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China, being a planned economy at heart, has a "VC" system that is essentially just the government deciding what needs to be developed, and then Chinese banks l

China, being a planned economy at heart, has a "VC" system that is essentially just the government deciding what needs to be developed, and then Chinese banks lending without any practical strings to those developers. Profit and loss, ROI, business plan, aren't really factored in. China wants to develop AI? You have some experience and want to start an AI business? Great! Here is a few million go make AI. This is the system that led to those infamous ghost cities and billion dollar high speed trains to nowhere. China puts the carts before the horse, and hopes at at least a few of them get to the destination. They're not unfamiliar with burning tens of billions to get a few hundred million of value. It also means that if you are competing against one of these chosen industries, you are not competing, because they are just burning daddies money, whereas you need to make interest payments.

tonyhart7 1y ago
I mean they are 2nd largest GDP economy with "world factory" title some words you said can be true of course but its clearly working out for them
- dralley 1y ago
  There are some pretty big cracks underneath the surface. But yes they certainly have been successful at drawing in the manufacturing at the very least, even if it's ultimately not very sustainable.
  - tonyhart7 1y ago
    "There are some pretty big cracks underneath the surface" they are just as vulnerable as western counterpart has, I can assure you that just media narrative that make it overblown. Yes western can sanction them and hurt them but they also hurt western economy in the process
    - dralley 1y ago
      I'm not referring to sanctions or tariffs. I'm referring to inefficient resource allocation, debt, unsustainably low margins, companies not making any profit, etc.
      - tonyhart7 1y ago
        but its just trade off, they know what they are doing in return of macro and focused economic growth in key strategic areas. in the long run they would win CCP has many criticsm, but waste and ineffecient isnt one of them
naasking 1y ago
I don't see how that could be considered a planned economy, you're describing individuals creating startups of their own free choice and the government backing them with no strings. Individual choices are driving economic progress. A planned economy would be some government committee deciding what specific startups and how many of them should be started up in any give year, and no one else can create a startup.
- dkdcio 1y ago
  "A planned economy would be some government committee deciding what specific startups and how many of them should be started up in any give year, and no one else can create a startup." no it would not be...where is this definition from?
  - ajmurmann 1y ago
    That's how planned economies worked under "proper" communism in the Soviet Union or pre-Deng and how we ended up with stories about factories only baking giant screws to meet weight quotas to the switch to tiny screws to meet quantity quotas while no medium-sized screws people actually needed for produced. Two distinct words night be useful to distinguish between planned without any market feedback and heavy industrial policy like we see in China now. In fact the CCP recently voiced their impatience with Cuba refusing to introduce market-oriented reforms.
    - dkdcio 1y ago
      fair enough —- I need to read up more on the usage, but I find it surprising for “planned economy” to imply the former
- davidmurdoch 1y ago
  Money (subsidies) and laws are exactly how economies are planned. When you've got scale like China, USA, EU, you can throw money at things you want to exist and there will be citizens who will just do those things because of the incentive.
kklisura 1y ago
Can't tell if this post is against VC system or just China?
- abullinan 1y ago
  Yes
kennywinker 1y ago
> Great! Here is a few million go make AI. So how is this different from the US? It’s VC’s making the choices not the gov - seems little different. Maybe scale? > They're not unfamiliar with burning tens of billions to get a few hundred million of value. The chinese economy seems like proof this is a valid strategy that pays off in aggregate. Yet when gov here attempts any kind of economic development policy it seems largely unpopular. > you are not competing, because they are just burning daddies money So like the american defense industry then?
- Workaccount2 1y ago
  VC's gauge what the market wants, the Chinese government is one person who decides what he wants. One of these is grossly inefficient compared to the other, despite the final outcome looking similar from some angles.
  - ohdeargodno 1y ago
    "Capitalism good, but state capitalism bad". Not only are US VCs dumping billions in shitty Bluetooth connected dog collars and other kinds of crap, apparently according to you because that's "what the market wants", it's also an incredibly stupid reading of how the Chinese government works. They target specific industries that are important, according to them, like solar panels, batteries, cars, etc. They then dump billions into a bunch of companies, and see which ones come out alive and on top. As it stands, it's been pretty accurate for many things, and has made them market leaders on many, many things. But sure, jerk off the VC model, after all YC thinks the market wants... AIs and ERPs. Woo.
    - Workaccount2 1y ago
      I'm failing to see where our descriptions diverge. You aren't acknowledging is that China has unbelievable waste and crushing debt from it (provincial debt, because they typically finance these projects). Of course the system is great for getting projects build and advancing. China has a massive workforce to fund it's money hose. It's awful for doing it efficiently, because there is no incentive to be efficient when you never have to pay the creditor back.
porphyra 1y ago
People love to point out the ghost cities and high speed trains to "nowhere". But, for every ghost city, there are hundreds of thriving actual cities full of people. Shenzhen itself was a planned special economic zone that went from an impoverished fishing village to a thriving megalopolis and the worldwide center of electronics within decades. And despite some high speed train stations being underutilized in the off season, the majority of Chinese cities are connected with blazing fast high speed trains that depart every 15 minutes. Even third tier cities have high speed trains and they are amazing. Now, despite using some underhanded tactics to get Siemens and others to hand over their IP initially, the Chinese high speed rail system is the envy of the world, with orders of magnitude greater coverage, track length, and ridership than Japan. At the same time, domestic innovations allow the newer trains to be a more comfortable, faster, and smoother ride than the Shinkansen, TGV, and ICE. I would take that any day over, say, California High Speed Rail dilly-dallying for decades with nothing to show for it. The Chinese electric car industry is another one of those that are famously subsidized. People love to point out that some shady companies that have large lots of unsold new vehicles sitting there but written off as being sold via some accounting tricks. While that does happen and is deplorable, the fact is that Chinese EVs have basically leapfrogged the rest of the world in quality, capabilities, and innovation. The Xiaomi SU7 is amazing, for example. But don't despair, some Western companies like Tesla are still able to keep up with the pace of innovation. Also, all this talk of the Chinese government subsidizing this, and subsidizing that being unfair competition, as though China had a magic money tree to fund everything. In contrast, it is sad that the US government, while having vastly greater tax revenue, fails to fund basically any sort of technological development, and instead wastes all of its enormous amounts of money on inefficiencies (e.g. our spending per capita on healthcare being the highest in the world, but most of it is going to bureaucracy, and we languish with poor life expectancy) while being saddled in debt.
- tkel 1y ago
  Yes, I'm really tired of the propagandized "ghost cities" talking point. Having spent time in China, it's clear that they just put a little bit of planning into their development, where as in the US there is little to none, and the resulting infrastructure + development is far below China's. And like you said, the capacity and capability is there, but the money gets disappeared into some DoD contractor instead. As well as there being thousands of failed projects, ghost towns, and empty neighborhoods across the US. But the propagandized talking point isn't there. Some wealthy anti-planning capitalists obviously made a successful media push about it. Much like other "enemies" of the US, nearly all reporting is loose on facts and biased negative.
RobotToaster 1y ago
The CIA has it's own venture capital arm (In-Q-Tel) for the same reason, it helped fund Google, Palantir and Anduril.

tonyhart7 1y ago

I mean they are 2nd largest GDP economy with "world factory" title some words you said can be true of course but its clearly working out for them

dralley 1y ago
There are some pretty big cracks underneath the surface. But yes they certainly have been successful at drawing in the manufacturing at the very least, even if it's ultimately not very sustainable.
- tonyhart7 1y ago
  "There are some pretty big cracks underneath the surface" they are just as vulnerable as western counterpart has, I can assure you that just media narrative that make it overblown. Yes western can sanction them and hurt them but they also hurt western economy in the process
  - dralley 1y ago
    I'm not referring to sanctions or tariffs. I'm referring to inefficient resource allocation, debt, unsustainably low margins, companies not making any profit, etc.
    - tonyhart7 1y ago
      but its just trade off, they know what they are doing in return of macro and focused economic growth in key strategic areas. in the long run they would win CCP has many criticsm, but waste and ineffecient isnt one of them

naasking 1y ago

I don't see how that could be considered a planned economy, you're describing individuals creating startups of their own free choice and the government backing them with no strings. Individual choices are driving economic progress. A planned economy would be some government committee deciding what specific startups and how many of them should be started up in any give year, and no one else can create a startup.

dkdcio 1y ago
"A planned economy would be some government committee deciding what specific startups and how many of them should be started up in any give year, and no one else can create a startup." no it would not be...where is this definition from?
- ajmurmann 1y ago
  That's how planned economies worked under "proper" communism in the Soviet Union or pre-Deng and how we ended up with stories about factories only baking giant screws to meet weight quotas to the switch to tiny screws to meet quantity quotas while no medium-sized screws people actually needed for produced. Two distinct words night be useful to distinguish between planned without any market feedback and heavy industrial policy like we see in China now. In fact the CCP recently voiced their impatience with Cuba refusing to introduce market-oriented reforms.
  - dkdcio 1y ago
    fair enough —- I need to read up more on the usage, but I find it surprising for “planned economy” to imply the former
davidmurdoch 1y ago
Money (subsidies) and laws are exactly how economies are planned. When you've got scale like China, USA, EU, you can throw money at things you want to exist and there will be citizens who will just do those things because of the incentive.

kklisura 1y ago

Can't tell if this post is against VC system or just China?

abullinan 1y ago
Yes

kennywinker 1y ago

> Great! Here is a few million go make AI. So how is this different from the US? It’s VC’s making the choices not the gov - seems little different. Maybe scale? > They're not unfamiliar with burning tens of billions to get a few hundred million of value. The chinese economy seems like proof this is a valid strategy that pays off in aggregate. Yet when gov here attempts any kind of economic development policy it seems largely unpopular. > you are not competing, because they are just burning daddies money So like the american defense industry then?

Workaccount2 1y ago
VC's gauge what the market wants, the Chinese government is one person who decides what he wants. One of these is grossly inefficient compared to the other, despite the final outcome looking similar from some angles.
- ohdeargodno 1y ago
  "Capitalism good, but state capitalism bad". Not only are US VCs dumping billions in shitty Bluetooth connected dog collars and other kinds of crap, apparently according to you because that's "what the market wants", it's also an incredibly stupid reading of how the Chinese government works. They target specific industries that are important, according to them, like solar panels, batteries, cars, etc. They then dump billions into a bunch of companies, and see which ones come out alive and on top. As it stands, it's been pretty accurate for many things, and has made them market leaders on many, many things. But sure, jerk off the VC model, after all YC thinks the market wants... AIs and ERPs. Woo.
  - Workaccount2 1y ago
    I'm failing to see where our descriptions diverge. You aren't acknowledging is that China has unbelievable waste and crushing debt from it (provincial debt, because they typically finance these projects). Of course the system is great for getting projects build and advancing. China has a massive workforce to fund it's money hose. It's awful for doing it efficiently, because there is no incentive to be efficient when you never have to pay the creditor back.

porphyra 1y ago

People love to point out the ghost cities and high speed trains to "nowhere". But, for every ghost city, there are hundreds of thriving actual cities full of people. Shenzhen itself was a planned special economic zone that went from an impoverished fishing village to a thriving megalopolis and the worldwide center of electronics within decades. And despite some high speed train stations being underutilized in the off season, the majority of Chinese cities are connected with blazing fast high speed trains that depart every 15 minutes. Even third tier cities have high speed trains and they are amazing. Now, despite using some underhanded tactics to get Siemens and others to hand over their IP initially, the Chinese high speed rail system is the envy of the world, with orders of magnitude greater coverage, track length, and ridership than Japan. At the same time, domestic innovations allow the newer trains to be a more comfortable, faster, and smoother ride than the Shinkansen, TGV, and ICE. I would take that any day over, say, California High Speed Rail dilly-dallying for decades with nothing to show for it. The Chinese electric car industry is another one of those that are famously subsidized. People love to point out that some shady companies that have large lots of unsold new vehicles sitting there but written off as being sold via some accounting tricks. While that does happen and is deplorable, the fact is that Chinese EVs have basically leapfrogged the rest of the world in quality, capabilities, and innovation. The Xiaomi SU7 is amazing, for example. But don't despair, some Western companies like Tesla are still able to keep up with the pace of innovation. Also, all this talk of the Chinese government subsidizing this, and subsidizing that being unfair competition, as though China had a magic money tree to fund everything. In contrast, it is sad that the US government, while having vastly greater tax revenue, fails to fund basically any sort of technological development, and instead wastes all of its enormous amounts of money on inefficiencies (e.g. our spending per capita on healthcare being the highest in the world, but most of it is going to bureaucracy, and we languish with poor life expectancy) while being saddled in debt.

tkel 1y ago
Yes, I'm really tired of the propagandized "ghost cities" talking point. Having spent time in China, it's clear that they just put a little bit of planning into their development, where as in the US there is little to none, and the resulting infrastructure + development is far below China's. And like you said, the capacity and capability is there, but the money gets disappeared into some DoD contractor instead. As well as there being thousands of failed projects, ghost towns, and empty neighborhoods across the US. But the propagandized talking point isn't there. Some wealthy anti-planning capitalists obviously made a successful media push about it. Much like other "enemies" of the US, nearly all reporting is loose on facts and biased negative.

RobotToaster 1y ago

The CIA has it's own venture capital arm (In-Q-Tel) for the same reason, it helped fund Google, Palantir and Anduril.