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China definitely has industrial policy supporting its manufacturing, but the wages argument is begging the question. The USD, as the global reserve currency, is

China definitely has industrial policy supporting its manufacturing, but the wages argument is begging the question. The USD, as the global reserve currency, is over-valued; if an alternative system were used (eg. the Bancor) and the Yuan allowed to float, then those 34,000 Yuan would buy a lot more and the median US wage would buy less.

alephnerd 1y ago
Hypothetically yes, but the lack of social safety net means most of that hypothetical purchasing power expansion in China is moot. China has a medical debt problem [0], education pricing problem [1], and private sector capital crunch [2] similar to that of the US. This makes it much more difficult for the median household to spend in China because there is an incentive to keep saving. In isolation an $8,000 EV looks cheap to us earning a salary in the West, but that is still 1.7x the median household income (so half of all Chinese households have even less money to spend). For half of Chinese households, that's the equivalent of your median American household purchasing a Maserati. And healthcare costs can reach the $8k-15k price point in China for critical operations. The reality is, the median Chinese household is significantly underpaid compared to their peers in Thailand [3] or Malaysia [4] - either incomes have to rise to allow Chinese consumers to consume as well as cover health+education spending, or the central and provincial governments will have to dramatically expand social services in order to cover rising costs. The Chinese consumer cannot replace the American consumer without an expanded social safety net giving some breathing room to spend instead of saving. [0] - https://www.ft.com/content/4d892cd4-e7ef-446d-85c4-93262a7a3ba7 https://www.ft.com/content/4d892cd4-e7ef-446d-85c4-93262a7a3... [1] - https://sccei.fsi.stanford.edu/china-briefs/high-cost-education-china https://sccei.fsi.stanford.edu/china-briefs/high-cost-educat... [2] - https://www.bloomberg.com/news/articles/2025-03-18/china-private-equity-venture-funds-seek-more-time-to-deploy-capital https://www.bloomberg.com/news/articles/2025-03-18/china-pri... [3] - https://www.nso.go.th/nsoweb/storage/survey_detail/2023/20231018103954_32528.pdf https://www.nso.go.th/nsoweb/storage/survey_detail/2023/2023... [4] - https://open.dosm.gov.my/dashboard/household-income-expenditure https://open.dosm.gov.my/dashboard/household-income-expendit...
- mitthrowaway2 1y ago
  What I mean is that if the CNY properly appreciates relative to the US dollar, that CNY60k ($8,000) EV becomes a CNY60k ($16,000) EV. The median Chinese wage goes from CNY 34k ($5,000) to CNY 34k ($10,000). Meanwhile imports of agricultural products and other things into China becomes cheaper, and the cost of food gets lower. Most expenses an average Chinese worker pays might be unaffected given how self-reliant China is, but in theory at least the wage gap between Chinese and US workers would close significantly this way, even if the gap in living standards do not.
  - alephnerd 1y ago
    > Meanwhile imports of agricultural products and other things into China becomes cheaper, and the cost of food gets lower Food costs are already dropping in China [0]. That is not what is dampening Chinese spending. > if the CNY properly appreciates relative to the US dollar, that CNY60k ($8,000) EV becomes a CNY 60k ($16,000) EV. The median Chinese wage goes from CNY 34k ($5,000) to CNY 34k ($10,000). But a critical surgery will still cost $8k-16k nominal (or $16-32k using your purchasing power multiplier) and education spending by households is rising in nominal, and that is what is dampening consumer spending in the middle and lower quartile. > Most expenses an average Chinese worker pays might be unaffected given how self-reliant China is, but in theory at least the wage gap between Chinese and US workers would close significantly this way But the products which a median American consumer purchases doesn't directly overlap with that which the median Chinese consumer purchases (and vice versa). So it's a moot comparison. [0] - https://www.statista.com/statistics/1446926/china-monthly-food-inflation-rate-consumer-prices/ https://www.statista.com/statistics/1446926/china-monthly-fo...
    - mitthrowaway2 1y ago
      ... Yes. Although, you've phrased that like it's in some way a rebuttal to what I wrote, when it's actually consistent with what I said.
      - alephnerd 1y ago

alephnerd 1y ago

Hypothetically yes, but the lack of social safety net means most of that hypothetical purchasing power expansion in China is moot. China has a medical debt problem [0], education pricing problem [1], and private sector capital crunch [2] similar to that of the US. This makes it much more difficult for the median household to spend in China because there is an incentive to keep saving. In isolation an $8,000 EV looks cheap to us earning a salary in the West, but that is still 1.7x the median household income (so half of all Chinese households have even less money to spend). For half of Chinese households, that's the equivalent of your median American household purchasing a Maserati. And healthcare costs can reach the $8k-15k price point in China for critical operations. The reality is, the median Chinese household is significantly underpaid compared to their peers in Thailand [3] or Malaysia [4] - either incomes have to rise to allow Chinese consumers to consume as well as cover health+education spending, or the central and provincial governments will have to dramatically expand social services in order to cover rising costs. The Chinese consumer cannot replace the American consumer without an expanded social safety net giving some breathing room to spend instead of saving. [0] - https://www.ft.com/content/4d892cd4-e7ef-446d-85c4-93262a7a3ba7 https://www.ft.com/content/4d892cd4-e7ef-446d-85c4-93262a7a3... [1] - https://sccei.fsi.stanford.edu/china-briefs/high-cost-education-china https://sccei.fsi.stanford.edu/china-briefs/high-cost-educat... [2] - https://www.bloomberg.com/news/articles/2025-03-18/china-private-equity-venture-funds-seek-more-time-to-deploy-capital https://www.bloomberg.com/news/articles/2025-03-18/china-pri... [3] - https://www.nso.go.th/nsoweb/storage/survey_detail/2023/20231018103954_32528.pdf https://www.nso.go.th/nsoweb/storage/survey_detail/2023/2023... [4] - https://open.dosm.gov.my/dashboard/household-income-expenditure https://open.dosm.gov.my/dashboard/household-income-expendit...

mitthrowaway2 1y ago
What I mean is that if the CNY properly appreciates relative to the US dollar, that CNY60k ($8,000) EV becomes a CNY60k ($16,000) EV. The median Chinese wage goes from CNY 34k ($5,000) to CNY 34k ($10,000). Meanwhile imports of agricultural products and other things into China becomes cheaper, and the cost of food gets lower. Most expenses an average Chinese worker pays might be unaffected given how self-reliant China is, but in theory at least the wage gap between Chinese and US workers would close significantly this way, even if the gap in living standards do not.
- alephnerd 1y ago
  > Meanwhile imports of agricultural products and other things into China becomes cheaper, and the cost of food gets lower Food costs are already dropping in China [0]. That is not what is dampening Chinese spending. > if the CNY properly appreciates relative to the US dollar, that CNY60k ($8,000) EV becomes a CNY 60k ($16,000) EV. The median Chinese wage goes from CNY 34k ($5,000) to CNY 34k ($10,000). But a critical surgery will still cost $8k-16k nominal (or $16-32k using your purchasing power multiplier) and education spending by households is rising in nominal, and that is what is dampening consumer spending in the middle and lower quartile. > Most expenses an average Chinese worker pays might be unaffected given how self-reliant China is, but in theory at least the wage gap between Chinese and US workers would close significantly this way But the products which a median American consumer purchases doesn't directly overlap with that which the median Chinese consumer purchases (and vice versa). So it's a moot comparison. [0] - https://www.statista.com/statistics/1446926/china-monthly-food-inflation-rate-consumer-prices/ https://www.statista.com/statistics/1446926/china-monthly-fo...
  - mitthrowaway2 1y ago
    ... Yes. Although, you've phrased that like it's in some way a rebuttal to what I wrote, when it's actually consistent with what I said.
    - alephnerd 1y ago