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PaperclipPerfector  4d ago (text post)   14161 thread views

Culture War Roundup for the week of December 22, 2025

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And I know the obvious critique. If America can't compete in semi-conductors on a level playing field or any other industry then they should lose and China should make these things cheap as the pie growing move. But this isn't a level playing field. No one does more industrial policy than China. The CCP has an autarkic goal and pursues it at the cost of many things.

They systemically suppress domestic consumption through keeping deposit rates so that households earn below inflation returns so that those savings can be pumped into industrial buildout. The Hukou system creates workforces with limited rights in their migratory cities suppressing their wages to reduce labor costs. They spend very little on social safety nets. the end result being that Chinese household consumption is something like 40% of gdp vs 65% in the states.

You can say that's just them running their economy lean and that decadent westerners should lean down their consumption to compete, but if they did then you really would run into an environment where demand is too scarce. I know you've mocked that idea in the past but it really would be a problem for industrial buildout if no one was buying the stuff China or everyone else was producing.

They spend very little on social safety nets. the end result being that Chinese household consumption is something like 40% of gdp vs 65% in the states.

I simply don't think this is even true, it's more self-serving imperial propaganda to present failures as a moral choice. Most of your consumption value is rent-seeking like high rents. Chinese consumption is not that low, read this. Even Chinese safety net is not as low as is often said, it's on par with other middle-income nations.

You're not doing anyone a favor by being corrupt.

Chinese consumption is not that low, read this.

It's paywalled. What does PPP have to do with the fraction of Chinese household income that goes to consumption?

Because those are the same issue.

In the PPP-based approach adopted, China–U.S. aggregate price differences are computed using China’s category-level shares of household cash consumption expenditure as weights. Under this weighting scheme, China’s overall price level is estimated to be approximately 66 percent lower than that of the United States.

By contrast, when China’s category-level consumption is explicitly revalued under the U.S. price system and then aggregated—as shown in Table 7—China’s per capita consumption under U.S. prices reaches USD 24,507, which is close to the earlier conservative estimate of USD 26,857. This convergence reflects substantial reweighting across consumption categories once prices are converted to the U.S. price system. For example, health is extremely expensive in the United States, and China’s health prices are approximately 94.7 percent lower. As a result, after price adjustment, China’s per capita health expenditure increases sharply from USD 340 to USD 6,443, with its expenditure share rising from 7.2 percent to 26.3 percent. A similar pattern is observed in education. In contrast, categories such as transport, clothing and footwear, and food—where China–U.S. price gaps are smaller—experience declines in their relative weights in total consumption.

In effect, if Chinese services consumed by the people provide 5-20 times more value than PPP calculations suggest, this straightforwardly means that Chinese people's "consumption" share of GDP is higher, because the volume of economic activity included in these services is larger relative to exports and government spending than it appears. We can directly estimate the value of their exports. The efficiency of their services and internally consumed goods is more opaque, so it's easy to say “oh just 2000 RMB, that's $285, adjust for PPP… $428”. It actually matters if it's more like $3000.

This feels like a misdirection. The price level of China vs the US doesn't matter for the question of how much of Chinese GDP is household consumption. In each case the ratio can be calculated in local currency without any need for PPP adjustments.

The article you linked is (apparently, based on your excerpts) discussing correct PPP factors based on household expenditures, which is really not the same question at all.

Put another way, my argument is that household consumption as % of GDP is low because a great volume of capital has been invested in making life cheap, in particular rent, healthcare, connectivity and education, via infrastructure and assorted social transfers-in-mind. The fraction of GDP that is “government spending” or “employer spending” goes towards increasing purchasing power of the average (and below-average) Chinese. Consider:

Chinese households receive benefits such as subsidised education and healthcare provided by the state. Such social transfers in kind (STIK) were about 6.2 per cent of China’s GDP in 2019 and 6.4 per cent in 2021, up from 3 per cent two decades ago.

Even so, STIK only covers the transfers and consumption provided by governments and non-profit organisations. Chinese businesses are also more likely to provide employee welfare such as subsidised lunches and staff dormitories than their foreign counterparts. These, however, count towards Chinese business expenses rather than household consumption. Thus, adding all social transfers could lift China’s consumption rate by at least 6 percentage points.

etc.

This is a separate strategy from either low-intervention market economy or “welfare socialism” with explicit gibs that boost discretionary spending. It can be criticized but it's internally coherent and it's not just “make people poor to have cheap labor to flood global markets”.

Sure, let's throw that in to the consumption number.

That brings us to 46% for China and 65% for the US based on the numbers above, once we apply the increase from the text you quoted. Still, the gap is fairly significant.

Yes, there is a big gap. But why does the gap to the US matter at all? You both have abnormal societies.. China is an outlier in its GDP bracket, you are an outlier in yours. Chinese household consumption is similar to its East Asian neighbors. We can quibble about specific datasets, but South Korea is under 50% pretty much no matter how one looks at it. Why is Indian or American ratio inherently better than Chinese or Swiss ratio? This is all a pretty facile discussion, different nations have different systems, your main problem with their system is that it's too internationally competitive, not that Chinese people are poor (and they aren't even that poor).

I don't even have a "problem" with their system in the context of this conversation, and it seems a bit facile to resort to accusations like that when we're discussing a narrow empirical question about Chinese consumption as a fraction of GDP which you were the one to dispute.

@aquota said it's 40%, you said that's bullshit propaganda and provided a paywalled source to support that which, it turns out, suggests the true number is 46%.

Now you're saying that 40%-50% is perfectly normal, actually. Well, maybe, but then why call the original claim imperial propaganda when it's pretty close to correct?

self-serving imperial propaganda

You're not doing anyone a favor by being corrupt.

Is this how you do all your argumentation?

No, as you can see mainly I rely on other means. But this Baumol-diseased "consumption" that Americans pride themselves on is indeed largely propaganda.

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