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Another narrative that’s missing is ‘Discretionary government intervention can be good for the market actually’, and if the Chinese administration is making big

Another narrative that’s missing is ‘Discretionary government intervention can be good for the market actually’, and if the Chinese administration is making big bets on an emerging high value market (batteries and EVs), maybe the traditionally laissez-faire US should take note. That does rely on the notion that China is actively subsidizing and enabling BYD more than the US is for Tesla, and leaving aside their efforts on battery R&D, vertical integration, leveraging lower labor costs etc. as you say

AnthonyMouse 3y ago
> Discretionary government intervention can be good for the market actually This is more like "government intervention can give domestic companies an unfair advantage in global markets", which isn't actually a good thing, but also isn't something you can just ignore without a response. In this case you might like it because what they're subsidizing helps with climate change, but this is mainly because we don't price carbon (pricing major externalities is one of the things governments actually have to do), not because having governments subsidize businesses is a net positive in general.
- ZeroGravitas 3y ago
  Note that China does price carbon, which the USA does not (though some states do).
  - AnthonyMouse 3y ago
    China is building more new coal-fired power plants than anyone else. Whatever they're doing on paper, they're not doing it in practice.
    - h0l0cube 3y ago
      China is building the more solar capacity than the US[0] and more nuclear capacity[1] than anyone else. Coal as a percentage of their energy mix has been markedly decreasing since 2014 [2] [0] https://ourworldindata.org/grapher/share-electricity-solar?tab=chart&country=CHN~USA~OWID_EUR https://ourworldindata.org/grapher/share-electricity-solar?t... [1] https://ourworldindata.org/grapher/nuclear-energy-generation?tab=chart&country=OWID_WRL~CHN~OWID_EUR~USA https://ourworldindata.org/grapher/nuclear-energy-generation... [2] https://ourworldindata.org/grapher/share-elec-by-source?country=~CHN https://ourworldindata.org/grapher/share-elec-by-source?coun...
      - ZeroGravitas 3y ago
        And their carbon price has played a role in that: https://www.sciencedirect.com/science/article/abs/pii/S030142152300109X https://www.sciencedirect.com/science/article/abs/pii/S03014... > How carbon emission prices accelerate net zero: Evidence from China's coal-fired power plants
        AnthonyMouse 3y ago
        This is just trying to write on both sides of the ledger. If you tax carbon but then have other policies that encourage the construction of coal-fired power plants, they might only cancel out and at worst the price is doing less than the counter-incentives. You can try to claim that it would be even worse without it, but the real metric is, are you shutting down the existing coal-fired power plants or are you building more?
        ZeroGravitas 3y ago
        No, the real metric is carbon, not the number of coal plants. "China is building more coal plants but might burn less coal" https://www.sustainabilitybynumbers.com/p/china-coal-plants https://www.sustainabilitybynumbers.com/p/china-coal-plants
        AnthonyMouse 3y ago
        Except that makes no sense. You don't build something that expensive if you don't expect to use it, unless you're a fool. Moreover, unless they plan to continue to use all of the the existing coal-fired power plants and the new ones, if they were going to burn less then they could just use the existing ones. You can come up with some hypothetical like that article does where they're using coal as peaker plants (even though it's not very good at that because they take more time than natural gas to get up to temperature), but both the economics and the CO2 of that are pretty bad. You build and maintain all of these coal power plants and then only use them half the time, doubling their cost per unit electricity, and yet you do use them half the time and emit all of that CO2. But the alternative where you build them all for some rare emergency load is crazy. That's the one where they wouldn't be producing a catastrophic amount of CO2, but the economics of that are so bad that assuming that's their intent is assuming they're incompetent. They'd have to recover the cost of building and maintaining all of those power plants while only running them 2% of the time. That makes no sense compared to spending not all that much more to build nuclear plants instead which then generate power all of the time and avoid the need to also build something else (presumably intermittent renewables) to generate that power the other 98% of the time. So either they're incompetent or that theory is wrong and they're building a lot more coal power plants because they intend to burn a lot more coal. > the real metric is carbon https://www.macrotrends.net/countries/CHN/china/carbon-co2-emissions https://www.macrotrends.net/countries/CHN/china/carbon-co2-e... More than triple the CO2 emissions as they had in 2000 and the number continues to go up over time rather than down.
- h0l0cube 3y ago
  Just curious why it’s not a ‘good thing’? The only thing I can think of is it would be bad in the situation of a monopoly, but that’s not the current situation. Otherwise, it seems like an emergent market is being accelerated, and I, the consumer, can benefit from cheaper and better products and the attendant competition spurred by government finance of sorts. Historically it’s been seen as governments are uniformly terrible at allocating capital, but if subsidies really are the dominant factor here—still not sure that’s true—then BYD seems to be in contradiction to that theory.
  - AnthonyMouse 3y ago
    > Otherwise, it seems like an emergent market is being accelerated TANSTAAFL. The money from the subsidy came from something else, which you had to pay for. Often it comes from some industry where that country already has a dominant position and therefore can charge you higher prices without you having a choice to switch to something else. Which is, moreover, the problem with this: > I, the consumer, can benefit from cheaper and better products and the attendant competition spurred by government finance of sorts. The country doing the subsidizing thereby destroys their competitors in other countries who don't receive it, and then once they have a large enough lead they can raise prices and you have no alternative.
    - h0l0cube 3y ago
      > The country doing the subsidizing thereby destroys their competitors in other countries who don't receive it, Meh. The governments in this case become very powerful investors, and not just to a specific company, but to an entire industry, more like a sector fund. The US government is more than capable of matching China here—once again—if subsidies are what's propelling BYD, but judging by the top comment[0] it's probably just good old-fashioned capitalism favoring the best player > and then once they have a large enough lead they can raise prices and you have no alternative. I think the fears of a monopolized automotive industry are alarmist. China isn't the country with the most capital, and rather than being sore loser about it with sanctions, the US can invest in its own market just as hard. (Edit: Worth noting that this is nothing new. Countries around the world have been subsidizing automotive companies for a long time. There's some gestalt benefit here for governments in specialized training, advanced manufacturing, employment etc.) If anything with so many directions to be taken in battery chemistry and the reduction in complexity of drive train (and supply chain), more companies can enter the fray. There's plenty of room for competition. [0] https://news.ycombinator.com/item?id=39425092 https://news.ycombinator.com/item?id=39425092
- tqi 3y ago
  > which isn't actually a good thing Maybe not for competitors but seems like a pretty good thing for the country doing the subsidizing?
  - AnthonyMouse 3y ago
    Which is why other countries would be wise to provide a disincentive for engaging in that behavior.

AnthonyMouse 3y ago

> Discretionary government intervention can be good for the market actually This is more like "government intervention can give domestic companies an unfair advantage in global markets", which isn't actually a good thing, but also isn't something you can just ignore without a response. In this case you might like it because what they're subsidizing helps with climate change, but this is mainly because we don't price carbon (pricing major externalities is one of the things governments actually have to do), not because having governments subsidize businesses is a net positive in general.

ZeroGravitas 3y ago
Note that China does price carbon, which the USA does not (though some states do).
- AnthonyMouse 3y ago
  China is building more new coal-fired power plants than anyone else. Whatever they're doing on paper, they're not doing it in practice.
  - h0l0cube 3y ago
    China is building the more solar capacity than the US[0] and more nuclear capacity[1] than anyone else. Coal as a percentage of their energy mix has been markedly decreasing since 2014 [2] [0] https://ourworldindata.org/grapher/share-electricity-solar?tab=chart&country=CHN~USA~OWID_EUR https://ourworldindata.org/grapher/share-electricity-solar?t... [1] https://ourworldindata.org/grapher/nuclear-energy-generation?tab=chart&country=OWID_WRL~CHN~OWID_EUR~USA https://ourworldindata.org/grapher/nuclear-energy-generation... [2] https://ourworldindata.org/grapher/share-elec-by-source?country=~CHN https://ourworldindata.org/grapher/share-elec-by-source?coun...
    - ZeroGravitas 3y ago
      And their carbon price has played a role in that: https://www.sciencedirect.com/science/article/abs/pii/S030142152300109X https://www.sciencedirect.com/science/article/abs/pii/S03014... > How carbon emission prices accelerate net zero: Evidence from China's coal-fired power plants
      - AnthonyMouse 3y ago
        This is just trying to write on both sides of the ledger. If you tax carbon but then have other policies that encourage the construction of coal-fired power plants, they might only cancel out and at worst the price is doing less than the counter-incentives. You can try to claim that it would be even worse without it, but the real metric is, are you shutting down the existing coal-fired power plants or are you building more?
        ZeroGravitas 3y ago
        No, the real metric is carbon, not the number of coal plants. "China is building more coal plants but might burn less coal" https://www.sustainabilitybynumbers.com/p/china-coal-plants https://www.sustainabilitybynumbers.com/p/china-coal-plants
        AnthonyMouse 3y ago
        Except that makes no sense. You don't build something that expensive if you don't expect to use it, unless you're a fool. Moreover, unless they plan to continue to use all of the the existing coal-fired power plants and the new ones, if they were going to burn less then they could just use the existing ones. You can come up with some hypothetical like that article does where they're using coal as peaker plants (even though it's not very good at that because they take more time than natural gas to get up to temperature), but both the economics and the CO2 of that are pretty bad. You build and maintain all of these coal power plants and then only use them half the time, doubling their cost per unit electricity, and yet you do use them half the time and emit all of that CO2. But the alternative where you build them all for some rare emergency load is crazy. That's the one where they wouldn't be producing a catastrophic amount of CO2, but the economics of that are so bad that assuming that's their intent is assuming they're incompetent. They'd have to recover the cost of building and maintaining all of those power plants while only running them 2% of the time. That makes no sense compared to spending not all that much more to build nuclear plants instead which then generate power all of the time and avoid the need to also build something else (presumably intermittent renewables) to generate that power the other 98% of the time. So either they're incompetent or that theory is wrong and they're building a lot more coal power plants because they intend to burn a lot more coal. > the real metric is carbon https://www.macrotrends.net/countries/CHN/china/carbon-co2-emissions https://www.macrotrends.net/countries/CHN/china/carbon-co2-e... More than triple the CO2 emissions as they had in 2000 and the number continues to go up over time rather than down.
h0l0cube 3y ago
Just curious why it’s not a ‘good thing’? The only thing I can think of is it would be bad in the situation of a monopoly, but that’s not the current situation. Otherwise, it seems like an emergent market is being accelerated, and I, the consumer, can benefit from cheaper and better products and the attendant competition spurred by government finance of sorts. Historically it’s been seen as governments are uniformly terrible at allocating capital, but if subsidies really are the dominant factor here—still not sure that’s true—then BYD seems to be in contradiction to that theory.
- AnthonyMouse 3y ago
  > Otherwise, it seems like an emergent market is being accelerated TANSTAAFL. The money from the subsidy came from something else, which you had to pay for. Often it comes from some industry where that country already has a dominant position and therefore can charge you higher prices without you having a choice to switch to something else. Which is, moreover, the problem with this: > I, the consumer, can benefit from cheaper and better products and the attendant competition spurred by government finance of sorts. The country doing the subsidizing thereby destroys their competitors in other countries who don't receive it, and then once they have a large enough lead they can raise prices and you have no alternative.
  - h0l0cube 3y ago
    > The country doing the subsidizing thereby destroys their competitors in other countries who don't receive it, Meh. The governments in this case become very powerful investors, and not just to a specific company, but to an entire industry, more like a sector fund. The US government is more than capable of matching China here—once again—if subsidies are what's propelling BYD, but judging by the top comment[0] it's probably just good old-fashioned capitalism favoring the best player > and then once they have a large enough lead they can raise prices and you have no alternative. I think the fears of a monopolized automotive industry are alarmist. China isn't the country with the most capital, and rather than being sore loser about it with sanctions, the US can invest in its own market just as hard. (Edit: Worth noting that this is nothing new. Countries around the world have been subsidizing automotive companies for a long time. There's some gestalt benefit here for governments in specialized training, advanced manufacturing, employment etc.) If anything with so many directions to be taken in battery chemistry and the reduction in complexity of drive train (and supply chain), more companies can enter the fray. There's plenty of room for competition. [0] https://news.ycombinator.com/item?id=39425092 https://news.ycombinator.com/item?id=39425092
tqi 3y ago
> which isn't actually a good thing Maybe not for competitors but seems like a pretty good thing for the country doing the subsidizing?
- AnthonyMouse 3y ago
  Which is why other countries would be wise to provide a disincentive for engaging in that behavior.