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China will not be captured by the middle income trap because it has already escaped the middle income trap. The middle income in my opinion has a different reas

China will not be captured by the middle income trap because it has already escaped the middle income trap. The middle income in my opinion has a different reason countries get stuck there and its by design. Because the road to high income is protected by western IP protection. Patents are way for the west to forever license fees for their high end technology, China is beating the west in new IP generation and hence will get an ever bigger share of the high end technology fees income. If one thing i expect western nations most likely EU nations to slip back into middle income status and get trapped their with their suicidal foreign policy. I got this insight in 2016 when the US started its suicidal trade and tech war with China which they claimed would be easy to win. It was never about money or trade it was all about keeping asians down and dependent.

deleted 3y ago
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kristofferg 3y ago
Some bold claims with little evidence. GDP capita flattened at 13k is hardly “escaped the middle income trap”. IPs can be harmful to growth but then again China has never shown any intent to enforce IPs of western origin. There are no evidence of the US wanting to “keep asians down” - many of USAs asian trading partners enjoy less trade regulation. The “trade war” might be counterproductive but was a, imo mild, response to the extreme levels of protectionism exhibited by the chinese communist party.
- geysersam 3y ago
  > GDP capita flattened at 13k Flattened? It's growing something like 5% per year.
  - oblio 3y ago
    https://news.ycombinator.com/item?id=37171762 https://news.ycombinator.com/item?id=37171762
    - throwaway4good 3y ago
      You can cherry pick negative news all you want. But if you a clear picture look at the aggregate for longer terms.
      - dmix 3y ago
        The article explains there are multiple signals which suggest we can't trust the growth numbers coming out of China. People have been ringing that bell for years. That still applies in aggregates and recent history.
      - misja111 3y ago
        The CDS (credit default swap) on Chinese government bonds went up over 30% during the last week. This means that the market believes that the chance for a default on bond payments went up considerably. If you believe you are right and the market is wrong, you should short-sell CDS'es and get rich.
  - nradov 3y ago
    We really don't know how fast the Chinese economy is growing. The numbers are largely made up by Party functionaries with no oversight; they often exaggerate and falsely claim to be meeting goals in order to keep their jobs. Independent analysis based on satellite imagery and import/export volumes indicates the growth rate is probably lower, but no one knows for sure.
- throwaway4good 3y ago
  1. 13K is technically the point where a country goes from middle to high income. 2. The Chinese economy is still growing more than most countries. 3. The US is clearly engaged in zero/negative sum economic warfare against China at the moment - for example read this article and the quoted views by admistration officials therein: https://www.nytimes.com/2023/07/12/magazine/semiconductor-chips-us-china.html https://www.nytimes.com/2023/07/12/magazine/semiconductor-ch... ‘An Act of War’: Inside America’s Silicon Blockade Against China
  - throwaway2037 3y ago
    The US is clearly engaged in zero/negative sum economic warfare against China I suggest that you read the history of post war trade relations between US and Japan. It was a bumpy ride! One big difference: General adherence to IP laws (China does whatever they want), plus both are democracies. Related: Do you think China can catch-up to developed world in fab tech? I do not. They are hopelessly behind.
    - throwawayqqq11 3y ago
      ... ehem, taiwan.
      - throwaway2037 3y ago
        Invasion or naval blockade? Your choice. Sure, for a few days, before multiple US carriers float into these waters. It won't last a month if it happens. You would have every high developed country in the world ready to support Taiwan in the event of an "unfortunate incident" with Mainland China. Plenty of people in the US are "itching" for a small military confrontation with M/C. If you think the support for Ukraine has been strong, it will be multiple times stronger for Taiwan, if only for economic (TSMC) reasons.
    - throwaway4good 3y ago
      Yes. I know the history; the US is absolutely ruthless against friend and foe in keeping its hegemony. And it has a long history of having its natsec apparatus integrated into its largest corporations. As for China "catching up": 1. China is indeed far far behind the US-controlled West if the criteria is purely Chinese designed and manufactured semiconductors using purely Chinese designed and manufactured equipment. 2. The extreme nature of the US semiconductor blockade has surprised even me (and I was kinda expecting the worst). However: 3. China is developing along a path already throtten by Western companies; far easier than developing on the leading edge. 4. The Chinese market (plus Russia, Iran whoever is on the US shit list) is massive. It can sponsor a lot of technological development. In the end there is no magic in tech. Whatever company is at the top seemingly untouchable is there because of a "natural monopoly" created by massive fixed cost and little marginal cost. History is full of tech companies that were at one point dominant but no longer is: Digital, Microsoft, Intel, Google ... The companies that are used as chokeholds today: NVDIA, ASML, TSMC will at one point join that list. In fact using them as chokeholds probably makes it happen faster.
- bakuninsbart 3y ago
  There are enormous economic differences within China and given the scale of the country it is much harder to make these kinds of broad-stroke arguments. Looking at gdp per region [0], the main tier one cities are already clearly a cut above middle income countries, even a province like Jiansu with 23k$ in GDP per capita has a higher GDP/capita than Poland and a larger population than Germany or the UK. [0] https://en.wikipedia.org/wiki/List_of_Chinese_administrative_divisions_by_GDP_per_capita https://en.wikipedia.org/wiki/List_of_Chinese_administrative...
  - refurb 3y ago
    The problem with GDP per capita is that it doesn't necessarily correlate with wages (which is what we're talking about with middle income trap). You can look at Singapore or Ireland for another example. They have higher GDP per capita than the US, but a lot of it's due to multi-nationals storing IP in those countries, and funneling cash through for tax purposes. It's not GDP that gets converted to local wages. And in the case of certain Chinese regions, if you have companies headquartered there (with multiple sites at satellite cities), GDP measures are going to assign national GDP to that one region, so again, it doesn't necessarily reflect local wages.
jsiepkes 3y ago
> It was never about money or trade it was all about keeping asians down and dependent. Thats way too much simplification. For starters there isn't a level playing field. Any Chinese company can start a company in the west but if a western company wants to start a company in China you can either start a "second class" entity (a WFOE) or if you want a level playing field with the locals you can use a joint venture but then a Chinese national must have 50+% stake in your business. Just ask ARM what can happen if you go for a joint venture.
- justinclift 3y ago
  > ... then a Chinese national must have 50+% stake in your business. Didn't they drop that requirement last year?
- oreally 3y ago
  > For starters there isn't a level playing field. Think about it, who determines what is a 'level playing field'? That's right, the US in this context. Every country has the right to determine it's own policies, and the US shouldn't have any say, and yet is applying pressure for it's own benefits. The same goes when China insists on one-on-one bilateral country negotiations on the issue of the south china sea instead of multilateral negotiations. Historically the number one country will always be putting pressure on potential the upstart countries, and Big countries will be big countries. The US especially is adapt at spinning up narratives, so calm down and take a look at the different perspectives.
  - krona 3y ago
    The US is still nominally governed by and accountable to the rule of law. Companies cannot use the court system in China to hold the government to account, the government is accountable only to itself. This difference is irreconcilable.
    - oreally 3y ago
      > The US is still nominally governed by and accountable to the rule of law. You mean the rule of law that it imposes upon others that they didn't agree on? And they'll bring it up only when it's convenient. I'll say it again: Big countries will be big countries.
aylmao 3y ago
Not sure why this comment is getting downvoted. I think it's relevant to the discussion, whether people agree with it or not.
- oblio 3y ago
  > it was all about keeping asians down and dependent. Probably because of this. The US is allied to several prosperous Asian countries.
  - throwaway4good 3y ago
    Who all got seriously smacked down when they got too independent (from the Vietnam war to the Plaza accord).
    - dmix 3y ago
      Neither the Vietnam war nor Plaza Accords were about "keeping Asians down". Unintentional side effects is not intention. A very important distinction. Japan's recent Stagflation has plenty of obvious internal causes. Blaming the west for that is some weird cope. China is an expert at manipulating their currency and internal markets for global advantage. Countries reacting to China's top-down aggressive self interest in a global market is only logical. Other countries engaging in those markets aren't there for charity and nor is China.
      - modo_mario 3y ago
        >Japan's recent Stagflation has plenty of obvious internal causes. Blaming the west for that is some weird cope. I don't think it extends so far since it's the 80's but I can see why one would blame the US there. Around this time Japan was forced to do technology transfers to the US, to have minimum marketshare in japan for US cars and semiconductors, to have unfavorable monetary policy. That smells equivalent to being a vassal at gunpoint. Of course European countries helped pressuring and it being the cold war japan did not have much developed (or allowed alternatives) for it's export based economy even if it did have an army, more independence and a more varied political landscape.
unstatusthequo 3y ago
“Beating the west in new IP generation” is highly misleading. China is probably the best at IP theft, and they are certainly beating everyone at that game. Have a look at their EV cars that look like BMWs and Fords. Or their completely stolen Boeing plans. I sure as hell would not get on a fake Chinese plane, that’s for sure.
mensetmanusman 3y ago
Um, no. China killed itself off with its own policy of ‘for every two of us there should be one of us’. Now their work force is shrinking and costs are rising fast. They aren’t competitive and the future is with India and Africa.

deleted 3y ago

[deleted]

kristofferg 3y ago

Some bold claims with little evidence. GDP capita flattened at 13k is hardly “escaped the middle income trap”. IPs can be harmful to growth but then again China has never shown any intent to enforce IPs of western origin. There are no evidence of the US wanting to “keep asians down” - many of USAs asian trading partners enjoy less trade regulation. The “trade war” might be counterproductive but was a, imo mild, response to the extreme levels of protectionism exhibited by the chinese communist party.

geysersam 3y ago
> GDP capita flattened at 13k Flattened? It's growing something like 5% per year.
- oblio 3y ago
  https://news.ycombinator.com/item?id=37171762 https://news.ycombinator.com/item?id=37171762
  - throwaway4good 3y ago
    You can cherry pick negative news all you want. But if you a clear picture look at the aggregate for longer terms.
    - dmix 3y ago
      The article explains there are multiple signals which suggest we can't trust the growth numbers coming out of China. People have been ringing that bell for years. That still applies in aggregates and recent history.
    - misja111 3y ago
      The CDS (credit default swap) on Chinese government bonds went up over 30% during the last week. This means that the market believes that the chance for a default on bond payments went up considerably. If you believe you are right and the market is wrong, you should short-sell CDS'es and get rich.
- nradov 3y ago
  We really don't know how fast the Chinese economy is growing. The numbers are largely made up by Party functionaries with no oversight; they often exaggerate and falsely claim to be meeting goals in order to keep their jobs. Independent analysis based on satellite imagery and import/export volumes indicates the growth rate is probably lower, but no one knows for sure.
throwaway4good 3y ago
1. 13K is technically the point where a country goes from middle to high income. 2. The Chinese economy is still growing more than most countries. 3. The US is clearly engaged in zero/negative sum economic warfare against China at the moment - for example read this article and the quoted views by admistration officials therein: https://www.nytimes.com/2023/07/12/magazine/semiconductor-chips-us-china.html https://www.nytimes.com/2023/07/12/magazine/semiconductor-ch... ‘An Act of War’: Inside America’s Silicon Blockade Against China
- throwaway2037 3y ago
  The US is clearly engaged in zero/negative sum economic warfare against China I suggest that you read the history of post war trade relations between US and Japan. It was a bumpy ride! One big difference: General adherence to IP laws (China does whatever they want), plus both are democracies. Related: Do you think China can catch-up to developed world in fab tech? I do not. They are hopelessly behind.
  - throwawayqqq11 3y ago
    ... ehem, taiwan.
    - throwaway2037 3y ago
      Invasion or naval blockade? Your choice. Sure, for a few days, before multiple US carriers float into these waters. It won't last a month if it happens. You would have every high developed country in the world ready to support Taiwan in the event of an "unfortunate incident" with Mainland China. Plenty of people in the US are "itching" for a small military confrontation with M/C. If you think the support for Ukraine has been strong, it will be multiple times stronger for Taiwan, if only for economic (TSMC) reasons.
  - throwaway4good 3y ago
    Yes. I know the history; the US is absolutely ruthless against friend and foe in keeping its hegemony. And it has a long history of having its natsec apparatus integrated into its largest corporations. As for China "catching up": 1. China is indeed far far behind the US-controlled West if the criteria is purely Chinese designed and manufactured semiconductors using purely Chinese designed and manufactured equipment. 2. The extreme nature of the US semiconductor blockade has surprised even me (and I was kinda expecting the worst). However: 3. China is developing along a path already throtten by Western companies; far easier than developing on the leading edge. 4. The Chinese market (plus Russia, Iran whoever is on the US shit list) is massive. It can sponsor a lot of technological development. In the end there is no magic in tech. Whatever company is at the top seemingly untouchable is there because of a "natural monopoly" created by massive fixed cost and little marginal cost. History is full of tech companies that were at one point dominant but no longer is: Digital, Microsoft, Intel, Google ... The companies that are used as chokeholds today: NVDIA, ASML, TSMC will at one point join that list. In fact using them as chokeholds probably makes it happen faster.
bakuninsbart 3y ago
There are enormous economic differences within China and given the scale of the country it is much harder to make these kinds of broad-stroke arguments. Looking at gdp per region [0], the main tier one cities are already clearly a cut above middle income countries, even a province like Jiansu with 23k$ in GDP per capita has a higher GDP/capita than Poland and a larger population than Germany or the UK. [0] https://en.wikipedia.org/wiki/List_of_Chinese_administrative_divisions_by_GDP_per_capita https://en.wikipedia.org/wiki/List_of_Chinese_administrative...
- refurb 3y ago
  The problem with GDP per capita is that it doesn't necessarily correlate with wages (which is what we're talking about with middle income trap). You can look at Singapore or Ireland for another example. They have higher GDP per capita than the US, but a lot of it's due to multi-nationals storing IP in those countries, and funneling cash through for tax purposes. It's not GDP that gets converted to local wages. And in the case of certain Chinese regions, if you have companies headquartered there (with multiple sites at satellite cities), GDP measures are going to assign national GDP to that one region, so again, it doesn't necessarily reflect local wages.

jsiepkes 3y ago

> It was never about money or trade it was all about keeping asians down and dependent. Thats way too much simplification. For starters there isn't a level playing field. Any Chinese company can start a company in the west but if a western company wants to start a company in China you can either start a "second class" entity (a WFOE) or if you want a level playing field with the locals you can use a joint venture but then a Chinese national must have 50+% stake in your business. Just ask ARM what can happen if you go for a joint venture.

justinclift 3y ago
> ... then a Chinese national must have 50+% stake in your business. Didn't they drop that requirement last year?
oreally 3y ago
> For starters there isn't a level playing field. Think about it, who determines what is a 'level playing field'? That's right, the US in this context. Every country has the right to determine it's own policies, and the US shouldn't have any say, and yet is applying pressure for it's own benefits. The same goes when China insists on one-on-one bilateral country negotiations on the issue of the south china sea instead of multilateral negotiations. Historically the number one country will always be putting pressure on potential the upstart countries, and Big countries will be big countries. The US especially is adapt at spinning up narratives, so calm down and take a look at the different perspectives.
- krona 3y ago
  The US is still nominally governed by and accountable to the rule of law. Companies cannot use the court system in China to hold the government to account, the government is accountable only to itself. This difference is irreconcilable.
  - oreally 3y ago
    > The US is still nominally governed by and accountable to the rule of law. You mean the rule of law that it imposes upon others that they didn't agree on? And they'll bring it up only when it's convenient. I'll say it again: Big countries will be big countries.

aylmao 3y ago

Not sure why this comment is getting downvoted. I think it's relevant to the discussion, whether people agree with it or not.

oblio 3y ago
> it was all about keeping asians down and dependent. Probably because of this. The US is allied to several prosperous Asian countries.
- throwaway4good 3y ago
  Who all got seriously smacked down when they got too independent (from the Vietnam war to the Plaza accord).
  - dmix 3y ago
    Neither the Vietnam war nor Plaza Accords were about "keeping Asians down". Unintentional side effects is not intention. A very important distinction. Japan's recent Stagflation has plenty of obvious internal causes. Blaming the west for that is some weird cope. China is an expert at manipulating their currency and internal markets for global advantage. Countries reacting to China's top-down aggressive self interest in a global market is only logical. Other countries engaging in those markets aren't there for charity and nor is China.
    - modo_mario 3y ago
      >Japan's recent Stagflation has plenty of obvious internal causes. Blaming the west for that is some weird cope. I don't think it extends so far since it's the 80's but I can see why one would blame the US there. Around this time Japan was forced to do technology transfers to the US, to have minimum marketshare in japan for US cars and semiconductors, to have unfavorable monetary policy. That smells equivalent to being a vassal at gunpoint. Of course European countries helped pressuring and it being the cold war japan did not have much developed (or allowed alternatives) for it's export based economy even if it did have an army, more independence and a more varied political landscape.

unstatusthequo 3y ago

“Beating the west in new IP generation” is highly misleading. China is probably the best at IP theft, and they are certainly beating everyone at that game. Have a look at their EV cars that look like BMWs and Fords. Or their completely stolen Boeing plans. I sure as hell would not get on a fake Chinese plane, that’s for sure.

mensetmanusman 3y ago

Um, no. China killed itself off with its own policy of ‘for every two of us there should be one of us’. Now their work force is shrinking and costs are rising fast. They aren’t competitive and the future is with India and Africa.