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Comment by mgraczyk | Hacker News Reader

A lot of comments here are criticizing Apple for chasing cheap labor.

Ignoring for a second the fact that this has a lot more to do with geopolitics and hedging geopolitical risk, I think it's important to think more carefully about the impact of companies investing in developing economies.

By and large, the factory work done by people in developing economies is dramatically better in terms of quality of life and safety than the agricultural work that they would be doing without economic development. It would be better if the factories were more often owned domestically (instead of owned by Chinese companies), but the actual workers are not suffering in the short term as a result of Apple bringing jobs. The complete opposite is true.

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There is a lot of dishonesty around Westerners complaining about foreign cheap labor.

They claim to be championing labor rights, but they are often just angered at companies for stopping all manufacturing in the West. They see it as an obvious weakness in their ideology that companies can just walk away from their labor movement and go elsewhere.

The obvious truth, and what literally all of these Vietnamese workers will tell you, is that foreign tech manufacturing is an amazingly better paying job than what is currently available.

The true story with China is that moving Western manufacturing to China raised the standard of living for literally hundreds of millions of Chinese people out of poverty.

> There is a lot of dishonesty around Westerners complaining about foreign cheap labor.

This is a strawman.

You're conflating different groups of people with different interests. Some people complain about labor conditions, some people complain that jobs are leaving the country. Almost nobody is "dishonest" about this.

There are plenty of people who are extremely selective with regards to their outrage on each issue, though.

So? Most people's entire existence is predicated on unsustainable consumerism. There is literally too much to care about. If you require that people must care about all issues to care about any issue, then progress won't be made. Maybe that's your intention.

I don’t require everyone to care the same about all issues, that wasn’t my point.

My point was people who care about labor rights, shipping jobs offshore, etc are selective about those specific issues. Never said they had to care about other issues.

The same type of argument can be made about any specific issue. For instance, labor rights is incredibly broad. I don't think it's a realistic requirement for someone to care about every possible labor-rights issue. It's fine if people want to be selective.

I wasn’t specific enough.

My point was that people are inconsistent due to the intersection between their advocacy and their own sense of nationalism. The issues are amplified when they pertain to Americas enemies and lessened when it pertains to Americas Allies.

Maybe to help explain what I think you are getting at. A year or two ago, you had senators preaching about how we needed to stop china's slave labor of the uighyurs. Okay, fine, I agree with that. But what about the horrible labor practices American companies rely on in central Africa where there, slavery also exists? The people who say bad China about labor practices have their blinders up to our allies who use the same labor practices. The reality is, if you think a company should not use slave labor in China, you should also thing they shouldnt use slave labor in Africa or Vietnam or any other emerging country/economy/third world country.

For a specific example, I did a quick search and Malaysia is one. Malaysia has the same or worst labor practices then China, but no one complains about tech companies relying on Malaysia's poor labor practices.

A blog post that talks about it. https://medium.com/swlh/forced-labor-in-tech-c91daf979201

So your point is that you can’t call out an instance of slavery unless you call them all out? That doesn’t make sense to me. You should be able to highlight an issue without someone retorting “what about X?”, which is literal whataboutism.

Everybody is a hypocrite on almost every issue. Take a major issue like climate change. Almost every human in the U.S. and Europe has massively large carbon footprints. Does that mean Americans or Europeans can’t care about climate change? We’re not ideal beings working in an ideal system. We’re flawed being in a flawed system trying to make things a little better.

Again, the point was never that you have to be perfect, it’s that it’s shouldn’t just happen to perfectly align with Americas foreign policy agenda.

Why is it not ok to align with American foreign policy? I guess you’re implying that Americans are ok benefiting from other forms of labor exploitation? Why does that matter? Going back to the climate change example: everyone benefits from GHG emissions. Allowing arguments to be derailed by “NO U” is a quick way to stifle all discussion.

To me, your argument, fully constructed, is: “you can’t care that Uyghur’s are enslaved because America also uses slave labor and American foreign policy is anti-China.” How is that an argument?

Not necessarily. If someone only knows about the case of the uighurys, buts not the case of Malaysia, you can't hold someone against that. However, once the issue is raised and they are made aware, if they still only care about the uighurys, then it is targeted for a reason. We are all only as good as our information is and none of us know everything. The issue with the senators is, when they started that campaign, a bunch of information dropped about those same practices elsewhere they they definitely had access to and still refused to acknowledge it. Instead, they created an extremely target bill specifically at China. Maybe I am just an ass because I expect our representatives to be a little more thorough than the average citizen, especially when they are the ones drafting legislation. I and other average citizens don't have access to the wealth of information and resources our representatives to. So I expect them to use. I don't have the power to subpoena people to answer questions before congress, they do.

But no, Jim Bob isn't a hypocrite if the information was never brought before him. Jim Bob does become a hypocrite when the information is in front of him and refuses to acknowledge it.

>But what about the horrible labor practices American companies rely on in central Africa

Also the slave labor in US itself, https://amp.theguardian.com/us-news/2022/jun/15/us-prison-wo...

That's the same thing. It's just an arbitrary line in the sand you have drawn where you say if care about these issues but not these you must be dishonest.

It’s not the same thing, if you only care about these issues when they are related to Americas enemies (eg China, Iran, etc), then you are inconsistent.

Welcome to humanity where everyone is inconsistent. It's part of the fallibility of humans.

Everybody is. Unless there is someone outraged all the time.

Our scarcest commodity is attention.

The people complaining on Twitter that foreign cheap labour is being used are writing on devices that were produced by that same labour. Those very same people are the ones that are demanding that we bring those labour back but unwilling to brunt the cost that companies will then pass on to those same customer. It's not a strawman its the reality of Western society, whatever feels wrong is totally and completely detached from any logic or intellectual discussion about why the reality they feel like they are entitled to is at conflict with their own contradictory desires.

It is virtue signaling, largely to placate and pat themselves on the back to deflect blame from them, that their consumption, their vote with their money, and unwillingness to pay the true cost, is what creates this situation.

> but unwilling to brunt the cost that companies will then pass on to those same customer

HUGE "citation needed" here. Apple did a study years ago (when Obama was President) and the cost to manufacture iPhones in the US was well under 10% of the total cost, by their own calculations.

The cost of labor in China has only gotten worse since then (hence the move to Vietnam in the OP).

> years ago

No longer the case obviously but more importantly, Apple studied themselves and found they were only saving 10% in costs? This makes no sense lol

10% is many billions every three months. I don't think it's wise or ethical to manufacture in countries that have human rights violations but there's nothing ethical about a corporation.

Where do you propose that Apple move their Texas plant then?

(The US, like China, also runs concentration camps. As far as I can tell there is no country on Earth that uniformly preserves human rights.)

That quip was over cost of labour specifically. The broader point was US no longer had the manufacturing base or expertise pool to manufacture advanced Apple products at scale or timelines of modern release cycles at all, i.e. Cooks observation that PRC had enough tooling engineers to fill multiple stadiums vs US a room. The entire point was that cheap labour wasn't what was keeping Apple in manufacturing in PRC.

99% chance the people complaining about labor conditions are doing so on a made in China phone.

Let’s be honest, people complaining about labor conditions have a pretty weak understanding of economics and what is actually going on with regards to these factories. China isn’t stupid. They weaken their currency specifically to bring in the cheap labor jobs to lift the poorest to a slightly less poor tier. Unless you realize how poor they started out with it’s hard to appreciate the gains in wealth even if it still looks dirt poor to an armchair labor rights activist.

> 99% chance the people complaining about labor conditions are doing so on a made in China phone.

99% of everyone has a phone made in China, does this mean it's not possible to complain about the state of the world we live in?

Not while you are literally voting with your dollars to preserve that status quo.

Especially when said iPhone assemblers aren't even complaining about their work conditions as much as some clueless American... if one is going to complain, complain about one's own conditions, or something one actually knows about...

It's not a vote if there is practically only one option.

> have a weak understanding of economics

Economists hardly understand the economy, so I’d say they’re in good company…

Jokes aside, demanding better treatment of workers and onshoring of jobs doesn’t seem as insane as people here are making it seem? This whole thread feels kind of irrelevant.

>99% chance the people complaining about labor conditions are doing so on a made in China phone.

Is there any other option?

Don't stop people from complaining about lead in the water supply, just because they have nothing else to drink.

I'd be willing to bet that many who complain about "labor conditions" being too poor would still rather preserve a $200 discount on their phone instead. But having come from poverty, most people complaining about labor conditions on behalf of poor people have never experienced poverty themselves. It's possible for a capitalist society to have actors that willfully exploit people, but it is not the default that simply employing the poorest people equates to exploitation. People are just whiny that jobs are being lost to someone poorer.

I think you can get a Fairphone in some parts of the world (Europe). But it's not a particularly viable option in the USA.

This kind of reminds me of the plot of The Good Place [spoiler warning] -- in the show it's essentially impossible to get to Heaven because every decision you make has transitive dependencies on awful labor practices, abusive behaviors, and other unseemly things. So everyone ends up in Hell.

I don't think using a smartphone built with evil labor practices is inherently evil. But buying one every year when you could use one for 5 years is probably a bit evil.

95% of Vietnamese support capitalism: https://eu.usatoday.com/story/news/world/2015/03/13/vietnam-... thus making it the most capitalist country in the world...

Second in line is Bangladesh

P.S. USA had a capitalism approval around 70% in the same survey.

When I cam to Canada from the USSR in the beginning of 90s people at place where I worked were telling me that I am more of a capitalist that they were.

They won the war. Just took Americans awhile to accept that.

Huh? That’s doesn’t follow. Plus when they won they went full Communist.

That survey's execution is questionable

https://twitter.com/LunaOi_VN/status/1485985258302742528

If you want to decrease inequality, it would make sense for people to be compensated for reducing inequality. This is what exactly what outsourcing is.

Outsourcing has dramatically increased inequality in the United States.

Try again.

Why should we have to care about American workers over everyone else? On one side, you have a American factory worker loses the ability to buy steak. On the other, a Vietnamese worker gets access to running water, the consumer gets cheaper electronics and Apple shareholders get extra profits.

The Vietnamese workers already had access to running water.

Source: I actually live in Vietnam.

In cities, sure, but much of Vietnam still lives in rural areas, which still are very underserved. The continued industrialization of Vietnam is indeed enabling more access running water.

https://en.m.wikipedia.org/wiki/Water_supply_and_sanitation_...

Who do you think is the we here? Because usually the we that is complaining about it are those American factory workers.

I'd say it a little more complicated then that when it comes to analyzing the American worker. You have the American worker, who has a high standard of living because the cost of goods are driven down by the fact that the Vietnamese worker gets access to running water. This is just to use your terminology/example. The reality is its not access to running water, but a job that will higher their standard of living. The American worker wants the to buy the 72 in TV, but also wants to have the job to make the 72 in TV and the only way he can afford the 72 in TV is if it is made in Vietnam.

Inequality just means the rich got richer faster than the poor got richer.

The poor's increase in wealth still outpaced inflation.

...and given that the poorest in poor countries had their wealth skyrocket out of poverty, outsourcing has absolutely been a win-win.

Depends whether you include costs for healthcare, education and housing.

But now we can't build anything and if china embargoes us, we're doomed.

We produce things that matter, such as food. We’ll be fine.

With no chips to repair the john deere tractors? Yeah food won't happen.

We produce lots of chips now, and soon we're going to be producing enough for ourselves.

If that were true USA wouldn't care about Taiwan.

There are multiple fabs in the US.

> But now we can't build anything and if china embargoes us, we're doomed.

Firstly there is vastly more manufacturing in the US, Canada, and Mexico than you appear to realize. Secondly China is far more prone to being embargoed than the United States. If China cut us off then the price of certain goods would increase significantly and there’d be shortages of some goods and industrial inputs but we could feed ourselves, keep the lights on, heat/cool our homes, keep our industry going, and crucially our military capacity would be untouched. China would lose its largest and demographically healthiest consumer market which would vastly deepen its economic hole, lose a huge supplier of food which China can’t do without, and the US navy could interdict all energy shipments to China which would result in the country deindustrializing in a few months after its reserves ran out. Depending on how the embargo was effected it might drag in Japan or India both whose navies could single-handedly cut off China from oil shipments.

This is assuming that China's rapidly evolving navy cannot do anything about these blockades. They have massive shipbuilding capacity and currently the most advanced destroyer (type 055) in the world.

> They have massive shipbuilding capacity and currently the most advanced destroyer

The vast majority of their navy and ship building capacity is coastal. Their blue water navy is still minuscule and the challenge isn’t just manufacturing but experienced personnel which is decidedly harder to quickly scale up and is not aided by their terminal demographics.

>prone to being embargoed

Most US / global industries wouldn't be going anywhere without PRC supply chains / rare earth processing. Besides PRC is calorie self-sufficient and produces enough raw resources domestically for war economy, and export to west is like... 5% of GDP total, i.e. trivial in total war scenario. Now go look up how much steel, oil and other primary inputs PRC generates domestically... it wouldn't remotely deindustrialize meanwhile PRC military capacity wouldn't just be untouched, it would be allocated the redirected industrial resources to sustain aquisitions multiple times current size.

It's 2022, India and Japan do not remotely have capability to blockade PLAN. Refer to the detailed studies coming out of US wonks recently are questioning the feasibility of whether US can effectively enforce a blockade at all, which btw is an act of war, and in age of networked mutual vunerabilities PRC has options to make US/containment partners to hurt comparably. The amount of oil US produces is not measured in millions of barrels but 130 vunerable refineries and other critical infra that PRC can target in retaliation. Absolutely expect US industrial outputs to come to a crawl, John Deere tractors bricked in the fields, and homes freezing because half the energy grid is compromised in event of PRC blockade. Or that we maybe in or near the timeline where PRC will gain conventional global strike capabilities that places US CONUS at conventional risk.

Without IPR restrictions, most of manufacturing can be quickly scaled up in places outside China. Also remember, India is nuclear power and understand Mutually Assured Destruction working between India and China.

>quickly scaled up

Quickly is more likely decades to reach appropriate as in case of rare earth processing. There's 20 years of supply chains entrenched in PRC that's not going to be replicated without substantial effort or time. That means allocating resources so strategic companies can survive while everyone else that relies on those inputs die. Btw, most of those experts needed to scale up elsewhere? They're from PRC in PRC building out PRC capacity for last 20 years. There's not enough experts globally to do such a task "quickly".

>Mutually Assured Destruction working between India and China

Yes, which is why the idea India would blockade PRC is fantasy. They fight with fists over barren rocks to prevent escalation spiral, and India has been firm in preventing QUAD into becoming a security alliance. They're not going to escalate to full scale war with PRC while eastern theatre command can shower most of India with missiles from barren Tibet while India has very limited ordnance to reach PRC strategic east coast or XJ. At least not for decades.

There will conceivably be a time when PRC is disentangled from global supplies chains or PRC neighbours have built sufficiently capabilities to target PRC cost free, but it won't be in short/medium term.

> go look up how much steel, oil and other primary inputs PRC generates domestically...

China is a massive net importer of oil.[1] I guess they can make steel with coal but they can’t get coal to the steel plants let alone run their whole industrial base if they lose Saudi oil. Russian western pipeline imports might continue for a while but after the super majors exited Russia that isn’t going to last regardless of embargoes.

> US wonks recently are questioning the feasibility of whether US can effectively enforce a blockade at all

What “wonks” are these? The US Navy is by far the largest blue water navy on earth. To disrupt most oil shipments to China could be done anywhere from the Gulf to Singapore and be far out of reach of the vast bulk of the Chinese navy. Just firing a cruise missile or two would do the trick.

> PRC has options to make US/containment partners to hurt comparably

Nonsense. Who precisely? China is surrounded by enemies or frenemies (ie Russia) the US is surrounded by trading partners and ocean and is a naval power second to none.

> 130 vunerable refineries and other critical infra that PRC can target in retaliation

The US has refineries dotted all over the country. The gulf coast refineries and the nation as a whole has one of the best security geographies on the planet. How is the PRC going to attack them exactly?

[1] https://www.energypolicy.columbia.edu/sites/default/files/fi...

This is assuming brief embargo (blockade) and inevitable hot war after will last longer than PRC domestic production + strategic reserves + war rationing which is projected to stretch out over a year. 4M barrels a day plenty for war economy and maintaining industrial base for total war, indefinitely. PRC is not Japan who whithers on island resources alone. Which is really the scenario that anyway blockade will escalate to, total war. There seems to be this strange assumption that PRC would just sit there and eat embargo and passively erode away when they will run blockades by reflagging vessels under state and escalate/counter in other means including drawing US into first island chain defense commitments by attacking US forces stationed in JP/SKR.

>What “wonks” are these

Naval War College Review, something along the lines of "tactically tempting but strategically flawed". There's host of other recent literature that basically concludes that it's not viable at strategic level. Or that USN is large but not nearly large enough to maintain an active blockade for long without abandoning other important commitments. Amount of shipping going through Malacca is massive.

>Who precisely

Every US ally in first island chain is a few cruise missiles to ports/energy infra from regressing into developing country. They're all islands for functional islands _much_ worse food or energy security than PRC, which incidentally is what makes blockading PRC strategically flawed, because it can't be done without crippling US partners. Consider actual scale of force deployed in theatre (overwhelming in PRC favour and growing) and in actual war, US and allies aren't so much as surrounding PRC as being trapped within PRC's growing A2AD bubble. Surrounding PRC works fine for peacetime containment, but during wartime it forces US to go near PRC shores where USN is most vunerable due to security commitments. As for vaunted US naval power, it's limited to what US can deploy and sustain in theatre vs whole of PLA arsenal that's designed to dismantle US sustainment systematically.

>PRC going to attack them exactly

Cyber attacks on critical infra - there's a reason Biden communicated to RU/PRC despite all recent military sheningans and literal war against UKR that attacks on US critical infra = same as physical war. It doesn't matter how offensively capable US power projection is if US is defensively existentially vunerable on the homefront. Which flies over head most Murica strong and can blockade PRC relatively cost free proponents, sure, US can punch hard but like everyone else in networked infra era, US (likey) can't take a punch, but more historically importantly US isn't so out of reach by geography and technology anymore that it cannot be punched anymore. US want to blockade 10M barrels of imports a day? What if PRC takes out 10 million barrels of refinery infra. The scenario is not US can just starve PRC imports, but US and PRC will go balls out in escalation spiral to cripple each other's homefronts to the point of being unable to sustain modern life.

Or look at where PRC conventional hypersonic development and bulk of R&D/aquisition effort is trending. PLA is not rushing to catch up on 11 carrier groups or strategic bombers, they're focusing on precision strike conventional icbms that is able to hite every strategic node/asset in CONUS. Really around the world, i.e. Pinegap in AU. Every major strategic US platform like CVNs, SSBNs, B21s, have to sit still for maintenance sooner than later. Like entire USN runs on like 8 fast combat support ships for high tempo operation that rotates in theatre keep up replenishment. The MO behind PLA systems destruction warfare is to negate US military advantages and cripple US ability to operate at all. Of course PRC is similarly vunerable as well, but at the end of the day US loses much more being unable to defend global commitments because she can't support her blue water fleet than PRC who barely has any blue water obligations in the first place.

".. and the US navy could interdict all energy shipments to China .."

Generally, agree with your points, but the US Navy simply does not have the capability to do this any more. Might have been possible in 1990 but not today. US Navy would get its backside kicked.

> The true story with China is that moving Western manufacturing to China raised the standard of living for literally hundreds of millions of Chinese people out of poverty.

And thereby strengthened the hand of the CCP.

It's exactly the opposite.

People who can afford a good education are harder to control.

Yes, that's why American people are so dumbed down nowadays, intentionally by some people who happened to share this ideology.

No it isn't. People with nothing to lose and living in poverty while seeing their democratic neighbors prospering are harder to control. People with education, jobs, and families - something to lose - are easier to control. How many Tienanmen Squares has China had since Asian and Western democracies opened their markets and enriched China.

This is literally ahistorical. The overwhelming majority of consequential protests/rebellions/revolutions were heavily endorsed by the literati class. Why do you think freedom of speech and expanding education are classically liberal claims?

You can see it right now in Putin's Russia. Opposition to the regime, to the extent that it exists, does not come from the proles.

No, you are exactly backwards. Did the People’s Revolution win or did the students win? I seem to remember that the students were run over by tanks. Probably not being driven by highly educated PLA commanders.

You just destroyed the argument you were trying to make.

The protesters were the well educated students. This will always be the tip of the spear for change.

Revolutions that try to leverage the uneducated masses are the most bloody and destructive - and they usually lead to dictatorships, not democracies.

They all leverage the masses. That’s the whole point. Otherwise it’s just a coup.

Tiananmen protesters were mostly students, young people with a lot of prospects in life, usually from a better-off families who could afford to send children to a university (instead of having them work and keep up the family).

They definitely had much more to lose than Marx's lumpen proletariat.

Of course, now people in China, especially in the rich coastal cities, have dramatically more to lose. They've been shown though that they would be allowed to prosper, as long as they do not try to disobey or even express doubt about CCP's rule. So it's pretty easy for them to convince themselves that CCP's policy is fine enough and not worth protesting against.

> mostly students

Aka nothing to lose. Having family and job would be considered having things to lose. Also let’s not consider students “educated”, they will be if they then build a career and actually practice their knowledge. Any clown can get a degree.

Fun fact: due to the small labor market for terrorists and education spurring political interests, terrorists are disproportionally well-educated men from upper class families. Essentially, they're very intense lobbyists.

Citation: https://press.princeton.edu/books/hardcover/9780691177823/wh...

Even if this is the case, do you honestly not think the tradeoff is worth it? Lifting a billion people out of crushing poverty seems worth it even if it came at the cost of giving a dictatorship stronger geopolitical influence.

An authoritarian, nuclear armed government that is bent on expansionism by flaunting the established global rule of law and that is likely to start a world war over Taiwan? No, I don't think that's a worthwhile tradeoff.

I don’t think it’s accurate to say they are bent on expansion, but whether it’s worth it is more up to those 1 billion people to decide their fate and tradeoffs rather than foreign intervention. Oh and, due to China’s history of negative foreign interventions I doubt the population will take kindly to it now.

talking about the US?

China has been nuclear armed since the 1960s. That wasn't a product of the country's industrialization or trade with the West.

Somebody needs to dispel the myth that "outside of liberalism/west there will be no prosperity"

Assembly plants are just one kind of manufacturing, albeit a very visible part. Petroleum refining and other chemicals are manufacturing. The US does a lot of that.

Manufacturing has been a growing share of GDP for the past few years, interrupted surprisingly briefly by COVID. Just that most of it isn't assembly lines.

I submitted a thoughtful analysis of this recently: https://news.ycombinator.com/item?id=32214320

> They see it as an obvious weakness in their ideology that companies can just walk away from their labor movement and go elsewhere.

it's true! we can't force anybody to use our labor. but we can control access to our markets.

you don't have to be a union activist to recognize that exporting american manufacturing jobs has been disastrous for our domestic working class.

> you don't have to be a union activist to recognize that exporting american manufacturing jobs has been disastrous for our domestic working class

You do though. The reality is that "exporting" these jobs means cheaper products for everyone, and no one in what you call the "working class" wants these jobs to be in the US if it means they need to pay more for everything.

The US consistently manufactures more every year despite hiring fewer manufacturing workers because improved automation competes with US labor at lower costs.

>no one in what you call the "working class" wants these jobs to be in the US

you might be a little disconnected from reality

>if it means they need to pay more for everything.

yes, now they can pay a little less from their wage.. oh wait, they got fired

> you might be a little disconnected from reality

you might be projecting

> yes, now they can pay a little less from their wage.. oh wait, they got fired

nah, there are plenty of "working class" people who are working

> and no one in what you call the "working class" wants these jobs to be in the US if it means they need to pay more for everything.

look at a graph of productivity measures since 1990, a graph of real wages, and a graph of US GINI scores. i'm a knowledge economy worker like most people here, but we have been on a course of serious class warfare and economic cannibalism for decades. but thank you for letting us know that everybody actually wants it this way.

I can hire a person here (UK) to do something for £x/hour or £y/unit. I can perhaps hire a person in say Vietnam to do something for £x/n/hour etc.

I don't do this personally but we should explore the possibilities.

The thing about capitalism is it is capitalism. You should drive costs down and profits up. Ideally you don't kill people on the "journey" but hey that's what laws n that jud, errr judiciary ... ... cops/police thing is all about or something.

I own a very small company in the UK. We don't go full on capitalism (whatever that monster really is) We strive to be able to sleep at night.

NZ is where you want to hire remote staff. Our wages are low and so is our dollar. We speak the same language and have a very similar culture. The time zone is an issue but remote workers normally will do strange hours to make it work. The more people do that the better life gets here in NZ so I'm a big fan. Our exports are mainly agricultural and tourism. Neither are high earners.

Sounds like expensive version of the Philippines :)

Yeah, unfortunately this is true. Even Vietnam is usually pretty easy to deal with. Still go NZ.

A few thoughts:

-I knew someone who wanted to set up optical and circuit board manufacturing in Vietnam - the few factories they toured seemed to be set up very well. Also frequently with better female/male ratios in management levels (perhaps bc, at least what they were told, Vietnamese culture tends to be more matriarchal than elsewhere). Maybe why also a lot of Japanese electronic makers (Pentax, Nikon) had a bigger presence in Vietnam than expected

-the irony of Western manufacturing and standards of living - (coupled w/ strong policy and incentive support from the ccp) is that Xi Jinping seems to be actively going against perhaps one of the greatest economic partnership of recent times, namely USA/China. I think that is why there is likely going to be a contraction in the Chinese economy, if not already happen due to Zero Covid. If anything brings down the emperor/dynasty this time, it is because the grain ceases to flow (at least borrowing a phrase from an undergraduate Chinese history class...)

China's economy is in trouble. They've had a few property developers running Ponzi schemes and it's led to small bank runs. The government is propping things up and have massive reserves but it's not a good sign.

as a Vietnamese, we just laugh when we read about those things, so out of touch with reality. It's very condescending as well, the logic is that developing countries are stupid so whatever deal they negotiate for themself must be at a disadvantage and bad for them. When I read criticism of China in Africa I could not help but asking myself, if these developed countries care so much why don't they invest in Africa so that Africa has choices other than China? The fact is China (and Vietnam mind you) are the very few countries willing to invest in Africa at their own risk. I would not be surprised if one day it's "communist Vietnam"'s turn to be the scapegoat.

Funniest thing is that in the past Westerners were laughing at China for choosing manufacturing while glorifying their so called service economy. Now they are simping over manufacturing jobs.

> I would not be surprised if one day it's "communist Vietnam"'s turn to be the scapegoat.

Not even "vibrant democratic India" got spared

That's true, foreign company, from tech company to manufacture company, all of them provides more friendly working environment than China local companies. The workers in Shanghai Tesla work 12 hours a day, and paid less than 1500$ a month, which might be unacceptable for western labors, but even this is much better than other local car manufacture companies.

China was literally able to lift hundreds of millions of people out of poverty with all the manufacturing that was moved there. I think most people don't understand anything about economics. Vietnam absolutely wants and will benefit from an increasingly industrialized economy.

edit: I'm seeing a number of comments pointing out how these are companies owned by Koreans. Which maybe isn't optimal, but the potential for knowledge transfer coupled with investment in infrastructure and logistics chains is a great opportunity that just needs to be used well.

No doubt about any of that, but China played a really tough game to become more than just a cheap workbench. All those forced joint ventures, and the immense discipline required to make those become more than just easy profit-share for some lucky ones who know the right people. They did a lot of things extremely well to get to where they are now. That won't be easy to replicate. Particularly when one of the partners knows that game so well. It could end as colonization 2.0.

Most of those tough rules emerged well after the boom in Chinese manufacturing. It's not required for achieving what they did.

How long before Vietnam pulls a move from China's playbook where they start to manufacture things based on the plans foreign companies brought them and sell the product under Vietnamese company brands?

That's just the algorithm. Every nation leveraging manufacturing for growth will do this.

When it eventually gets too expensive for native workers, manufacturing moves again [1]. Except the locals now have a sizable middle class and knowledge economy, and there are high value industrial processes left behind: automotive, aerospace, scientific, etc.

The whole world is growing up, and wealthy nations are paying for it (because they love low cost goods). It's a win-win situation.

([1] doesn't mean every nation shouldn't think defensively about its own supply chain for essential inputs and outputs.)

It's interesting how e.g. Germany retains quite sizable manufacturing which is not going anywhere, and actually benefits from the local highly trained, highly paid workforce.

>Germany retains quite sizable manufacturing which is not going anywhere

It might after this winter. Its hard to manufacture without energy and resource input.

They've already pulled this on Samsung but it has nowhere to go. Where else can it find tens of millions of young workers?

SE Asia has plenty.

SE Asian workers, outside of Phillippines, are too expensive for large scale, low end manufacturing. Malaysia and Thailand are already middle income countries and Indonesia is getting there as well.

I don't think the salaries are very high in those countries you mentioned. Hardly up there with East Asia (Ecxept China)

I actually do not see much wrong about it. The area has been virtually raped by the West at one point. This is at least some compensation

they already did. VinFast

The companies who outsource dont really care about that, if they did, they wont do the outsourcing in the first place.

> hundreds of millions of people out of poverty

This is false because majority of Chinese citizens do not make more than $1000 per year or something very low. The average GDP is something like $6000, which is far below its neighbours. Even the ones that do make more, while not in complete poverty, they are barely live due to expensive housing and cost of living.

I think most of people simply don't know the reality of developing country. They often form ideas that have good intent, but sound very out of touch for people actually from these countries.

Manufacturing for export with Western companies was central to China's rise - same goes for Korea, Japan, and Taiwan - but there was more to it than comparative advantage/labor arbitrage. There was a lot of heavy-handed government action: land reform dispossessing wealthy families, aggressive/protectionist state financing, etc.

Someone read "How Asia Works"!

Ya got me. In my defense, its not the only book on Asia I've read

I think many of us would be more supportive of outsourcing manufacturing to developing countries if their government aligned more with Western ideals. The fact is many countries, like Vietnam, are still "developing" because they have authoritarian governments that have been oppressing their population to some extent keeping their labor cheap while stunting their economic potential.

We see the problems with this situation right now with Russia and China, whether it's buying oil from Russia or manufacturing in China, we've given these countries enormous amounts of power and influence by essentially funding their regimes. As we can see with the situation in Ukraine and Taiwan these regimes are not our friends or allies, even though we have allowed ourselves to become attached at the hip to them economically. As a western consumer I would much rather see my money either stay in country or go to a country that is a political ally and shares more western political and economic ideals.

Opression is necessary to development. Looking back for the cruelest opressions done by some nations towards American Indian, Asian, African in the early and haydays of industrial revolution.

You are going to see opressions happening again and again in the future as well. It's just a natural process of society development.

> Opression is necessary to development.

That's one of the main theme's of Hitler's Mein Kampf.

Always nice to see how classy the HN comment section is.

Well done, everyone.

maybe that's true and we need to question whether development no matter what is in line with our values

No, oppression being necessary for development is an observation from history, which is true for the majority of the world's leading national economy.

It's different from a political ideology. Because such observation does not justify the oppression, unlike hitler's case.

But ironically, your own comment is indeed a prime example of your own ridicule: poorly informed individual making shallow derogatory snab without consecutive feedback.

I can't agree with this at all. We have plenty of modern examples that show this to not be the case: West Germany versus East Germany, South Korea versus North Korea, Taiwan versus China. In all these examples less oppressions results in a stronger economy and a higher standard of living for citizens.

West Germany was marshal planned by US at height of economic primacy and was previously developed which made recovery to prior levels possible. SK and TW were both bloody authoritarian govs sponsored by US (for coldwar containment) who had industrial policies, again supported by US at height of economic primacy.

As far as I'm aware, there are zero countries that has ever successfully developed without initial phase of authoritarianism / wide scale abuse - europeans had their colonies, US her slaves - it's basically a prerequisite. The second requirement being either on the good books and gaining the support of reigning hegemons or at least not be actively contained by them (East Germany).

Historically, developing countries simply require massive repression (and the occasional dose of cultural genocide) to establish stable national identities and enviroments where people behave like good cogs in the machine to build up the material conditions to enable less opression / more liberalization for later generations. Authoritarianism is the worst form of government for developement... except for all the others that have been tried.

What about Finland? Very poor in the 1800s, rapidly industrialised and became wealthy in the 20th century. They did have a civil war but I'm not quite sure that counts as oppression by itself.

My understanding of Finnish history is rough but from what I understand Finland was also industrialized in late 1800s as Russian Dutchy under Alexander II's reforms. IIRC reward for being loyal unlike uprising in crimea and poland. It got the benefits of empire. Granted much slower than rest of Europe due to geography. Civil war over russification not unlike purges in SKorean or Taiwan/ROC, at the end of the day you need get the population in line under a national identity either through ideology or coercsion so they can focus on development instead of be distracted by sectarian drama.

It would be helpful to characterize them as "democratic" ideals - not "western" ideals. There is nothing intrinsically "western" about human rights.

In fact, calling them "western" ideas is exactly how autocracies belittle them to their people.

I agree, the term "Western Ideals" doesn't quite fit but it does go beyond democratic ideals which is why I didn't use that term. There are other aspects like a free market economy that extend way beyond a democratically elected government. I'm certainly open to a new term to describe it.

Free Market Economics is even LESS tied to the west in modern times than democracy.

There are very very few countries that haven't dropped centralized gov't controlled economies - even in Asia.

> There is nothing intrinsically "western" about human rights.

It would be interesting if you could give an example of similar ideas from seriously non-Western cultures. Say, Asia has plenty of cultures, a number of them with highly developed, original schools of philosophy.

I'm not sure what you mean by "similar ideas" to human rights, but with regard to democracies in Asia: Japan, South Korea, Thailand, Philippines, India, Pakistan, Indonesia, Mongolia, Taiwan, East Timor, Micronesia

Before or after they were majorly influenced by the West?

Right, but now you are talking about history. It's like calling our numbering system, the arabic numbering system. Sure - that's where it comes from historically, but now it's just OUR numbering system.

Calling democracy a "western" ideology makes it sound like it's not as relevant to eastern cultures - which is silly because it's now practiced widely in east asia.

Yeah, it's important to distinguish the two concepts.

The philosophies and ideas are of Western origin. But implementing those ideas is not restricted to people ethically descended from people from Western countries.

you are right, "western ideas" would be all theory, all talk and very little regard to practicality, such as Marxism, the Domino theory, Pax America, pretend democracy in South Korea, "human right" concerns that's comes from your mouth, instead of the actual humans you're trying to save.

Western ideals like abortions should be illegal?

> authoritarian governments that have been oppressing their population to some extent keeping their labor cheap

to think labor being cheap is the work of the communist party is pretty ridiculous. Authoritarian or not, no government benefits from their citizens being poor (capitalism does). The problem with authoritarian governments is that they are incapable of raising income, not that they do that by intent.

https://en.wikipedia.org/wiki/Great_leap_forward

https://en.wikipedia.org/wiki/Great_Chinese_Famine

https://en.wikipedia.org/wiki/North_korean_famine

> no government benefits from their citizens being poor (capitalism does)

Why do you make this incredibly stupid claim?

I suggest you learn a little bit of basic logic before calling people stupid. "Poverty happened under oppressive regimes", is pretty far from "oppressive regimes want poverty". I never said they didn't cause poverty, I said it's not what they want.

I'm not sure what more insulting: you calling me "incredibly stupid", or your incredibly poor understanding of basic logic. The former is kind of personal, but the latter is insulting to humans' intellect as a whole so it's a big deal.

If anything, the decline in needing cheap labor is going to be a problem for large countries like China. China needed those cheap labor factories to be the engine to help lift people out of rural poverty.

Unfortunately that engine will now falter and many will be left behind.

For an eye opening survey here, I highly recommend the book Invisible China.

If they are poorer than people in Vietnam they can just go to Vietnam to work. That's not that much different than going to southern China to work. It is almost a common market.

Wouldn’t Vietnamese people be massively favored? How much chance would a common Chinese person have. Language is also different enough, and culture probably as well.

Given their poverty, are you certain they have enough disposable income (let alone the personal freedom) to just pick up and move to an entirely new country?

Labor rarely has the mobility that capital does, especially when international borders are involved.

A number of rural migrant workers in China DO go to Vietnam to work[0], though this has been increasingly cracked down on by the Vietnamese government[1]. On a similar note, the Belt and Roads Initiative itself essentially acted as a jobs placement program to alleviate labor issues after the 2015-16 Stock Market crash in China [TODO: Find page numbers from notes]

[0] - https://data.vietnam.opendevelopmentmekong.net/dataset/fefed...

[1] - https://www.rfa.org/english/news/china/workers-1029202011165...

Imagine telling poor Americans to just move to Guatemala to do poor people work since it’s not that different and you’ll realize how insane that sounds.

+1 on Invisible China. Scott Rozelle's group at the FSI has been doing some good work on trying to alleviate the opportunity gap that exists in several prefectures in the PRC.

Xi Jinping know this problem all along. And his poverty eradication project is essentially siphoning embezzled fund from corrupted officials into rural areas.

I bet Xi Jinping knows research work in the similar lines of Invisible China.

https://www.worldbank.org/en/news/press-release/2022/04/01/l....

Rozelle's group at Stanford has consulted at the prefecture level with the CCP [0]. The PRC is de facto federal with a significant amount of leeway at the prefecture (state) level. In fact, a number of PRC policy initiatives are often done in coordination with research groups at Stanford University. The Guiding Cases [1] is another ministerial level initiative that Stanford has consulted on.

[0] - https://sccei.fsi.stanford.edu/reap/content/reap-home

[1] - https://law.stanford.edu/china-guiding-cases-project/

Nice, first time learn this, thanks!

They are well on their way of climbing onto the next rung of the manufacturing ladder and manufacturing more complex items with higher margins that can absorb higher wages

…and transitioning more to a service economy

…no?

Nope. By most standards the PRC is stuck in the middle income trap.

To paraphrase an earlier comment I wrote sometime back:

Chinese household median income is around $4,700-4,800 in 2021, with massive disparities between First world comparable regions such as Beijing, Shanghai, and Tianjin, and rust belt regions like Wuhan [0]. Even the Chinese Premier Li Keqiang has noted that 600 million Chinese earn less that $140/month [1].

[0] http://www.stats.gov.cn/english/PressRelease/202201/t2022011...

[1] https://www.globaltimes.cn/content/1189968.shtml

>middle income trap

China is not a good example for the middle income trap. Middle income trap countries relied on cheap labors but could not move up in the value chain.

China has moved up the value chain. They're the top or close to the top for many things including mobile phones, chip manufacturing (7nm), AI, software, 5G, electric car batteries, nuclear power, fusion research, quantum computers, etc. They also publish more scientific papers than any other country, by a significant amount.

Conversely, true middle-income country like Brazil and Thailand have not moved up in the value chain one bit.

China, Singapore, Hong Kong, South Korea, and Japan are all East Asian countries. They all have very similar values when it comes to education, hard work, and entrepreneurism. It's only a matter of time until China joins the first world. Their major cities are already first-world.

Yes, there are countries that have cheaper labor than China right now but China should be able to replace that with higher value services such as exporting 5G tech or nuclear power plants.

Yet, median income [0] and HDI [1] both at the macro level and at the prefecture level are comparable to Brazil [2][3] and lag behind both Russia [4][5] and Mexico [6][7].

There is no denying the amount of growth the service sector in China has seen, yet a lot of this growth and development is among a sliver of the population living in better developed regions such as the various coastal prefectures. Beijing, Tianjin, Guangzhou, Shanghai, etc can be treated as developed, but what about the hinterlands such as Sichuan, Ningxia, Hunan, Guangxi, etc? This middle income trap is not a good thing by the way - I take no joy pointing this harsh truth out because this means hundreds of millions of PRC nationals are stuck in less than ideal economic positions.

Also, if we are talking about the value chain, Brazil is very high in the ONG (Petrobras, Odenbrecht), Aeronautics (Embraer), Automotive, and Defense (Odenbrecht, Embraer) value chain thanks to economic policies in the 90s and 2000s that are comparable to those the PRC has started adopting in the past 10-15 years.

[0] http://www.stats.gov.cn/english/PressRelease/202201/t2022011...

[1] https://en.wikipedia.org/wiki/List_of_administrative_divisio...

[2] https://en.wikipedia.org/wiki/List_of_Brazilian_federative_u...

[3] https://agenciabrasil.ebc.com.br/en/economia/noticia/2017-02...

[4] https://en.wikipedia.org/wiki/List_of_federal_subjects_of_Ru...

[5] https://tass.com/economy/1301957

[6] https://en.wikipedia.org/wiki/List_of_Mexican_states_by_Huma...

[7] https://www.efe.com/efe/english/life/mexican-households-have...

>Yet, median income [0] and HDI [1] both at the macro level and at the prefecture level are comparable to Brazil [2][3] and lag behind both Russia [4][5] and Mexico [6][7].

This is the present. It does not mean China is a middle income trap nation. It continues to grow and advance in innovation.

Also, China's GDP PPP per capita has already surpassed Brazil. GDP PPP is a much better measure of stand of living than GDP/capita.

The biggest factor in whether a country stays in the middle income territory is innovation.

China is innovating. In some areas, it's already leading.

GDP and GDP PPP both quantify production, not income and living standard metrics. While there is often a correlation between production and rising living standards, it is a lossy indicator that fails to take into account inequality and differing regional CoLs. For this reason Median income plus HDI is the standard metric used in developmental economics to gauge QoL, as they give you insights on access to healthcare, education, inequality, and other metrics critical to the functioning of societies.

Countries can have cutting edge industries AND still lag behind in development - Brazil (Defense, Aerospace, ONG, Automotive), South Africa (Defense), Turkey (Defense, Automotive, ONG), Mexico (Defense, Automotive, ONG), Russia (ONG, Defense, Aerospace, Automotive), Malaysia (Automotive, ONG, Electronics), etc are all countries that are major innovators and even leaders in STEM/innovtion heavy industries, yet still have significant issues with spreading development across their countries. The PRC is facing a similar issue, and it is a hard nut to crack - I can't think of a single middle income to upper income economy that didn't also

1. receive a massive subsidy from either the EU (southern Europe, eastern Europe, Ireland) or the US (South Korea, Israel, Taiwan)

2. have a small population (<30mil at time of transition)

It is harder to lift a nation of 400 million poor (using PRC poverty definition) people than to lift a poor nation of 30-40 million.

Also, this same trap that China is in is something that India, Vietnam, Indonesia, and the Phillipines will face in 20 years

>GDP and GDP PPP both quantify production, not income and living standard metrics.

Purchasing power parity (PPP) allows for economists to compare economic productivity and standards of living between countries.

https://www.investopedia.com/updates/purchasing-power-parity...

>Countries can have cutting edge industries AND still lag behind in development - Brazil (Defense, Aerospace, ONG, Automotive), South Africa (Defense), Turkey (Defense, Automotive, ONG), Mexico (Defense, Automotive, ONG), Russia (ONG, Defense, Aerospace, Automotive), Malaysia (Automotive, ONG, Electronics), etc are all countries that are major innovators and even leaders in STEM/innovtion heavy industries, yet still have significant issues with spreading development across their countries. The PRC is facing a similar issue, and it is a hard nut to crack - I can't think of a single middle income to upper income economy that didn't also

Brazil does not lead in Aerospace, ONG, Automotive. South Africa does not lead in defense. And so on. They do not possess technology that other countries depend on. For example, Embraer's revenue in 2021 was 4.2 billion. Puny compared to Airbus' 52 billion. If Embraer stopped operating tomorrow, the world would not notice.

We're talking about actual innovation and a technology advantage. You mentioned that Mexico leads in automotive. What? Mexico does not have any cutting edge automotive technology that other nations depend on. Mexico is a hub for car manufacturing because it's close to the US and provides cheap labor. They do not produce any car tech that other countries cannot produce.

Real innovation is something like China's CATY new car battery which outcompeted Tesla's 4680 battery. https://medium.com/predict/tesla-is-about-to-lose-its-tech-a...

Before Tump's ban, Huawei was set to provide 5G technology to the UK, a country that could not produce 5G equipment on its own. A true middle-income country could never do this.

>This middle income trap is not a good thing by the way

One of OG researchers who coined the term believe phenonmenon is overstated, to the point of not being useful or existing at all. Fundementally, middle income trap is not a good concept in evaluating PRC because even according to the original middle income analysis countries with proper industrial policies designed to move up value chain (like PRC) is likely continue out grow developed countries and in PRC's case, close capability gaps. It's less about being trapped within arbitrary per capita bracket (which PRC is set to to reach upper income by years end anyway) and more about industrial stagnation that would theoretically lead to economic stagnation.

Reality is PRC as you recognize is almost like two countries, rich developed coastal that is still rapidly developing, and developing (really neglected) interior. This segregation was by design (Deng's let some get rich first policy), but that "sliver" living in T1 region is ~200M people, which is about Japan, South Korea, Taiwan combined. And really one should include another 200-300M T2 cities due to industrial synergies. Essentially you have a 500M strong rapidly developing country that is spilling out comparable STEM graduates as OECD countries combined while rapidly moving up value chain in every industry, not just a select few like in Brazil. This is the component of PRC that is globally competitive and building up comprehensive national power to the point of becoming pacing threat with US, even if it's dragged down by the interior poor. Just look at record youth umemployment which is absolutely not something to brag about but reflects just how much oversupply of talent resulted from education reforms 20 years ago meanwhile PRC moving up every research and innovation index controlled for quality and have indigenous industries in almost every sector, many of which are increasingly competitive. Even with demographic crisis looming, rich PRC is really just getting started because it is increasingly oversatuated with talent for moving up value chains.

Yeah there's still 600M undereducated poor that can't really be integrated into modern economy, hence common prosperity wealth transfer programs. Think of it as rich high-growth high-income PRC giving handout / economic aid to lower income PRC, not enough that rich PRC stops growing, but just enough that poor PRC isn't spiraling in subsistence and ready to rebel. Ultimately it's useful to think of PRC as massive developed China supporting massive low income China. It's better to have a country with 100 people where 50 rich people can build advanced tech but 50 are stuck being poor farmers then a country with 100 people with equal wages that can only make shoes or farm. Now consider India with 1400M people has 20% of PRC GDP... and while a drain, it really does not take crippling amount of resources relative to PRC GDP to subsidize 600M poor. Last time I did the math, if PRC spends 6% of GDP / 1 trillion per year, it can double income of the 600M poor on 1000rmb per month to 2000rmb. Which isn't great but enough to maintain stability especially if spread out over multiple years so people percieve they're getting richer YoY.

What you have described is BY DEFINTION the middle income trap. Economic growth and development is not linear - the type of strategy that brought incomes up from $400 to $2000 a year are not going to be the same to bring them up from $2000 to $10000.

The kind of regional income transfers you mentioned is a MASSIVE legal undertaking that will inevitabely face a significant amount of opposition from the richer coastal prefectures that would be subsidizing said development. You would need a revamping of tax brackets and also, you would still need to work on getting education quality in hinterland regions up to speed. We all want to say China is doing it's own thing for the first time, but this is the exact same story we saw with Malaysia and Mexico in the 90s and Turkey/Russia/Brazil in the 2000s-2010s. And it's not like economists and policymakers in the PRC are blind to this - Shaojie Zhou and Angang Hu at Tsinghua are two econometricians I can think of off the top of my head who are doing reseach on this conundrum specifically while also still in China. Li Keqiang himself is a former developmental economist btw and I wouldn't be surprised if a number of the recentish reforms that have started happening were lobbied by him.

Paraphrase from previous comment:

1. receive a massive subsidy from either the EU (southern Europe, eastern Europe, Ireland) or the US (South Korea, Israel, Taiwan)

2. have a small population (<30mil at time of transition)

It is harder to lift a nation of 400 million poor (using PRC poverty definition) people than to lift a poor nation of 30-40 million.

Again, these countries do not have any innovation advantage in those industries.

Here are actual leaders in those industries:

Aerospace --> USA, EU, UK, Japan

Defense --> USA, EU, China, Israel, Russia

Automotive --> USA, EU, Japan, South Korea, and soon to be China

ONG --> USA, UK

Electronics --> USA, Japan, EU, China, South Korea, Taiwan

Energy --> USA, EU, China

Gaming --> USA, Japan, China

You're confusing having a large industry with leading SUSTAINED innovation.

When was the last time you bought a Malaysian brand electronic? When was the last time you drove a Mexican brand car?

High income countries produce innovation, hence the ability to move up in the value chain, hence moving above middle income trap.

I don't think we're disagreeing that equitable development is a huge challenge for PRC, at PRC scale, but my main point is middle income is not a useful lens to evaluate PRC, because 1) it's arbitrary cutoff that PRC is going to pass sooner than later 2) stupid large countries operate on different dynamics/expectations. It's even very not useful to lump 32M malaysia together with 200M Brazil let alone 1400M PRC.

> BY DEFINTION

Conceptually middle income trap is about countries stops moving up value chain and income gets stuck in middle income levels. It's a dumb blunt indicator that has no bearing on equity of development. If country has 100 Tony Starks making 20Trillion dollars in GDP of wizard widgets, while 1.4 billion subsists on crippling poverty but GDP per capita is above middle income, then congradulations, that country has escaped the middle income trap and all the wizard widget would categorize it as an advanced economy even if 99.99% of the impoverished people starves. Techncially if PRC is stuck at +$1 above middle income, it has escaped the trap, but the real question is weather PRC can continue moving up value chain and build competitive comprehensive national power, even at the cost of extreme inequity, not how/whether such equity can be addressed, which obviously is still important consideration for policy makers.

On that note PRC per capita gdp is set reach upper income this year, if not already even with revised slow growth numbers. Official CCP stats is $12,551 for 2021, which will put PRC in upper income of $12,696 with 2% growth this year. If you entertain the Shanghai police leak demographic extrapolations seriously, PRC today has 100M less people and entered upper income years ago. Meanwhile PRC is climbing value chain rapidly in essentially every sector, it's not specializng in a few, like the mid sized countries, but issue is, PRC simply has too many people for everyone to be lifted into upper income range. The difference with Malaysia/Mexico/Turkey/Russia/Brazil is on paper, extrapolating from recent Asian Tiger and other historic medium size country development trends, there should be enough opportunities for middle sized countries of 20-200M to specialize and be competitive in some higher tier sectors and escape the middle income trap.

PRC is not a middle sized country.

My opinion expectation suitable for middle size countries is ridiculous to apply to PRC with 1.4B people where 200M-300M tier1/2/3 workforce (very course guestimate) are already specializing in most sectors + 100s of millions of bullshit makework jobs by SEOs just to keep people busy, while 100s of millions more drift in informal economy. Think of USA with 160M workforce who can do pretty much everything there is to do, except manufacturing, which during peak, PRC employed ~300M. There's simply not enough domestic opportunities or global demand for 1.4B people. A good example is central gov reluctantly holding on to inefficient collective agriculture that employs 450M when realistically mechanization will axe 440M of those jobs and provide better food security.

>MASSIVE legal undertaking

Yes, there's going to be a lot of policy changes and reforms to get common prosperity rolling, or address rural education, vocational training etc. But TBH and blunt, opportunity for education and training has already passed for 100s of millions who are stuck in informal economy. Interior provinces neglected for too many generations. I don't know if they'll be taken care of by safety net or simply neglected - even Xi stressed common prosperity is not about handouts/welfare - but whatever they get, it's unlike to uplift them into upper income. They're never going to experience 25000 per capita China Dream by 2049. I think going forward PRC will remain a 2 tier society, something like gulf state with professional class and migrant labours that goes back to their less developed homes where PPP stretchs further. There's going to be reforms to improve QoL of of the bottom, but the classes are never going to converge. And hot take: CCP probably wants it that way, modern PRC is built and likely can only be sustained by 2 tier society with massive cheap migrant labour pool.

Not only is it "no", China is in a population loss spiral. It's estimated that their population will halve, from 1.4B to 700M, by 2050.

Everything they've built is beginning to fail due to lack of new workers, and an excess of non-productive people.

In a country where most people earn around $1000/year.

You’re saying the population of China is expected to halve in less than 30 years? Do you have a source for that?

Is cheap labor the driving factor, though? I vaguely recall that the labor cost alone in China has not been the largest competitive advantage as the cost has been increasing steadily over years. Instead, it was the complete supply chain in China that out competes other countries.

Bloomberg also reported an incident: Jobs wanted to change the cheap plastic screen to glass, and Foxconn was able to recruit more than 8000 workers overnight and completely reconfigured their assembly line to fulfill such request. This level of efficiency used to belong to the US. I really hope US can revolutionize its manufacturing for this century.

> ...This is level of efficiency used to belong to the US.

I doubt that.

Relatively speaking? In WWII, the US produced 300K planes, 130 carriers, 80 tanks every day on average, increased its steel output to 80M tons in 1944 alone, more than other countries combined. And hundreds of destroyers, corvettes, and submarines. Not that we need to do the same now, but it shows that how capable the US manufacturing industry can be.

Was that ability a result of the recent Great Depression and desperate needs of workers?

More like colossal wartime spending.

A fighting army (and navy, and airforce) is one hell of a market; they almost always would like more than you can manufacture.

I said nothing about how capable US manufacturing was or is. I was addressing the point that you China could hire 8000 new workers overnight.

> In WWII, the US produced 300K planes, 130 carriers, 80 tanks every day on average, increased its steel output to 80M tons in 1944 alone, more than other countries combined

At what cost? What did that labour pool stop producing in order to produce machines of war?

The entire nation was mobilized for war, so the cost was high for sure. My point was that the US then could produce so much because their manufacturing sector was amazingly strong -- the same reason that Yamamoto Isoroku predicted, years before the US turned into a war machine, that Japan would lose to the US.

  > Foxconn was able to recruit more than 8000 workers overnight...This level of efficiency used to belong to the US.

is that efficiency or just control/desperation of workers? i'm not sure i'd like to see that come to the u.s...

> Foxconn was able to recruit more than 8000 workers overnight

Isnt that the same company which has suicide nets so that its employees wont kill themselves.

> This level of efficiency used to belong to the US. I really hope US can revolutionize its manufacturing for this century.

The US consistently increases its manufacturing output through improved automation. US workers are also significantly more productive than other countries', though US labor costs often cancel that advantage.

> US workers are also significantly more productive than other countries

I certainly hope so. Is it true, though? Obama's documentary, American Factory, says that Chinese workers are more efficient than their US counterparts. I also read somewhere that the average age of workers in shipyards were 55 years, IIRC, and it's harder to find qualified workers who can build heavy machineries in the US than in China, partly because the manufacturing sector shrank so much in the US.

I read similar things about new factories in Norway like 150 years ago. From our look it was terrible with 11 hours shifts, no vacations, child labor etc. But at that time people who worked there actually preferred that since the alternative was even harder work on farms or in fishery.

>the factory work done by people in developing economies is dramatically better in terms of quality of life and safety than the agricultural work that they would be doing without economic development

Wait, I think people were much happier and we should go back to an agrarian society and that people are miserable in the dystopia we created, so I need a citation for this.

Quite a few of the factories are actually owned by Koreans... Vietnam is their cheap labor force.

And Taiwanese

The interesting thing about the geopolitical context is that Vietnam is also single party Communist country now practicing state capitalism and also has all the trappings of communism such as internment of dissidents, same as China does

But our willingness to never think about it comes from Vietnam’s irrelevance, not the system they practice

Culturally Vietnam is tending quite pro-west, and yes its govt is single party communist, but nowhere near the levels of authoritarian hell of the CCCP.

Were you meaning USSR or China here as comparison?

Oh ta, yeah I meant china, CCP.

not for lack of interest, Vietnam’s party is just limited by competence and wealth and resources

Capitalism is one of the biggest eradicators of poverty. 1B of people in China was lifted from poverty because of it. And once it's done with one poor country, it starts taking care of the others :)

I’m no great defender of capitalism, but feudalism did a great job at that a long time before capitalism.

Or any system where owners of property could extract profit by employing non-owners of property. Much of the strife in the later Roman Empire was caused by large property owners exploiting slaves and depriving non land owners (including many legionaries) of a chance of making an income. Said legionaries and other plebeians supported politicians with a policy of land reforms.

Not to mention the poverty of the slaves themselves.

Similar to how modern medicine made 40 an early age to die

It’s well documented that there were no poor people at all prior to the publishing of The Wealth of Nations in 1776. /s

It's hard for me to understand how someone can hold this view, and it's hard to know where to start, but no. As capitalism has expanded it has dramatically reduced absolute poverty. It's not even close, and the change only got more dramatic when communism collapsed as an alternative.

https://ourworldindata.org/uploads/2013/05/World-Poverty-Sin...

There's an interesting argument in 'Sapiens: A Brief History of Humankind' [1] that capitalism is primarily responsible for the Enlightenment period in Europe. By the same token it may also be associated with some of the worst aspects of (relatively) recent history, such as colonialism and the slave trade.

[1] https://www.goodreads.com/book/show/23692271-sapiens

Is it ironic that the capitalistic poverty lift solidified the CCP?

Capitalism with a strong central government that regulates it tightly you mean.

The China duality: It seems that China is a capitalist country when people want to discuss their achievements, and a communist country when they want to discuss their faults.

They are capitalism since private sector is allowed and encouraged. They are an authoritarian country as there is no democracy and there can be a single political party. Why is that so difficult to understand?

They call their country communist because they can't afford to undermine the legacy of the communist party by admitting that they made huge mistakes in the past.

China is dominated by state owned enterprises and many of the private investment is in joint ventures with local governmental authorities.

People like to gloss over the more complex reality that is Chinas actual economic structure when it benefits their personal ideological agenda.

A ton of the achievement has to do with Western investments. For example, Apple spent $275 billion in the late 2010s to build up Chinese tech manufacturing capabilities. That's one company doing a 5X larger investment than the "historic" CHIPs bill signed by Biden this year.

Western FDI has definitely played a major role in China’s growth, yes.

Note that my comment doesn’t call that into question though, only that the conversation around chinas success is almost always grossly oversimplified to suit ideological agendas.

>A ton of the achievement has to do with Western investments.

To be fair, a fairly big reason why China became poor was because of western imperialism. Look up "Century of humiliation".

And if you go back in history far enough, China was the most advanced country and had the highest GDP in the world for long periods of time.

But I think you're not open to these ideas.

Well yeah, they are both; China has a mixed economy.

They are indeed.

It is quite clear, however, that most analyses of their economic successes don’t add that nuance and come to the predetermined conclusion that I outlined above: the success is due completely to adopting western capitalism, and the negatives are due to the elements that don’t fit that mold.

It's fairly clear which policies have contributed to their economic rise.

Shift to markets, stringent capital controls, consolidation of massive state owned enterprises, encouragement of joint ventures between Chinese companies, western companies, and the government, lack of stringent IP laws/rights.

Some of the above is “capitalistic” and some of it is not. Commentators have been predicting China would continue to shift towards becoming more capitalist or fail for decades and they’ve been continuously proven wrong. China has developed a completely different model of development from the western consensus, but people still want to have their cake and eat it too.

Yes, there are lots of reforms that contributed to their rise, but adopting elements of a market economy and engaging in open trade with the rest of the world were key elements. Reforming their centrally planned economy wouldn't have resulted in the same outcome without the those.

But yes, I totally agree that you don't need to be 100% capitalist to benefit from having a market economy. Even the US's economy is ~15% public sector. Usually when multiple ideologies are competing, there's elements of truth all around.

It's (mostly) capitalist in terms of economy and communist in government/politics.

It is not mostly capitalist.

A system with the property rights that exist in China is a long cry from any reasonable definition of capitalism.

Did it eradicated poverty in Burundi? South Sudan? Malawi? Pakistan? I can cherry pick examples too; means nothing, and what about the tankman? Was he lifted out of poverty? Or all the other victims of the goverment? Also China capitalism includes things like stealing tech secrets from the companies that manufacture there[0], is that part of the "ideal capitalism" you advocate for?

[0] https://money.cnn.com/2017/08/14/news/economy/trump-china-tr...

>Also China capitalism includes things like stealing tech secrets from the companies that manufacture there[0], is that part of the "ideal capitalism" you advocate for?

Sure, China has copied/stole tech from the West, just as the West has copied tech from China long ago. It happens when an economy is playing catchup.

But in my humble opinion, the idea that China could only steal western tech is rooted in racism and a lot of western media propaganda.

Ever had a Chinese co-worker? Did they seem dumber than you? Are they only good at the job because they're copying you or stealing your work?

Good old "if you critize a government it means you are racist against people in that country". No, that's not how it works, government positions -specially at autocracies- attract a rare kind of people, extremly greedy and ruthless, not representative of the rest.

Also if the government orders you to steal secrets from your clients to follow such orders it's just basic survival instinct.

> Capitalism is one of the biggest eradicators of poverty.

wat https://www.youtube.com/watch?v=Co4FES0ehyI

Can't shake the feeling that a similar rationality was used to partially justify trading slaves "The new master feeds them bread and milk instead of just rice and water! Its a clear win for them!". Yeah I get it, its an improvement for sure but maybe the problem has roots a bit deeper that must be adressed and therefore righfully critized despite being an improvement.

It wasn't true though. The lives of enslaved people were obviously, measurably worse after enslavement and transportation. They had shorter lifespans, less freedom, literally enslavement, etc. The lives of people groups in African captured for slavery were also worse.

Economics is called the "dismal science" because slavers called the economists that when the economists pointed out slavery was both bad and inefficient.

The slavers' argument was that treating them bad taught them proper Christian character.

All other things being equal, it doesn’t make sense to chase expensive labor!

> By and large, the factory work done by people in developing economies is dramatically better in terms of quality of life and safety than the agricultural work that they would be doing without economic development.

Do you have numbers on how it improved life of Chinese farmers compared to 100 years ago, 200?

When the US went through its industrial revolution we went from people owning farms to basically being owned by the factories boss. Child labor was rampant so we’re ridiculous working hours and blacksmiths and others who were put out of a job basically drank themselves to death.

Someone none of that seems to ever happen in other countries and all we hear about is “how great of an opportunity it is for them to get to build iPhones” odd stuff

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