[chabska]

> US manufacturing output is double that of China's on a per-capita basis.

Only on a dollar value basis. And that's heavily skewed on how an item's value is calculated. When you use $50 of parts (all made in China) to assemble a machine that you sold at $500 , $50 of GDP value is attributed to China while $450 of GDP value is attributed to the US. But who did more "manufacturing"?

[AnIrishDuck]

What other system of value are you using here? Bottle caps? Nostalgia?

While the dollar remains the global reserve currency, this is just a wild theory of trade. If the $450 of value was so easy to extract, why wouldn't China simply assemble it in their own country and take the whole pie?

(they clearly already do this everywhere they can)

[chabska]

> What other system of value are you using here? Bottle caps? Nostalgia?

A common proxy is "metric tonnes of steel produced" and "metric tonnes of sulfuric acid produced". For China, these have been going up in-line with their GDP growth, whereas for USA they have flatlined since 1980 despite the increase in manufacturing dollar-value output.

[chii]

And how do you compare metric tonnes of steel produced, with metric tonnes of plastic produced? What about metric tonnes (hours?) of entertainment on films?

The metric to measure value using quantity of goods must use a common denominator unit, otherwise, comparison becomes subjective (one might want to value tangible goods more than intangibles for example).

So making comparison using a price makes a lot of sense.

[AnIrishDuck]

You, of course, can choose these as your units of value.

I think it is telling that the rest of the world (particularly the central banks of most countries) have instead chosen USD (well, more specifically US treasuries) as their preferred store of value.

Well, at least, for now...

[biorach]

(Not the person you were replying to)

You asked a question, they answered in good faith, and now you've dismissed their answer. I would also point out that you're dismissal is actually about a related, but separate issue - you've suddenly started talking about preferred store of value, when your original question was about how to value production.

I don't think you're arguing in good faith.

[AnIrishDuck]

I pointed out they were providing ridiculous answers to the question of "how do you measure value" and they doubled down on the ridiculous.

You are correct, there are many ways to measure value.

However, I don't think picking various commodities as the "true" measure of what is "valuable" is a useful exercise.

You may disagree. That's fine! I suggest you put your wisdom to use on the various markets that are set up for this purpose instead of arguing with me.

EDIT: they ultimately never reached my main point anyway, which is: regardless of if you measure value in tons of steel or crushed coconut shells, if China could easily obtain that value by assembling this stuff themselves, why export all the inputs to us instead?

[biorach]

> I don't think picking various commodities as the "true" measure of what is "valuable" is a useful exercise.

No one said that a commodity is a "true" measure of value. A commenter simply said that it is often a useful proxy. It is something that is useful to do to understand specific trade patterns.

> I suggest you put your wisdom to use on the various markets that are set up for this purpose instead of arguing with me.

I did not claim any wisdom on the subject. And I suspect you are deflecting attention from the fact that you are not arguing in good faith

[StackRanker3000]

I feel like it’s pretty clear that chabska was saying that China does more manufacturing per capita, creates more stuff, whereas the US captures more value.

If a paralegal at a fancy law firm works 9 billable hours at $200/h, and a senior partner then spends one hour adding some finishing touches for which he bills $2000, the paralegal has likely produced more work, but the partner’s output is more valuable (and sometimes it might not even be that useful, maybe the paralegal could’ve done the whole thing himself, but the oversight is part of the package and that’s what a senior partner costs).

Which metric is more useful probably depends on what you’re trying to find out.

[chabska]

I didn't "choose" these, they are standard metrics used by industrial analysts. You know, the people who plan port expansions and cargo ship purchases, they need to deal with the actual tonnes of goods moved, not the dollar value of those goods.

[p_j_w]

Why should tonnage matter more than value? Would you rather have 10 tons of dung or 1 ton of smartphones?

[motorest]

> If the $450 of value was so easy to extract, why wouldn't China simply assemble it in their own country and take the whole pie?

If you pay attention, you'll notice that's what China is doing. For decades, China's GDP growth towered over the US's. Around 2015, China's GDP PPP overtook the US's.

[AnIrishDuck]

Growth is trivial to achieve when you are starting from zero. My footnote very much alludes to this. This is incidentally what the US did to powers like Britain a century and a half ago.

I just find it amusing that in this theory of trade China has found a way to do all the work while the US does nothing and takes all the value. Perhaps all that extra money is not as easy to claim as the OP suggests.

Maybe economies are changing and purely physical goods are becoming less valuable...

[motorest]

> Growth is trivial to achieve when you are starting from zero.

China currently reports the second highest GDP in the world.

[AnIrishDuck]

> For decades, China's GDP growth towered over the US's.

It's much easier to 100x $1k than to 10x $1m.

This is not to take away from the achievements of the Chinese economy, which are gargantuan. You just can't linearly extrapolate growth rates.

[oblio]

> It's much easier to 100x $1k than to 10x $1m.

That's kind of goes against the conventional wisdom, which largely feels true in my experience, that "the rich get richer". Countries are a bit different, but China looks poised to avoid the middle income trap up to a point, and even if they don't, their "middle income" is a lot more likely to fall somewhere near the Japanese levels, which would make the Chinese economy massively bigger than the US one, by 2050.

[motorest]

> It's much easier to 100x $1k than to 10x $1m.

China's GDP is the second largest in the world, and is around two thirds of US's. China's economy is growing continuously over 5% whereas the US already discussed facing a recession.

In some metrics, such as PPP GDP, China already towers over the US.

I think you're trying ver hard to diminish the second largest economy of the world at a moment where it's expected to be a few years until it's the single largest.

[jorts]

China’s GDP growth is great but they will face a huge pain now that they face an unsustainable population decline. They have more people aged over 52 than younger. I empathize with their youth.

[NhanH]

You are claiming that the median age in China is 52 or did I read this wrong? That would be beyond fake news level of statement (for my reading of the meaning)

The current median age of China is about 40, which is not great for their context, but a world apart from 52.

[aylmao]

China is automating at an impressive rate. Isn’t automation easier to face with population decline than with population increase? I’d imagine young people mind getting replaced by machines more than old people.

[Ray20]

>Isn’t automation easier to face with population decline than with population increase?

No? These things do not seem to be connected in any way.

[gambiting]

I mean, of course they are. If you have a population increase you have plenty of young people who will complain that automation is taking their jobs. But with a population decrease you eventually end up with just old people and not enough working people to sweep the streets or wash cars or whatever - so automation is welcome because it doesn't "steal" jobs.

[pbhjpbhj]

Please explain your position here?

[ReptileMan]

The good thing about being authoritarian is that you can easily solve the births issue. The same way there was one child policy, there could be 3 or 4 with penalties for non compliance.

[jampekka]

Highly unlikely CCP would pursue coercive birth policy, or even could do it if it wanted. CCP is extremely powerful but it still has to rely on the consent of the governed. It has to frequently roll back policies due to public outcry.

Current birth rate increase policies in China are based mostly on rewarding for births and subsidizing parenting costs.

[wqaatwt]

> GDP PPP

That’s not a particularly meaningful metric.

[psalaun]

No more no less than GDP. They outline different realities, which are all interesting to analyse as a whole.

[wqaatwt]

PPP on its own is a relatively poor metric and only covers a subset of the economy.

Then when you have semi closed economy like Russia with unclear currency rates (due to external capital inflow/outflow barriers) and convert the figures to USD you can end up with all sorts of wacky numbers

[amilios]

but not GDP per capita in purchasing power, in that the US is still far ahead. China's GDP PPP is greater, but with 4 times the population.

[NobodytheHobbit]

They do. If you just scroll the ubiquitous online market, that doesn't need to be named, and look for odd brand names. Intentionally odd. Like "sxrpgh" as the brand as a made up placeholder. These brands are named to quickly start a business.

Why? It's an aliexpress model. Create as many legal entities as you can and let an economic Darwinism kill the ones you do poorly at and cherry pick your successful businesses.

The actual labor is outsourced to the market itself with products produced in southeast Asia by a wholesaler, sent to the market by said contracted wholesaler, and sales handled by the market's fairly much only retailer. It's so automated you really only have to be lucky that consumers pick your product and luck can be bent to will at times.

It's a very botnet approach to business.

This does expand the approach from flooding the market with cheap goods, to making cheap goods and competing with prices from the middlemen, making less efforted profits using the same approach, but exports the profits out of the US economy. I know this is a unusual framing but that's exactly what is happening.

Before a middleman within the economy would extract the wealth from that labor in this way. Why not cut out the middleman if the formula can be followed by anyone? And in the current belligerent state of trade it would politically expedient to do so or at the very least encourage this model if you are adversarial to the US because it works well. Our businesses already proved that.

[usrbinbash]

> What other system of value are you using here? Bottle caps? Nostalgia?

The system where "production" means "where has item XYZ actually been made".

And for more than 1/3rd of all items, the answer to that question is: China.

https://cepr.org/voxeu/columns/china-worlds-sole-manufacturi...

[aylmao]

China's GDP (PPP) is already ~22% higher than the USA's [1]. Arguably, isn't this a better measure of value? PPP measures the real value to the citizens in a nation, and more closely measures actual economic activity.

Say a bottle of wine costs $20 in the USA, and in total one bottle is produced and sold for a total of $20 GDP. France makes 10 bottles at $2 each, for a similar GDP of $20. It's cool that the USA manages to "extract more value" from its smaller wine production, but at the end of the day, France has the stronger economy.

There's more wine to go around, more resilience to the loss of a bottle, arguably this higher production means more export capacity, more employment, more generation of wine expertise, supply chains, etc.

The nominal GDPs might be the same, but the GDP (PPP) of France in this case would be $200 to the USA's $20.

[1]: https://www.cia.gov/the-world-factbook/field/real-gdp-purcha...

[deaddodo]

> China's GDP (PPP) is already ~22% higher than the USA's [1]. Arguably, isn't this a better measure of value? PPP measures the real value to the citizens in a nation, and more closely measures actual economic activity.

Only if the only things you purchase are exclusively domestic. Turns out, the vast majority of Chinese citizens with any means are interested in foreign products (like most people in the world).

[oblio]

> Only if the only things you purchase are exclusively domestic. Turns out, the vast majority of Chinese citizens with any means are interested in foreign products (like most people in the world).

Are they, though? China has its own huge software stacks, cloud providers, car manufacturers, etc? Is China really starving for anything not made in China, except for luxury goods? To which, I would point at Lexus (the archetypal example from Japan, a comparable country) and say that if you're a luxury good manufacturer in the Western world, I would not rest on my laurels, it's just a matter of time: either by development or acquisition, China will be making its own luxury goods and even exporting them, soon.

[ggandv]

If China embraces capitalism more tightly that will be a good thing for the world. The problem with China is not its wonderful people or culture, nor its prosperity, the glaring problem with China is Communism and the morality of authoritarian style central planning and the Xi/Putin axis of evil.

[oblio]

What China is not do Communism in any shape or form. It used to be back in Mao's days. Now it's just capitalist authoritarianism.

What you are mistakingly calling "capitalism" that China should adopt is... democracy.

[aylmao]

> Turns out, the vast majority of Chinese citizens with any means are interested in foreign products (like most people in the world).

Is there data that backs up this claim? Is this broadly the case? Cause I do know that local brands have been taking over foreign brands recently. Take for example Apple— sales in China plunged 50%, and reports are pointing at Huawei [1], which amongst other things has been making some impressive high-end phones. Tesla is falling to Chinese brands too [2].

Moreover, foreign brand != foreign product. Tesla manufactures in China, as does Apple, Louis Vuitton, etc.

But regardless of specific examples, I'd imagine the vast majority of consumption in China isn't products of foreign origin given its massive trade surplus [3] and just how much of what it imports are materials, rather than finished consumer goods [4].

[1]: https://www.asiafinancial.com/apple-sales-in-china-plunge-50...

[2]: https://carnewschina.com/2025/05/12/teslas-sales-in-china-do...

[3]: https://tradingeconomics.com/china/balance-of-trade

[4]: https://oec.world/en/profile/country/chn?selector343id=Impor...

[deaddodo]

> Moreover, foreign brand != foreign product. Tesla manufactures in China, as does Apple, Louis Vuitton, etc.

This has nothing to do with PPP, and the fact that you are making this argument means you have no idea what it consists of at all.

If Chinese citizens purchase those products, they don't get them at an adjusted price because they are manufactured in China. They pay the same base price as worldwide, else they buy them secondhand (or, more frequently, bootleg).

Your questions reinforce, rather than dismiss, why PPP is a useless metric outside of base domestic purchase economics (primarily rent and food).

[seanmcdirmid]

That bottle of wine is going to be at least 400 RMB in China, so I’m not sure how PPP can be argued here. You would need to focus on things that are less expensive in China than the UsA (services mostly, low end goods and food), but things get more expensive quickly if you go for something nice outside of a restaurant. PPP is oddly calculated given that services in china’s case are mostly what is driving its higher value, and that simply means people are paid less (and increasingly they aren’t, which means PPP will shrink closer to GDP unless their automation investments really pay off).

[ozgrakkurt]

The he issue with this is the dependency direction, if the supplier learns to do the assembly then they don’t need US anymore and can sell the same thing for a fraction of the price.

Or if you go to war then all those base manufacturing can be used to manufacture for military

[pjmorris]

> If the $450 of value was so easy to extract, why wouldn't China simply assemble it in their own country and take the whole pie?

As someone else pointed out, they do, under various odd brand names.

You make what seems like an obvious point. However, The iPhone is assembled in China for the ballpark cost you mention, and sells for double the $450 price you mention... so they must have reasons to not take the whole pie.

[seanmcdirmid]

The IP is important. Not only did you use $50 in parts, but the design, software, and marketing were done in the states. One critical flaw in MAGA thinking is that these inputs are worthless: the full value of an iPhone comes from China because that’s where it was assembled even if most of the value was actually added in the USA. China wants to be on the other side of the value chain as well and really don’t mind swapping places with the US (and it looks like that will happen long term now due to Trumpism).

[adrian_b]

The value of the American "IP" consists more in the might of the US government than in the actual value of that "IP".

A few years ago, Huawei was in a clear path of becoming the biggest producer of smartphones in the world, with smartphones that by now were based on their own IP, including CPUs and modems, even if Huawei had started 20 years ago by buying smartphone IP from companies like Siemens (which had been reckless enough to sell it). At that time, the latest Huawei designs were superior in performance to those of Qualcomm and superior in performance per dollar to those of Apple.

The result was that the US government has started a campaign of sabotage against Huawei, because they did not like the result of a "free market".

A couple of years later everything has repeated when there was the danger that Chinese manufacturers of flash memories will overcome Micron.

So the percentage that American "IP" takes in the products of other countries is only maintained by quasi-military actions of the US government, which treats any commercial rivals as enemies against which any sanctions are justified.

[seanmcdirmid]

China is definitely getting there, no doubt. They won't be a place where assembly just happens anymore, it will be more like robots assemble things and people mostly focus on IP/software/etc...

The fairness of the competition between American and China in IP, I'm sure if you are heavy on one side or the other its obvious, but to me it seems like there is truth in China stealing secrets and there is truth in America using quasi-military actions to protect what is basically a monopoly on a segment of high-value goods. But whatever you think, what Trump is doing now ultimately benefits China and hurts America in the short and long term.

[adrian_b]

I have no doubt that China has stolen IP whenever they had a chance.

For example, Huawei was famous for draconic rules imposed to its employees in order to ensure that they could not take out any information from their computers and also that no information could be accessed by any visitor or by anyone outside working hours.

Presumably they were very careful with this because that is how they would have attempted to exploit a competitor.

Nevertheless, the many Americans who still believe that the Chinese success is based on stolen IP are completely delusional.

China has bought most of the IP with which they have started developments and not stolen it. Reckless companies from USA and EU have sold all that IP. Talking about "stealing" is just a tactic used to obscure who are the culprits, who have obtained nice financial gains from selling IP to China.

Moreover, in recent years China no longer has much to steal from USA, more the opposite becomes true.

If I look at recent research papers, even if there are also many published Chinese papers that are garbage, there also many that are very innovative, and such innovative Chinese research papers have become much more numerous than the innovative research papers coming from USA. The reason appears to be that the Chinese seem now willing to assume more risks, in searching paths that are uncertain to lead to useful results, while the research in USA seems to have become more conservative, striving to obtain immediate and guaranteed results, which however may not be able to exit a local optimal point in the space of solutions.

I assume that as research financing becomes more difficult, the research in USA will become even more conservative, diminishing its chances to compete successfully in innovations with China.

[starspangled]

> Only on a dollar value basis.

Uh, yes.

> And that's heavily skewed on how an item's value is calculated.

An item's value is calculated according to what it is bought and sold for. That's how value is determined. What would you rather it "skew" towards?

> When you use $50 of parts (all made in China) to assemble a machine that you sold at $500 , $50 of GDP value is attributed to China while $450 of GDP value is attributed to the US. But who did more "manufacturing"?

If an American company can design and develop and sell a product that requires $50 of parts and people are willing to pay $500 for it, then clearly that company created an enormous amount of value, didn't it? By definition almost. Manufacturing output or value is not a function of the number of beads of sweat or drops of blood or hours in a factory to make something. It is how much value (i.e., what others are willing to pay for) the things you create.

[hakfoo]

I suspect in many cases, the "value add" an American firm provides is an intangible.

In the pre-tariff omnishambles world, I could buy a more or less equivalent widget for $18 branded with a recognizable American brand, for $12 as a KWJIBO non-brand delivered from Amazon, or for $6 more-or-less manufacturer direct from AliExpress.

Amazon added $6 of value by saying "I can get it to you in a timely manner and offer a confidence-reinforcing return policy."

The American brand added another $6 of value for "this can probably be sourced consistently and people won't look at you weird trying to get it Shenzhen Tchang Zu Shrimp Cannery And Electrolytic Capacitor Plant #5 onto the approved vendor list."

They didn't actually improve the widget itself, just logistics around it. That means their value-add is extremely tenuous, and has a limited moat.

[selimthegrim]

Well, I never thought that Toby Jones barbecue and foot massage would have a resurrection, but here we go.

[starspangled]

The fact remains that the data we have says the value of US manufacturing is about 50% of that of China. You have your own perceptions of value of course, but that's not how value is actually calculated. The same as people who perceive China's manufacturing to be worthless because they produce cheap flimsy junk is also not an indication of any reality other than their own.

[coliveira]

> then clearly that company created an enormous amount of value

No, it is more like these companies monopolized access to the high income market and exploited this inefficiency. It is similar to buying a stock for $10 then increasing the bid ask spread to sell it for $100.

[starspangled]

> No, it is more like these companies monopolized access to the high income market and exploited this inefficiency. It is similar to buying a stock for $10 then increasing the bid ask spread to sell it for $100.

Okay so we have this scenario you constructed where the Chinese company produced great value without engaging in any IP theft or unbalanced terms of trade or currency manipulation and the American company simply took that and gouged prices with anticompetitive practices. What exactly is your question? The hypothetical American company in your example did not create value, by definition. I don't see how that's particularly useful though.

[intended]

This applies to a very specific type of constrained market, and does not generalize in this manner, making your example trivial to argue against, and then confuse readers.

If access was monopolized, then no competition would exist. Competition very much exists, and has resulted in a massive amounts of growth and improvement globally.

[int_19h]

The main reason why the American company can do this is because we have borders that allow said company to move goods across them, but prevent the cheap Chinese labor from moving to US. If not for the latter, US would be mostly speaking Mandarin by now and things would be a lot cheaper (and salaries would be a lot lower).