Domestic consumption in China was last estimated to account for 15.9% of its GDP. As far as I can see this is the lowest in the world by some margin. 16% of the Chinese economy is for sure a huge number so bare comparisons of spending are a little misleading, and I’m not sure if a Cyber Monday sale counts as domestic as a lot of that money will be spent abroad.
Here are some other domestic consumption as % of GDP numbers:
The other countries with a low figure here are oil exporters like Qatar (20.57%), Brunei (24.77%), and then you have Ireland (26.79%) whose tax loopholes mean that companies like Google are headquartered there.
I’m not an economist and China clearly has made a decision to shape their economy like this - this is a feature not a bug.
Plus on the other hand too high a figure is probably even more problematic - such as Guatemala’s 87.56%.
I’ve not visited China so indeed I only hear about ghost towns from third hand sources. I’m happy to hear your perspective on this; but I’ve also heard (possibly incorrect) estimates suggesting that there are anywhere from 65 million to 80 million vacant housing units in China.
What’s the cite for that? Not saying you’re wrong, but there are of course different ways of measuring this and it makes a big difference if we’re including the service sector, transport etc.
Do you mean the figures for the US might understate the difference? Because virtually all of the double 11 spending is on Chinese platforms like Taobao and JD.
The Economist recently mentioned the concerns I recently pointed out, along with the statement “young [Chinese] people do not want to work in factories”. Is there any basis for this claim?
Yes I’ve been going down the rabbit hole a bit this afternoon trying to get you an answer because I have had to pull everything from different sources from basic curiosity (and admittedly limited expertise) and I’m not sure those sources are all comparable to each other. Let me spend some more time on this and try to find some common definitions. I’ve seen one report that claims it is 50% in China but 70-80% in other countries so still smaller in China but they are using a completely different metric from the source I got for the various other countries which doesn’t include China (presumably because China’s is an external estimate):
So for now please regard my earlier post as under review with possible corrections to come! (I’m at work at the moment so can;t spend too long looking at this right now…)
True, but 2022 was post-COVID in teh US & UK and in the midst of lockdowns in China. It’d be interesting to see a time series of those percentages from e.g. 2015 - 2023.
Your point is valid that China collectively right now is spending their money on investing in (hopefully) productive infrastructure like factories and roads and housing, not in consumer frippery like Netflix subscriptions and 70" TVs.
But if/when they decide they have enough productive infrastructure, the balance will shift and the results will be a spectacular consumer blossoming.
I did a chart and added Argentina which has a similar GDP per capita. I cannot pick any more countries for the screenshot and have the key appearing on the same page but I included the drop down on the left so you can see where to go to have a play yourself.
Article from Business Insider comparing Japan’s property bubble of the 1990s to China’s situation today. Suggests that China may be heading for a similar deflationary downturn.
Geopolitics guru Peter Zeihan is close to 100% negative about China’s future prospects (I don’t take everything he says seriously, but he’s knowledgeable, intelligent, and entertaining. I subscribe to his YouTube channel.).
I come to this topic via my life as a Japanese<->English translator and interpreter. I’ve also studied Chinese to an extent.
Pros and cons of where China is at, IMO:
Pros
Has a strong industrial base with a relatively competent and educated workforce.
Has the ability to create and emulate technologies (has nukes, has a moon exploration program, etc.).
Has a relatively large and strong military (but quite weak compared to that of the US).
Cons
Has a pretty terrible government that is authoritarian while failing to provide a basic social safety net. It offers the worst of both communism and capitalism. Xi Jingping has made himself the new Mao but is a crap leader.
Has, as others have noted, a demographic disaster in progress. Japan has an aging population but at least is rich.
Has a dissatisfied, disaffected population and a weak to nonexistent vision for its future.
Right now, the cons significantly outweigh the pros, making China a slowly sinking ship. Its strengths are such that, if the people could rally around a strong plan and vision, it could do amazing things, but the mojo just doesn’t seem to be there.
The demographic collapse is just going to make that worse. Japan is a country that in many ways has everything going for it, but it too is a country without a purpose and vector right now. Japan, however, is going to its cultural grave in a neat and orderly manner. OTOH, China is flailing, and it’s just going to get worse.
No Western countries are going to support a Chinese invasion of Taiwan. It would get a lot of people killed, and it would have a massively negative impact on the world economy.
Lots of people actually do care about Taiwan–and it’s not just about iPhones. Don’t a lot of people care about Ukraine?
The US would directly respond to such an invasion, most likely on a massive scale.
China may be stupid enough to attack Taiwan, but I think Russia’s ongoing failure is a highly discouraging factor. If China does take the plunge, it will fail spectacularly and most likely see its current political order crumble into dust.
I think China’s strengths will eventually compensate for its weaknesses. Good leadership could make a big difference. It would be difficult for them to continue growing at the same remarkable pace. And they have some big problems, though these are not always unique to China. They will solve some of them.
Another strength of China compared to Japan is that it has a lot more natural resources, has more geographical space to spread out (Japan is packed into relatively tight, mountainous terrain, with the disadvantages of being an island nation) and shares land borders with 16 neighbors. Also, by sheer virtue of being the world’s No. 2 population-sized nation, it will always have some inherent clout that Japan did not or could not have.
Which sounds like you’re suggesting that if the semi-worst case scenario happens, China will use that population, industry, and nuclear weapons to, much like Putin’s Russia, fix internal problems by going (again) on an expansionist route.
Which, don’t get me wrong, I wouldn’t rule out under the current leadership. There’s a common trope, applied to multiple nations, peoples and the like, attributed to many different thinkers, I’ll use a common one as applied to Americans (I feel better poking fun at my own nation)
Americans are the only race which passed directly from barbarism to decadence without knowing civilization.
Which, is, of course, an exaggeration. But to the extent that there’s some truth to it, if a jaundiced one, it seems likely that China is heading to a similar end. And that’s ignoring the fact that there’s a chance it can and will pull out, in the same sense that the USA still has a chance to do so, although the last decade or so has shown a great reluctance to acknowledge that there’s even a problem.
HUGE NOTE: No, China have not been barbarians in almost any sense for thousands of years, with an admirable (and not-so-admirable at times) continuity of civilization, culture and the like, although it’s role on the world stage has waxed and waned no different from any other. But in terms of the modern, Communist (for very limited values of Communism) China, the generality would apply.
This year The Economist has had in almost every issue an article about China’s internal woes. Next to them have been a series of articles proclaiming America’s rebound to be the wonder of the world. How things have changed. Remember what I said in the OP?
Tesla’s stock is down from 268 on July 31 when I wrote that to 168 today.
What hasn’t changed is that China’s foreign policy bodes worse for the rest of the worst. They want the same level of hegemon over Asia that America has over the west and keep building toward that goal.
China, I have read, has influence over a greater number of countries than the United States. Though their problems are real and some are severe, one would be foolish to underestimate the ability of Chinese to adapt. I hope this occurs in ways that are sensible and somewhat Democratic.
Except it’s not clear they have good leadership. Xi may be very capable but he exists in an information vacuum as he’s culled a lot of senior people to consolidate his power and the people who are left don’t like to keep him in the loop.
