actually create things people want, i.e. wealth. But China has always (i.e. last 60 years) been a centrally planned economy, assuming the leadership doesn't all of a sudden get a lot more stupid, and given that the portion of the economy that's centrally planned is shrinking every year, I think one can even make an argument of putting on a few basis points of growth simply from the gov't playing a smaller role in the economy than before. (now of course the big stimulus package might completely skew the balance for these couple of years, but it's temporary noise that probably wouldn't reverse the trend.)
and argument of how big a village needs to be before it can be called a town is irrelevant.
- roel_v 16y agoI think he means by 'grey' that China's situation is not special, nor that it can escape from economic fundamentals, as shown up in other 'miracle growth' economies in the last century (Japan comes to mind, but also smaller, less-known ones like New Zealand or some of the newer members of the EU like Spain and Ireland whose growth turned out to be asymptotic to the wealth level of the older member states, and didn't exceed them like it looked for a while they would). Economic growth is bound by real value fundamentals, macro-economic policy tricks will catch up someday. That's how I interpreted grey - not uncommon, and quite bland, really.
- roel_v 16y ago"and argument of how big a village needs to be before it can be called a town is irrelevant." No it's not when the argument for continued economic growth is that that growth will be driven by further urbanization. If the country is already much more urbanized than is held, it becomes relevant. (I'm not saying this argument is true or not, I don't know; someone about brought up a good point of much smaller plot sizes in rural areas. Either way, it's valid to question the assumptions of the mainstream claims that China's growth will continue as it has in the past). "and given that the portion of the economy that's centrally planned is shrinking every year, I think one can even make an argument of putting on a few basis points of growth simply from the gov't playing a smaller role in the economy than before." That's not what I understand from observers and commentators. What I hear/read, guo jin, min tui (the state advances, the private sector retreats) is the current trend, and Chinese central leaderships wants to weather the crisis with more central control (as they need to, in order to be able to direct banks to loan out money, set growth targets for SOE's etc.) I'm interested to hear about your point of view as a local though, do you feel the grip of the state on the economic is loosening?