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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 go

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.
    - mitthrowaway2 1y ago
      Thai workers are not paid in the global reserve currency, so that is irrelevant. The wage gap will shrink because USD will come down relative to CNY. I make no argument that Chinese wages will increase in CNY, nor that the gap will close all the way to zero.
      - alephnerd 1y ago
        My point is a reserve currency doesn't help the median Chinese in any shape or form, nor does the USD being a reserve currency help the median American. There are benefits to being a reserve currency at the macro-scale, but they are not felt by the vast majority of households, and any attempts at making the CNY a competitive reserve currency would require dramatically reducing currency controls along with increasing the independence of the PBOC from political leadership, and leave the lower tier of Chinese workers open to job loss and outsourcing [0][1][2][3] as low-to-medium complexity industries remain the primary employment generator in Chinese manufacturing. This is the exact same thing that happened to Thai, Malaysian, and Mexican manufacturing workers during the 2000s when they hit plateaus similar to China today. Finally, the US's dominant position is the cause of the USD as a reserve currency, not the other way around [4]. Having a reserve currency is orthogonal to having great power status, as can be seen with the rise of China. A rising tide lifts all ships - the China story will stagnate if a serious effort at helping the bottom half of Chinese does not develop. [0] - https://www.degruyterbrill.com/document/doi/10.1515/cfer-2024-0023/html?lang=en&srsltid=AfmBOopXZMfz7sfj39KWfPk6xb4eMxdqbJwX0mEl663F59grwJrSyd6i https://www.degruyterbrill.com/document/doi/10.1515/cfer-202... [1] - https://www.tandfonline.com/doi/abs/10.1080/13602381.2025.2452870 https://www.tandfonline.com/doi/abs/10.1080/13602381.2025.24... [2] - https://sysengi.cjoe.ac.cn/EN/10.12011/SETP2023-0562 https://sysengi.cjoe.ac.cn/EN/10.12011/SETP2023-0562 [3] - https://www.nature.com/articles/s41599-024-03797-6 https://www.nature.com/articles/s41599-024-03797-6 [4] - https://www.ussc.edu.au/the-reserve-currency-myth-the-us-dollars-current-and-future-role-in-the-world-economy https://www.ussc.edu.au/the-reserve-currency-myth-the-us-dol...

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.
  - mitthrowaway2 1y ago
    Thai workers are not paid in the global reserve currency, so that is irrelevant. The wage gap will shrink because USD will come down relative to CNY. I make no argument that Chinese wages will increase in CNY, nor that the gap will close all the way to zero.
    - alephnerd 1y ago
      My point is a reserve currency doesn't help the median Chinese in any shape or form, nor does the USD being a reserve currency help the median American. There are benefits to being a reserve currency at the macro-scale, but they are not felt by the vast majority of households, and any attempts at making the CNY a competitive reserve currency would require dramatically reducing currency controls along with increasing the independence of the PBOC from political leadership, and leave the lower tier of Chinese workers open to job loss and outsourcing [0][1][2][3] as low-to-medium complexity industries remain the primary employment generator in Chinese manufacturing. This is the exact same thing that happened to Thai, Malaysian, and Mexican manufacturing workers during the 2000s when they hit plateaus similar to China today. Finally, the US's dominant position is the cause of the USD as a reserve currency, not the other way around [4]. Having a reserve currency is orthogonal to having great power status, as can be seen with the rise of China. A rising tide lifts all ships - the China story will stagnate if a serious effort at helping the bottom half of Chinese does not develop. [0] - https://www.degruyterbrill.com/document/doi/10.1515/cfer-2024-0023/html?lang=en&srsltid=AfmBOopXZMfz7sfj39KWfPk6xb4eMxdqbJwX0mEl663F59grwJrSyd6i https://www.degruyterbrill.com/document/doi/10.1515/cfer-202... [1] - https://www.tandfonline.com/doi/abs/10.1080/13602381.2025.2452870 https://www.tandfonline.com/doi/abs/10.1080/13602381.2025.24... [2] - https://sysengi.cjoe.ac.cn/EN/10.12011/SETP2023-0562 https://sysengi.cjoe.ac.cn/EN/10.12011/SETP2023-0562 [3] - https://www.nature.com/articles/s41599-024-03797-6 https://www.nature.com/articles/s41599-024-03797-6 [4] - https://www.ussc.edu.au/the-reserve-currency-myth-the-us-dollars-current-and-future-role-in-the-world-economy https://www.ussc.edu.au/the-reserve-currency-myth-the-us-dol...