Comment by hackernewds
2 months ago
China scaling and efficiency is really something else. it seems they've latched on to something that works better than even democracy and capitalism
2 months ago
China scaling and efficiency is really something else. it seems they've latched on to something that works better than even democracy and capitalism
They’re certainly good at building.
Actually utilizing that capacity is something else entirely; there are factories less than ten years old shuttering due to overcapacity. https://www.nytimes.com/2024/04/23/business/china-auto-facto...
And the rush to subsidize more capacity is a big contributor to local government debt burdens in China, which is estimated to leave Chinese debt to GDP at 117%.
You are never going to get exactly the right amount of capacity, so the question is whether you want to err on the side of too much or too little. Too little might often be more efficient, but there are undeniable strategic benefits to having too much. The events of the last few years have taught us all some painful lessons about the hidden costs of JIT and lean. China might have got the balance wrong, but they aren't prima facie wrong.
They are prima facie wrong, their overcapacity is bad and actively harmful, this isn't a sign of it succeeding, its a sign of desperation from it failing.
There's a type of Western mind that gets distracted by their scale, and getting to build things we built a century ago.
Dazzled by the spectacle, this misses that their economy is characterized by deflationary headwinds due to a massive, massive over-investment in property, and this just squeezes the toothpaste (debt taken on to goose GDP) to another side of the tube. (housing to batteries)
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China’s debt load fluctuates if you consider just the central government, local governments, and SOEs owned by either the central or local governments. Then you have private sector debt. SOEs are where a lot of china’s shadow debt comes from (localities ask SOEs they control to fund public projects of their own books), this is what pushes China’s debt load over 100%.
There’s that and the LGFVs financed by land sales which are all off official balance sheets.
Debt in China is not a big issue, because Chinese banks are mostly owned by the Government. They can rearrange debt to deal with problems much more freely than Western governments.
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In the US this model is called venture capital - build lots of things knowing lots will fail.
It's a model that creates big winners and lots of losers.
Ironically of course the other alternative is central planning which is a hallmark of communist economic systems.
> estimated to leave Chinese debt to GDP at 117%
Japan is 264%, Singapore 168%, the US 129%, France 112%, Canada is 107%, UK 97%, Germany 66%, Australia 22%, Afghanistan 7.4%, Kuwait 2.1%.
A debt ratio isn't particularly useful to know on it's own.
Not a great take - those factories are foreign owned ICE car factories. Hyundai basically underestimated how fast China's EV transition would be.
That's good news for China, full speed domestic EV production.
10-year old ICE car factories idling is a sign of success in their transition to NEV.
> China has more than 100 factories with the capacity to build close to 40 million internal combustion engine cars a year. That is roughly twice as many as people in China want to buy, and sales of these cars are dropping fast as electric vehicles become more popular.
Efficient yes, generates good quality of life for the average citizen? Not as much. Plenty the west can learn from China on how to do large public works though.
Quality of life for average citizen improved must faster in China that in the US during the last 40 years.
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Chinese government in general doesn't just "get" a factory. They need to compensate private owners too if they need to use their land. But the state owns every piece of the land (it's a bit more complicated than that, especially not true for rural where collective ownership is a big thing).
IMO, labelling governments as "authoritarian" sometimes gives an inaccurate outlook. The government is not a single person that just orders other people around and magically gets nods everywhere. It's an organization and you can expect all kinds of messy and chaotic stuffs in it.
I have lived under both "kinds" of governments and I feel the democratic ones have a lot of "authoritarian" elements in it too, especially nowadays when national security touches everything. And surprisingly it is way more effective than the "authoritarian" government I lived in.
Liberal governments also implement unpleasant decisions, for example: paying subsidies for solar panels, electric vehicles, banning good old cheap lightbulbs, banning cheap plastic bags, cheap cars etc.
Those are the subject of political agitprop but they’re not really unpopular: each of those will have large, usually majority, popular support if you ask people about them outside of political contexts. For example, “cheap” incandescent light bulbs cost far more over a given time period – even my Republican family members all switched because they’re not going to pay more just to spite environmentalists, especially since incandescent bulbs need to be replaced far more frequently.
You can still buy old lightbulbs, they are sold as heaters.
This factory is being built by BYD, not the government, and not a state-owned enterprise.
It's being built because BYD anticipates massive growth in demand for electric vehicles, not because of some arbitrary mandate.
BYD is known for its ruthless price-cutting and drive for efficiency, so they're a very bad example to illustrate government bloat.
There is a mandate, several interconnected mandates actually.
They're not arbitrary though, and many nations have them. China just seems to be translating that into action better.
https://www.globalpolicywatch.com/2021/06/chinas-14th-five-y...
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> Basically, Chinese government wants a bigass factory and they will get a bigass factory because literally fuck you.
And what's the difference from the US government when it wants a bigass factory?
Isn't the difference that the US also wanted China to build bigass factories? They got too good at that.
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No, it's when an authoritarian government wants something they'll get it. And by get it I mean "they'll take your house, ignore any local environment concerns and possibly just demolish entire villages and generational livelihoods".
Everyone seems to have some "oh how great it is they just get things done" as though they haven't diligently turned up to complain about some development application of the local council.
Yeah, sunshine and rainbows I suppose provided you're thousands of miles away.
From my visits to China, lI've come to conclude that Chinese people have more property rights than Westerners .
I saw roads built around houses because villagers refused to sell.
Eminent domain doesn't seem to exist there
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> it seems they've latched on to something that works better than even democracy and capitalism
Wouldn’t this just be plain old fashioned authoritarianism? America can latch on to this too, and we might based on how the Trump admin turns out.
No. One required component is plain old fashioned oversupply of labor. America doesn't have that because all employable people are too rich. China also has an oversupply of skilled labor like engineers, in part because the threat of poverty is a strong motivator to get rich. America also lacks that which you can see in capable young people doing arts degrees with no thought to their future income because it doesn't matter - they'll still live comfortably even on minimum wage.
You made a few good points until this one. No one in the US is living comfortably on minimum wage.
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It's not that life on minimal wage is comfortable, it's that we have been told for a generation now that 'just get a college degree and it will be fine'. Happily amplified by for-profit education investing a lot of money lying to young people (ads).
Ask your local waiter with a college degree if they would have studied something else if they got the chance. My experience is that many would.
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There is an estimation of 11-30 million undocumented immigrants in the US. The biggest difference is that in the US they are working on fast food jobs, house cleaning, babysitting. Different priorities.
That’s an easy enough problem to solve if we had the appetite to solve it, why couldn’t we legitimize the roles illegal immigrants currently do right now with a Singapore style migrant worker program?
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If the Trump administration (or the Biden administration) tried to enact an industrial policy like China, I think they would fail. It's not easy, and plenty of authoritarian governments fail at it.