4 ms·

China's Real Economic Crisis

11 points by mxschumacher 2y ago

patrickhogan1 2y ago
China grew 5.2% last year and is growing faster than the US this year. Clearly problems with how they allow startups to operate but growth is happening. Do you trust the numbers? That’s another story.
- consumer451 2y ago
  I don’t understand how anyone can trust the numbers coming out of Russia or China. In both cases, there is zero transparency.
  - ggm 2y ago
    There has to be some basis to link public numbers with reality because very large sums of money aren't invested without more due diligence than a HN sceptical hot take. People dislike the one party state but they work with it because the fundamentals work. Temporary glitches happen, informing central planning false numbers is unsustainable in the long term, you can't hide the bodies and waste forever.
    - hall0ween 2y ago
      From my understanding, outside of taking the CCP at their word, there is no way to confidently state either way. To me, I haven’t seen much reason to trust the CCP’s word when it comes to discussing itself.
    - consumer451 2y ago
      > informing central planning false numbers is unsustainable in the long term, you can't hide the bodies and waste forever. I would argue that this is a major reason why modern history is littered with the corpses of authoritarian regimes. They "work great" until the lie-debt stacks up to the point where it is undeniable.
      - ggm 2y ago
        So I can take that as supportive to my line of reasoning given we're way past 1949 and the state isn't failing. And the ones that fail didn't learn the lesson. Don't lie to yourself about hitting the plan targets. Vietnam is also mostly centrally planned and seems to be doing what the state says it is.
        consumer451 2y ago
        I grew up under an authoritarian regime, and I am heavily biased against them. It is impossible for me to give an untainted opinion on this subject. Has China been successful since 1949? By many measures, yes it has. However, in my bones, I know that when there is no chance of losing an election, corruption will run rampant and eventually reach critical mass. Xi anointing himself emperor and steadily getting rid of many high-ranking officials who question his final authority, is to me, the most obvious example of the wave peaking before it breaks. When Xi became leader for life it was a tacit admission that "the system" had begun to fail, therefore extraordinary measures had to be taken.
        ggm 2y ago
        None of this alters the fundamentals about the checkpoints to reality. Sure, they can drift from observed outcomes, but to the extent China (or any nation state) trades internationally, it's capacity to supply, and acquire goods and services and raw materials to meet external market demand present an objective reality. Can you know if the published reserves are as large (or small) as suggested? No. But you can reflect on the terms of trade and decide if they are better or worse than you expected in the light of reality. DPRK is supplying shells to russia for the war in Ukraine. This speaks both to the DPRK capacity to manufacture and supply shells, their quality (the rate of duds) and the industrial capacity inside the FSU such that it requires this to meet expected demand. These are the kind(s) of measures in reality which make it very unlikely sustaining "lies" about the economy can work long-term: Other people can draw their own inferences. Planned economies set goals. China set specific economic goals. Failure to deliver has consequence. If they miss targets there is an internal conversation which in due course we hear about. If they exceed target there are consequences and a conversation in due course we hear about. If a goal is met but the next cycles goals are radically different that tells a story too: if your demand remains but they cannot supply, their prior ability to supply must have had consequences or some other aspect of the econnomy has changed. In any event, planning an economy on false data is an exercise in peak frustration for the staff concerned. It's less likely anyone pushes paper for a fake outcome, the stakes are too high. I view this as similar to differential analysis in cryptography. Heat of the chip die tells a story. Where the work is done tells a story. Remember, aircraft and satellites fly the world 24/7 so it's not like an open cut mine can be hidden, or the spoil heaps of a deep mine, and the extent they grow is governed by the laws of physics: you can only pile soil so high before you have to slope it. So even things as unlikely as overflight by remote sensing satellites can tell you about the fundamentals of mining, industrial activity. "success" here has many measures. I'm focussed on the one which relates to the core topic, the economy. There are other measures, the demographics for instance which tell a tale of a cohort "missing" during the Mao famine years, and in due course will tell a tale of covid.
  - DiogenesKynikos 2y ago
    This is not at all true about the Chinese economy. The Chinese economy is tightly integrated into the world economy, and there are many ways to check their numbers. For every widget they export, there is a foreign importer. For everything they import, there is a foreign exporter. There are foreign companies that are heavily invested in most sectors of the Chinese economy. The idea that China is a black box that no information comes out of is just horribly out of date. This isn't the Mao era of a sealed-off China. This is the era of international China. The government itself does not like fake numbers, because they render economic policy ineffective. Beijing needs to know what is going on in the provinces. Generating fake numbers for public consumption and then a private set of real numbers would be a monumental undertaking that would be impossible to pull off over the long term for a country with as large and complex an economy as China's. Provinces have tried to fudge numbers in the past, and Beijing has punished them when it found out, because doing so goes against the interests of the central government.
- refurb 2y ago
  > China grew 5.2% last year and is growing faster than the US this year. This is true, but insufficient. US GDP per capita is 6.3x that of China. So the US' 2.4% growth last year was 3x larger than China's on an absolute per capita basis. If China ever hopes to become a high income country it needs to grow in the 10% per year every year, for the next two decades. In fact, if the US has mediocre growth of 3%, and China 9%, for the next 20 years, China will still only be half as rich as the US. China would need to maintain a growth rate of 12-13% per year, for 2 decades if it ever hope to match US wealth.
  - petermcneeley 2y ago
    China is expected to see a population decrease while America an increase https://en.wikipedia.org/wiki/Projections_of_population_growth https://en.wikipedia.org/wiki/Projections_of_population_grow... America's growth is narrowly focused on the digital tech sector. This is a fragile position and now requires the full force of tariff and bans to sustain. The GDP per capita is also a not great indicator of wealth for those actually living inside the country. https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP) https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)
    - refurb 2y ago
      > America's growth is narrowly focused on the digital tech sector. This is incorrect. Tech gets the most attention, but it's not the driver of GDP growth. https://www.statista.com/statistics/248004/percentage-added-to-the-us-gdp-by-industry/ https://www.statista.com/statistics/248004/percentage-added-... > This is a fragile position and now requires the full force of tariff and bans to sustain. This doesn't even jive with your prior sentence. The US doesn't use tariffs to protect the tech sector. However, China outright bans foreign tech in many cases. Maybe you mixed up the countries? > The GDP per capita is also a not great indicator of wealth for those actually living inside the country. It's not perfect, but it's best we have. You can consider it the maximum amount of wealth that can be distributed within the country. And I'm not sure why you linked to GDP by PPP. It's just COL adjusted GDP, which can be helpful, but has many caveats of it's own.
anramon 2y ago
Another "China will collapse in X months/years".
- yftsui 2y ago
  Did you even read the article? Label every article like labeling a diode is not something worth published here as comments.

11 points by mxschumacher 2y ago

China grew 5.2% last year and is growing faster than the US this year. Clearly problems with how they allow startups to operate but growth is happening. Do you trust the numbers? That’s another story.

consumer451 2y ago
I don’t understand how anyone can trust the numbers coming out of Russia or China. In both cases, there is zero transparency.
- ggm 2y ago
  There has to be some basis to link public numbers with reality because very large sums of money aren't invested without more due diligence than a HN sceptical hot take. People dislike the one party state but they work with it because the fundamentals work. Temporary glitches happen, informing central planning false numbers is unsustainable in the long term, you can't hide the bodies and waste forever.
  - hall0ween 2y ago
    From my understanding, outside of taking the CCP at their word, there is no way to confidently state either way. To me, I haven’t seen much reason to trust the CCP’s word when it comes to discussing itself.
  - consumer451 2y ago
    > informing central planning false numbers is unsustainable in the long term, you can't hide the bodies and waste forever. I would argue that this is a major reason why modern history is littered with the corpses of authoritarian regimes. They "work great" until the lie-debt stacks up to the point where it is undeniable.
    - ggm 2y ago
      So I can take that as supportive to my line of reasoning given we're way past 1949 and the state isn't failing. And the ones that fail didn't learn the lesson. Don't lie to yourself about hitting the plan targets. Vietnam is also mostly centrally planned and seems to be doing what the state says it is.
      - consumer451 2y ago
        I grew up under an authoritarian regime, and I am heavily biased against them. It is impossible for me to give an untainted opinion on this subject. Has China been successful since 1949? By many measures, yes it has. However, in my bones, I know that when there is no chance of losing an election, corruption will run rampant and eventually reach critical mass. Xi anointing himself emperor and steadily getting rid of many high-ranking officials who question his final authority, is to me, the most obvious example of the wave peaking before it breaks. When Xi became leader for life it was a tacit admission that "the system" had begun to fail, therefore extraordinary measures had to be taken.
        ggm 2y ago
        None of this alters the fundamentals about the checkpoints to reality. Sure, they can drift from observed outcomes, but to the extent China (or any nation state) trades internationally, it's capacity to supply, and acquire goods and services and raw materials to meet external market demand present an objective reality. Can you know if the published reserves are as large (or small) as suggested? No. But you can reflect on the terms of trade and decide if they are better or worse than you expected in the light of reality. DPRK is supplying shells to russia for the war in Ukraine. This speaks both to the DPRK capacity to manufacture and supply shells, their quality (the rate of duds) and the industrial capacity inside the FSU such that it requires this to meet expected demand. These are the kind(s) of measures in reality which make it very unlikely sustaining "lies" about the economy can work long-term: Other people can draw their own inferences. Planned economies set goals. China set specific economic goals. Failure to deliver has consequence. If they miss targets there is an internal conversation which in due course we hear about. If they exceed target there are consequences and a conversation in due course we hear about. If a goal is met but the next cycles goals are radically different that tells a story too: if your demand remains but they cannot supply, their prior ability to supply must have had consequences or some other aspect of the econnomy has changed. In any event, planning an economy on false data is an exercise in peak frustration for the staff concerned. It's less likely anyone pushes paper for a fake outcome, the stakes are too high. I view this as similar to differential analysis in cryptography. Heat of the chip die tells a story. Where the work is done tells a story. Remember, aircraft and satellites fly the world 24/7 so it's not like an open cut mine can be hidden, or the spoil heaps of a deep mine, and the extent they grow is governed by the laws of physics: you can only pile soil so high before you have to slope it. So even things as unlikely as overflight by remote sensing satellites can tell you about the fundamentals of mining, industrial activity. "success" here has many measures. I'm focussed on the one which relates to the core topic, the economy. There are other measures, the demographics for instance which tell a tale of a cohort "missing" during the Mao famine years, and in due course will tell a tale of covid.
- DiogenesKynikos 2y ago
  This is not at all true about the Chinese economy. The Chinese economy is tightly integrated into the world economy, and there are many ways to check their numbers. For every widget they export, there is a foreign importer. For everything they import, there is a foreign exporter. There are foreign companies that are heavily invested in most sectors of the Chinese economy. The idea that China is a black box that no information comes out of is just horribly out of date. This isn't the Mao era of a sealed-off China. This is the era of international China. The government itself does not like fake numbers, because they render economic policy ineffective. Beijing needs to know what is going on in the provinces. Generating fake numbers for public consumption and then a private set of real numbers would be a monumental undertaking that would be impossible to pull off over the long term for a country with as large and complex an economy as China's. Provinces have tried to fudge numbers in the past, and Beijing has punished them when it found out, because doing so goes against the interests of the central government.
refurb 2y ago
> China grew 5.2% last year and is growing faster than the US this year. This is true, but insufficient. US GDP per capita is 6.3x that of China. So the US' 2.4% growth last year was 3x larger than China's on an absolute per capita basis. If China ever hopes to become a high income country it needs to grow in the 10% per year every year, for the next two decades. In fact, if the US has mediocre growth of 3%, and China 9%, for the next 20 years, China will still only be half as rich as the US. China would need to maintain a growth rate of 12-13% per year, for 2 decades if it ever hope to match US wealth.
- petermcneeley 2y ago
  China is expected to see a population decrease while America an increase https://en.wikipedia.org/wiki/Projections_of_population_growth https://en.wikipedia.org/wiki/Projections_of_population_grow... America's growth is narrowly focused on the digital tech sector. This is a fragile position and now requires the full force of tariff and bans to sustain. The GDP per capita is also a not great indicator of wealth for those actually living inside the country. https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP) https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)
  - refurb 2y ago
    > America's growth is narrowly focused on the digital tech sector. This is incorrect. Tech gets the most attention, but it's not the driver of GDP growth. https://www.statista.com/statistics/248004/percentage-added-to-the-us-gdp-by-industry/ https://www.statista.com/statistics/248004/percentage-added-... > This is a fragile position and now requires the full force of tariff and bans to sustain. This doesn't even jive with your prior sentence. The US doesn't use tariffs to protect the tech sector. However, China outright bans foreign tech in many cases. Maybe you mixed up the countries? > The GDP per capita is also a not great indicator of wealth for those actually living inside the country. It's not perfect, but it's best we have. You can consider it the maximum amount of wealth that can be distributed within the country. And I'm not sure why you linked to GDP by PPP. It's just COL adjusted GDP, which can be helpful, but has many caveats of it's own.

anramon 2y ago

Another "China will collapse in X months/years".

yftsui 2y ago
Did you even read the article? Label every article like labeling a diode is not something worth published here as comments.