China’s Economy Won’t Overtake the U.S., Some Now Predict | Hacker News Reader

China’s Economy Won’t Overtake the U.S., Some Now Predict

wsj.com

12 pointst236 comments

>Researchers debate how meaningful GDP rankings are

Basically. PRC already overtook US by PPP, 2022 estimate by IMF, PRC 29T vs US 24T with gap widening (US +1.3T, PRC +2T). This isn't even getting into calculation shenanigans like imputed rent that pad US GDP estimates vs PRC conservative estimates, which would bump PRC numbers up another 5-10%. Or massive US money printing vs PRC trying to actively manage national debt @55% (+20% in 10 years) of GDP vs US@138% (+40% in 10 years), total aggregate debt 270% vs US 810%. It's a matter of which indicator one wants to wank over.

The useful one, PPP/international dollars, PRC has surpassed US long ago and gap is widening. And this is with PRC self imposed lockdowns, 3 redlines policy to deliberately deflate real estate bubble (which is about as wasteful as US healthcare spending), while still managing 1/3 inflation rate.

E: Ultimately, it's why PRC shifting towards quality / tangible growth and focusing on comprehensive national power for peer (US) competition, which it's demographically well positioned to do. Yes demographically. PRC labour force is finally seeing gains from massive education/R&D reforms years ago that's converted sufficient proportion of work force to be competitive for pivotting towards advanced industrial/tech development. Sufficient as in comparable STEM talent generated every year vs OECD countries combined. AT PRC population scale overall demographic trend down matters less when subsect of skilled labour pool is rapidly exploding. Realistically modern PRC miracle was built by 300-400M in coastal provinces of which small fraction (~single digit) had education to could push advanced development (i.e. MIC2025), magnitude increase in higher ed labor force is what will be driving PRC growth going forward. Think of SKR, JP, TW who all had shit tier demographics but have consistently improved technologic competitiveness simply because new generations became disproportionately STEM educated, and subsequent generations harnessed the talent to move up value chain. Yeah there's still going to be massive income disparity with huge segments of uneducated population relegated to informal economy, but that just how things shake out with 1.4B people. It's more important to disproportionately uplift 200-400M to advanced competitiveness than uplift all boats a little. IMO wise to forget GDP wank, focus on PRC science/innovation/hightech development and military aquistion. That will determine whether PRC overtakes US.

You make some interesting claims. Got references?

I'm less impressed with "Yeah there's still going to be massive income disparity with huge segments of uneducated population relegated to informal economy, but that just how things shake out with 1.4B people. It's more important to disproportionately uplift 200-400M...".

I can't see that working out well.

Edit: SK, JP, TW all had growing working age populations during their periods of rapid advance. And low populations of elderly.

This situation is called the "demographic dividend" and is thought to be a key feature of rapid economic/technological growth.

China's working age population has peaked and that is a headwind no matter how many Walmart Ph.D.s it mints.

I guess we'll see in 2040.

Which references, figures are all easily found on Google with associated terms, except maybe PRC imputed rent in GDP calculations which you'll find in mostly PRC sources or tweets from niche tweets by western PRC domain experts. IIRC think CSIS Chinapower podcast had episode on it years ago.

>less impressed

That's just reality of having too many people. Height of PRC manufacturing employed 300-400M. Even today there's still 600M making 1700 USD per year, largely undereducated unskilled labour pool stuck in migrant economy because to be blunt, their time's run out and they can't be integrated into modern economy. Global demand is simply not enough to provide opportunities for entire PRC population. PRC simply has too many excess people.

>demographic dividend ... >Ph.D.s it mints.

It absolutely matters at PRC scale relative to peers. Above all else. China's un/semiskilled, undereducated workforce, majority with HS or less education attainment peaked. New cohort of educated (skilled/STEM dominant) post academic/R&D reform demographic is second wave of higher tier demographic divident.

(Old) PRC Workforce: -50 unskilled workers -48 semi-sskilled workers -2 skilled workers

(New/Trending towards) PRC Workforce: -20 unskilled workers -30 semi-skilled workers -20 skilled workers - 50 worker replacements in terms of automation (thanks 20 skilled labour)

Old PRC with 100 workers makes low value widgets. New PRC with 70 workers makes high tech widgets and services in every sector and at top of value chain. New Has greater ceiling for development/productivity. It's competitive with US because PRC population denominator makes numbers stupid, i.e. generously scaled US workforce with 1/3 PRC population:

- 10 unskilled workers - 10 semi-skilled workers - 10 skilled workers - 20 automation

That's being charitable considering # of STEM graduates and industrial automation PRC is building. Multiple fold current US. Compound with PRC, even with trash tier TFR is training 3x more skilled workers than US can domestically and with immigration. Or US's "mere" 10 skill workers and 10 semi-skilled workers was all it took become the most advanced economy in the world. JP,SK,TW would be some like 3,2,1 skilled workers.

In terms of income disparity trends, for new PRC, those 20 unskilled workers will basically be scraping by above PRC poverty levels until they die (2-4k USD per year). 30 semi skilled workers might eek up upper income (10-20k USD), skilled workers probably TW/JP/SKR tier (30-40k USD). And everyone is going to be stressed as fuck stuck in highly competitive east Asia work culture. It's unfair, but IMO PRC simply going to be a tiered society... with benefits. Semi-skilled vs skilled income gap large enough that semi-skilled labours wage will remain depressed. Think a rich gulf state with cheap, exploitable migrant labour force. Disparity in unskilled/poor income gap with is so large that modest wealth transfer (common properity) can keep their QoL improving (political stability). GDP India with 1.4B is around 15% US GDP, less than US spends on healthcare. PRC with greater PPP can keep 600M poor relatively serene.

As for Walmart PhD, PRC moving up in innovation/academic rankings (controlled for quality), it's not US / Saks on Fifth Avenue , but within upscale/luxury tier.

China is looking like an absolute basket case at the moment. I understand that contagion risk over there is very different than in western economies given that the government controls where capital goes but I still think they are looking at major systemic level risk right now

Couldn’t agree more. The CCP mismanaged the economy and its growth over the last decade, and now they’ve failed to achieve economic escape velocity before their population’s aggregate productivity wanes due to a rapidly aging population.

Yeah, add on top of that severe water and food issues, a tsunami of unproductive debt, and leadership that doesn't care about a single thing besides staying all powerful at any cost.

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