[throwaway4good]

It seems like the Chinese authorities are trying to deleverage by explicit policy (very evident in the stock market), here when the leverage in the western economies is at its highest.

We in the west have a tendency to overestimate China's debt problems by comparing the numbers and ratios to that of the west. Forgetting that 1) China is very big and has a lot of people 2) most people in China are poor and live essentially in a third-world economy that can grow very fast by basic investment in infrastructure such as transportation, housing, energy, education.

[another_story]

They have been investing in infrastructure, housing and energy. The return on that investment has been decreasing. The CCP has been kicking the can down the road as best it can trying to maintain growth numbers, which in part acts as justification for its single party rule.

[throwaway4good]

You (and most other western commentators) underestimate just how long the road is.

[another_story]

I'm Chinese and not living in the west. Don't make assumptions.

[starfallg]

China is rapidly heading towards the middle-income trap. All of the positioning in the past decade is in the hope of avoiding it. This is a massive challenge as the prosperity of the upper classes is based on cheap labour. All of the advanced economies overcame this by moving jobs up the value chain. China can't easily to do this due to its massive population, a large part of not very well educated. There is a real risk of social instability when semi-skilled jobs dry up.

[dragonelite]

I 100% believe that the main reason a country stays stuck in the middle income trap is its capability to create high tech IP which the nation can use to suck up what I would a global rent for lending out its IP.

That why the patent system is so toxic for the global south its like cutting off the steps on the value chain stair.

[throwaway4good]

10 years ago people were also chatting about China being caught in the middle income trap because China was unable to create its own global brands and original products, and was destined to be a cheap factory for western brands forever, never would be rich enough to have an internal market.

Today we have global brands like Xiaomi, Huawei, Tiktok in every corner of the planet.

And there is just going to be more of it.

[starfallg]

Middle income trap doesn't have much to do with global brands. It has to do with whether there is enough capacity to absorb excess labour when economic growth necessitates transition away from agriculture and manufacturing to service and information industries.

Export driven growth is also very risky as geopolitical issues (as we can see now with Huawei) can happen on a dime. In order to develop China up to western standards, the world needs to supply resources for a population well over all the western countries (EU+US+CANZUK+Asian Tigers) combined. All of the countries that have achieved had good relationships with their importing trading partners, China on the other hand is moving in the opposite direction due to political reasons.

[dragonelite]

When I visited family in the Philippines every dam mall or street market I visited you saw Oppo, Vivo, Huawei and Apple stands. It was kind of a shock compared to here in western Europe.

And from what I can gather Chinese EV car brands are now just entering the European markets. The EV car market has pretty much has been a hard reset of the car industry where new players and old player need to duke it out. Its kind of exciting as someone with a Asian background to see so much happening in Asia to the point im planning on using the next 3~5 years to learn to read and listen to spoken Chinese. Just so I don't have to see it all through a western politically and racially biased lens.

[starfallg]

What's important is high-value jobs. You need these to transition excess labour away from unskilled and semi-skilled jobs. The key is creating and sustaining these jobs.

Obviously tech is a part of this, but also financial services as well as resource/energy industries. IP is less of an issue than it first seems, it's the ability to execute in a market that is more important.

[another_story]

I never put a timeline on it.

[dragonelite]

This is what I have heard more from other China investing podcasts, that the next China is in rural China. Not ASEAN, not India but rural China will become the next China. Like you said most of them are probably just getting by. Moving them to the cities and make sure the next generation is educated will give China its next two decades of growth. From what I also gathered in land rural China grows at like 10% plus a year compared to single digit coastal regions.

[starfallg]

Most of China's industry is already powered by rural China. Migrant workers (Mingong/民工) are the workforce manning the factories. They number roughly 300 million.