Any attempt to compare the economy of China vis-à-vis that of the U.S. will have to be viewed in context of very fundamental structural distinction between the two. While China’s comparative advantage lies in its industrial production capacity, that of U.S. is in the hegemony of the dollar. Comparative advantage is an economy's ability to produce a particular good or service at a lower opportunity cost than its trading partners. This underlying principle is used to explain why countries, companies or individuals benefit from trade through the exploitation of their respective comparative advantages. The idea behind opportunity cost is that the cost of something or doing something is the lost opportunity to do or consume something else. In other words, the opportunity cost is the value of the next best alternative. Understandably, U.S. chose to print money as the cost of print is a fraction of the cost of manufacturing. The certitude of dollar as the world’s reserve currency has enabled the U.S. to print unlimited amount money - via issuance of debts - to finance its insatiable appetite for consumption; and to augment the exploit and hegemony of capital. It gave the American businesses a new empowerment to trade as the dollar may be viewed as a “de facto commodity” or a medium to exchange for goods and services produced by other country. Effectively, to the U.S., the cost of capital and labour of other producing countries is no more than the cost of printing of the greenbacks. That is indeed a massive comparative advantage that the U.S. possesses over the rest of the world. This underlying principle had prompted Washington to believe that a whole new U.S. economy may be created by consumptions driven by government spending and consumer spending, which is theoretically correct as long as the demand for dollar as the primary currency for international trade remains intact. Consequently, the hegemony of the dollar had triggered U.S.’s shift towards what is to be its post-industrial economy. Underpinned by the belief that the U.S. could be (1) a successful economy just by being consumers; and (2) fund its insatiable consumption by unlimited issuance of debt or deficit spending. As the U.S. economy shifted from an industrial economy to a consumer economy, the labor force engaged in the primary and secondary industries declined, while those employed in the tertiary industries expanded exponentially. Unfortunately, that is a double-edge sword. Like all good things that came “cheap”, it becomes addictive and subject to abuse. Today, manufacturing constitutes only 10.3% of US 2023 GDP as compared to 68.2 % for private consumption. Whereas for China, the value added of its primary industry, the secondary industry and the tertiary industry were 7.1%, 38.3% and 54.6% respectively.
Nearly all Western analysts project their “Western U.S. Rules Based Order”, business analysis, methodologies on China. China's “planned economy”, and methods for achieving their growth are dramatically different in a number of areas. It’s rare if any know how China’s governance model works. It’s like comparing apples to oranges. For example, China DOES NOT place much emphasis on their stock market. Its position is NOT indicative of the state of the economy. They don’t bail out poor performers. This quarter’s gains with a corresponding 9% drop in the real estate sector demonstrates their “managed” transition into “value-oriented” productivity, accelerating and documenting their strength in the 4th Industrial Revolution is working, and working well! Its trade surplus keeps increasing month after month, quarter after quarter irrespective of the worsening global economy. You WILL NOT find this level of expertise capable of doing so in the West. Not even close. China leads the world in transforming its economy into the 4th Industrial Revolution by many YEARS and it’s NOT POSSIBLE for the West to mathematically catch up unless there is a retooling of their own governance models. Simply stated, capitalism is failing. Irrespective of the constant negatives you hear, “the sky is falling in China”, just the opposite is happening. Many companies know if they are to survive, they MUST move manufacturing and export operations to China or they will be left aside. Western leaders are flocking to Beijing asking for China to save their economies; the US, Germany, France, Italy and so on. The political narratives of the growing China “Yellow Peril” - the enemy when WE made them the enemy - a hot war - will increase over the election year, becoming outright unethical and obscene, but China's growth and development WILL NOT STOP. Sadly our leaders are (sorry) intellectually “stunted”, lacking objective, critical thinking skills. The worst leadership since at least WWII. Don’t criticize China's economy. Look at yours, it’s a piece of “sh*t”. ;-0 And this Is the Way…
China's economy is currently the best-managed one in the world. The property bubble is a hangover from the earlier period when China had not quite seen that what happened in the US and Japan could have been avoided. They're letting the developers and bankers whose excesses created the bubble take the pain. In the process, the overall Chinese economy will inevitably slow down (it's already happening). However, Xi and company know what they're doing. There won't be a Lost Decade like the one in Japan.
Ok, this analyst says China will increase manufacturing 5% year over year. Making what? And for whom? Is stuff being made just to be thrown away or dumped at any price? In a demand driven economy these questions don't have to be asked but in China's managed economy it's important to understand if China is bein productive and profitable or inefficient and wasteful, possibly even destructive to other economies.
There's plenty of other countries when Chinese products are in demand. It's funny people think US is the only country with spending power in the world.
