China's Real Economic Crisis
foreignaffairs.com
foreignaffairs.com
In both cases, there is zero transparency.
People dislike the one party state but they work with it because the fundamentals work. Temporary glitches happen, informing central planning false numbers is unsustainable in the long term, you can't hide the bodies and waste forever.
I would argue that this is a major reason why modern history is littered with the corpses of authoritarian regimes. They "work great" until the lie-debt stacks up to the point where it is undeniable.
Vietnam is also mostly centrally planned and seems to be doing what the state says it is.
Has China been successful since 1949? By many measures, yes it has. However, in my bones, I know that when there is no chance of losing an election, corruption will run rampant and eventually reach critical mass.
Xi anointing himself emperor and steadily getting rid of many high-ranking officials who question his final authority, is to me, the most obvious example of the wave peaking before it breaks. When Xi became leader for life it was a tacit admission that "the system" had begun to fail, therefore extraordinary measures had to be taken.
Can you know if the published reserves are as large (or small) as suggested? No. But you can reflect on the terms of trade and decide if they are better or worse than you expected in the light of reality.
DPRK is supplying shells to russia for the war in Ukraine. This speaks both to the DPRK capacity to manufacture and supply shells, their quality (the rate of duds) and the industrial capacity inside the FSU such that it requires this to meet expected demand. These are the kind(s) of measures in reality which make it very unlikely sustaining "lies" about the economy can work long-term: Other people can draw their own inferences.
Planned economies set goals. China set specific economic goals. Failure to deliver has consequence. If they miss targets there is an internal conversation which in due course we hear about. If they exceed target there are consequences and a conversation in due course we hear about. If a goal is met but the next cycles goals are radically different that tells a story too: if your demand remains but they cannot supply, their prior ability to supply must have had consequences or some other aspect of the econnomy has changed.
In any event, planning an economy on false data is an exercise in peak frustration for the staff concerned. It's less likely anyone pushes paper for a fake outcome, the stakes are too high.
I view this as similar to differential analysis in cryptography. Heat of the chip die tells a story. Where the work is done tells a story. Remember, aircraft and satellites fly the world 24/7 so it's not like an open cut mine can be hidden, or the spoil heaps of a deep mine, and the extent they grow is governed by the laws of physics: you can only pile soil so high before you have to slope it. So even things as unlikely as overflight by remote sensing satellites can tell you about the fundamentals of mining, industrial activity.
"success" here has many measures. I'm focussed on the one which relates to the core topic, the economy. There are other measures, the demographics for instance which tell a tale of a cohort "missing" during the Mao famine years, and in due course will tell a tale of covid.
Just 25 years ago, Beijing was a city of bicycles with no modern highways and just two subway lines. Now, there are 27 subway lines and modern highways everywhere, but even with that, the car traffic (increasingly from Chinese-made electric cars) is unbearable at rush hour.
This is not a collapsing country that's barely fumbling along by hiding up its decrepitude. It's a place where the signs of massive progress are everywhere.
The idea that China is a black box that no information comes out of is just horribly out of date. This isn't the Mao era of a sealed-off China. This is the era of international China.
The government itself does not like fake numbers, because they render economic policy ineffective. Beijing needs to know what is going on in the provinces. Generating fake numbers for public consumption and then a private set of real numbers would be a monumental undertaking that would be impossible to pull off over the long term for a country with as large and complex an economy as China's. Provinces have tried to fudge numbers in the past, and Beijing has punished them when it found out, because doing so goes against the interests of the central government.
This is true, but insufficient.
US GDP per capita is 6.3x that of China. So the US' 2.4% growth last year was 3x larger than China's on an absolute per capita basis.
If China ever hopes to become a high income country it needs to grow in the 10% per year every year, for the next two decades.
In fact, if the US has mediocre growth of 3%, and China 9%, for the next 20 years, China will still only be half as rich as the US. China would need to maintain a growth rate of 12-13% per year, for 2 decades if it ever hope to match US wealth.
America's growth is narrowly focused on the digital tech sector. This is a fragile position and now requires the full force of tariff and bans to sustain.
The GDP per capita is also a not great indicator of wealth for those actually living inside the country. https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)
This is incorrect. Tech gets the most attention, but it's not the driver of GDP growth.
https://www.statista.com/statistics/248004/percentage-added-...
> This is a fragile position and now requires the full force of tariff and bans to sustain.
This doesn't even jive with your prior sentence. The US doesn't use tariffs to protect the tech sector. However, China outright bans foreign tech in many cases. Maybe you mixed up the countries?
> The GDP per capita is also a not great indicator of wealth for those actually living inside the country.
It's not perfect, but it's best we have. You can consider it the maximum amount of wealth that can be distributed within the country.
And I'm not sure why you linked to GDP by PPP. It's just COL adjusted GDP, which can be helpful, but has many caveats of it's own.
I was more referring to growth in the value of the companies in the snp 500. https://insight.factset.com/are-the-magnificent-7-the-top-co...
Why I responded initially was because the focus on GDP per capita. This isnt a great way to compare living standards and it isnt a great way to compare economic prowess.
And instead of GDP you think S&P is a better metric? It’s even less relevant than GDP to QOL.
1. I dont think it makes much sense to compare GDP per capita of china and the USA when trying to understand the power of their economies. It is the excessively demos thinking that causes one to focus on GDP per capita.
2. I dont think the prices of things are the same in China vs USA. I dont mean simply rice or rent but say building a road or a bridge.
3. Following from this I dont think one can compare QoL based on GPD per capita. It is also very hard to compare QoL which is a human lived experience thing between different societies. Whereas one can more easily compare the USA to Canada.
3. Economic financialization is generally seen as a bad thing. And government services tend to be inefficient. So GDP growth in these areas is either a bad sign or just a sign of faulty data.
4. The digital tech sector is growing. Other sectors have slow growth. This is reflected in the SNP500.
5. America has started protecting its tech sector. EV cars. Phones. Chips.
One could go on but overall I think (as a materialist) these trends point to a precarious position for the USA economy.