There's an economist from Tsinghua University named Patrick Chovanec who used to do an amazing job of documenting China's explosive growth and the many ways in which it might have been artificially inflated (easy credit, shadow banking, fudged numbers, empty skyscrapers, etc.).
His blog is still up, but unfortunately he switched from blogging to Tweeting in 2013 and it's been impossible to follow his train of thought since then. It's a pretty fascinating read (assuming you find dry economic posts fascinating) if you start sometime around the 2009 entries and go from there: https://chovanec.wordpress.com/
My guess is that China is inflating its numbers, but even so, the growth they've had is impressive and a lot of it is real. And even with further inflation of their numbers, I don't think they will be a paper tiger with nukes, like the USSR was.
I can't help wonder if China is what the USSR could have been had not the hardliners come after Gorbachev, leading to turmoil and dissolution of the union.
They can only systematically inflate a little bit. By the exponential nature of economic growth, if you overestimate the annual 8% by, say, 2% for a decade, by the end that results in a huge absolute gap between the nominal and real GDP. But the estimates from other methods or just going to China show that the official estimate is fairly reasonable, certainly not off by 10x or anything. Which supports the smoothing interpretation: they do fiddle the numbers a lot each year but in different directions and so the net is minimal.
Much of it is real, China's growth has been outstanding! Then you encounter the occasional ghost mall or notice that many of the apartments in your complex are empty and wonder a bit about how much of it is real (probably a lot) and how much of it is just a bubble (probably a significant portion also).
A lot of China's GDP growth is tied up in asset growth (e.g. appreciated real estate). So if/when that bubble pops, they will take a hit. Accordingly, in the Chinese news, they talk about supporting and nurturing what they call the "real economy" as a counter to that danger.
I'm not sure if the ghost stuff is really indicative of a failing economy. I mean, China is about 20% of the world population, you're bound to find emptiness. We're talking about city planning on a massive scale. 220 cities of >1m people are expected by 2025. (SF at 0.8m by comparison). China has multiple cities bigger than countries like the Netherlands, multiple cities 4x bigger than Norway that was recently in the news. It has 280m (rural) internal migrants. Compare it to the US working age population of is just 200m.
The numbers are insane. In the US, we move 11x in our lifetimes of ~80y aka 13% of our population moves each year. Apply that average to China and you're looking at 170m migrants annually. And unlike US (a lot of urban to urban), in China there's a gigantic one-way rural->urban traffic, i.e., two people aren't switching urban houses and calling it 'moving', two people are leaving behind a rural home and needing an entirely newly built urban home.
How do you accommodate that many people in new homes. Do you start building homes only after they're needed? Or do you build some capacity at a surplus, to cover expected growth?
Probably the latter. It isn't much different from any company stocking surplus inventory. That's not an immediate indication of a failure of economics and a bubble.
And do you only build in existing popular cities and just try to add to the periphery, or do you build-up new cities? Probably the latter, too.
Plenty of other countries do it as well. Incheon developed very much due to overdevelopment in Seoul. Or here in the Netherlands, we now have close 0.8m people living in so called Vinexwijken. They're a development centered on a new ordinance concerning housing development between 1995 and 2005. Since 1995 our population grew by 1.6m or so, apparently half our growth went to these new locations created out of nothing. And we always have discussions about structural emptiness, big malls being built and remaining 75% empty for years. But the scale is smaller, the country is 75x smaller than China. We had issues with structural vacancy rates at a new 100k 'village', scale that up to 75x and you have a similar story. Yet the biggest ghosttown in China ia Ordos, planned for 1 million people, scaled back and built for 'only' 300k, and currently houses more than 100k and climbing. That's what is consistently called the biggest ghost town in China. For Chinese, both the size of the project as well as the timeframe (10 years of vacancy) is a rounding error.
Don't get me wrong, there's definitely an asset bubble. But we've also been saying that for who knows how many years and I feel we tend to focus too much on symbolism of the ghost town narrative.
The fact that there were shortage of basic necessities in its last years of its existence. The fact that the majority of its exports were oil and gas based, like those of a petro state.
No toilet paper anywhere. Imagine that. Eleven time zones of no toilet paper. International Hotels in the center of Moscow had little stacks of 2 inch square wax paper if you were lucky. This was a completely dysfunctional and failed state.
About those empty skyscrapers i think in part they are a gamble on workers migrating from the interior to the coast.
But in recent years their government has started a program aimed at transferring some of the coastal activity inland.
How effective that will be is hard to tell, but there are already interesting stories of hotels that have entrances on multiple floors because the city was funded in a valley between multiple hills. End result is that new roads go between the hills on bridges, passing right by the hotel. Sounds like one crazy place to live.
Another somewhat popular or not so popular opinion is that China reports gdp numbers lower than what they actually have. I don't know what to believe but putting it out there for discussion.
I think the OP might have been misunderstanding a thing that actually happens. Because officials are graded on whether they hit targets or not but they don't get extra points for exceeding them they have an incentive to under-report growth in good years so that a return to accurate reporting in bad years lets them still report growth. So there will be a combination of over and under-reporting of growth at different times, as was show in the graphs in the article. How China Escaped the Poverty Trap goes into more detail for those interested.
... except top-level officials are constantly shuffled between posts in different cities/provinces they have no family ties to specifically to prevent such corruption.
(1) rotations are most often exactly one of the periods on which goals and evaluations occur (that is, understating growth that at least meets the goal never is expected to help you by making it more likely you can plausibly claim to meet a growth goal the next period), and
(2) the rotating top-level officials have some other structursl disincentive to form a class identity and class norms (stack ranking where the top slice promotes into a national administration group and the bottom slice is demoted out of regional leadership, while the middle group remains, for instance, would do this, since everyone would have a strong incentive to make everyone else's results relatively worse; OTOH, this incentivizes an opposite kind of misreporting, so it's not really a solution.)
Oh you mean like "play by the rules, have a nice life for you and your family" versus "capital punishment for you, and movement restriction and asset seizure for your family"?
Sure, if the punishment is perceived to be applied reliably and accurately.
If it's perceived to be applied in a spotty manner, according to shifting whims of the leadership as to issues of concern, and with favoritism that can see the guilty free and the innocent punished, then, no, that just incentivizes currying favor and trying to influence the leadership perception that drive where enforcement is and isn't focussed.
I have heard a theory that goes something like this: China spends massive amounts on propaganda yet everyone believes that China's economy is about to crash and the society is about to fall apart. Are they grossly incompetent? No. China wants the declining western powers to underestimate its rise and strength as cunning way of avoiding conflict until its outcome is certain. Make of it what you will.
Having travelled to China a few times over the past two decades, I have witnessed the economic growth with my own eyes and it is quite real. That of course does not mean that any number coming out of China is real and that there are not big inbalances whoes correction is overdue.
Only in PPP, which doesn't mean much because many things are more expensive in China than the USA (housing, cars, high-end goods, schooling, ...). For an equivalent lifestyle, you often need to earn more in China than the USA, so PPP seems to be a weird metric.
- Solar is suspected to be heavily subsidized by the government. That isn't so bad for us as long as we don't produce panels, it has led to a solar revolution in the USA as well.
- China still hasn't done its own production nuclear plant yet. Citizens are extremely wary of the government to do it right.
- The point here is "will" rather than "does". China keeps touting how they will beat the USA in AI by 2020 or 2030 or whatever, but it is still all aspirational. China has a lot of talent and a lot of data work with (privacy isn't much of a concern), but claiming you are going to win a race is much different from winning it.
"Citizens are extremely wary of the government to do it right." - I don't think citizens have much say in the matter...
- it's worth noting that along with data and talent, there is money - China's dedicated 150 billion USD to AI as part of it's 5 year plan. Meanwhile the US is considering cutting scientific research funding by as much as 15% as part of 2018 budget
> "Citizens are extremely wary of the government to do it right." - I don't think citizens have much say in the matter...
They actually have more say than you think. And also, the government also has a lot of its own introspection about nuclear, especially after Fukushima. Couple with the huge capital costs, and it isn't a sure thing for China.
> it's worth noting that along with data and talent, there is money - China's dedicated 150 billion USD to AI as part of it's 5 year plan.
Much of the current advances in AI are not coming from federal funding (rather, private companies who are using it). Nor can you expect Chinese academia to soak up that much money and use it efficiently. Again, China has a chance at it, but it is far from inevitable. It is annoying to me when they talk about how their success is a sure thing, the Chinese government used to talk about how they would clean up their pollution problem by 2015 in 2010 because they were going to spend a lot of money on it....
"They actually have more say than you think" - I disagree. China forcibly relocated over 1 million to complete the 3 gorges project. It doesn't have the best track record of reacting to citizen concerns. I think the other points you mention are more material in it's nuclear considerations.
Fair about the money and pollution. I would assume those commercial advances you mention however are mostly non-military, nor will players like Google or Apple likely soon contribute to US government/military AI research initiatives. I guess in the end the "AI race" is more like "AI olympics" in that no country will win all the events
The trailer sounds like typical documentary crap. I'll reserve my opinion for now.
PS: This seems to be implying that the Chinese economy is all hot air, but none of the characters in the trailer looked like Chinese. If the banks sold a nonsense China story to "mom" and "pop" investors who know nothing about China, then what makes these guys so much more knowledgeable? Also, one shit company exposes the entire Chinese economy now? Aren't there any mediocre companies in the US? This extrapolation needs a lot more explanation.
As someone who know nothing about this, whats likely is that some people in the US have way too much money in their hands and seemingly nowhere to put that. So they looked at China and pumped too much money there following a herd. To call that a conspiracy and a financial crime seems like a huge leap.
I mean the same is happening in Indian stocks which are at a stupidly high level. It's more investor stupidity than some grand conspiracy.
I read a while back that local governments would significantly artificially inflate their manufacturing, construction, spending, and raw materials numbers. There were dozens that seemed so far fetched they were easily spotted as fake by a professor that did little research.
When you have govt officials who are forced to increase growth and you'll look bad/fired if you don't and no authority is safeguarding this, then these actions seem fairly logical.
Interesting to see how perception is sometimes as good as reality.
However, at the end of the day large corporations need to keep shareholders pleased to survive. They could lie all they want to themselves, but the shareholders would see through that and remove the bad administrators.
China has no such mechanism to ensure accountability.
I'd argue there have been plenty of examples of large corporations delivering rosy figures, until they could no longer sustain the lie.
Some years ago, I got an investment club to put some of our money in Harley-Davidson, based on numbers that hit our criteria perfectly. Too perfectly. A few months later, the CEO resigned, revised numbers came out, it became clear they'd been more or less cooking the books, and the stock tanked. This happens a lot. Worse, it happens with stock market darlings. Remember Enron?
Having lived, worked and now running a B2B SaaS company there, the growth is real. Are the numbers exactly right, of course not. China is a massive, complex and not entirely transparent mesh of interests. Long story short though, there is a real middle class in China that is driving real consumer demand. This is starkly different to India, South Africa or Brazil where no real middle class exists.
China (practically synonymous with Han ethnicity) has been shockingly racist by modern western standards for thousands of years.
And that largely stems from the fact that Han culture has been mostly stable and very successful for most of those thousands of years. They only got a blip of doubt in their total confidence of racial superiority when American-European culture suddenly lurched ahead economically within the last 200 years. White people earned temporary, grudging status as near-equals by making a colossal pile of money while building massive new empires around the world, while China was busy still being the best China that ever China'd.
The thought in the back of the Han-Chinese mind is that the success of the West is but a temporary condition, and that once the technological gap closes, China will once again be the undisputed center of the world, populated by the best, smartest, and most sophisticated people. There is almost zero self-awareness of their own racism, and barely an inkling of consideration that racism might even be bad.
China is 92% Han. The remaining 8% are largely sequestered in poor regions of the interior, like the Indian reservations in the US, so any city you are likely to visit for business or tourism will be 99.9% Han. And if you are not already Chinese, it is nigh-impossible to gain citizenship without being a full-blooded Han (tragically born into the wrong country) or by marrying a native.
So don't pin your hopes on being able to follow the money if China becomes the dominant global economy.
> undisputed center of the world, populated by the best, smartest, and most sophisticated people.
Funny thats pretty much what the average Joe thinks about the US.
I don't know how you ended up with that twisted opinion, but after working in software development in Beijing for almost two years I can't share these views at all. I perceived my colleagues as pragmatic, forward-looking, interested in politics regarding China and the world, with critical opinions on each of them. I rarely had so many insightful discussions about various political and social aspects as when I stayed there.
All of this can be true at once—I have relatives who hold all of these positions. Like the US, China is a big country, with folks on all sides of the political spectrum.
(the following is based on personal experience so YMMV) If anything, they have a longer term perspective on history. It's an ancient civilization and they have seen it all. There are those who think it's inevitable that China will eventually be on top once again, but generally, even they are pretty humble going about it and eager to learn from Westerners and imitate what works (sometimes resulting in IP violations or cargo culting).
Citizens of the empire at or near the peak of its influence always think that. And if your culture has been rolling along for 2000 years almost without interruption, you might even be right.
It's just patriotism. I expect Chinese people to be as proud of China as Americans are of America. Some will be more die-hard than others, and some will be more humble about it.
All of my co-workers working in software are a lot more critical of our government and national politics than--to name near-antipodal opposites--some of my Trump-electing MAGA in-laws, for whom America is the paragon of nations that can do no wrong. Maybe you didn't talk to a representative sample?
The actual best, smartest, and most sophisticated people tend to be much more cosmopolitan in their world view (and in their distribution). But they aren't always the ones driving the politics, or the ones exporting the cultural stereotype.
Joe in the US idolizes the US, and Wei in China idolizes China. And to be fair, it is the most populous nation, with a rapidly growing middle class and developing high-tech manufacturing sector. While China hasn't ever been the center of the world, it has always been the center of east Asia.
> Maybe you didn't talk to a representative sample?
I did to some extend. Your initial post sounded quite stereotypical, like the typical communist gulag FUD you get from fox news etc., so I tried to give a counter example. Your follow-up however read much more insightful and I can pretty much agree.
My impression was that it was mostly older people who believed in China being the undisputed number one for all time (after a quick recovery from the western take over), which I like to account to Mao's influence on their views and values. Younger people had much more realistic views, while I have to admit that it was mostly college students I talked to due to my lack of Chinese skills. But even if the less well-educated youth from some remote village is the prime example of a patriot not questioning anything the government does, is that really that different from here? In general I'm very curious what the next generation of Chinese will be like. There is such a huge clash in the current gen that's about to have kids, because many of the habits and ideas of the past generation just don't work anymore in the current Chinese society. This is just one of the aspects that make me wonder where the country as a whole is headed. It's moving so fast and unexpectedly that I don't really dare to take an opinion on whether China will "take over the world" or not and what this would actually be like for the rest of us. I see great potential for this to happen, but also lots of inner-political and social tensions that could have devastating impact on the country and throw it back again quite a bit.
Just want to point out that basing perceptions of social attitudes on fellow software engineers isn't exactly a great metric.
You specifically mention what the average Joe in the US thinks, which sharply contrasts with the global, left-leaning attitudes that are prevalent with US software developers.
Did you ever venture to the countryside in China? Or speak with people outside of software?
China has a long history of not only racism, but a potent classism where urban families are considered far superior to rural families. They even regulate which rural people can move to cities. The fact that you don't appear to be aware of this is odd.
> Did you ever venture to the countryside in China? Or speak with people outside of software?
see my reply further down this thread...
> They even regulate which rural people can move to cities.
Do you have the slightest clue what would happen if they didn't do that? Apparently not. It's not a great system, but it's necessary.
> The fact that you don't appear to be aware of this is odd.
I don't see the relevance to racism. I could bring to the table that there's a country that was able to go to the moon but didn't allow black people to vote at the same time which is just mind boggling, but doesn't really help the discussion either.
Great perspective. And I would add everyone I know; arms length relationships and not involved with their businesses at all, make strong efforts to get as much money out as possible. The saying essentially goes, "every few decades, something cataclysmic happens. Better to protect one's family." Not saying anything is going to happen, but the intelligent have not lost their history lessons and the self-inflicted wounds are never forgotten.
I'd say you're probably right. But I think China isn't the exception. The West, especially America, is the exception. Most of the world is covered in super racist ethnostates. America is the first experiment in all races living together that worked. And it worked really well. It's not that the Chinese are super racist. They're just average racist, and Americans are super unracist.
This might seem surprising in a country with racial tensions running high, but I think that we're talking so much about racial inequality and tensions is the reason why America is one of the least racist places. It's an ongoing struggle to deal with it. And in most places, people don't deal with it.
Only because the government keeps redefining what is Han.
I lived in Hong Kong, Shenzhen and Ghongzhou for over ten years. There were Hakka, Canton and Chui Chow people but few ethnic Han. That has since changed as factories are filled from all over China.
The government desperately wants everyone to think that China is for all intents and purposes one people, but it's a patch-work quilt of different ethnic groups, cultures and languages who are often at odds with each other.
Han is a cultural concept, as is American. The government is not desperate, because Han culture is real: speaking Chinese, reading Chinese characters, looking like Chinese, then you would be accept as Chinese. Appearance is a issue for Westerners, but not a issue for all other indigenous ethical groups.
Remember, being Han is not something people are ashamed of, in ancient East Asia, it is an honor, the hallmark of civilization, as was Rome, as is being American. Realistically, earn an ticket to the enormous economic opportunities China is offering is not a bad deal either, if you already look like one.
For example, we pay out team in Shanghai between 3000 USD and 1000 USD per month. They represent the middle class. Yes, it is less than many in the US, but it is still high enough to enjoy consumer products, travel, and invest in their future and their children's. Plus salaries are increasing 2-3% a year. Government spending on infrastructure is a huge part of GDP, but if you take the high speed trains in China you will see that every seat is sold out and they are not that cheap and if you go to a Chinese tourist location, it is packed, and tickets to enter can easily be 30-40$. This is anecdotal evidence of course, but I would recommend a trip to China - both coastal and interior - if you are so skeptical. Flights are cheap!
Oh I lived in Pudong for a while ;). I will have to disagree with you. It was also very busy for US in 2007, during the housing bubble. And it was busy for Japan in 1989, during the asset bubble. There is little reason for China to be able to escape its massive bubble right now.
China is literally following step by step where Japan was, fighting debt with more debt, until they could no longer defend it.
It's also interesting that prior to 1989, there was real fear of Japan overtaking US and it was reflected by the media and films.
If you studied Economics in university, you will realize US hegemony is far more penetrating and hard to replicate due to network effect...its self evident when the Chinese political elite send their kids away from China, along with wealth...
In my humble opinion, the American empire is probably the most efficient and anti-fragile system set in human history because it feeds off on our weakness for rare material goods. I will have to agree with Warren Buffett that the next 100+ years for America will be very good indeed for business. Majority of the network is on an English speaking framework, it's unlikely to switch to hieroglyphics and archaic Confucian values that oppressed individual freedom.
tl;dr: China won't usurp the US hegemony without surpassing its military and its transnational and intranational reach through corporatism. Soft power plays a huge role and its not something communist architectures are known for. Otherwise, American elites would be fighting to send their kids to the dreamy foggy lands of Beijing University. The US model is to provide a platform where American corporations can thrive, with money or bullets. It's a system where the value of every nation's money is backed by it's own fiat currency, guaranteeing the #1 position as long as there isn't a civil war or something like that divides the country.
The only people that believe PRC will overtake the US are Chinese folks and through Chinese diaspora that bought the line.
Japan is a pretty good place to be born. Better than many places. Talking about debt without talking about assets and ownership structure of debt is incomplete.
The difference with China is as a Communist state, they can make the debt disappear into some bad bank in an instant. One year debt becomes thirty year debt to be worked out long after the officials are gone. There is no downside to them and who in the global investment community will hold them accountable? No one.
the future Chinese generation will pay the burden. Debt simply doesn't go away on it's own, it can only be kicked further down the road until you can't.
it's foolish to believe that China is somehow immune from economic downturns because it's a communist state. USSR would like a word with you....
The same opinion repeated by lots of western economists every year, so you are not the first one. China's economy and culture is different, which lots of western couldn't understand, but still try to use western prospect to interpret it. Like asset bubble, the western don't know the mortgage in China is at least 20% for first property, and the second one would be 50% or even higher. And also in Chinese culture, most people would not get finance for the vehicle, and the saving rate is significant higher than US.
Well, 1-2% gdp growth is not real if you are a Chinese and see through your own eyes. Every year I feel people around me spend way more and buy way more than last year, even in small cities. China is a bit weird that I have to say there are many aspects that you cannot understand from books or "experts".
Actually we also don't really care the faked data. If you can feel the growth, it should be fine. US's economy growth rate is 2~3% and I can barely feel it, it's nowhere close to the rapid growth I felt in China.
hmm, for middle class numbers and ability to spend, check iphone/galaxy S sale numbers.
Edit: I would really recommend you visiting China and I can guarantee you can see something interesting there.
Running a relatively new global professional services company in Shanghai for 2 years, I really appreciate the perspective. Growth "feels" weak but not too and slightly stronger than 6 months ago. I can only speak to things I hear from other expats and my focused areas of English resume writing, Linkedin Profile editing, interview coaching, salary negotiations and assisting academics to get into foreign undergrad/grad/PhD programs.
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[ 2.8 ms ] story [ 120 ms ] threadHis blog is still up, but unfortunately he switched from blogging to Tweeting in 2013 and it's been impossible to follow his train of thought since then. It's a pretty fascinating read (assuming you find dry economic posts fascinating) if you start sometime around the 2009 entries and go from there: https://chovanec.wordpress.com/
Some of the ones I found most interesting:
Beijing’s Bad Debt Bailout: Problem Solved? https://chovanec.wordpress.com/2011/06/02/beijings-bad-debt-...
Big Losses Hidden on China’s Bank Balance Sheets: https://chovanec.wordpress.com/2009/09/23/big-losses-hidden-...
Even though they're almost a decade old they still give you an interesting look into how things work in China.
A lot of China's GDP growth is tied up in asset growth (e.g. appreciated real estate). So if/when that bubble pops, they will take a hit. Accordingly, in the Chinese news, they talk about supporting and nurturing what they call the "real economy" as a counter to that danger.
The numbers are insane. In the US, we move 11x in our lifetimes of ~80y aka 13% of our population moves each year. Apply that average to China and you're looking at 170m migrants annually. And unlike US (a lot of urban to urban), in China there's a gigantic one-way rural->urban traffic, i.e., two people aren't switching urban houses and calling it 'moving', two people are leaving behind a rural home and needing an entirely newly built urban home.
How do you accommodate that many people in new homes. Do you start building homes only after they're needed? Or do you build some capacity at a surplus, to cover expected growth?
Probably the latter. It isn't much different from any company stocking surplus inventory. That's not an immediate indication of a failure of economics and a bubble.
And do you only build in existing popular cities and just try to add to the periphery, or do you build-up new cities? Probably the latter, too.
Plenty of other countries do it as well. Incheon developed very much due to overdevelopment in Seoul. Or here in the Netherlands, we now have close 0.8m people living in so called Vinexwijken. They're a development centered on a new ordinance concerning housing development between 1995 and 2005. Since 1995 our population grew by 1.6m or so, apparently half our growth went to these new locations created out of nothing. And we always have discussions about structural emptiness, big malls being built and remaining 75% empty for years. But the scale is smaller, the country is 75x smaller than China. We had issues with structural vacancy rates at a new 100k 'village', scale that up to 75x and you have a similar story. Yet the biggest ghosttown in China ia Ordos, planned for 1 million people, scaled back and built for 'only' 300k, and currently houses more than 100k and climbing. That's what is consistently called the biggest ghost town in China. For Chinese, both the size of the project as well as the timeframe (10 years of vacancy) is a rounding error.
Don't get me wrong, there's definitely an asset bubble. But we've also been saying that for who knows how many years and I feel we tend to focus too much on symbolism of the ghost town narrative.
This comic describes it very well: https://goo.gl/GAn5fi
What has changed?[1] I would argue that this neither confirms nor refutes your defense of the "paper tiger" assertion.
[1] https://en.wikipedia.org/wiki/Economy_of_Russia#/media/File:...
- that huge stack of nukes
- the ruthlessness of its mostly autocratic leader(s)
Neither of those bode well for their future... ("it's the economy, stupid", and all that).
https://www.mhprofessional.com/9781259644580-usa-chinas-guar...
But in recent years their government has started a program aimed at transferring some of the coastal activity inland.
How effective that will be is hard to tell, but there are already interesting stories of hotels that have entrances on multiple floors because the city was funded in a valley between multiple hills. End result is that new roads go between the hills on bridges, passing right by the hotel. Sounds like one crazy place to live.
BTW, i believe the city in question is Chongqing. But sadly i didn't keep a bookmark of the story itself.
https://en.wikipedia.org/wiki/Chongqing
(1) rotations are most often exactly one of the periods on which goals and evaluations occur (that is, understating growth that at least meets the goal never is expected to help you by making it more likely you can plausibly claim to meet a growth goal the next period), and
(2) the rotating top-level officials have some other structursl disincentive to form a class identity and class norms (stack ranking where the top slice promotes into a national administration group and the bottom slice is demoted out of regional leadership, while the middle group remains, for instance, would do this, since everyone would have a strong incentive to make everyone else's results relatively worse; OTOH, this incentivizes an opposite kind of misreporting, so it's not really a solution.)
Oh you mean like "play by the rules, have a nice life for you and your family" versus "capital punishment for you, and movement restriction and asset seizure for your family"?
If it's perceived to be applied in a spotty manner, according to shifting whims of the leadership as to issues of concern, and with favoritism that can see the guilty free and the innocent punished, then, no, that just incentivizes currying favor and trying to influence the leadership perception that drive where enforcement is and isn't focussed.
Having travelled to China a few times over the past two decades, I have witnessed the economic growth with my own eyes and it is quite real. That of course does not mean that any number coming out of China is real and that there are not big inbalances whoes correction is overdue.
https://www.bloomberg.com/view/articles/2017-10-18/who-has-t...
China, and eventually India, matching the United States will hopefully help increase R&D.
For example:
- Solar energy prices have dropped significantly because of China's investment.
- Nuclear energy is dead in the US but lives in China.
- AI - China will match the US, accelerating development
- Mass Transportation - High-speed rail, maglevs
- Electric vehicles - China has large EV quotas and they're the largest car market.
- Solar is suspected to be heavily subsidized by the government. That isn't so bad for us as long as we don't produce panels, it has led to a solar revolution in the USA as well.
- China still hasn't done its own production nuclear plant yet. Citizens are extremely wary of the government to do it right.
- The point here is "will" rather than "does". China keeps touting how they will beat the USA in AI by 2020 or 2030 or whatever, but it is still all aspirational. China has a lot of talent and a lot of data work with (privacy isn't much of a concern), but claiming you are going to win a race is much different from winning it.
- it's worth noting that along with data and talent, there is money - China's dedicated 150 billion USD to AI as part of it's 5 year plan. Meanwhile the US is considering cutting scientific research funding by as much as 15% as part of 2018 budget
They actually have more say than you think. And also, the government also has a lot of its own introspection about nuclear, especially after Fukushima. Couple with the huge capital costs, and it isn't a sure thing for China.
> it's worth noting that along with data and talent, there is money - China's dedicated 150 billion USD to AI as part of it's 5 year plan.
Much of the current advances in AI are not coming from federal funding (rather, private companies who are using it). Nor can you expect Chinese academia to soak up that much money and use it efficiently. Again, China has a chance at it, but it is far from inevitable. It is annoying to me when they talk about how their success is a sure thing, the Chinese government used to talk about how they would clean up their pollution problem by 2015 in 2010 because they were going to spend a lot of money on it....
Fair about the money and pollution. I would assume those commercial advances you mention however are mostly non-military, nor will players like Google or Apple likely soon contribute to US government/military AI research initiatives. I guess in the end the "AI race" is more like "AI olympics" in that no country will win all the events
https://www.youtube.com/watch?v=55892jT06aI
PS: This seems to be implying that the Chinese economy is all hot air, but none of the characters in the trailer looked like Chinese. If the banks sold a nonsense China story to "mom" and "pop" investors who know nothing about China, then what makes these guys so much more knowledgeable? Also, one shit company exposes the entire Chinese economy now? Aren't there any mediocre companies in the US? This extrapolation needs a lot more explanation.
As someone who know nothing about this, whats likely is that some people in the US have way too much money in their hands and seemingly nowhere to put that. So they looked at China and pumped too much money there following a herd. To call that a conspiracy and a financial crime seems like a huge leap.
I mean the same is happening in Indian stocks which are at a stupidly high level. It's more investor stupidity than some grand conspiracy.
When you have govt officials who are forced to increase growth and you'll look bad/fired if you don't and no authority is safeguarding this, then these actions seem fairly logical.
Interesting to see how perception is sometimes as good as reality.
However, at the end of the day large corporations need to keep shareholders pleased to survive. They could lie all they want to themselves, but the shareholders would see through that and remove the bad administrators.
China has no such mechanism to ensure accountability.
Some years ago, I got an investment club to put some of our money in Harley-Davidson, based on numbers that hit our criteria perfectly. Too perfectly. A few months later, the CEO resigned, revised numbers came out, it became clear they'd been more or less cooking the books, and the stock tanked. This happens a lot. Worse, it happens with stock market darlings. Remember Enron?
Cooking the books is maladaptive in the long run, and needs to be discouraged at every level.
https://news.ycombinator.com/newsguidelines.html
Much longer thoughts on America vs. China http://www.jonathanbrun.com/who-will-lead-the-world/
And that largely stems from the fact that Han culture has been mostly stable and very successful for most of those thousands of years. They only got a blip of doubt in their total confidence of racial superiority when American-European culture suddenly lurched ahead economically within the last 200 years. White people earned temporary, grudging status as near-equals by making a colossal pile of money while building massive new empires around the world, while China was busy still being the best China that ever China'd.
The thought in the back of the Han-Chinese mind is that the success of the West is but a temporary condition, and that once the technological gap closes, China will once again be the undisputed center of the world, populated by the best, smartest, and most sophisticated people. There is almost zero self-awareness of their own racism, and barely an inkling of consideration that racism might even be bad.
China is 92% Han. The remaining 8% are largely sequestered in poor regions of the interior, like the Indian reservations in the US, so any city you are likely to visit for business or tourism will be 99.9% Han. And if you are not already Chinese, it is nigh-impossible to gain citizenship without being a full-blooded Han (tragically born into the wrong country) or by marrying a native.
So don't pin your hopes on being able to follow the money if China becomes the dominant global economy.
Funny thats pretty much what the average Joe thinks about the US.
I don't know how you ended up with that twisted opinion, but after working in software development in Beijing for almost two years I can't share these views at all. I perceived my colleagues as pragmatic, forward-looking, interested in politics regarding China and the world, with critical opinions on each of them. I rarely had so many insightful discussions about various political and social aspects as when I stayed there.
(the following is based on personal experience so YMMV) If anything, they have a longer term perspective on history. It's an ancient civilization and they have seen it all. There are those who think it's inevitable that China will eventually be on top once again, but generally, even they are pretty humble going about it and eager to learn from Westerners and imitate what works (sometimes resulting in IP violations or cargo culting).
It's just patriotism. I expect Chinese people to be as proud of China as Americans are of America. Some will be more die-hard than others, and some will be more humble about it.
All of my co-workers working in software are a lot more critical of our government and national politics than--to name near-antipodal opposites--some of my Trump-electing MAGA in-laws, for whom America is the paragon of nations that can do no wrong. Maybe you didn't talk to a representative sample?
The actual best, smartest, and most sophisticated people tend to be much more cosmopolitan in their world view (and in their distribution). But they aren't always the ones driving the politics, or the ones exporting the cultural stereotype.
Joe in the US idolizes the US, and Wei in China idolizes China. And to be fair, it is the most populous nation, with a rapidly growing middle class and developing high-tech manufacturing sector. While China hasn't ever been the center of the world, it has always been the center of east Asia.
I did to some extend. Your initial post sounded quite stereotypical, like the typical communist gulag FUD you get from fox news etc., so I tried to give a counter example. Your follow-up however read much more insightful and I can pretty much agree.
My impression was that it was mostly older people who believed in China being the undisputed number one for all time (after a quick recovery from the western take over), which I like to account to Mao's influence on their views and values. Younger people had much more realistic views, while I have to admit that it was mostly college students I talked to due to my lack of Chinese skills. But even if the less well-educated youth from some remote village is the prime example of a patriot not questioning anything the government does, is that really that different from here? In general I'm very curious what the next generation of Chinese will be like. There is such a huge clash in the current gen that's about to have kids, because many of the habits and ideas of the past generation just don't work anymore in the current Chinese society. This is just one of the aspects that make me wonder where the country as a whole is headed. It's moving so fast and unexpectedly that I don't really dare to take an opinion on whether China will "take over the world" or not and what this would actually be like for the rest of us. I see great potential for this to happen, but also lots of inner-political and social tensions that could have devastating impact on the country and throw it back again quite a bit.
You specifically mention what the average Joe in the US thinks, which sharply contrasts with the global, left-leaning attitudes that are prevalent with US software developers.
Did you ever venture to the countryside in China? Or speak with people outside of software?
China has a long history of not only racism, but a potent classism where urban families are considered far superior to rural families. They even regulate which rural people can move to cities. The fact that you don't appear to be aware of this is odd.
see my reply further down this thread...
> They even regulate which rural people can move to cities.
Do you have the slightest clue what would happen if they didn't do that? Apparently not. It's not a great system, but it's necessary.
> The fact that you don't appear to be aware of this is odd.
I don't see the relevance to racism. I could bring to the table that there's a country that was able to go to the moon but didn't allow black people to vote at the same time which is just mind boggling, but doesn't really help the discussion either.
This might seem surprising in a country with racial tensions running high, but I think that we're talking so much about racial inequality and tensions is the reason why America is one of the least racist places. It's an ongoing struggle to deal with it. And in most places, people don't deal with it.
Only because the government keeps redefining what is Han.
I lived in Hong Kong, Shenzhen and Ghongzhou for over ten years. There were Hakka, Canton and Chui Chow people but few ethnic Han. That has since changed as factories are filled from all over China.
The government desperately wants everyone to think that China is for all intents and purposes one people, but it's a patch-work quilt of different ethnic groups, cultures and languages who are often at odds with each other.
Remember, being Han is not something people are ashamed of, in ancient East Asia, it is an honor, the hallmark of civilization, as was Rome, as is being American. Realistically, earn an ticket to the enormous economic opportunities China is offering is not a bad deal either, if you already look like one.
Also, lots of Chinese local governments have confessed to faking data.
https://www.google.com/amp/mobile.reuters.com/article/amp/id...
http://money.cnn.com/2017/01/18/news/economy/china-province-...
In addition, if you check out Anne Stevenson yang, a China expert living in China, she said the real gdp growth is only 1-2%
It's also interesting that prior to 1989, there was real fear of Japan overtaking US and it was reflected by the media and films.
If you studied Economics in university, you will realize US hegemony is far more penetrating and hard to replicate due to network effect...its self evident when the Chinese political elite send their kids away from China, along with wealth...
In my humble opinion, the American empire is probably the most efficient and anti-fragile system set in human history because it feeds off on our weakness for rare material goods. I will have to agree with Warren Buffett that the next 100+ years for America will be very good indeed for business. Majority of the network is on an English speaking framework, it's unlikely to switch to hieroglyphics and archaic Confucian values that oppressed individual freedom.
tl;dr: China won't usurp the US hegemony without surpassing its military and its transnational and intranational reach through corporatism. Soft power plays a huge role and its not something communist architectures are known for. Otherwise, American elites would be fighting to send their kids to the dreamy foggy lands of Beijing University. The US model is to provide a platform where American corporations can thrive, with money or bullets. It's a system where the value of every nation's money is backed by it's own fiat currency, guaranteeing the #1 position as long as there isn't a civil war or something like that divides the country.
The only people that believe PRC will overtake the US are Chinese folks and through Chinese diaspora that bought the line.
Sorry should've been more specific with my terms, debt levels that exceed assets has proven to be toxic in Japan, Korea, Ireland, Greece.
it's foolish to believe that China is somehow immune from economic downturns because it's a communist state. USSR would like a word with you....
I’ve taken the HSR many times and the car I’ve been in has almost been empty for much of the way between Beijing and Guangzhou.
Actually we also don't really care the faked data. If you can feel the growth, it should be fine. US's economy growth rate is 2~3% and I can barely feel it, it's nowhere close to the rapid growth I felt in China.
hmm, for middle class numbers and ability to spend, check iphone/galaxy S sale numbers.
Edit: I would really recommend you visiting China and I can guarantee you can see something interesting there.
All the best, Vince