It feels like The Economist and other Western oligarch media have been saying that China is going to collapse "next week" for decades. Almost like they have some sort of anti-reality agenda.
It's collapsing, just not "nest week"
China's manufacturers are going broke
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Re: China's manufacturers are going broke
#72If the capacity was for exports of ev’s, solar panels, batteries to U.S. and Europe, the 100% tariffs are going to bring some pain. somehow iPhones, leather bags are not getting tariffs.
Re: China's manufacturers are going broke
#73If the capacity was for exports of ev’s, solar panels, batteries to U.S. and Europe, the 100% tariffs are going to bring some pain. somehow iPhones, leather bags are not getting tariffs.
iPhone tariffs would hurt the us and china both too much.
Ev tariffs are meh for china because they don’t sell here much anyway.
Re: China's manufacturers are going broke
#74It’s pretty simple, Chinese companies need to lower Chinese wages, reduce costs, reduce profit expectations, provide lower cost shipping to ports, guarantee the quality of their product once it arrives in North America not pay when it leaves the factory. We want $1 products again at dollar tree (not $1.25 tree), and better quality for less money. Otherwise we will just make the stuff in the USA ourselves. One day we…
Personally, I have been coming more around to Chinese manufactured goods. It used to be low-end crap 30 years ago, but they are market leaders in many sectors today and probably even more tomorrow. I recently drove a Chinese (ICE) SUV for the first time and was blown away by the fit, finish, and price.
I think they are referencing various food scandals that rocked trust of Chinese food production in china (esp. for babies).
Re: China's manufacturers are going broke
#75I live in China, and what I see is quite the opposite.
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Re: China's manufacturers are going broke
#76Earlier quoted context omitted.
China was actually trying to heavily establish offshoring in the Philippines—but that has seemingly dried up with the increasing South China Sea tensions.
Looks like militarism and imperialism are not compatible at that crazy new 21th century world. IMO, that's a good development. I hope it lasts.
The US government has put a lot of effort into isolating China from the Phillippines. It's just statecraft and covert influence campaigns, nothing to do with the moral supremacy of anti-imperialism.
Moralizing arguments such as this one are FUD.
Re: China's manufacturers are going broke
#77Earlier quoted context omitted.
I would not say that this is trivially corrected. The latest news from Boeing is that American manufacturing has been obliterated. Rebuilding the skill and culture that has been lost is neither easy nor guaranteed.
Not a good example because Boeing didn’t outsource. China flies Boeing airframes made in the US and has for the last 50 years. Boeing is an example of financiers running the company from an ivory tower on the other side of the country.
They did outsource to various states.
Re: China's manufacturers are going broke
#78Earlier quoted context omitted.
> China's manufactures finding the winners But what happens to the failures, especially since they are overwhelmingly subsidized by local governments? Shanghai (SAIC), Jiangxi (BAIC), Guangxi (GAG), Guangdong (GAC), Hebei (Dongfeng), Beijing (BAIC), and other prefectures are putting tens of millions of dollars in SoEs that cannot compete with BYD domestically, and face preemptive hurdles entering foreign markets. If…
Some local jurisdictions, especially wealthier ones will continue to misallocate because they can. For sectors like ev/pv/chips, they pay back in reducing imports/dependencies, some level of even stupid pork barrel waste should be expected/endured, i.e. US fine with 700B fossil subsidies because strategic. 700-800/m couple income fine for 4000-5000 budget EV (new). Realistically in a few years when EV enter secondary…
> apology for edits, out and about
No worries. We all have lives.
> Some local jurisdictions
It's not some - it's a lot. And a number of these are not wealthy prefectures - Guangxi, Jiangxi, Jillin, Anhui, and Hebei underperform compared to the Chinese average on social indicators and economic health.
The amount of money spent to subsidize EV cars made by GAG, FAW, Dongfeng, Changan, Chery, JAC, etc that most Chinese buyers just don't think about for EVs when they can buy a BYD is staggering, and could be better used by the prefectures I listed to better living standards or further increase consumer spending via DBTs or a better welfare system (which itself has been devolved to prefectures since the 90s).
> This [export] is very necessary
Absolutely, and this is why every major automotive market (US, EU, TR, MX, BR, SK, JP, VN, ID, IN, ZA) has already or is in the process of closing their markets to direct "Made in China" automotive exports (as well as other sectors like renewables, consumer electronics, pharmaceuticals, etc). Why should these countries lose their domestic champions at the expense of Chinese players?
What large greenfield market can Chinese manufacturers directly sell to? And you can't say "Africa" - it's not a uniform market, and Chinese companies face competition from (depending on the region) Turkish, Japanese, Korean, Brazilian, Vietnamese, Indian, Emirati, European, South African, and American competitors.
This is the crux of the problem - the very low median household income forcing players to export.
Either the collective billions in subsidizes are deployed to push Chinese median household incomes to at least Malaysian or Mexican levels (~$10,000/yr) or even Thai levels (~$6,500/yr) in order to consume this excess capacity, or keep burning money subsidizing laggards while alienating foreign markets and partners.
> Let's not pretend PRC trade wars are any less strategic than US trade wars
At a high level it is, but the governance is atrocious. Just look at the First and Second Big Fund for example.
And anyhow, Chinese manufacturers in these sectors then face similar tariffs like EVs in the markets I listed above under NatSec or Dumping grounds, which in turn drives neighbors further into the US camp (eg. VN after the 2011 standoff and the Techo Canal, JP after Senkaku Diaoyu, TW after the 2014 trade war, SK after the 2017 trade war, India after the 2019-20 Galwan crisis, PH after the PoGo scandal, ID and the US CSP, etc).
This in turn means you guys will escalate under the fear of being encircled, which pushes those countries to further up the ante. The same fear Chinese nationalists have about the US is the fear those countries have about China.
Either way, this means China both loses potential economic partners/markets AND exacerbates an arms race.
It didn't have to be this way, but the MFA's and CMC's tone change since 2014 has drastically deteriorated China's relations with it's neighbors.
Re: China's manufacturers are going broke
#79Re: China's manufacturers are going broke
#80The CCP's current manufacturing policy is analogous to the modern venture capitalist approach of "subsidize the product until your competitors go broke, then reap the fruits of having a captive market by the balls", except the fruits have gone from "the power to set prices as a monopoly and extract a massive amount of profit" to "massive geopolitical leverage against countries that are dependent on your exports". It'…
I would not say that this is trivially corrected. The latest news from Boeing is that American manufacturing has been obliterated. Rebuilding the skill and culture that has been lost is neither easy nor guaranteed.
Pointing at Boeing for any broad business thesis is difficult given recent developments (i.e. failures) -- maybe excepting a shift to finance-driven culture away from engineering-driven culture.