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Comment by audunw | Hacker News Reader

What the West is doing is forcing China into a situation which is impossible to sustain when their economic dividend runs out. Especially considering these investments are fuelled by an extremely high level of debt.

And it’s not a given that they’ll catch up. I think it’s fair to say that their development of jet engines is on track to be obsolete before they’re competitive.

They may in principle have established the technologies to be self sustained but that’s only relevant and sustainable if they develop an economy based on domestic consumption rather than exports. Which they are struggling with as well.

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> their economic dividend runs out

i dont think it will - they still have a chokehold on battery production (which implies dominance in the EV sector), and they also control the vast majority of all rare earths. The chinese gov't can subsidize chip research/development with these other sectors that are dominating.

The west is the one that need to watch out for their own economic dividend running out from the past century.

another thing: chinese gov can just some of its wipe its populace easily (the gov controls media 100%)

but... not the western govs

"Economic dividend" really means "Demographic dividend". It's when your fertility rate decreases but your total population isn't decreasing yet, so you get more people to work more as they spend less time as parents. This of course is a self perpetuating cycle and ends in demographic collapse. China's population is now decreasing. The West's population is still growing. China is in the most literal sense dying. It's what you get for having a one child policy for 50 years. But hey, for a beautiful moment in time they really created a lot of shareholder value.

What makes you think they don't have a domestic market?

The Chinese domestic EV market is the largest in the world.

Chinese factories are full of Chinese robotics.

Companies like Huawei are struggling to meet the domestic demand for AI accelerators, while growing volume very fast year over year.

The Chinese domestic AI market is massive, but we just don't hear much about it outside of the models that are also sold here. Can you even name the models that ByteDance (China's Meta) makes?

As far as exports go, China is a low cost producer for many things. If the US doesn't want to buy high quality EV's costing 1/2 the price of a Tesla, then there are plenty of other countries happy to do so. The US is only 5% of the global population - there are lots of other consumers out there.

> They may in principle have established the technologies to be self sustained but that’s only relevant and sustainable if they develop an economy based on domestic consumption rather than exports. Which they are struggling with as well.

Is this really true? Can't they just keep exporting "forever"? What requires them to find a domestic audience? I can think of some other countries that have done quite well mostly without finding a domestic audience (eg, Switzerland comes to mind, and frankly Europe might largely be in the same bucket).

https://www.imf.org/en/publications/fandd/issues/2023/06/sup...

Totally non-biased of course.

Nothing exists in the world that is not biased. The key to knowledge is understanding what those biases are.

Europe (by which I assume you mean EU or possibly Euro area) has a fairly balanced balance of trade overall.

And a teeny-tiny country like Switzerland can't be usefully compared to something as big as China - the rest of the world can easily consume whatever the Swiss produce, but there are limits to how much Chinese can produce until consumption will have to shift to domestic consumption because the world doesn't have infinite ability to pay for its demand.

That said don't expect any big change anytime soon - there are very strong political incentives to keep the status quo with China focusing a bit too much on exports.

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