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I don't really understand where you think America, or any other nation, is going to fit into the picture at all if your predictions of Chinese dominance come to pass. What is China going to buy from the US in 2038 in your view? They have a long track record of having an industry come into their sphere and then replicating as much as their can of it and then push out the competitor before exporting their version to any market that will take it. What are other trade partners supposed to do with a nation that's long term goal is to not buy anything from their partners? In the mean time I understand the economist position that says this is an obvious surplus, china sends us goods for pieces of paper, why look this gift horse in the mouth? But What happens when this happens to every industry?
I don't follow Noah too closely but in this piece recently I think he's spot on.
With the American hegemony other nations have options. Americans are happy to let other nations lead in some industries and rely on them long term. We're happy to buy Korean appliances, Japanese cars, European fine crafted goods and Columbian cocaine. If you want to build out a niche the American empire is happy to let you have it and integrate into the global family. This is not how China acts. China doesn't tolerate this kind of interdependence. I don't really see how you think allowing them to take up the dominant position in every industry is long term sustainable. Even in your post you talk about how China is already doing industrial policy to try to make sure that nvdia's position is obsoleted as soon as possible through energy subsidies.
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.
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.
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 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:
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).
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