4 ms·

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 pr

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
      Because your point is that the wage gap between the US and Chinese household would close significantly - yet it does not. Even with those multipliers, the wage gap between your median Thai and Malaysian household and your median Chinese household is significant, let alone with an American household. The wage gap cannot be solved until there is a serious expansion in China's social safety net if China wishes to continue to use a production driven growth model. This is what Japan, Germany, the US before Reagan, South Korea, and much of Eastern Europe did when they reached similar developmental precipices to China today. China can see a significant jump in living standards similar to that which Poland saw over the past 15-20 years if the social safety net is expanded.
vkou 1y ago
> 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). You're looking at China the wrong way. A better way to view it is as two countries - a developed urban one, tied to a developing, rural one. The latter is currently bigger than the former, so it drives any median wealth metrics down. A lot. But for the past 40 years, the developing part of it has been shrinking - while the developed part has been growing. On that kind of trajectory, that median divide of wealth is currently where the 60th percentile was a decade ago, and in a decade, will be where the 40th percentile is today. Where does the median urbanite in China stand, compared to her Thai or Malaysian counterpart?
- alephnerd 1y ago
  > You're looking at China the wrong way. A better way to view it is as two countries - a developed urban one, tied to a developing, rural one This is how I am looking at China, and this is ALL THE MORE reason that development needs to be spread out much more equally. Urban China isn't that much richer either - median urban household income is CNY 43,000/$6,000 [0] - so on par with Thailand and half that of Malaysia's. And rural China is in a worse position - CNY 19,600/$2,700 [0] Ignoring the bottom half of China (urban and rural) is going to set China up for failure long term. Having well developed cities (in reality a couple megacities that are also 直辖市) but a significantly underdeveloped hinterland and urban underclass will only lead to extended instability. Furthermore, it isn't that expensive to expand the social safety net in China. The Chinese income tax system is severely regressive and is comparable to the US system, and the provinces and municipalities that generate the majority of growth for China can easily divert portions of their total production to either expanding their own social safety nets or subsidizing those of adjacent provinces. Just by my back of the napkin math, expanding social services such that it becomes the equivalent of $2,000 per household would automatically add 1% to China's GDP growth rate, and also alleviate the overproduction trade war issue, as that would give significant breathing room to the bottom half of Chinese consumers. It's just pigheadedness to not divert some amount of spending into education and healthcare. > On that kind of trajectory, that median divide of wealth is currently where the 60th percentile was a decade ago, and in a decade, will be where the 40th percentile is today Past trajectory cannot be used to predict future trajectory. Even the IMF forecasts Chinese GDP growth to drop to 3% by the end of this decade. It is much more difficult to lift the bottom 50% of Chinese households in that kind of a macro environment. It is just plain complacency to ignore this trend. > Where does the median urbanite in China stand, compared to her Thai or Malaysian counterpart On par with their Malaysian or Thai urban counterparts based on HDI [1][2], but based on household income, they are roughly at the same median household income of Thailand, and half that of the median Malaysian household, so worse off than their Malaysian or Thai urban counterparts - and let's be honest, there's a reason you bump into plenty of "Cina" migrant workers doing blue collar work in KL, Johor, Klang, or Penang like bus driving or working as the help at Malaysian Chinese owned businesses, just like how there are plenty of white collar Chinese immigrants in Malaysia. And if we decide to use a subnational lens as you insisted on your post, we can see that the majority of Chinese provinces are much more deprived than their Malaysian or Thai counterparts, which itself highlights the need for the Central and Provincial governments to really concentrate on expanding social welfare. [0] - https://www.stats.gov.cn/english/PressRelease/202501/t20250124_1958443.html https://www.stats.gov.cn/english/PressRelease/202501/t202501... [1] - http://www.dosm.gov.my/portal-main/release-content/malaysia-human-development-index-mhdi-2023/ http://www.dosm.gov.my/portal-main/release-content/malaysia-... [2] - https://globaldatalab.org/shdi/table/shdi/CHN+THA/?levels=1+4&years=2022&interpolation=0&extrapolation=0 https://globaldatalab.org/shdi/table/shdi/CHN+THA/?levels=1+...

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
    Because your point is that the wage gap between the US and Chinese household would close significantly - yet it does not. Even with those multipliers, the wage gap between your median Thai and Malaysian household and your median Chinese household is significant, let alone with an American household. The wage gap cannot be solved until there is a serious expansion in China's social safety net if China wishes to continue to use a production driven growth model. This is what Japan, Germany, the US before Reagan, South Korea, and much of Eastern Europe did when they reached similar developmental precipices to China today. China can see a significant jump in living standards similar to that which Poland saw over the past 15-20 years if the social safety net is expanded.

vkou 1y ago

> 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). You're looking at China the wrong way. A better way to view it is as two countries - a developed urban one, tied to a developing, rural one. The latter is currently bigger than the former, so it drives any median wealth metrics down. A lot. But for the past 40 years, the developing part of it has been shrinking - while the developed part has been growing. On that kind of trajectory, that median divide of wealth is currently where the 60th percentile was a decade ago, and in a decade, will be where the 40th percentile is today. Where does the median urbanite in China stand, compared to her Thai or Malaysian counterpart?

alephnerd 1y ago
> You're looking at China the wrong way. A better way to view it is as two countries - a developed urban one, tied to a developing, rural one This is how I am looking at China, and this is ALL THE MORE reason that development needs to be spread out much more equally. Urban China isn't that much richer either - median urban household income is CNY 43,000/$6,000 [0] - so on par with Thailand and half that of Malaysia's. And rural China is in a worse position - CNY 19,600/$2,700 [0] Ignoring the bottom half of China (urban and rural) is going to set China up for failure long term. Having well developed cities (in reality a couple megacities that are also 直辖市) but a significantly underdeveloped hinterland and urban underclass will only lead to extended instability. Furthermore, it isn't that expensive to expand the social safety net in China. The Chinese income tax system is severely regressive and is comparable to the US system, and the provinces and municipalities that generate the majority of growth for China can easily divert portions of their total production to either expanding their own social safety nets or subsidizing those of adjacent provinces. Just by my back of the napkin math, expanding social services such that it becomes the equivalent of $2,000 per household would automatically add 1% to China's GDP growth rate, and also alleviate the overproduction trade war issue, as that would give significant breathing room to the bottom half of Chinese consumers. It's just pigheadedness to not divert some amount of spending into education and healthcare. > On that kind of trajectory, that median divide of wealth is currently where the 60th percentile was a decade ago, and in a decade, will be where the 40th percentile is today Past trajectory cannot be used to predict future trajectory. Even the IMF forecasts Chinese GDP growth to drop to 3% by the end of this decade. It is much more difficult to lift the bottom 50% of Chinese households in that kind of a macro environment. It is just plain complacency to ignore this trend. > Where does the median urbanite in China stand, compared to her Thai or Malaysian counterpart On par with their Malaysian or Thai urban counterparts based on HDI [1][2], but based on household income, they are roughly at the same median household income of Thailand, and half that of the median Malaysian household, so worse off than their Malaysian or Thai urban counterparts - and let's be honest, there's a reason you bump into plenty of "Cina" migrant workers doing blue collar work in KL, Johor, Klang, or Penang like bus driving or working as the help at Malaysian Chinese owned businesses, just like how there are plenty of white collar Chinese immigrants in Malaysia. And if we decide to use a subnational lens as you insisted on your post, we can see that the majority of Chinese provinces are much more deprived than their Malaysian or Thai counterparts, which itself highlights the need for the Central and Provincial governments to really concentrate on expanding social welfare. [0] - https://www.stats.gov.cn/english/PressRelease/202501/t20250124_1958443.html https://www.stats.gov.cn/english/PressRelease/202501/t202501... [1] - http://www.dosm.gov.my/portal-main/release-content/malaysia-human-development-index-mhdi-2023/ http://www.dosm.gov.my/portal-main/release-content/malaysia-... [2] - https://globaldatalab.org/shdi/table/shdi/CHN+THA/?levels=1+4&years=2022&interpolation=0&extrapolation=0 https://globaldatalab.org/shdi/table/shdi/CHN+THA/?levels=1+...