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Comment by jonathannat | Hacker News Reader

The era of CCP economic rise is over. Middle income trap and aging demographics dictate as much. CCP will now have to contend with

- internal turmoil

- political infighting

- encirclement by democracies (India, Japan, Australia, US, UK, Canada, France, South Korea, Taiwan). Once Merkel is out in sept 2021, Germany will be onboard

- negative sentiment from most of population in the world due to covid

- exploding debt/bankruptcies

- lack of efficient feedback loops to self correct, as dictatorship has little of that. Thus Jack Ma is no more.

If you have a foreign commercial presence in China, expect

- kidnapping of executives (for layoffs, unpaid bills)

- no delivery for paid merchandises

- seizure of molds/machines/factories (nationalization)

- seizure of tangible assets (nationalization)

- trademark/copyrights given to Chinese entities

with no recourses.

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Yes, many good points, but some of the same problems exist in the West and in the Asian democracies: covid, debt, aging demographics.

China does have one compelling advantage: its enormous population. Even if a horrible plague or even a civil war happened and 100m people died, they still have plenty of people to accomplish anything they want.

They have Ph.D. scientists, many trained at top Western universities, who are equal to anyone in the West. They are doing an amazing job in manufacturing and technology; virtually all high value objects are manufactured in China, and, increasingly, designed there as well.

They're pushing into automotive and aerospace and every other field. I don't see them slowing down any time soon.

The one child policy makes China’s aging problem particularly rapid, at a time when they are not wealthy enough per capita to make the transition. One child supports two parents and four grandparents. Plus a low retirement age that is only now getting extended. (60 for men, 55 for women previously). Over a third of Shanghai is over 60, as is a quarter in Beijing, Tianjin, etc.

Now the one child policy has been relaxed, but it will take a while before extra kids are available to work, and at this point it’s sort of a cultural norm to have one kid (plus prohibitively expensive to raise two kids and provide them decent resources).

True, they're in trouble demographically. Projections I have read in the past (before one-child was repealed) suggested they would lose 400m people by end of 21st Century. 400m!

Meanwhile, the West has its own implosion well underway... but, unlike China we have immigration. The U.S. population is still growing thanks to immigration, as is Europe's, even though both regions have replacement-level or below-replacement birthrates by natives. Immigrants tend to have higher birthrates however.

I would think this is actually good for them, as more internal demand relative to supply will help further transition away from exports, and also help increases their productivity (at least if they make working hours less insane).

more internal demand but few people working is basically going to increase debt significantly, leave seniors in abject poverty, or some combination of the two. And possibly massive deflation as well since old people are on fixed incomes and don't spend too much.

I thought Chinese household debt was absurdly low, but I guess that's changed.

Still, I would prefer to "quotient out the money", and say either the demand is met or it isn't? To the extent it is met, perhaps there are imports of material goods or domestic labor (nurses?)

I don't think it makes sense to worry about "domestic debt" in the same way, given the non-liberal political economy. Of course that doesn't mean there aren't limits, but the limits maybe would take the form of e.g. rising discontent and decreased productivity if it feels like an old-people-focused service economy with nothing in it for the workers.

So, Lost Decade Japan on steroids. A massive debt hangover after an asset bubble pop, deflation for a decade, and worse employment prospects and economic conditions for young people.

It's silly to think that smaller portion of working age population -> worse employment prospects. That process is very possible but relies on higher order effects.

You can't just blindly apply the economics of traditional liberal economies to a 21st century high tech illiberal economy.

China's 1.3B population is not equal. around 700M still lives on $140/month income, with no education to "accomplish anything they want". It will have 500M 65 year olds by 2050, too old to "accomplish anything they want".

China suffers brain drain to the West. Many of Chinese Ph.D students and scientists I know curse the day Xi Jing Ping declared himself to be the emperor, and is actively moving their families out of China as quickly as possible after 2018.

China has had very little luck in advanced semiconductor or airplane engine productions

>advanced semiconductor or airplane engine...

Not to disagree, but I believe it's just a matter of time. They're working hard in these areas.

Also, recent stats I read somewhere say Chinese Ph.D.'s are returning to China in increasing numbers these days, somewhere around 50% or more compared to the old days when the majority stayed in America or Europe.

there's also alot more chinese students studying abroad, compared to the old days. The creme of the crop stays, and the rest goes back.

The "rest" is still significantly better educated than those who never left, which implies they can fuel additional growth in China

Do they actually have the freedom to decide to leave China?

The USSR worked hard on semiconductors and airplane engines, but ultimately failed to keep up with the West.

Turns out, people with the means generally prefer living in countries with (a) individual freedom and rights, (b) freedom of the press, (c) an independent judiciary, & (d) economic surplus that responds to demand for luxury goods.

We can whataboutism on where the West currently stands with regards to these things, but if you're pro- and con- ing various options as an educated professional then you have a choice.

And if culture is a major consideration, then you could do worse than the Chinese communities in neighboring democratic states, or the literal democratic Chinese island...

> China does have one compelling advantage: its enormous population.

Which so far translates into ability to outcompete robots on cost and not much else.

China between 1919-1949 China was ruled by "Warlordism" a weak central government and local strongmen controlling 10-100 million people.

Uncle Xi is killing China. After Mao the whole political model was "collective" so no one could become so strong he would become an Emperor, Xi changes that by removing the two term (10 Yrs) rule of leadership. The CCP had one thing for legitimacy, economic growth. For 30 years China become richer and freer. In 2007 even people in HK were proud to be Chinese. That is not the case anymore. China peaked internationally in 2017.

Post-Xi China whenever that occurs will be a large poor country surrounded by enemies without easy access to global markets. It is impossible to use any Chinese product without the possibility of the use of slave or child labour within the supply chain.

China is more likely to return to Warlordism than become rich.

TL:DR - China became richer and freer post-Mao and now that process has reversed and China is becoming less free and poorer.

The incentives are pretty bad for researchers in China. Cheating and corruption is the best way to progress rather than innovation. I find it waste of time reading a Chinese scientific article, yet Chinese scientist in the US or Canada are brilliant.

Is this a documented sequence of events? Is there a book/resource to read into more details on these types of evens played out?

> If you have a foreign commercial presence in China, expect...

In how many months do you expect your predictions will come true, in a way that will cause the majority of Fortune 500 firms to leave China? Three? Six? Sixty? Six hundred?

I, for one, have strong doubts that the majority of those firms will ever leave China.

I will also note that all of your criticisms can be applied even more-so to democracies. Internal turmoil, political infighting, negative world sentiment (for some of them), exploding debt, aging demographics, ossification of political structures and poor ability to self-correct, check, check, check. It's true that, say, the United States is not encircled, but it has a separate problem of having to over-reach to maintain an incredibly ambitious, and unsustainable overseas military presence.

If those criteria were sufficient for a social collapse, then we're all living on borrowed time, and I don't see why you're singling China out as a likely point of failure.

most of it is already happening, check chinalawblog (including tales/warnings of kidnapping). the only thing that hasn't happened full scale is nationalization of tangible assets, such as molds, machines or factories. But if you owe some (made up) bills to the local government when you close your factories, the local government will prevent you from grabbing your stuff.

So, when do you expect social collapse, and most of Fortune 500 pulling their presence out of the country? Give me a rough timeline. Three months? Six? Sixty? Six hundred?

It's easy to make non-specific, non-committal predictions of doom and gloom. I can say with absolute certainty that, say, the Euro will become worthless sometime between now and the heat death of the universe. My prediction is as useless, as it is accurate.

What kind of prediction, with what kind of error bar, are you ready to commit to?

Prior to this, seeing the writing on the wall, my previous (Fortune 100) employer was already on the way out. I think there will still be plenty of F500 companies that stay, but they will do a better job of fire walking their business from their operations in China and walking away from all but the highest returns.

Current CPP leaderships are blaming US/West for all the trouble.

Xi is just a little red guard grew up from the culture revolution the only economic solution solution was follow Mao's "Nationalize" way.

That's a trillion dollar question.

Firms will leave China once democracies around the world make a multi-lateral trade agreement and put our money elsewhere that's aligned with our core beliefs including or primarily free speech, say India. Get the agreement in place, have it come into effect in 2 years ahead of time, provide investment grants or loans to businesses (globally if they're aligned with democracy/free speech) who want to manufacture whatever will fill a gap in production for what the 80% of what consumers buy currently from China.

CCP could easily prevent this redirection of resources by allowing free speech and having elections.

Have you ever been to India?

The fine people of India believes that cows are sacred gods. They also believe that drinking cow piss is good for you. They also believe that bathing and wallowing in cow sh*t is healthy for you, because it’ll help strengthen your immune system.

India has a very very long way to go.

But hey, India has free speech and elections. So maybe you should tell all your multi-national corporations to relocate to India.

With the election of Biden, the US will shift to a more cooperative strategy for containing China. There will be a higher emphasis on building/repairing relationships with allies in the region, so that American blood is not spilled (allies will help put boots on the ground, backed by American guarantees). How long this will continue and whether this strategy will continue regardless of the changes of leadership in the US is open to question, though.

As part of the 'pivot to Asia' initiated by Obama, America has helped many neighbors of Israel make peace with it formally. Iran vs. Saudi Arabia is the only other major engagement in the region. America will also likely extricate itself from Afghanistan completely in order to focus its resources on containing China.

Maybe your analysis make sense. But I often look opposite analysis to defeat the algorithm of social media. Personally I think it's partially responsible for there are 2 different realities that lead to the Jan 6 Capitol event.

Here's a piece that draws quite different picture from yours.

https://worldaffairs.blog/2020/12/31/from-terrified-to-trium...

a quick glimpse of the link you sent, alot of the economic data depends on you trusting the data coming from a dictatorship which obfuscates every clear economic signals. So I don't buy it personally. As for politics, China aligned itself with small countries/other dictatorships, while the big democracies that composes of 80+% of the world's economies united. As for tech, you need to also believe the claims they made.

When comparing the outcome of covid, I think we need to consider more than the response of the government. The civil society played a key role, too.

Regarding covid, Taiwan did very well, despite being very close to China.

- The government responded quickly, tracing everyone who entered Taiwan to control for spread of covid.

- The civil society took it seriously, with the experience of SARS.

Taiwan beat covid because the society has trust in science and the government [1].

[1]: https://www.wired.com/story/how-taiwans-unlikely-digital-min...

P.S. your link has a very pro-Beijing tone throughout:

- It calls India and Australia as the vassal states of the US, and framing China's actions towards Australia as sending a warning to other vassal states.

- The numbers cited there are not comprehensive: when measuring space launches, not counting SpaceX.

> In the midst of all these problems, America’s vassal states — India and Australia — saber rattled in ominous ways. [...] Australia was spanked very hard as a warning to other vassals. If Australia slips into a recession, the next Prime Minister will be a lot less racist and uncouth. And perhaps Australia will be more careful about committing war crimes in Afghanistan and elsewhere.

"Objective Nonpartisan Insightful", really now! I think your source needs to learn how to write non-editorial English.

I agree with most of these. China is massively underestimating the implications from its widening wealth gap. People in China are not stupid.

Westerners have been saying the era of Chinese economic rise is over for more than 20 years now. For pretty much all of the same reasons. One would think the lesson would be learned after 20 years.

over the years, demographics change, macro economics change, geopolitics change, etc etc etc

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