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China has done what every developing country should do (Edit: and what the likes of Japan and Korea did before them) If you open your economy when you are rela

China has done what every developing country should do (Edit: and what the likes of Japan and Korea did before them) If you open your economy when you are relatively undeveloped and weak then foreign companies will immediately occupy your economy and you can forget about creating national 'champions'. China is not a closed market but they are careful not to fall into that trap.

radmuzom 7y ago
Agreed. A good book on this subject is "How Asia Works" by Joe Studwell.
ngokevin 7y ago
Yup, they've set it up so money can flow within their own system and their own economy can prosper, rather than money feeding out to Google or Facebook. Quality of life in China has exploded massively, and things like restaurant prices are reaching American prices, which is insane going back ten years. And they remix the ideas of western tech and often improve upon it. WeChat is orders of magnitude more convenient than what the US has to offer. Everything is centralized and integrated, what Google tries to do, but adopted everywhere. Book anything, pay for anything, tap phone to pay for anything. I don't expect many places to take phone payments. In China, most everywhere can take phone payments. Their social networks also seem to do great at getting things naturally viral. I posted a random video without any boosting and it got like 1.5K views in a day.
- teknologist 7y ago
  I would just like to say that contactless chip cards are ubiquitous, do not require a battery, are more secure (no reliance on QR codes) and have been around for years in the West.
  - njepa 7y ago
    It isn't the same thing by any means, and doesn't really offer much over cards other than a slight improvement in convenience. Mobile payments in China are essentially peer-to-peer and universal. The closest equivalent is probably something like MobilePay or Swish, but that isn't as good or as widespread.
    - teknologist 7y ago
      Peer-to-peer in the same way that PayPal is peer-to-peer. There's still a central entity somewhere holding all the money and data.
      - njepa 7y ago
        Sure, but cards are even more centralized. The "feature" of WeChat is that it can be used for almost anything. It is a cash successor more so that a card alternative. Anyone can print, display or scan a QR code. Doesn't matter if it is a store, a friend or a random person. Doesn't matter if it is in the physical world, on a website or in a chat. And it is easy to do. And almost everyone uses it. Contactless cards only matches WeChat in the same way something like Apple Pay does.
        teknologist 7y ago
        I am not seeing the value in being able to print QR codes unless your business is selling fruit on the street (to be fair, a lot of businesses in China are just this). The more secure analogy comparable in price would be solutions like Square and PayPal Here. Smartphones are ubiquitous.
  - A2017U1 7y ago
    My contactless card works nowhere outside my small home country. Meanwhile Chinese tourists are there seamlessly buying food from 7/11 with alipay whole I go through the full pin and card thing. As the other reply says too, any shop can set this up easily. I challenge you to take contactless payments in your home country, it's nothing like simply getting a qr payment and involves merchant banking. I've seen tiny remote rural village stores that would never even imagine having a visa PoS terminal with big wechat payment signs out front.
    - teknologist 7y ago
      I've used contactless Visa to buy things in Japan, Singapore and several other places. It's a UK card though so maybe there's something different going on there
- CountSessine 7y ago
  WeChat is orders of magnitude more convenient than what the US has to offer. Everything is centralized and integrated, what Google tries to do, but adopted everywhere Fascism has it's good points! Seriously though, WePay isn't innovation - we could have that right now in the West. Citibank could make an app that would allow peer-to-peer money transfers with QR codes the way WePay works. It would be smooth and easy. You'd just have to have a Citibank account. After a while, everyone could get an account with Citibank and it would be great! The other banks wouldn't like it, but whatevs. Then Citibank would realize they were the gatekeepers of the digital peer-to-peer economy and they would seek rent. Transaction fees would increase. Monthly account fees would sky-rocket. Eventually, the govt would realize this was a drain on commerce and would seek to regulate and maybe even break up Citibank, but in a rule-OF-law nation, the govt would actually have to go to court and Citibank would get to argue their case against govt intervention. It could take YEARS! Look at how long it took the govt to prosecute IBM back in the day! Meanwhile, if Tencent gets too greedy with WePay, the govt just makes their CEO disappear. In fact, in a fascist state, having monopolies is an ADVANTAGE! It's one throat to throttle - if there's a problem, there's just one CEO you need to kill. WePay isn't innovative - it's just something that works particularly well in a fascist state. Getting the whole banking industry to agree to communicate and cooperate on a common mobile payment system is a bit more difficult... Update - s/rule-by-law/rule-OF-law/
  - prewett 7y ago
    The US is is a rule-OF-law country, China is rule-BY-law. The difference is that in rule-OF-law, the government is subject to the law. In rule-BY-law, the law is the tool the government uses to rule (dominate), that is, rule by means of law. It may sound nitpicky, but it’s a rather big difference.
    - CountSessine 7y ago
      It's not nit-picking - that's very interesting. Thanks for the correction.
chvid 7y ago
I find it scary that you get downvoted for saying something you can find in an economics textbook.
- barry-cotter 7y ago
  Read a macroeconomics textbook written more recently than the 1970’s and it will call the infant industry argument theoretically plausible and reference Krugman’s paper on industry clusters. It will spend far more time on the globally optimal and not strategically effected strategy, free trade. We know protectionism can theoretically work. It can also be a massive failure, like in all of post-colonial South Asia and Africa. The only countries that made protectionism work were South Korea, Japan and Taiwan.
  - NotPaidToPost 7y ago
    The point is that a fully open economy is not necessarily the optimal strategy for a developing country. Of course this is just one aspect of development and there is no silver bullet. Those who succeeded used protectionism and controlled opening of their economy as part of a broader strategy, governance, and culture.
  - low_poly_shiba 7y ago
    There has been a big push to normalize the idea that "macroeconomists have figured out x and y". However, macroeconomists aren't scientists, and their messes like the Reinhardt-Rogoff affair should make everyone skeptical that they can claim they "know" anything with any degree of certainty. I first encountered this when economists kept attacking rent control saying it destroyed cities, while Montreal remained the best place to live in all of North America. Then I found this interesting essay about economists finally getting to try out an experiment about sweatshops in Africa, and concluding "Everything We Knew About Sweatshops Was Wrong": > https://www.nytimes.com/2017/04/27/opinion/do-sweatshops-lift-workers-out-of-poverty.html https://www.nytimes.com/2017/04/27/opinion/do-sweatshops-lif... > > In the 1990s, Americans learned more about the appalling conditions at the factories where our sneakers and T-shirts were made, and opposition to sweatshops surged. But some economists pushed back. For them, the wages and conditions in sweatshops might be appalling, but they are an improvement on people’s less visible rural poverty. > >As the economist Joan Robinson said, “The misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all.” > >Textbook economics offers two reasons factory jobs can be “an escalator out of poverty.” First, a booming industrial sector should raise wages over time. Second, boom or not, factory jobs might be better than the alternatives: Unlike agriculture or informal market selling, these factories pay a steady wage, and if workers gained skills valued by the market, they might earn higher wages. Factories may also have incentives to pay more than agricultural or informal market work to persuade workers to stay and be productive. > >Expecting to prove the experts right, we went to Ethiopia and — working with the Innovations for Poverty Action and the Ethiopian Development Research Institute — performed the first randomized trial of industrial employment on workers. Little did we anticipate that everything we believed would turn out to be wrong. Never blindly trust an "economics textbook" lol. When you disagree with them, economists say "read a textbook", and when you point out the models are bad, they pivot to "it's just a textbook, real models are much more complex than that" (they tend not to be).
NTDF9 7y ago
This is accurate. For example, India doesn't have Alibaba or Tencent or whatever because they allowed in foreign companies with stronger currencies too soon. USA set the rules after WW2. China played the game according to those rules. Countries that didn't were either smashed economically or by warfare.

radmuzom 7y ago

Agreed. A good book on this subject is "How Asia Works" by Joe Studwell.

ngokevin 7y ago

Yup, they've set it up so money can flow within their own system and their own economy can prosper, rather than money feeding out to Google or Facebook. Quality of life in China has exploded massively, and things like restaurant prices are reaching American prices, which is insane going back ten years. And they remix the ideas of western tech and often improve upon it. WeChat is orders of magnitude more convenient than what the US has to offer. Everything is centralized and integrated, what Google tries to do, but adopted everywhere. Book anything, pay for anything, tap phone to pay for anything. I don't expect many places to take phone payments. In China, most everywhere can take phone payments. Their social networks also seem to do great at getting things naturally viral. I posted a random video without any boosting and it got like 1.5K views in a day.

teknologist 7y ago
I would just like to say that contactless chip cards are ubiquitous, do not require a battery, are more secure (no reliance on QR codes) and have been around for years in the West.
- njepa 7y ago
  It isn't the same thing by any means, and doesn't really offer much over cards other than a slight improvement in convenience. Mobile payments in China are essentially peer-to-peer and universal. The closest equivalent is probably something like MobilePay or Swish, but that isn't as good or as widespread.
  - teknologist 7y ago
    Peer-to-peer in the same way that PayPal is peer-to-peer. There's still a central entity somewhere holding all the money and data.
    - njepa 7y ago
      Sure, but cards are even more centralized. The "feature" of WeChat is that it can be used for almost anything. It is a cash successor more so that a card alternative. Anyone can print, display or scan a QR code. Doesn't matter if it is a store, a friend or a random person. Doesn't matter if it is in the physical world, on a website or in a chat. And it is easy to do. And almost everyone uses it. Contactless cards only matches WeChat in the same way something like Apple Pay does.
      - teknologist 7y ago
        I am not seeing the value in being able to print QR codes unless your business is selling fruit on the street (to be fair, a lot of businesses in China are just this). The more secure analogy comparable in price would be solutions like Square and PayPal Here. Smartphones are ubiquitous.
- A2017U1 7y ago
  My contactless card works nowhere outside my small home country. Meanwhile Chinese tourists are there seamlessly buying food from 7/11 with alipay whole I go through the full pin and card thing. As the other reply says too, any shop can set this up easily. I challenge you to take contactless payments in your home country, it's nothing like simply getting a qr payment and involves merchant banking. I've seen tiny remote rural village stores that would never even imagine having a visa PoS terminal with big wechat payment signs out front.
  - teknologist 7y ago
    I've used contactless Visa to buy things in Japan, Singapore and several other places. It's a UK card though so maybe there's something different going on there
CountSessine 7y ago
WeChat is orders of magnitude more convenient than what the US has to offer. Everything is centralized and integrated, what Google tries to do, but adopted everywhere Fascism has it's good points! Seriously though, WePay isn't innovation - we could have that right now in the West. Citibank could make an app that would allow peer-to-peer money transfers with QR codes the way WePay works. It would be smooth and easy. You'd just have to have a Citibank account. After a while, everyone could get an account with Citibank and it would be great! The other banks wouldn't like it, but whatevs. Then Citibank would realize they were the gatekeepers of the digital peer-to-peer economy and they would seek rent. Transaction fees would increase. Monthly account fees would sky-rocket. Eventually, the govt would realize this was a drain on commerce and would seek to regulate and maybe even break up Citibank, but in a rule-OF-law nation, the govt would actually have to go to court and Citibank would get to argue their case against govt intervention. It could take YEARS! Look at how long it took the govt to prosecute IBM back in the day! Meanwhile, if Tencent gets too greedy with WePay, the govt just makes their CEO disappear. In fact, in a fascist state, having monopolies is an ADVANTAGE! It's one throat to throttle - if there's a problem, there's just one CEO you need to kill. WePay isn't innovative - it's just something that works particularly well in a fascist state. Getting the whole banking industry to agree to communicate and cooperate on a common mobile payment system is a bit more difficult... Update - s/rule-by-law/rule-OF-law/
- prewett 7y ago
  The US is is a rule-OF-law country, China is rule-BY-law. The difference is that in rule-OF-law, the government is subject to the law. In rule-BY-law, the law is the tool the government uses to rule (dominate), that is, rule by means of law. It may sound nitpicky, but it’s a rather big difference.
  - CountSessine 7y ago
    It's not nit-picking - that's very interesting. Thanks for the correction.

chvid 7y ago

I find it scary that you get downvoted for saying something you can find in an economics textbook.

barry-cotter 7y ago
Read a macroeconomics textbook written more recently than the 1970’s and it will call the infant industry argument theoretically plausible and reference Krugman’s paper on industry clusters. It will spend far more time on the globally optimal and not strategically effected strategy, free trade. We know protectionism can theoretically work. It can also be a massive failure, like in all of post-colonial South Asia and Africa. The only countries that made protectionism work were South Korea, Japan and Taiwan.
- NotPaidToPost 7y ago
  The point is that a fully open economy is not necessarily the optimal strategy for a developing country. Of course this is just one aspect of development and there is no silver bullet. Those who succeeded used protectionism and controlled opening of their economy as part of a broader strategy, governance, and culture.
- low_poly_shiba 7y ago
  There has been a big push to normalize the idea that "macroeconomists have figured out x and y". However, macroeconomists aren't scientists, and their messes like the Reinhardt-Rogoff affair should make everyone skeptical that they can claim they "know" anything with any degree of certainty. I first encountered this when economists kept attacking rent control saying it destroyed cities, while Montreal remained the best place to live in all of North America. Then I found this interesting essay about economists finally getting to try out an experiment about sweatshops in Africa, and concluding "Everything We Knew About Sweatshops Was Wrong": > https://www.nytimes.com/2017/04/27/opinion/do-sweatshops-lift-workers-out-of-poverty.html https://www.nytimes.com/2017/04/27/opinion/do-sweatshops-lif... > > In the 1990s, Americans learned more about the appalling conditions at the factories where our sneakers and T-shirts were made, and opposition to sweatshops surged. But some economists pushed back. For them, the wages and conditions in sweatshops might be appalling, but they are an improvement on people’s less visible rural poverty. > >As the economist Joan Robinson said, “The misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all.” > >Textbook economics offers two reasons factory jobs can be “an escalator out of poverty.” First, a booming industrial sector should raise wages over time. Second, boom or not, factory jobs might be better than the alternatives: Unlike agriculture or informal market selling, these factories pay a steady wage, and if workers gained skills valued by the market, they might earn higher wages. Factories may also have incentives to pay more than agricultural or informal market work to persuade workers to stay and be productive. > >Expecting to prove the experts right, we went to Ethiopia and — working with the Innovations for Poverty Action and the Ethiopian Development Research Institute — performed the first randomized trial of industrial employment on workers. Little did we anticipate that everything we believed would turn out to be wrong. Never blindly trust an "economics textbook" lol. When you disagree with them, economists say "read a textbook", and when you point out the models are bad, they pivot to "it's just a textbook, real models are much more complex than that" (they tend not to be).

NTDF9 7y ago

This is accurate. For example, India doesn't have Alibaba or Tencent or whatever because they allowed in foreign companies with stronger currencies too soon. USA set the rules after WW2. China played the game according to those rules. Countries that didn't were either smashed economically or by warfare.