[riehwvfbk]

Those investments were more than paid for with cheap Chinese labor. Which is why these companies moved manufacturing there in the first place. Now China doesn't need the buffer anymore. In fact, it's ahead in many areas, electric cars for example. Smart.

[alephnerd]

Yet the median Chinese household cannot afford those EVs, because median household income has stagnated at around 33k Yuan/$4.5k for years now.

If you're overproducing yet there is limited ability for domestic consumers to put these products, this means you are dependent on foreign trade partners.

Yet even these trade partners are forcing Chinese players to manufacture in those markets or face high tariffs and revocation of MFN guaruntees.

[riehwvfbk]

The median American can't afford to pay for a new car outright either. And they've got loans in China too.

[alephnerd]

Absolutely, yet absolute consumption remains low [0]. The kind of consumption on high tech gizmos is barely 13% of per capita household consumption (so median is much lower).

There just isn't enough spend on a quarterly basis to subsidize industries like EVs, Chips, etc industry without export - and most markets are only increasing the barrier of entry, or requiring domestic JVs.

Every EV, PV, Construction, etc JV that a Chinese manufacturer creates in countries like Mexico, Brazil, Indonesia, India, etc is an equivalent amount of jobs and domestic investment lost.

What's the point of being ahead if you're spending tens of billions yet most domestic consumers cannot afford them. This only kills domestic capacity long term (and is what Zhou Qiren has argued for years and why he was so prominent at the third plenum).

Edit: cannot reply below so replying here

Yet even with low prices, products are still relatively expensive. For example, auto loans tend to be limited to 36 months by banks to non-high income consumers. Assuming you get a 3.85% loan (as the current Chinese LPR is) to purchase the BYD Seagull (cheapest EV), even with a 50% down you are looking at half of the median monthly disposable household income (~$150/mo). The per capita Chinese household spends no more than $50/mo on transportation AND telecom according to govt stats [0].

And this is the crux of the issue - if most Chinese cannot afford most products, and foreign markets are increasingly adding tariffs where does all this stuff go?

[0] - https://www.stats.gov.cn/english/PressRelease/202404/t202404...

[riehwvfbk]

Low percentage of household income spent on gadgets could also simply be reflective of how dirt cheap they are domestically in China.

To take your argument further: Californians spend way more on housing than people anywhere else in the world. They must all live in palaces.

[mensetmanusman]

Foreign direct investment has dropped 10x in a few years.