Comment by ahartmetz 2 days ago
The Chinese economy is indisputably strong and real, but rumor has it that its reported growth numbers have been inflated in the last couple of years. And why wouldn't they be - there is an autocratic government whose justification is that what they are doing is increasing economic success. No success is not an option.
People say this, but it’s also not the exact reality. You can verify a lot of things, like import/export data. Basically import stats from one country should match China’s export to that country stat and so on.
People just have trouble understanding the complexity of China, and assume nothing they say can be true. It has a lot of problems, but progress and ability to make money isn’t one.
Personally I'm less and less inclined to believe in capitalism and money as a concept - we've long past moved the concept of money as universal barter, and into strange and speculative theories about how things ought to be valued, with the most valuable things either emerging from immediately unclear value propositions (impossibly valued companies, high-paid jobs that seemingly dont contribute to society) or artificially created shortages (housing, overpriced infrastructure projects due to government regulation and meddling).
If for example, BYD makes a car that's substantially similar between the China and Europe versions, and sells said car for $15k eqv RMB in China, but $30k in the EU, it makes double the revenue for the same 'value'. Even the argument of the EU being generally richer, and thus the car having higher monetary utility doesnt hold - a well-paid EU surgeon wont pay more for it than your average office worker.
So I feel money is increasingly a poor proxy for actual value/wealth etc.
You're describing gouging and gold rush pricing, which thankfully not a feature any major economic system relies on for everyday operation.
It's entirely reasonable to expect logistical costs to inflate the price of a good, so the price should reflect the market equilibrium value of the service of bringing water into the middle of the desert, not the good.
But politics isn't involved.
The point of tender is to represent value.
Your water in the desert costing 100 times what it costs where it rains is meant to represent its scarcity here vs over there.
Take cuban dollars vs normal dollar. In there the two tenders aren't proxy for value. Proxy for a political control so that the wealthy visitor pays 10 times, for the same bottle of water on the same shelf.
We are hoarding money to buy many bottles. The chinese are making and filling it while drilling wells that dont seem financally viable. They spoiled their entire bottle buying budget on that? What dumb communist central planners.
Much of the difference in the BYD cost is accounted for by a 27% tariff on the cars, transport and increased costs for warranty and compliance certification costs, as well as likely subsidies in the domestic market.
Of those, you’ll see that only transport costs are a function of “capitalism” the rest is government.
If that were true, Euro and US models would cost the same in China as they do in Europe - after all they dont have import tariffs, and all the stuff you listed - but they're priced in accordance to the local market. As for subsidies, afaik the only difference between how the Chinese do them and the EU does them, is in China, the manufacturer receives them rather than the customer afaik.
But I didn't want to get heavily into cars - its a clear and omnipresent feature of modern economics that things cost different amount of money between economic blocks in ways that's not explainiable by the fundamental cost of goods and services rendered. And not only economic blocks - prices of existing concrete (like an apartment that is just there, and been there) goods can increase wildly over time - which in industrial terms would mean society getting less efficient.
I think it's an important thing to discuss, considering the current system's mandate to lead is based entirely around its ability to bring prosperity to the people.
If it's objectively outperformed by other systems, perhaps the system has to at least face the pressure change or be replaced.
The UK doesn’t apply tariffs on Chinese cars yet the situation is similar here.
Economists account for the divergence you're describing with a concept known as "purchasing power parity", which does indeed result in a 2x adjustment in Chinese wealth. The intuition is that market exchange rates combine a number of things beyond the purchasing power of comparable goods. For example, if you have a 30 year horizon it makes perfect sense to trade 1 car worth of RMB for 0.5 cars worth of GBP: with the GBP, you can buy a government bond at 5.29% instead of 2.26%, and even with no reinvestment you end up with 1.794 cars worth of GBP vs. 1.678 cars worth of RMB.
Yeah basically every single academic and economist knows the Chinese government lies about its GDP numbers and pumps out fake stats. Its the Chinese way.