China's manufactures finding the winners. This is the system working as intended - create many producers in xyz sector via subsidies, hardcore (involution) competition from 1000s in different provinces innovate manufacturing to bare margins, losers go out of business/ get bought up by better competitors and consolidate like _intended_ outcome of other PRC industrial policy. TLDR Set up competitive environment to forc…
Still doesn't work. 1.) Internal consumer demand for China has collapsed, due to real estate debt overhang, local government debt overhang, increasing job loss, and incoming and increasing college graduates. It's estimated that 80% of this year's current graduates are jobless. 2.) External demand for China has been decreasing, 3.5T total export in 2022, only 3.3T in 2023. probably below 3T this year. Due to geopoliti…
1) Consumption is "sluggish", i.e. it's small positive growth instead of large precovid positive growth. It's not negative decline let alone collapse. Get off the FLG. Employment rate steady, including new grads at 20% accounting for those in school and not looking for work (i.e. the Chinese tertiary way), 40%-50% for graduate cohorts who takes time job hunting / not ready to settle. Which they will, given broad unemployments is steady, i.e. new grads get job after 1+ year and roll into genpop employment stats. There's 1% drop in new salaries in some industries, people are staying in jobs longer. "New productive" industry jobs, i.e. the high value ones set to drive PRC economy including energy, semi etc experience continuous growth. In aggregate positive, not fantastic, but also opposite of collapse.
2) Exports stabilizing after record covid highs, still only ~20% of gdp, i.e. PRC hasn't been (barely) export dependant for 10+ years at high of ~35%. If you follow brad setser, he'll note PRC exports probably being massively/deliberately hidden/under reported because two way data suggest much higher. BTW export dependant countries regularly over 50-100% export to gdp. Entire overproduction/overexport narrative is retarded considering how little PRC exports as share of GDP.
3) Who said EV was suppose to rescue PRC economy? PRC too big for 1 sector/industry to make difference. Collection of New productive industry jobs doing their part, sure. But generally when you remove RE drama, which they deliberately crippled, you get current modest 5% growth instead of previous 7-8%. Settling to modest growth is expected sooner or later. Modest growth (~5%) is enough to increase GDP PPP gap vs US. Most of projections on PRC passing US GDP assumes eventual modest growth + FX movements i.e strength RMB. Which they strategically don't want to because right now it's all about pricing out incumbant competitors in new export categories. Like CCP can get easy propaganda win by moving RMB band 5-10% to entier per capita $14000 USD high income range, but they don't because modest growth works fine.