Economist explains why China's growth miracle is failing
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I've linked my sources in the blog that goes along with this video. Links are in the text.
www.moneymacro.rocks/2023-11-...
Timestamps:
0:00 - introduction
2:55 - the economic miracle
18:56 - tuta
20:31 - why the miracle stopped working
26:20 - the future
Attribution:
- old pictures from Shenzen cc Leroy W. Jemery jr.
- pile of bikes from the South China Morning Paper CZcams channel
Narrated and produced by Dr. Joeri Schasfoort
Edited by Christopher Adewole
Thumbnail by Tom Hurling studiotomkin.com/
Previous title: China's Stagnating Economy: How a Rising Superpower Fell From Grace
Keep your e-mails private at tuta.com/moneymacro
You should do a video about EU stagflation. There is no growth and the ECB are warning of potential further interest rate rises.
The EVs in those grave yards were owned by failed ride share companies, so the cars are used and have small batteries.
MM = 33 Proof all your CLAIMS are Required.
The Eastern Matriarchy runs the World and you know it.
BIRD IS THE WORD!
ANGL00REGIME PARROT SPREADING CHEAP PROPAGANDA AGAINST CHINA AS USUAL😂😂😂
😴😪 ...another wh!†€¥ smearing about chinese government. What so new about it?
It is very refreshing to see content creators putting considerable effort to research and synthesize a lot of information in order to present something truly informative and insightful.
The so-called economists he cites are all proponents of Western economics, which, in itself, is riddled with flaws. Why doesn't he reference the perspectives of scholars from non-Western economic systems?
@@user-rf5nl9oi2q
Interesting and valid point.
Maybe because china is now a part of an international system that is not isolated to need a local theory of economy. The economists looked at specific data from china and compared it with non western countires like Japan.
I think the conclusion of the video is postive for china.
China has a clear problem and enough resources to solve it if political will is present. And that's more than what many countries ask for.
This video seems fair and non dramatic unlike us media.
The title of this video is dramatic but the conclusion is nuanced and is not at all about the end of china's economy or something.
@@ahmedtoufahi5198 He uses historical cases of economic growth and decline in countries like the United States and Japan as references to speculate on China's prospects. We know that whether a country's economy continues to grow fundamentally depends on whether its domestic productivity can steadily improve. In the process of catching up in less developed countries, rapid improvement in production efficiency can be achieved due to the advantage of being a latecomer, coupled with the demand potential of the laggards, leading to a period of rapid economic growth.
However, in the process of catching up, the latecomer's advantage will gradually diminish. Whether it can gradually establish a leading advantage in certain areas and become a pioneer is crucial in determining whether the pursuer can sustain growth after the latecomer's advantage disappears (i.e., whether it can continue to improve productivity). After Japan approached the United States in catching up, it failed to establish sufficient advantages in key industries such as semiconductors due to pressure from the United States, leading to stagnation in productivity. However, for China, the latecomer's advantage is gradually diminishing, but it may continue for about 10 more years. Currently,
China is already in a leading position or in the top tier in many important areas (such as new energy, electric vehicles, aerospace, quantum technology, artificial intelligence, nuclear energy, etc.), and it will not be controlled by the U.S.. For instance, the United States is making every effort to suppress China's semiconductor industry and Huawei, but this can only delay rather than prevent their development and breakthroughs. Given China's cultivation of talents in science and engineering, the period when research and development achievements continue to emerge is approaching. There is great potential for becoming a leader, so I believe there is still significant room for improvement in China's productivity.Therefore, this brings about the sustained driving force for China's future economic growth.
@@ahmedtoufahi5198 Many people often mention the issues of population aging and declining birth rates in China, which indeed pose significant challenges. Particularly when compared to emerging countries like India that are catching up with China, these challenges are considered disadvantages for China. However, if we compare China with the developed countries it aims to catch up with, all economically developed nations (such as the United States, Europe, Japan, and South Korea) face similar issues. While the United States and Europe can alleviate some problems through immigration, the process itself brings about various social challenges that can hinder sustainable development. The impact of such disruptions will need to be observed in the changes in Europe and the United States in the coming decades.
@@user-rf5nl9oi2q Ofc. China's diffculties can be percieved in the context of the broader issues that concern all developed nations too.
I loved the balance between the up and downsides for the economic growth. Wages were low, and that greatly helped the economy, but the workers were screwed
Agreed. It points towards an unpleasant aspect of capitalism, that development is often based on heavily exploiting workers, because the people making investment decisions directly benefit from paying workers less. I'm interested in the idea of worker co-ops and how they can be used as an alternative that may result in more inclusive growth. It would be good to see more research into them at least.
@@Rb39-ej5hh in the history of mankind has there been a successful economic system that has not exploited workers for the sake of development, according to Marxist analysis? Even the communist states exploited their workers. The average worker in a communist country was probably paid much less than their capitalist worker counterpart.
@@Rb39-ej5hh The thing is that it didn't used to be. Management used to be the ones shouldering the risk, because they also made more return. Now it's the worker that shoulders the risk while management flits about from company to company not giving two shits who they work for, just whoever gives them the biggest paycheck.
@@Rb39-ej5hh but thats not capitalism, its feodalism with communist party as feodals, if it were at least somewhat free market system, workers would get an increase in wages due to competetion for them and overall economic output growth. But in a world where government controls currency and does everything it can to prevent inflation of wages, we end up without real income growth(true for many countries, including china, usa, eu, etc...)
@Rb39-ej5hh Employee owned businesses are a thing. I buy my groceries at one. Anyone can start one. They fail at about the same rate as any other business.
Fascinating, man. Really valuable to have this kind of foundational knowledge at the back of one's mind while navigating the deluge of opinions about world events.
Very good videos. Love the academic and journalistic integrity you put into these videos. Keep up the great work!
Thanks, will do!
Fantastic video, explaining in clear and understandable language why a country needs a thriving service sector and why the service sector must arrive at the last stage of development. The best part of the video is at 22:45, which explains the rationale for the stages of economic development.
Ughh wtf dude this video and channel is a mess of misinformation...
First off China manufactures then exports to a GLOBAL market not only domestic....
Second he said China build enough homes for 3B people... lol whattt, I knew that was bs and there is absolutely no facts surrounding that just random heresay
Wait wtf this guy has a phd...
Anyone who followed Micheal Pettis, Beijing University finance professor for over 22 years, will know that China's economy would become similar to Japan, USSR, Brazil, and two other handful of other countries using the same economic model. In year 2007, both top leaders of the Chinese government, both Hu and Wen, made speeches to the people of China that they need to change their economic model from a debt-investment (infrastructure spending) model to a consumer-driven economic model like the US. Fiat currency can be printed at will since the world is no longer on the gold standard.
Yang Zoe Liu during her interview last month was filled with biases and flaws in her argument. She said it is perfectly fine that China is overleveraged. What she missed is that over the last decade, there are many years where China's GDP growth only grew one RMB per 10 to 12 RMB of debt. Understanding economics in general in a country does not mean you know what you are talking about.
To figure out the "What's Next?" question is heavily dependent on understanding China's politics. Since Pettis still teaches in China, he is not allowed to mention anything that is political in terms of the direction of how the Chinese government. Any sane and reasonable person in China have already answered this political question and the answer to that question is very dire.
@@kennethli8So what did he avoid?
If 5% GDP growth is considered stagnation, then my country is in a deep recession.
Will they manage to keep those 5% in the future, if most of it comes from useless investment?
@@degenerate_mercenary9898 Last time China had a GDP growth of over 10% was in 2010. You really thought they were going to keep +10% for several decades or what? Also, +10% of small X is easier to achieve than +10% of bigger Y. Common sense isn't that hard.
That's because those 5% are real GDP growth, which is used for comparing living standards. However, China's nominal GDP growth measured in dollar/euro is flat because the renminbi is weakening against those currencies like what happened with Japan in the 1990s. This way China can never grow larger than the US in economic power.
Do you live in an advanced or developing economy? 3% of a large number is more than 5% of a small number. So, China, for instance, would need to have far greater growth in GDP just to catch up to the US. Starting at a lower number also means that, in theory, there is a lot more potential growth in productivity for each Chinese worker than US worker (i.e. US workers produce a lot more on average than the average Chinese worker). Advanced economies usually require around 2-3% growth in GDP in order to continue to produce enough job for the population without causing too much inflation whereas developing economies require much higher growth. Thus, you can't compare the growth of GDP of countries directly, but need to take their relative circumstances into account. Note that if China's GDP grew at the same rate as the US every year, then they would never catch up to the US economy in size (they would stay the same size relative to each other).
@@darryll5711 Precisely. Further, advanced economies are more likely to have higher accumulated wealth. Someone who has inherited 5 houses and earning $100k a year is a lot wealthier than someone who does not have a house but earns $200k a year. GDP growth is analogous to yearly earnings and does not take accumulated wealth into account.
I really appreciate your videos, as I find you intellectually honest, always being clear about what you base your claims on and what the limits of your claims are. Too rare on CZcams...
Very well said, completely agree!
Fantastic. I now understand why all the three sectors; Agriculture, Manufacturing and Services should emanate progressively in that order and coexist, with the latter employing the majority of the people.
Domestic consumption is the key to sustainable development. It's also imperative to aim at sustainability way more than chasing infinite growth in a finite world.
Lastly, to boost employees incomes, it's necessary to upgrade to manufacturing of advanced goods whose prices aren't dependent on cost of production but on the value consumers derive by consuming them!
Great video as always. Kudos mkubwa.
chinese wealth distribution does not work through gdp compared to us, like you pointed out. Because gdp does not consider purchasing power, wealth concentration, money flow and control, is calculated in usd and does not consider the state houshold and budgeting, which in case of china is not as heavy on debt and more able to boost economy. It is in interest of china to have a lower gdp in dollar, lower living and production cost (not domestic purchasing power of citizens) to stay attractive for their way of international trade. And they work the numbers, so that the perception is always the desired one.
@@cwpv2477GDP has always been a Western game base on their rules which, are also alterable anytime to suit their needs. For sure, it reflects partial of the reality but, I wouldn't just soak myself in it. The methods employed to calculate GDP are vastly different between the US and China, I just don't see the relevance anymore. For example, since Health Care services are privatized in the US, it virtually turns an expense (very huge too) into profit, making up a staggering 18% of US GDP.
Or maybe humanity should stop consuming so much. Time to leave capitalism behind.
Unproductive labor by definition is catabolic and superfluous. Western ruling class will have us digging holes to fill them back up again just to retain wage relations.. China will be living in the future as we're still citing our superior GDP as proof we aren't spiraling into decay and destruction.
@@stevenhenry5267 Thats a massive shift in economics and politiics and would likely leave millions suffering. It isn't worth it until we're forced to or better ideas succeed.
Excellent video, sums up a lot of research accessibly and concisely
Im just happy that you uploaded a video. This was so insightful kudos to your hardwork! 🙏
Great video! Thank you for uploading such an informative video
Appreciate all the research you put into this, excellent deep dive into the topic. Thanks!
this video is cope, there growth was 5% which is huge for a 18 trillion dollar economy and China surpassed US in terms of PPP long ago
It’s a dangerous myth that the lower interest rates means banks will lend to entrepreneurs. Banks don’t loan money to high risk or new ventures.
I love your videos. Have been a fan since the start of the channel. Keep making high quality informative videos !
Thanks, will do!
Incredible work Joeri. Thank you for putting this together. I learned alot and I found it very insightful.
Very happy to hear that!
Fascinating stuff. I really appreciate how you broke down super complex topics without numbing them down. Truly making things simple but not too simple! Just discovered your channel today and I will follow it closely. One of the best CZcams finds in a long time. :)
I love your videos ! It is refreshing to see someone research both side of every argument. Keep up the good work please :)
You should really look into Wenzhou Model of growth for China's future. Most people outside of China look at Shenzhen and thinks that is the model for China. Most Chinese look at wenzhou model instead.
Yeah, people forget that it' basically a continent, twice the size of the EU and twice the population. Greater Shanghai alone has a similar population to Australia or England
Yet shenzhen's framework is MORE predominant in the entrenched political elites of China.
@@petermanuel5043 tofu dreg building.
people who say tofu dreg construction are usually from countries whose infrastructures are crumbling, new buildings and bridges collapsing before even completion.
@@madsam0320 wumao!!
Great way of presenting different views and scenarios! I very much enjoy the analysis. Thank you!
Appreciate your research that gone into this video!
I've been watching the CZcams channel "China Update" for a year or more, and "Tony" (who produces that channel) often cites the work of economist Michael Pettis of Peking University. (I have no idea why the CCP allows Pettis to keep his job.) Thus much of what you said here was familiar to me. However, your presentation was clear and concise. Your video does a very good job of providing a casual viewer with the background which is required to understand China's current dilemma: CCP control vs. the development of a sustainable service economy. Thank you.
China allows people to criticize the government, policies, and economy, but it does not allow criticism of the CCP.
@@kevinz-bb7it -- As early as 2021, the CCP began to warn social media not spread bad news about China's economy. More recently, the CCP has raided the offices of companies that perform "due diligence" investigations of Chinese companies in which foreign investors are considering investing. Most recently, spreading bad news about China's economy has been made a crime. So Pettis has committed (technically) "crimes".
ironcially the academia is more free in China than US... shit really hit the fan if you critized Israel... cancel culture is so cursed.
@@kevinz-bb7itchina is always a one party system 😅
CPC is always the best
After hearing all the details I still think the simplistic explanation that China opened up -> economic progress, China closing down -> economic stagnation. Just that in this instance closing down means they won’t allow their population to evolve into consumers as they need to.
Really well put together. Thanks for providing clarity on all this controversy on what’s happening in China
GREAT VIDEO MAN!!! You have an excellent niche here. Great distillation of the Pettis thesis into a narrative many can understand. A true educator!
I always love your analysis. I would love it if you covered the Indian Economy in such detail sometime.
The problem with our economy is that our story didn't start until 1991.
Good thing the IMF forced us to open our doors.
India skipped the manufacturing phase so they still have large parts of population working in agriculture.
@@alburaq3290 yaa
The govt has noticed that and has started to focus on manufacturing and service both
Hi Joeri, very interesting video! On another note: what's your take on Argentina using dollar as their primary currency? Abstracting the likelihood of this happening if course, could this curb inflation or is this a huge risk considering international trade?
this is dumb. if argentina has alot of dollar in their bank, it might make sense, but if they don't, where is the dollar they need for circulation going to come from? if there is not enough dollar to cicular, government can't pay services, services willl shut down, the entire economy will grind down.... you won't be curbing inflation at that point, you will be forcing people to resort to barter trade. there is a reason why most countries don't use foreign currency...
Video coming soon
Great in depth video. Love to see more of these.
Wow! There is so much to unpack here. It reminds me of two neighbors of ours when I was growing up. The first couple bought the house right next to ours and the wife was a lawyer, while the husband designed and built successful engines for race cars. They made an enviable amount of money and used the money to add a second story to their house, buy land from the farmer behind us, and install an in-ground swimming pool, all of which increased the value of their home and, because there were no loans or interest payments, were inexpensive for them relative to the equity value they built up.
The other neighbors, not to be outdone, but not earning as much as the first neighbors, took out a second mortgage with a high-interest rate (this was in the mid-1980s) and also built a second story and installed a swimming pool with a heated jacuzzi... and spent the next 10 years struggling to pay both mortgages until finally his wife left him and he went bankrupt, selling the house at a loss. The new owners promptly filled in the swimming pool.
China is the second neighbor who was, as we say in America, "Trying to keep up with the Joneses" and racking up untenable debt with no means to ever pay it back.
(1) As Li Keqiang pointed out, 600 million Chinese people - or roughly 40% of the population - still had a monthly income of just 1,000 yuan ($137) when Xi was declaring China's victory over poverty and, further, Xi never 'ended' poverty, but rather just redefined the level needed to no longer be CALLED impoverished to a lower number. He further, stopped counting the rural areas of China in many of the official statistics. Lastly, also as Li Keqiang pointed out, "the CCP's GDP figures are man-made" (I am paraphrasing, of course).
(2) China was never so much a 'manufacturer' as a 'fabrication hub' for foreign manufacturers except for the lowest skill levels of manufacturing. They could not 'manufacture' a ballpoint pen from start to finish until 2016 and that pen sucked: It is no longer produced. Their manufacturing consisted of foreign designs, foreign skilled labor, foreign machines, foreign machine parts, foreign high-end chips with, most importantly, foreign-supervised quality control. For those who think I am not being honest, or being too critical, then one need only to look with their own eyes the predictable collapse of logistics hubs, and cargo container ports from the very second that the CHIPS Act was passed in the US and similar "de-risking" moves that were made by other, real, manufacturing countries.
(3) Compounding the problems that the Covid lockdowns (and unreported deaths) had caused, the CCP passed the HK National Security Act and Espionage Act which defined normal and even legally required business practices such as Due Diligence and Auditing to be criminalized with many foreign businesspeople being arrested for the legally-required task of collecting information to prevent liability.
(4) the Ponzi Scheme of Evergrande, Country Gardens, and associated banks in the Real Estate and Development industries revealed other, related and unrelated, 'schemes' in China such as the High-Speed Rail systems (high-speed rail debt is 3X that of Evergrande), BRI, the use of excessive development twice a year as tax revenue for local governments, ChaBuDuo "Tofu Dreg" construction (which was largely unknown in the West before two years ago), the government-supported theft of depositor's bank deposits by banks, the hurdles of profit repatriation, etc. etc. etc.
I could go on and on and on and back each statement up with primary sources. An unabridged listing of the grievances would be such a multi-volume set of books that the first volume would be the table of contents and the last 5 volumes would be a listing of cites and sources.
I don't disagree with much of this video, especially with the Economics 101 lessons and the names of the models, but as with everything else in post-Mao China, each model as it applies to China needs to be appended with the notorious " -- With Chinese Characteristics" suffix. This video glosses over "Forced Technology Transfer" especially when it is coupled with "Intellectual Property (IP) Theft." Further, while it talks about the explosion of BYD EV cars onto the world stage, it ignores that the world has very severe "Buyers Remorse" and the market is just as quickly imploding for China car makers. The same is true for Huawei products even among Chinese buyers of Huawei phones. Temu, Shein, and Alibaba are also quickly gaining bad reputations for being shoddy and not worth the hassle: Clothing that falls apart after one wash, plastic that crumbles in the hand after one use, fire extinguishers filled with sand, EV batteries that catch fire, etc. It is nearly impossible to sue the companies.
US bank are far more leveraged than Chinese bank. your example might be reversed.
@@lagrangewei You don't know what you're talking about. Further, you have to make a distinction between the mostly state-owned Chinese banks such as Construction Bank, or Agriculture Bank where most Chinese deposit their money and the Shadow Banks where most civil and real estate projects get funded. In either case, Chinese banks are often leveraged to many times their total deposits. American banks, especially after 2008 have to keep a minimum deposit amount in cash.
我想你学习的这些东西都是错误的，我欢迎你来中国学习，并了解真实情况。🎉
@@Dang-ren-bu-rang Ha! I'd be in handcuffs before I even got off the plane! Maybe someday!!
@@GeoScorpion 没有药可以救你了😂
India wasn't very open. It was protectionist throughout the Cold War and mostly remains so today.
At the end it doesn't seem like, "don't need," but rather, can't afford.
Great video, as usual.
USA invested in China to use it against Russia. That was the difference between India and China. India was already committed to being non-aligned. China grew because of year after year of investment by USA while neglecting its own manufacturing. India was also a democracy and bureaucracy controlled country while China had autocratic rule and could move things faster along. So it was not just a question of closed and open it was more geopolitical after Nixon and Kissinger visit to meet Mao. He only gave the speech of cat either black or white after meeting with Kissinger and Nixon.
USA was desperate to get ahead in the Cold war especially since USSR was ahead in many fields including space technology at that time.
USA was also an ally of Pakistan in its fight against Russia in Afghanistan. That is why it could not overlook Pakistan in favor of India.
@@user-nf7bl7mb5q You're conflating Nixon era policy with most of China's expansion that took place in the Clinton era of the 1990s. By the early 90s Russia was no longer a major threat to the US and most of the investment into China was being driven by the initiative of corporate actors rather than US policy. US policy began to chill toward China from the early 2000s as Cheney identified China's government as a major threat to global democracy. All while Bush continued to court Putin at the same time. Russia was not seen by US policy makers as a serious threat to its goals in the early 2000s. Obama largely continued the frosty language toward China while attempting another "reset" with Russia.
@@avernvrey7422 read your history again.
Investment started after Nixon and continue right upto COVID days. Dropping only recently.
Nixon/Kissinger created the policy and Mao was forced to accept it because he was broke, China was completely broken. People were dying, living in caves and starving. The policy was driven by USSR and cold war. Ofcourse later this was overtaken by capitalism and corporate greed. Today even F35 parts are made in China.
@@user-nf7bl7mb5q US did not "invest" in China. if you look at China FDI, most of the investment China received came from Asia. this myth that "US build China" is a lie. Japan and Germany was already developing product in China a decade before the first American business show up. Deng hand pick Sharp and VW to develop it electrical and car industry. it why VW was the biggest foreign brand in China, because it the most recognised brand in China having been in China the longest. Sharp however failed to capitalise as appliances were easier to make and soon other companies were making their own.
the reason no one invest in India is because of high tarriff. if India has high tarriff on US product, than US government is going to apply high tarriff on Indian product. so if you product in India, you can't sell to the US and expect to make money. China has been trying to join every FTA it can find. RCEP for example was a major win for China. India has avoided every FTA it was invited to... it is not politic that divide the 2 country fate, it is trade policy.
I remember when everyone was saying that China would overtake the US economy, but I’ve heard that before (Japan in the 1980s). It takes more than just growth to become a superpower. It takes political, financial and social structures to keep that fire going. Economically, China was advanced, but their financial system is still VERY old school, and their political system can’t allow enough freedom for people to make the choices needed to keep the economic advances going.
Freedom to do what. It is no guarantee. Just look at the homeless situation in the west. Freedom...to what end.
@ZhenYae There's poverty in China, too. The US gives you the freedom to see poverty. We have the freedom to see the darker side of our society. In that way, we are better able to properly evaluate our choices.
When the dirty truth is covered up, it has a way of poisoning you.
homeless was result of freedom @@ZhenYae
@NiaArifah-br6cr
Yes, they are free from their government, which is exactly what they wish for and hope for. Yet, it behoves me to think about how they look to their government to rape, loot, and rob others in order to brag about living in a supreme " civilization" the world must emulate!
Who is supposed to help them then? when they get sick with more than just a flu?!
Lol everyone knew that a smaller country with 1/30 of the land area of the US with few resources and 1/3rd of the US population won't be able to surpass them meanwhile china has enough of it to surpass the US only if things go accordingly
Your content is great, I hope more people will watch it in the future. Thank you for educating me.
Great video Joeri!
Thank you very much.
Your videos always look so amazing 🎉
By holding itself back, China was attempting to prevent the mantle of manufacturing powerhouse from going to nations that were next in line to assume that role, like Vietnam, Bangladesh, etc. Which would in turn make them more powerful.
Don't forget India too. China isn't gonna like more powerful India that for sure.
Not even close. China is trying to get rid of low profit labor intensive industries and move up the supply chain. Why do you think China is boasting about breakthroughs in EVs, planes, high speed rail, semiconductor, machine tools instead of talking about how many pairs of underwears it exported?
但是中国鼓励部分制造业转移到东南亚
You are projecting too much. China does not think like America.
Ridiculous
Excellent video. Learned so much. Your channel deserves millions of subscribers.
Excellent synopsis. Thanks.
Thank you, your research finally make me understand what is going on with China’s economy
I think what most people are getting wrong here is that they think this whole stagnation thing will result in the collapse of China or at least will prevent it from be becoming a superpower. China will continue on the path of becoming a superpower capable of competing with the US on a global scale, it just won't dwarf the American economy as some used to speculate a decade ago. Just know that the Soviet Union never managed to overtake the American Economy, this however didn't prevent it from competing with the Americans for 50 years.
The Soviet Union didn't have over 1 billion people with almost 500 million of them nearing retirement age in the next 50 years coupled with an almost nonexistent birth rate 😅
@@SUPERPOWERCHINA_ You forgot that COVID came from US deer.
@@tonyazzaro9593 Retirement is 50-55 in China. have you seen where the "us" population growth is coming from and the quality? LOL
What yourself overlook is the heavy hogs competing with China's at the same trough seeking a limited consumer base. Also, China's nasty business table manners and lack of friends will weigh them down. They are also bleeding money...their rich are fleeing fast.
SU was competing with US only on its own TV.
Watching this video from Shenzhen 😉 Very balanced storytelling, thank you for your analysis!
Oh, man. This explanation is so good and simple, it's crazy. Now all makes sense!
Love this guys presentation style. Very balanced and not sensationalized. His students were very fortunate.
I really enjoyed this video, especially the linking of current events to a specific model. I would love to learn more about different development models
Great content. Pls do part two
I really enjoyed this. I had so many questions about the standard narrative because I saw inconsistencies and this was a good summary. When I finish this comment, I’m going to see what books were used for reference and read up.
Maybe it's too unknown to reach a wide audience in video, but I'd love to hear you explain the case of Thailand and why it did not manage to follow the East Asian growth model when it had a lot of advantages going for it.
So much political instability
true but maybe there is more @@BoltarThePirate
If there's a coup in what seems like a couple times per a decade, would you invest billions of your company's money there, or look elsewhere? That's your answer.
when i see the question, the first thing in my mind is the economic crisis of southeast Asia in the 1990s, which led to the big failure of the economic development of southeast nations, such as Thailand, Malaysia, Indonesia
Great video. Regarding the political causes of China's growth, before even having good policies, a country should not have a destructive regime.
I believe that a developed country is a country where the elites understand that it is more profitable to steal 2% of a billion rather than 50% of a million.
I get a lot of story from people from North-Africa who learned how to run a company in the West but when they try to do it back home, they get blocked by some administrative power who expect to take away a lot of money from them. It is not even corruption, it is sabotage.
What's the difference between admin's destroying small business and big business destroying small business ?
@@skutchBlobaum Big business can only do it by offering cheaper/better products, which benefit the economy as a whole.
Admin can destroy businesses just because.
@@maxpower9979 "Big business can only do it by offering cheaper/better products" - you need to visit some countries like mine where they do it by bribing public officials, lobbying for legislation that limits new entrants and coalesce with commercial real estate providers so that new entrants can't get a foothold in best locations.
@@pritapp788 I understand but in this case, you can mainly blame the State for accepting bribes. With a non corrupt State, attempts at bribery would result in a severe punishment for the business and its executives.
[ a country should not have a destructive regime. ]
US regime is 10 times more destructive than China's... so i don't know...
[ I believe that a developed country is a country where the elites understand that it is more profitable to steal 2% of a billion rather than 50% of a million. ]
oh sweet summer child, you have no idea what the elite in developed country are doing do you? how did the greek manage to hide so much debt? US bank hide the numbers for them...
Thanks for explaining so simply
Very good and concise analysis! Best and unbiased i have seen to this point (and i have watched a lot about china)
Can you talk about the economic plans for argentina from the new president elect Javir Milei? Specifically the dollarization of the economy and closing of the central bank and how viable it is?
I am an expat living in China. It’s true that the economy has slowed down quite a lot in China, but unlike many other countries, which suffered similar economic slow down plus high inflation, inflation in China is non-existent.
No inflation hurts their economy. Especially for an export oriented country. Most foreign investors and producers already have or are in the process of pulling out of China. I'd highly recommend to leave China if you still can.
@@thorwaldjohanson2526 I don’t have a PHD in economics, what I know is most Chinese have barely enough income for basic needs, inflation will lead to riots.
@@zeissiez Well millions are losing their job due to economy going down the shitter and the CCP's stupid policies. They are however very good at stomping out riots and making people disappear.
@@zeissiez(never mind that’s not what they’re staying but what I said still stands).
I think what they mean is that in basic terms slight inflation allows for better wages over time, but if there’s deflation then it becomes harder to stimulate the economy since people won’t spend what they have. So yes in most cases a bit (and I meant a very small amount) of inflation is a good thing.
@@zeissiezAn inflating currency means it is valued less compared to others. For an export-based nation, it makes their exports more competitive. More competitive exports means more exports. More exports means more money. In that regard, exports are actually a deflationary pressure, so long as you are using your own currency, which, surprise surprise, China is attempting to do with its exports.
Amazing analysis-thank you!
Excellent analyze. Thank you.
Already knew this was going to happen to China well over 6 years ago.
People have been saying "China will collapse" since 1960. You are late to the party.
yeah 6 years ain't the most impressive stat here buddy
The U.S. "Great Depression" covered the interwar period between WWI and WWII; a period of declining global cooperation. Japanese stagnation occurred within a period of improving globalization such that in Japan's case: "A rising tide lift[ed] all boats". The fact that both Russia and China wish for "border adjustments" at this critical juncture in Chinese economic development - bodes ill for the type of economic "adjustment" they are going to endure.
As much as I want China to fail, the unbiased and intelligent look into their economy has won me over. Great job, possibly one of the most enlightening videos I've watched.
The westerners economic experts have been predicting the fall of China since early 1990's now its 30 yrs anniversary of their biased and hateful predictions.
Didn't even finish the video. But have to say it's probably my favorite channel on CZcams at this point 🥰
To answer your question. Yes, I like this style of video as well. I would love if you'd make some deep dives on India. It seems to me it will be a very important country for global growth in the following decades.
Excellent format and Fantastic video and why a country needs a thriving service sector to keep growing.
Thank you for such quality video, please keep it up. CZcams audience is starving for such kind of well done material.
Excellent and clear review. Thank you
I got the argument about primary and tertiary sectors (different turn-over). Here, more and more primary producers (agriculture) have become energy farmers, which might be important to look at, when analysing industry.
This was insightful and amazing. Thank you for the stellar content!
Thank you for the great content as usual! Considering as you point out that China government already recognized the problem in 2007, and considering the unwillingness to further empower households and the private sector to boost domestic consumption, I wonder if those conditions were an incentive for the CCP to shift toward a more authoritarian rule, anticipating the increasingly challenging economic and social issues ahead.
Great video. Well researched!
Fantastic video Joeri! Mooi werk
I've been looking forward to this video. This is one of the only channels that reliably provides insightful and unbiased information!
From my observations in the past 50 years, I would say that although the Chinese government tend to be slow in making necessary changes, it will do it eventually, even if at a higher cost, but they will do it.
"even if at a higher cost, but they will do it." They have to, otherwise popular revolt will oust them from power, and even then the higher costs might already be catastrophic, vis the One-Child policy, or increasingly the wolf-warrior diplomacy. The issue is exactly how detached and insulated the CCP is their own policies, which allows awful policies to remain decades after they should have been abandoned. The Authoritarian nature of the Chinese state is literally the source of these problems, since there is no accountability from those affected by these policies, no matter how much the party wants to lampshade the successes of their policies. After all, China adopted it's current economic model based on Japan's and Japan achieved its success without having to be a 1-party authoritarian state.
@jackjones4824 Famines and civil wars that killed millions is just typical Chinese history. And just as with the other similar events in Chinese history, it lead to infighting and splintering in the Chinese leadership. In earlier periods it resulted in fracturing of central power and warlords all claiming the mandate of heaven, and in this case it forced Mao to lose his active position in politics (a loss of his god-among-men status like Stalin or Il-Sung) for a few years until he was able to powerplay back into power at an opportune moment. Xi is exactly worried about this situation: a rival from the CCP capitalizing on discontent with Xi to challenge him and the inner government falling into infighting as a new leader rises and the politburo cadres choose loyalties. These reshufflings also are generally the catalysts to reforms, which is exactly what happened during the Boluan Fanzheng.
Technology empowers everyone, not just the government. The amount of resources China NEEDS to invest in domestic policing and suppression is mindboggling, and we still see large organized cases of demonstrations (like this and last year when people came out en-masse to protest mortgage payments to units that were not being built, or the COVID lockdown protests) shows that China's strict surveillance and censorship is very fragile, and reaffirms the necessity to keep increasing prosperity palpable for the masses. It is the only thing that keeps them politically uninterested. That is China's and the CCP's great problem - they do not get their legitimacy from elections like governments in the developed West do, they get it through promising and then delivering economic growth and wealth. And therefore when that growth falters, they lose legitimacy. The Chinese have indeed experienced great advances in wealth, but that just means they now expect more as a baseline. China in 1958 was poorer than Sudan, they now have a lot more to lose and fight for.
@jackjones4824 Power consolidation is certainly what preoccupies Xi's decision making, best illustrated by that public theatre piece with Hu Jintao last year. But that's exactly why his situation is so precarious. Xi is unable to stymie protests and revolts when people actually get motivated, vis my previous and recent examples, and he is no spring chicken. He is 70 years old. No matter how much power consolidation he does, right now he will always need to contend with adversaries in strong positions - people who know they have good opportunities to reach power within 10 years if not sooner, if only by playing a waiting game and fighting it out to be his successor with others below him. That still creates a giant risk of mismanagement, that ultimately will fall at Xi's feet as supreme leader. So Xi's public displays of consolidation betray the fact that he NEEDS them to be this visible, he is telegraphing his actions in hopes that it scare people to back off. But his sort of behavior is the double-edged sword that will result in political miscalculations, that others can take advantage of, especially withing the supreme circle of the party.
You severely underestimate technology, and the stark difference contemporary society lives in compared to consolidated mass media of generations ago. I repeat, even despite the many billions spent, the large infrastructure, the army that exists primarily for domestic order with no real capability of outward projection, the firewall, et. - widespread organic protests still occur in China to this day, and that is simply due to the nature of social media connection, human ingenuity in euphemisms, and the simple fact that censorship is a reactive, not proactive strategy. Technology in China is itself also a double-edged sword, since now that so much of life is consolidated on it, yes it offers granular movement tracking for the government, but the government cannot really turn off the switch without collapsing the economy, and therefore exacerbating their legitimacy issue. The fact remains China has over a billion people. A billion angry people do not need guns. They did not need guns generations ago during previous revolts. They just need sufficient qualms to mobilize. The government is spending hundreds of billions on domestic suppression, because it is the cheaper alternative, even with that gigantic army that serves that purpose, but even so, it is still too costly to actually be able to suppress in real time. And that's the advantage.
"Timing is everything in a revolt; United we stand, but divided we fall." Timing is very seldom everything. Mass and snowball effects are far more important. If timing was everything, the CCP would not be in power, the Nationalists would have stamped them out. I implore you to view China from it's own historical lens, instead of applying what appears to be an American perspective to Chinese cultural specificities.
their government today arent the goverment 50 years ago
Thanks for sharing
Amazing educational video, thank you!
Thanks you for explaining the situation in China. I would argue as well that Chinese would rather have low growth economy then go to a service based economy as they see a lot of social consequences of doing so, like in the USA unappealing.
I have to agree with you. I think China currently is trying to move up the supply chain and become the next Japan or Germany. In short terms, Lawyers and finance jobs are great on paper, but they just do not hire enough people for a country like China.
经济转型，不再以房地产拉动经济，从而生产高端制造，造船，飞机，汽车，电子，不会再做低端生产代加工，我们要掌握价格主动权😂😂😂
The Chinese have no choice. Xi decides.
Yeah that's why the number 1 destination for immigration for Chinese is US !
@@yamingyu2234Japan and Germany are service economies
Odd how Shenzhen in the 1980's look so similar to some parts of Vietnam today😐. Good video Joeri. Looking good today. Seems you lost some weight. Stay healthy.👍
THANKYOU FOR THR GLIZZYS SIR
This video should be played in all schools and universities on our planet. Marvelous work, more please more of this in depth expertise with references to the scientific consensus. ❤
I learnt the other day about the 70 year interest rate cycle. I was wondering what your thoughts on this were? USA interest rate cycle every 70 years. Are we going to see interest rates rise for the next 30 years?
Loved this balanced and well-researched video. The only thing I am wondering about is why you didn't include a part about the demographic changes in the country that are often claimed to have had a large effect on the ecnonomy. The large growth in population from the 1960s and the decline now after decades of the One Child Policy
Demographics will have even larger effect on the chinese economy. Today it is a minor problem.
@@peliculiar yeah, especially in the long term. It's estimated that if China don't take some measure to boost its birth rate, it's population would be lower that US by the end of 21st century, given that US's population is growing steadily.
@@William_Fei No it isn't, not even close. China's population is expected to decline to about 800 million by 2100 according to the UN. That is still TWICE what the US is expected to be at about 400 million.
@@ArawnOfAnnwn I have to tell you that's an overestimation. China's birth rate is lower than Japan now, only about 1.1 child per woman in 2022. If the birth rate doesn't go up in the future, and keep the current rate, China's population will be about 600 million by 2100. However there is no clear sign that the birth rate will go up, especially when considering China's economy situation, and it seems that the government don't have any measures and policies to boost the birth rate.
@@ArawnOfAnnwn China's situation is worse than everyone think.
Very informative. I enjoyed your analysis. To be honest with you, I really don't know what will happen with China. It is interesting times right now
Great video!👍
Great video! Really appreciate the whole story line from the late 70s to now. So much more balanced and underpinned than the other opinions out there. Having visited China this year I must say I saw a lot of service sector dynamism driven by the strong entrepreneurial culture and tech innovation. Do you have anymore data points to show how the government is constraining the service sector?
Technological innovation such as EVs and green energy is a huge, booming sector of the Chinese economy. If Xi Jinping continues to refrain from real estate stimulus, thereby deflating the property bubble, it's illogical to think China's economy would stagnate this decade.
Sorry, but you both see the "shop windows" of Chinese economy. This is not a new norm yet.
I am not seeing the "green energy" boom you speak of. China has definitely been increasing its electricity production, but most of that is through coal fired plants.@@J_X999
The government is constraining the service sector by not allowing its citizens to keep more of the money it earns and not providing an adequate welfare system. The citizens have not got the money to spend on consumer goods and although the Chinese are good savers it's to pay for their old age pension and welfare as there isn't an adequate system in place. While China has been allowed to dominate in areas of export it targeted most of the West is pushing back on the trade imbalance of China, the US are being more aggressive in this stance and Europe is dragging its feet but slowly realising if they don't have a more equitable trade deal with China it is becoming one sided and will impose tariffs, China makes very little surplus on its trade with Asia, Africa or South America if at all, the majority of its trade surplus is gained from the West!?!
Very good and understandable video. I almost always learn something new from your video's.
Perhaps a nice topic in a similar vein would be India. I recently saw a video about India and why skipping over the Industrial phase, and business rules / coruption effecting companies over 10 employees causes huge problems.
Would love to hear your view on it, and if there is any thruth in it and a good way forward.
Great analysis!
You earn my subscription because of your effort to make knowledge and research based videos unlike other CZcamsrs. Thank you for sharing this whom ever your name is. ❤
It's much less "you need your economy to transform into a service based economy" than "you need a free market to properly allocate resources to the things people need/want." Yes, local governments needed land prices to keep going up to continue to finance themselves, but the reason EVERYBODY poured their money into real-estate was because there was literally no other 'safe' way to store wealth.
@@jackjones4824 OK, but things like zoning is not the free market. Likewise a lot of the mortgage backed securities issue was started by government meddling.
When you're in the business of making money, doing things that will clearly lose out in the long term are against your interest. With that said, blatant fraud should be prosecuted as such.
I'd make the argument that regulations are just a way for large corpos to shield themselves from liability. "We followed the regulations, take up your issues with the government... Who we bought and paid to write the regulations like this..."
Top quality, as always!!
Excellent commentary 👌
I'd love to hear your thoughts on Taiwan's economic prospects given the geopolitical tensions with China, their looming population decline, the state of the micro-chip wars, and other relevant factors.
I believe China's plan is to cripple the Taiwanese economy by taking over the microchip industry completely and out pricing all competitors as they have done with everything else. This will more or less force/push Taiwan into China's open arms. I believe all the noise about invading Taiwan is mainly as a deterrent to prevent them and outside forces from moving Taiwan closer to independence, and also as a distraction - while everyone is focusing on Taiwan war they are focusing everything on building the microchip industry...CPC knows they cannot invade Taiwan, not only because war is too costly but just for the principle of it, they will forever be cemented as the bad guys and what kind of relationship do you even have with Taiwan, who you want to be your ally, after you force them to be your friend?
40% of Taiwan's exports go to China. Nothing to talk about really. The micro-chip thing is very small issue compare to, say, their agriculture and seafood industry which largely depending on China.
既然你是台湾人，你自己也知道，台湾毕竟相当于美国的殖民地。 目前来说，只能随着美国衰落。 没有办法。
即使中国崩溃，印度会取代中国，美国依然衰落。 台湾缺乏资源，石油，矿，肥沃的土地，什么都没有，台湾最美是人。
如果有清醒的台湾人意识到这个问题，能研发出高新技术，那台湾就有突飞的可能。
例如台湾有了光刻机，就可以摆脱美国控制。 亲中，亲美自己垄断芯片，成为世界霸主。
这个几率很小，凭那点人口，几乎是不可能的，台湾对教育的不重视，缺乏人才，人才流失也很严重。
要么吸引全球高智商人才，这需要一位优秀的领导人，各大学演讲，全世界交朋友，凭个人魅力，吸引人才。
即使有大量人才，高新技术需要大笔资金投入，高风险，通常都是失败。
台湾领导人亲美政策也有他们的道理，毕竟台积电在手，多了过几年好日子。
3纳米芯片搬迁到美国，台湾好日子结束，会更难过。
@@leezhieng 40% goes to China..... that is a problem. Dependancy.
@@dapan978Berkshire Hathaway, ASML, IBM, Micron, NVIDIA are all derisking from Taiwan and investing in Japanese semiconductors now. Rapidus will take all customers of TSMC in a few years.
Thanks Joeri for the analysis. As an overseas Chinese I honestly don’t care if China has the world’s biggest economy… However I do want China to have a healthier economy in the long run.
和美國等西方一樣嗎？
@@wutongtaiwa😂😂😂中国领导人和西方一样吗？习总说决不放弃制造业，同时发展高科技产业
Honestly I don't want them powerful at all. More money and power for the CCP, more problems for the entire world.
Great video, thanks 😊 👍
Excellent economic analysis.
Really good video. This type of expert yet understandable and entertaining analysis is what’s missing on CZcams
cultural marxism and its disastrous effects on any economy
As always Joeri and his team doesn't dissapoint.🎉
great video boss
Sounds a lot similar to what I feel was happening in Russian economy in late 2000s. The people in power didn't want to let anyone in and took away businesses from anyone successful. As a result, the economy couldn't develop properly, since all the perspective businesses were taken over by less competent oligarchs and bureaucrats.
Those oligarchs were always present.
It happens in the US as well. Lobbying exist.
Thats Why Love Your Videos Mate,You Are The Most Balanced Of All When Analysing China's Economy,Most Of Them Just Start Politics & Have Wishful Thinking Of Doom Of China.I Hope You Make More Videos Like this😊.
*❝Democracy is a rule of the **-people-** capitalists, for the **-people-** capitalists & by the **-people-** capitalists.❞*
@@MuhammadAbdullah-kx3kn Lots of poor people vote. Ergo, the "social democracies" of Europe. Even the United States has a rather larger welfare state than you might think, with hundreds of billions spent on Medicaid and Social Security.
Thank you for this video! It's really impressive! You really went the extra mile to find the truth and present a comprehensive picture of China's economy.
Incredible video!
China did already overcome the US in terms of manufacturing and the GDP PPP... And when it comes to services, it's important to remember that services in China are an order of magnitude cheaper than in the US, so the equal or even greater growth in the services in China when compared to the US, won't show as much on the graph, because the raw GDP is just calculated on the amount of dollars spent, not on the quantity/quality of goods and services. There are TONS of growth in the Chinese service industry, both in things like software and in things like the restaurants, food delivery, whatever... It's just not as visible on the graph.
I am not an expert in any way, but I don't think the Chinese policty makers really pursue as much growth in terms of raw GDP numbers anymore, because the GDP statistics of China's main competitor, the US, are very much inflated by finance speculations, so there's very little reason to compete in terms of who has more dollars with a country that can literally print as much of it as it wants.
And, while the US still dominates the world financially and militarily, it's already behind in terms of quantity (and sometimes even quality) of production of almost anything, from food and concrete to cars and electronics (except the smallest chips, but even here China has a chance to catch up), and in many areas the gap is probably going to grow even more (I mean, we've probably all seen many statistics videos where China's indicators like manufacturing just go through the roof). And the isolated examples like the abandoned cars you showed in the video are just anecdotal evidence. I mean, most Chinese DO buy WAAAY more than they ever did before, and get a way better price to quality ratio than in most places in the world.
By the way, while I do respect you, in most of your videos, your argument that "The Chinese citizens are just too poor to buy as much" is just plain wrong. For example, the "tons of cars" are standing without the owners in some field not because nobody could afford them (a lot of them cost less than 5000$ each, so most people in China indeed can afford those), but because they are of an older generation of EV vehicles that were owned by car sharing companies that went bankrupt, but didn't find buyers for their cars, because there are newer alternatives which are more reliable and easier to use.
Also, why is having 3 billion homes when you have just 1,4 billion people bad? You need to remember that China has a Communist ideology, so they expect that due to automation, people will be able to work less and have more leisure time, so they probably expect that people would want to travel more and be able to live in different places at different points of their lives. Even if they will not abandon the concept of money altogether by that point, the excessive housing would still beneficial because it will protect the housing market from the rent increases that plague US and Canada, for example.
Good analysis. At least Chinese do not need to pay high rent like UK or US.
Why the hell are you looking at GDP PPP?
You don’t know what you’re talking about.
That’s only measuring how cheap it is to live on a country
China is not consuming as much as they’re making and their exports are falling rapidly. Contend with that first before you go on long rants
china the world assembly, & how do we know those number arent proped up?
@@dordorfromhk-hj5vo Rent to income ratios in China are some of the highest in the world despite having all these vacant properties...
Meauring via PPP is very difficult as a meal at a restaurant in France, Italy or the UK will be of a much higher quality, subject to higher safety and cleanliness standards etc than another meal at a restaurant in Ethiopia. It is hard to normalise these things. On average electric cars made in China are not of the same quality as a Tesla. Baidou is not as good as ChatGPT4 etc. Prada or Gucci handbags are better than . The price of a basket of goods is very hard to normalise across countries.
So while everything in China is cheaper it is not often better. Not only that but while the country may overall be able to purchase all these things the money may not be spread out evenly or it may be spread over way more people. So if you look at China GDP PPP per capita (what is an average person's share of this GDP)... It is less than half of America or the UKs and if you look at how that money is shared it is even worse still.
Near the end when you talk about the future I was hoping that you touch briefly upon China's last 5 year plan that they released in 2021. In it, they have addressed it as their stated goals of fixing of many of the problem sectors that you touch upon in this video. For example, they mention lifting the restrictions of the hukou system in cities under 3 million people.
Yes, it is. Hukou system is becoming less and less important in the past 10 years. For Shenzhen, you are almost free to get the Hukou of Shenzhen.
That will help. But means more financial obligations for local governments.
Very nice recap and relating to models and influencers. Something omitted was the acquisition of American debt, of which China is the largest holder, and seems to be starting to unwind. How much and how fast? The braking effect on the US economy? Counter measures and their effects…😮
China is not the largest Holder of US debt they own less than 3% Japan owns more, but 80% of owned by the American people in various terms
come on tuta!! been using them for years and happy to see an EU company growing