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Agreed. Scott Rozelle's _Invisible China_ is very much worth a read on this topic. The author is not a China hater - far from it. But he lays out in sobering d

by eej71 4y ago

Agreed. Scott Rozelle's _Invisible China_ is very much worth a read on this topic. The author is not a China hater - far from it. But he lays out in sobering detail the substantial demographic challenge they still face and why they may not escape what is known as at the middle income trap. If anything, I came away with the understanding that while many fear a rising China, it is a China that stumbles that can be more worrisome.

dirtyid 4y ago
Even conservative GDP and growth estimates will put PRC in high income within a few years. Official 2021 per capita figures is $100 away, so theoretically reachable at end of year even with stymied covid growth projections. That said middle income trap is overstated to the point that it may not exist, including by OG researcher who coined the term. TLDR is middle income countries with successful industrial structure still generally grows significantly better than developed economies. As for Rozelle, he does good work. But reality is even with deficient interior education infra, PRC is still massively overproducing talent after massive brain drain. There's record youth unemployment, again some of which is covid driven, but talent oversupply was evident pre-covid. The demographic crisis is going to be difficult to negotiate, but ultimately PRC has too manypeople, specifically undereducated older cohorts that can't be integrated into modern economy. Whatever happens PRC will be better off with 1B people than 1.4B, simply too many mouths to feed. Meanwhile there's plenty of talent to go around to build comprehensive power which more than GDP undergirds national strength. Xi/CCP's vison for "moderately prosperous society" was $10000 per capita, leadership knows PRC has too many people to reach developing country incomes. The current pipe "China dream" is $40000 per capita by 2049 (100 year anniversary) probably not realistic but still a lot of overhead to improve productivity. Likely enough to establish PRC as geopolitical superpower even with at low high income level. At end of the day, a populous country with $20000 GDP and 20 aircraft carriers is still much more powerful than a small country with $100000 GDP and none.
- iabacu 4y ago
  One thing that you overlook is something that even Xi points out as an issue: right now, China needs more quality than quantity. For example, in semiconductors, Taiwan, with a much smaller population (and arriving late in the game) beat the US, Japan and Korea. China, with 600k STEM graduates per year, is still trying to catch up. On covid vaccines, even Russia has their own vaccine that reach mRNA levels of protection, but China is still stuck with the Covid Zero policy. Quantity was definitively an asset for Chinese growth based on cheap labor. That source of growth is almost running dry (to the point where they are resorting to labor camps). But at some point, quantity becomes more of a liability.
  - dirtyid 4y ago
    >China needs more quality than quantity. Yeah entire MIC 2025 move up value chain drama that turned into tech war with US. TW had decades of head start over PRC serious semi efforts and TBH if it wasn't for US sanctions on Fujin Jinhu, PRC would have EUV machines 3 years ago, might be on 7nm by now, and at least Huawei pre sanctions was world class in semi design. Issue is PRC needs to pursue indigenous quality now which is burden but also opportunity. TW will rely on foreign equipment forever, even though they have monopoly on some supply chains (which PRC is replicating). Shit hits the fan, TW semi can't work without foreign tech, PRC can at least cobble together indigenous 28nm and soon 14nm. Flip side of US PRC containment policy is seriously taking MIC 2025, i.e. PRC has gap of 300k in IC talent (need 720k according to white paper), and integrated circuit major was only upgraded to first-level discipline in 2018 due to tech war. Previously private companies happy with using western equipment but now they're pursuing entire indigenous supply chain. Something TW can't do. PRC needs to master quantity (in every sector and subsector) and quality, which is much larger task but also large growth potential. Transition is in effect, entire soft tech crack down to redirect talent into hard tech. Excess talent isn't be absorbed in many fields but semi not one of them. But really apart from semi, turbojet/aviation, very high end machinery, PRC is closing gaps everywhere. It's matter of time after finally US tensions finally kicked PRC industrial policy into right priority. >On covid vaccines, even Russia has their own vaccine that reach mRNA levels of protection, but China is still stuck with the Covid Zero policy. Because mRNA vaccines makes very little difference. That's just triumphant mRNA propaganda wank. Traditional vax protects marginally less well for severe cases. mRNA virtue was preventing spread, which it doesn't post delta. Reality is Chinese vax is effectively as good as mRNA after booster, but covid zero is simply much better. Extrapolate current TW covid stats after they've capitulated to live with covid to PRC population and you're looking at millions of death even with mRNA. Zero Covid is power move by PRC who has strong state capacity to maintain zero covid (so far), relying on vax is capituation for those who systemically can't. The idea that mRNA would solve PRC covid problems is naive. >Quantity was definitively an asset for Chinese growth based on cheap labor. That source of growth is almost running dry (to the point where they are resorting to labor camps). But at some point, quantity becomes more of a liability. PRC labour is not cheap anymore. But PRC is improving both in quality and quantity as seen in export figures and value capture. They're moving up the industrial chain in many sectors. Remember meme that PRC only got $3 per iphone 3G?, it grew to $100 by iPhone X. Meanwhile anyone in manufacturing including Chinese will tell in you labour costs in PRC is becoming uncompetitive. South East Asia is much cheaper, but PRC efficient logistics still comes out ahead. >resorting to labor camps Alleged labour camps are poverty alleviation efforts as part of long running rural labour transfer programs. Even "coerced" labour studies by propagandist (Zenz) report payment is substantially higher than the 600M bottom tier Han living on 1000RMB a month. Most companies don't want to hire "cheap" Uyghur workers who has no language proficiency when there are plenty of Han willing to do the job for LESS. They're pressured by central gov take in Uyghurs workers for again, poverty alleviation (and yeah some Uyghurs being pressured to join these PAID programs along with reeducation). There's really no shortage of labours for the kind of low skill work they typically get thrown into. Like even the entire XJ cotton drama over Uyghurs picking cheap cotton is incongruent with fact that most of XJ cotton is mechanized and US sanctioned John Deere from selling XJ cotton pickers because no one in XPCC wants to spend the money to pay Uyghurs to pick cotton when machines are cheaper. Sidenote: ask why US refuse to sell machines that would alleviate alleged coerced cotton labour. Almost like they want PRC to continue subsidizing these manual labour jobs to perpetuate narrative of slave Uyghurs handing picking cotton. Anyway, XJ security architecture cost TRILLIONS with massive subsidies, even CCP chattle slaved every Uyghur it wouldn't be profitable. That's why they're focusing on poverty alleviation, with spectrum of reward/pressure/coersion/ strategies to get Uyghurs to particpate in uptraining, because integrating/improving XJ workforce and participation in broader PRC economy is long term better than maintaining securitization. You don't do that with the most inefficient labour camps, you do that by showing them (even if forcefully) that making life changing amounts of money is better than being impoverished coping on religion.
- rr808 4y ago
  > Even conservative GDP and growth estimates will put PRC in high income within a few years. Source? I think big coastal cities are very advanced, but there are loads of rural villages with subsistence economies and widespread poverty. https://en.wikipedia.org/wiki/List_of_Chinese_administrative_divisions_by_GDP_per_capita https://en.wikipedia.org/wiki/List_of_Chinese_administrative...
  - dirtyid 4y ago
    Extrapolate world bank data $10,916 (from 2020) @4-5% growth and PRC will cross recently revised WB upper income of $12,696 within a few years. Official CCP stats is $12,551 for 2021, which will put PRC in upper income with 2% growth this year. Yeah, PRC income disparity is massive, 600M living on un less than 1000RMB a day. But we're talking per capita. Disparity result of Deng's entire, some get rich that resulted in two (or more) tier society, high income coastal one with a few hundred million that can compete globally, and low income interior provinces that can be arbituaged to do things other countries can't (i.e. labour intensive massive low cost infra). It's like UAE with foreign migrant labour but entirely domestic. Xi's trying to fix this with common prosperity with wealth transfers, whether that works is another question. But IMO the math is in his favor. There are so many low income people that it's not unfeasible to dramatically improve their QoL YoY with relatively little resources = party stability. Like you can double 600M on 1000rmb to 2000RMB with annual transfer of 90billion dollars (USD). PRC GDP growth last year is projected to be 900B USD. A fraction of annual growth can be titrated over years to "underclass" to maintain marginal but consistent growth that people will always feel like they're getting richer. PRC can treat common prosperity of developing provinces same way developed nations treated developing nations with aid. That's why IMO demographic problem is managable, at least in terms of stability. The wealthy coastal competitve class has so much talent to increase productivity, while the poor interior provicnes can be easily bribed. Like it's still going to be a high pressure cooker east asian life, but PRC citizen's QoL could consistent increase since base effect of productivity so low, whereas in developed western nations new generations are worse off than their parents.

by eej71 4y ago

dirtyid 4y ago

Even conservative GDP and growth estimates will put PRC in high income within a few years. Official 2021 per capita figures is $100 away, so theoretically reachable at end of year even with stymied covid growth projections. That said middle income trap is overstated to the point that it may not exist, including by OG researcher who coined the term. TLDR is middle income countries with successful industrial structure still generally grows significantly better than developed economies. As for Rozelle, he does good work. But reality is even with deficient interior education infra, PRC is still massively overproducing talent after massive brain drain. There's record youth unemployment, again some of which is covid driven, but talent oversupply was evident pre-covid. The demographic crisis is going to be difficult to negotiate, but ultimately PRC has too manypeople, specifically undereducated older cohorts that can't be integrated into modern economy. Whatever happens PRC will be better off with 1B people than 1.4B, simply too many mouths to feed. Meanwhile there's plenty of talent to go around to build comprehensive power which more than GDP undergirds national strength. Xi/CCP's vison for "moderately prosperous society" was $10000 per capita, leadership knows PRC has too many people to reach developing country incomes. The current pipe "China dream" is $40000 per capita by 2049 (100 year anniversary) probably not realistic but still a lot of overhead to improve productivity. Likely enough to establish PRC as geopolitical superpower even with at low high income level. At end of the day, a populous country with $20000 GDP and 20 aircraft carriers is still much more powerful than a small country with $100000 GDP and none.

iabacu 4y ago
One thing that you overlook is something that even Xi points out as an issue: right now, China needs more quality than quantity. For example, in semiconductors, Taiwan, with a much smaller population (and arriving late in the game) beat the US, Japan and Korea. China, with 600k STEM graduates per year, is still trying to catch up. On covid vaccines, even Russia has their own vaccine that reach mRNA levels of protection, but China is still stuck with the Covid Zero policy. Quantity was definitively an asset for Chinese growth based on cheap labor. That source of growth is almost running dry (to the point where they are resorting to labor camps). But at some point, quantity becomes more of a liability.
- dirtyid 4y ago
  >China needs more quality than quantity. Yeah entire MIC 2025 move up value chain drama that turned into tech war with US. TW had decades of head start over PRC serious semi efforts and TBH if it wasn't for US sanctions on Fujin Jinhu, PRC would have EUV machines 3 years ago, might be on 7nm by now, and at least Huawei pre sanctions was world class in semi design. Issue is PRC needs to pursue indigenous quality now which is burden but also opportunity. TW will rely on foreign equipment forever, even though they have monopoly on some supply chains (which PRC is replicating). Shit hits the fan, TW semi can't work without foreign tech, PRC can at least cobble together indigenous 28nm and soon 14nm. Flip side of US PRC containment policy is seriously taking MIC 2025, i.e. PRC has gap of 300k in IC talent (need 720k according to white paper), and integrated circuit major was only upgraded to first-level discipline in 2018 due to tech war. Previously private companies happy with using western equipment but now they're pursuing entire indigenous supply chain. Something TW can't do. PRC needs to master quantity (in every sector and subsector) and quality, which is much larger task but also large growth potential. Transition is in effect, entire soft tech crack down to redirect talent into hard tech. Excess talent isn't be absorbed in many fields but semi not one of them. But really apart from semi, turbojet/aviation, very high end machinery, PRC is closing gaps everywhere. It's matter of time after finally US tensions finally kicked PRC industrial policy into right priority. >On covid vaccines, even Russia has their own vaccine that reach mRNA levels of protection, but China is still stuck with the Covid Zero policy. Because mRNA vaccines makes very little difference. That's just triumphant mRNA propaganda wank. Traditional vax protects marginally less well for severe cases. mRNA virtue was preventing spread, which it doesn't post delta. Reality is Chinese vax is effectively as good as mRNA after booster, but covid zero is simply much better. Extrapolate current TW covid stats after they've capitulated to live with covid to PRC population and you're looking at millions of death even with mRNA. Zero Covid is power move by PRC who has strong state capacity to maintain zero covid (so far), relying on vax is capituation for those who systemically can't. The idea that mRNA would solve PRC covid problems is naive. >Quantity was definitively an asset for Chinese growth based on cheap labor. That source of growth is almost running dry (to the point where they are resorting to labor camps). But at some point, quantity becomes more of a liability. PRC labour is not cheap anymore. But PRC is improving both in quality and quantity as seen in export figures and value capture. They're moving up the industrial chain in many sectors. Remember meme that PRC only got $3 per iphone 3G?, it grew to $100 by iPhone X. Meanwhile anyone in manufacturing including Chinese will tell in you labour costs in PRC is becoming uncompetitive. South East Asia is much cheaper, but PRC efficient logistics still comes out ahead. >resorting to labor camps Alleged labour camps are poverty alleviation efforts as part of long running rural labour transfer programs. Even "coerced" labour studies by propagandist (Zenz) report payment is substantially higher than the 600M bottom tier Han living on 1000RMB a month. Most companies don't want to hire "cheap" Uyghur workers who has no language proficiency when there are plenty of Han willing to do the job for LESS. They're pressured by central gov take in Uyghurs workers for again, poverty alleviation (and yeah some Uyghurs being pressured to join these PAID programs along with reeducation). There's really no shortage of labours for the kind of low skill work they typically get thrown into. Like even the entire XJ cotton drama over Uyghurs picking cheap cotton is incongruent with fact that most of XJ cotton is mechanized and US sanctioned John Deere from selling XJ cotton pickers because no one in XPCC wants to spend the money to pay Uyghurs to pick cotton when machines are cheaper. Sidenote: ask why US refuse to sell machines that would alleviate alleged coerced cotton labour. Almost like they want PRC to continue subsidizing these manual labour jobs to perpetuate narrative of slave Uyghurs handing picking cotton. Anyway, XJ security architecture cost TRILLIONS with massive subsidies, even CCP chattle slaved every Uyghur it wouldn't be profitable. That's why they're focusing on poverty alleviation, with spectrum of reward/pressure/coersion/ strategies to get Uyghurs to particpate in uptraining, because integrating/improving XJ workforce and participation in broader PRC economy is long term better than maintaining securitization. You don't do that with the most inefficient labour camps, you do that by showing them (even if forcefully) that making life changing amounts of money is better than being impoverished coping on religion.
rr808 4y ago
> Even conservative GDP and growth estimates will put PRC in high income within a few years. Source? I think big coastal cities are very advanced, but there are loads of rural villages with subsistence economies and widespread poverty. https://en.wikipedia.org/wiki/List_of_Chinese_administrative_divisions_by_GDP_per_capita https://en.wikipedia.org/wiki/List_of_Chinese_administrative...
- dirtyid 4y ago
  Extrapolate world bank data $10,916 (from 2020) @4-5% growth and PRC will cross recently revised WB upper income of $12,696 within a few years. Official CCP stats is $12,551 for 2021, which will put PRC in upper income with 2% growth this year. Yeah, PRC income disparity is massive, 600M living on un less than 1000RMB a day. But we're talking per capita. Disparity result of Deng's entire, some get rich that resulted in two (or more) tier society, high income coastal one with a few hundred million that can compete globally, and low income interior provinces that can be arbituaged to do things other countries can't (i.e. labour intensive massive low cost infra). It's like UAE with foreign migrant labour but entirely domestic. Xi's trying to fix this with common prosperity with wealth transfers, whether that works is another question. But IMO the math is in his favor. There are so many low income people that it's not unfeasible to dramatically improve their QoL YoY with relatively little resources = party stability. Like you can double 600M on 1000rmb to 2000RMB with annual transfer of 90billion dollars (USD). PRC GDP growth last year is projected to be 900B USD. A fraction of annual growth can be titrated over years to "underclass" to maintain marginal but consistent growth that people will always feel like they're getting richer. PRC can treat common prosperity of developing provinces same way developed nations treated developing nations with aid. That's why IMO demographic problem is managable, at least in terms of stability. The wealthy coastal competitve class has so much talent to increase productivity, while the poor interior provicnes can be easily bribed. Like it's still going to be a high pressure cooker east asian life, but PRC citizen's QoL could consistent increase since base effect of productivity so low, whereas in developed western nations new generations are worse off than their parents.