Comment by seanmcdirmid
10 hours ago
Most of those pronounces have greater than 50 million people. Anhui has 60 million, guangdong has 127 million. Shanghai only has 26 million people as a city. The federalism exists because the numbers China is working with are huge. It’s not some small podunk town in North Carolina deciding to make cars, it’s a province on par with that have a populous country. We can’t judge China based on a much smaller scale of US states and cities.
The Chinese provinces and cities are competing aggressively with each other, both the local governments who provide cheap loans (largely funded by profits from other corporate loans, as China has much lower income taxes than the US) and companies also compete aggressively for dominance both locally and globally.
In the US you usually have 2-3 giant companies who are pets of the federal government and get tax breaks and subsidies if they make 'jobs' in particular states, particularly where useful congressmen live. It's a far more centralized market even though it has little direct government capital investment.
Old legacy companies being propped up in the name of national interests while they slowly become more and more detached from the global market.
On top of that China allowed heavy investment in infrastructure and real estate instead of interfering in it, so everything from property to energy costs are cheaper. Making cost of doing business cheaper.
Those giant companies in China are supported by the cities/provinces. It is just that they are comparable to not even small countries, the central government doesn't need to create champions for consumer goods, more local governments can do that just fine. SOEs are also mostly zombies in China, it should be very telling that BYD is not an SOE; we aren't even talking about any of the SOEs FAW Group, Dongfeng Motor, Changan Automobile, SAIC Motor, BAIC Motor, and GAC, who are still more known for their JVs.