Money & Macro - 2025-07-14
Get access to global coverage at an exclusive 20% discount at https://economist.com/moneymacro Further reading from the Economist: 1. https://www.economist.com/science-and-technology/2024/06/12/china-has-become-a-scientific-superpower 2. https://www.economist.com/china/2025/07/03/chinas-growth-targets-cause-headaches-even-when-met 3. https://www.economist.com/finance-and-economics/2025/06/30/xi-jinping-wages-war-on-price-wars Get access to global coverage at an exclusive 20% discount at https://economist.com/moneymacro Further reading mentioned in the video: China has become a scientific superpower: https://www.economist.com/science-and-technology/2024/06/12/china-has-become-a-scientific-superpower China’s growth targets cause headaches—even when met: https://www.economist.com/china/2025/07/03/chinas-growth-targets-cause-headaches-even-when-met Xi Jinping wages war on price wars: https://www.economist.com/finance-and-economics/2025/06/30/xi-jinping-wages-war-on-price-wars If you appreciate the research, consider buying me a 'coffee' at https://ko-fi.com/moneymacro or supporting long-term for membership benefits via: https://www.patreon.com/moneymacro WANT AN IN-DEPTH INDUSTRIAL POLICY MASTERCLASS? △ https://school.moneymacro.net/p/industrial-policy-masterclass LIKE CHATTING ECON WITH ME? △ Follow me on Twitter: https://twitter.com/joerischasfoort △ Follow me on LinkedIn: https://www.linkedin.com/in/joeri-schasfoort/ △ I have a private Discord server for Senior and Chief economist Patrons / members. SOURCES: I've linked my sources in the blog that goes along with this video. Links are in the text: https://www.moneymacro.rocks/2025-07-14-china-weird/ Timestamps: 00:00 Intro 01:36 What is going with China’s economy? 02:46 China’s Japanification 06:39 Blowing a housing bubble? 10:21 China’s second economic miracle 12:02 Conclusion 14:21 Sponsor Attribution: Music by Epidemic Sound: http://nebula.tv/epidemic Thank you to AP Archive for access to their archival footage. Stock footage and others clips by Getty Narrated and produced by Dr. Joeri Schasfoort
Finally, someone on YouTube used the sentence "I don't know"! Thanks for your great videos.
Even outside YouTube. That kind of humility paired with curiosity makes the truth a collaborative effort.
Don't know is right. I wonder if any of this western media reports about China ever been there. I was just in China a couple of weeks ago. I went to several cities. All the malls were packed, all the restaurants are packed. There's plenty of spending. Didn't look like China is suffering or economy slowing down. China to me seems like it's thriving.
@@jaiho9442 people are a bit stuck in the "China can only copy" mindset. It's not longer true! Well they can still copy, but there's much more. But when you say that people think you're believing the propaganda.
@@jaiho9442Beep boop, thanks for your input Mr Chinese Bot!
@@serf___he is right tho, the economy is different in different parts of china, in Shanghai it seems like is thriving in other places no, so all things can be true at the same time
The point about industrial elites fighting a move to a service economy is really good. Too often we forget that economics impacts and is impacted by politics.
The powerful and rich refusing to transition to a model in which new businesses gain market power... Seems sadly familiar.
No one ever forgets that.
There’s still a huge job-education mismatch even though many more are getting post high school education. 70% of the youth still live in rural areas where education is still weak and people are still restricted in where they live by the household registration system or hukou. The working age can’t get retrained fast enough to work in good service jobs. A construction worker isn’t going to go back to become an accountant. Ev and hi tech is a small segment of the economy.
Who is "we"
@@homestarrunner-e9d On the bright side, those relatively poorly educated areas are untapped gold mines to fuel future growth. You can only develop your city centers so much.
I've been to China. There are red flags everywhere. Oh wait, that's not what you mean.😂
In our lexicon, red is the best. 😂😂 I have learned so much studying Chinese economic policy which has dispelled every neoliberal myth.
They broke up financialisation of the economy by destroying property speculation. Broke up inflation.
Invested in green and high tech industrialisation to move up the industrialisation ladder. If they transition into a post fossil fuel economy they will have the world at their feet bearing in mind that Trump has quadrupled down on fossil fuel energy. Their innovation is unprecedented and all achieved through a planned economy.
time for your nap grandpa
Especially on Chinese National Day!
😂
😂😂
The joke in China is "一三五崩溃，二四六崛起，周日休息". Translation: Collapses on Mondays, Wednesdays, and Fridays; booming on Tuesdays, Thursdays, and Saturdays; rests on Sundays.
Is all of that information really in that short sentence? Crazy efficient :O
You clearly dont understand the vide9
英语是条形码，中文是二维码。@@mrcool7140
@@mrcool7140Chinese syntax literally do be like that. “One three five crumble down, two four six rising strong, and Sunday’s a day off” would be a generally accurate translation that takes into account of rhythm and the meaning of individual characters.
P.S, the joke pokes fun at the media’s violently shifting narrative on China’s simultaneous rise/collapse. It’s Schrödinger’s economy lol
@@mrcool7140Is just how the language work. Chinese grammar can skip a lot of things (like preposition and conjunction) while shortening nouns or verbs to form phrases. So long as the context is known to the reader then no meaning will be lost.
If you translate what he said word to word, without context, it would literally means “One, three, five collapse; two, four, six rises; Sunday to rest”.
4 years ago I was thinking about whether I should take AP macroeconomics or not. Then your video on money creation appeared on my feed. After the video I decided to take that class and I have been following you ever since. Your videos were where my interest in economics started and four years later in this fall I’ll be starting my bsc in economics. Thank you for your efforts. This and all the other videos are really great.
Super happy to hear that!
Most Western economists, including this economic YouTuber, don't understand ONE basic fact about China and the Chinese economy. They don't want to become the second Soviet Union politically, and they don't want their economy to become the de-industrialized and financialized economy like the US and most of the West and Japan either; for the fact that the Chinese currency is not the US dollar and so it's not feasible to financialize the Chinese economy and focus on services. What they are trying to do is to transition their economy up the manufacturing value chains, and that's why you see what you're seeing in the Chinese economy; the traditional manufacturing sectors are slowing down, but the new high value-added manufacturing and tech sectors are growing. And they don't want to jump into the consumer economy too strongly and too prematurely before they can secure the upper end of manufacturing, thus both boom and down movements of the economy are happening simultaneously and will continue to happen like that for the next little while.
And what is the end result?
It is very strong in export markets like Solar and wind and battery Technologies and major supplier tech and over all manufraction.
Cheap high end technology@@Arlo-n1o
I agree with your broader point, but "for the simple fact that the Chinese currency is not the US dollar" doesn't really fit in to me, because plenty of other countries also made the service economy transition, so what makes China fundamentally so different?
@@Arlo-n1o"we don't know". If you sit and watch enough analysis of the bad parts of the economies of the Soviet Union, Japan, South Korea, and the US, you can see that they all have bad parts. So, according to this theory, the desired end results are "not those parts". But what will be in those parts? We don't know yet, but remember that for a huge chunk of history, China was self-sufficient. It survived the Bronze Age collapse. The Opium War was waged to force China to trade with Britain and Britain can buy cheap shits from China.
It can be as simple as "autarky"
The key differnce between Japan and China for the housing bubble is that China poked the bubble itself, so its banks can gradually shifted to industry lending. But Japan bubble was busted by market, so the Bank was in danger itself. This is the sign of great leadership.
That's where the "democratic" governments fail. They can't take such bold decisions nor do they've much control over the mostly private capital.
This is simply not true! - it was the Bank of Japan itself that ended the bubble by raising the inter bank loan rate
@@MalaksMessage
But the results speak for themselves. China manage the slow deflation of the Housing market and bankrupt the biggest troubling companies one at a time. So this is a managed bubble-busting. In few years it will achieve the soft-landing.
On the other hand Japan had lost 3 decades after its housing bubble busting.
@@qingzhou9983nah the issue is japan was already highly developed in the 80s when the bubble was popped and it coincided with theh Population slump. CHINA still as a LOT more low-wage earners unlike Japan. Japan had no direction but to go down, china still as some room but is squandering it
“Great leadership” is the 3 fingers Basterds inglorious moment in this phrase here. Go away umao
So, basically, when the Chinese housing market went south, the Chinese government pumped huge amounts of stimulus into their industrial sector allowing them to innovate and remain competitive. I've always said that the wailing and gnashing of teeth over US and now Chinese sovereign debt was way overblown, and I think this makes my point. It's not the debt/GDP ratio, it is what you are spending it on that matters.
Only if it pays off (last comments in the video), which is not obvious to happen.
You lost me at ‘innovate’.
There is no innovation occurring in Communist China.
It’s a lot of malinvestment in China though, dumping all their efforts into producing for customers who are increasingly serious about becoming direct competitors, as opposed to growing a demand base for all that stuff at home.
@@doujinflipWhat’s your source for this bullplop? The sponsor of this video at 14:30 ?
LOL
@@doujinflipWishful thinking since the 1980s. US and Western Colonies keep dreaming of China's collapse. Get a chair, this 21st Century belongs to China. Just like the past 17 Centuries.
Didnt japaneese growth actually stop because of USA forcing currency exchange change in order to make japaneese export less competitive?
That and housing collapse too.
Yes. Plaza Accords.
It stopped because the US ceased subsidizing Japanese industries via extremely favorable exchange rates that it had allowed for decades in order to strengthen Japan.
Even that's still a gross oversimplification, but it gets to the meat that rather than the US strong-arming Japan into acting against its own interests, the US shut off the tap because American taxpayers were getting annoyed by the continued economic support of a country that was actually out-performing the US at that point.
And even THAT isn't taking into account that the Plaza Accords weren't necessarily the death knell for the Japanese economy that it's often made out to be.
The Plaza Accords are what caused Japan's late '80s "golden years", because the appreciation of the Yen boosted Japanese purchasing power. Japanese growth stopped because they let it fuel a massive asset bubbe.
@secretname4190 Nah.... That growth just after Plaza accords was "accounting growth" because Yen rose fast against USD, so in term of USD, all Yen debts (financial assets) looked like they were gaining value (while underlying asset values were nose-diving.)
Edit : It is my 2-cents. No ref. in hand though.
This is one reason why solely looking at GDP numbers is so misleading. If I take huge loans and spend them, did my economy just improve? Well, wise spending of money could lead to improvements, but you can't tell if it's an improvement just by looking at the spending. But at least this spending by China isn't as bad as Russia's, where the "GDP growth" goes straight into piling up exploded vehicles and turning working age men dead or otherwise permanently unable to work.
This thinking can be applied just as well to us, which is also heavily indebted. And Europe, which is headed that way too
IMF report in debt to GDP: Japan 250%, Italy 150%, US 123%, France 111%, UK 101%, China 84%. What this mean in the misleading world of economics you are talking about? China is even more economically powerful than appear?
@@ArawnOfAnnwnas well it should?
@@ArawnOfAnnwn I don't think you should ever look at just GDP numbers and call it a day. The more similar economies and societies are, the more useful GDP comparisons can be. But still, it's a blunt tool at best. A pet peeve of mine is how unpaid work in a household is ignored in economic comparisons. If e.g. three people each clean their own houses, cook their own food and care for their own children, none of that will show up in GDP. But if those three people each focus on only one of those tasks, perform it for all three and gets paid (in a way that's registered officially), then it becomes part of GDP. No more value has been produced (assuming equal skills and so on) though, but it's easy to get fooled into thinking that value has been added because a number has gone up.
@@hernanuliana9111 Are you asking me? My point wasn't about comparing China's debt to other countries debt, just the practice mentioned in the video, with increased borrowing increasing GDP (at least short-term). But comparing debt between countries is as tricky as comparing GDP. You realize that China also has a lot of local government debt, not least using Local Government Financing Vehicles that can be tricky to track, right?
Isn't GDP always a lie? If I pay you to dig a hole and then you pay me to fill it in, we just grew GDP.
Your example is correct. But, in normal economies that does not happen that much.
i would argue the US GDP is also inflated, due to inefficient healthcare, insurance, legal costs, expensive education etc.
@@austinli8891 Yes, the U.S. GDP includes bloated sectors like healthcare and education — that's a fair criticism. But that’s not the same as fake GDP.
In the U.S., inefficiencies come from market failures and bad policies, but the data is generally transparent, independently collected, and debated openly. In China, GDP is often artificially inflated through top-down pressure, overbuilding, shadow banking, and local officials massaging numbers to meet political growth targets.
Both economies have flaws — but let’s not confuse expensive healthcare with entire ghost cities built to hit a spreadsheet goal. One is inefficient; the other is structurally distorted.
@@SWSSIAR Yes, there is no denying that there are still substantial differences between the two events, but it really does show that GDP numbers aren't a reliable method of assessing an economy without considering other factors
No, because in that economy the currency has collapsed and real GDP is zero.
What you call "economic collapse," we call "strategic transformation," and what the country refers to as "macroeconomic regulation and control." For us, we actually hope that housing prices can come down a bit. If our monthly mortgage payments decrease, we'll have more money to spend on daily consumption. It's just simple logic.
I wished the housing bubble would pop in Canada too. China could've easily bailed out its most indebted developer Evergrande, but chose not to. This controlled demolition did hurt the equity of many existing homeowners, but also provided hope to a generation of youth who saw housing as completely unattainable.
I thought it popped.
is it just me or is the audio kinda weird
High levels of static or white noise. I guess its the mic rubbing off his jacket
I think the background music is a bit too high
@@CoB33333 The gate used for removing the background noise is set to aggressive and on to many channels. When the voice mic is below a certain level the all audio true that channel is killed so that explains the high level of static too.
For me it just sounded a bit muffled.
Yeah, this needs some improvements
I'm not an economist, I'm studying History, but I'm moderately familiar with Japanese economic history. While it's not very accurate or productive to make 1 to 1 analogies I do think China's current situation since 2020 matches that of Japan in the early 70s with the Nixon shock (1971) and Arab oil crisis (1973), rather than the beginning of the Lost Decades (1989/91).
1971 and 1973 serve as the rough dividing line between the 高度成長期 (High growth period, roughly 1955/60 to 1971/73), what most think of when they refer to the "Japanese economic miracle" (Tokyo Olympics, unveiling of shinkansen, massive postwar recovery) and the 安定成長期 (stable growth period, 1973 to 1991).
In the high growth period, we saw Japan focus on low end export manufacturing (gadgets/portable tech, textiles, etc. the very same sort of thing China became known for in the 2000s and 2010s), whilst in the stable growth period it focused on high end manufacturing (cars, computers, consoles, semiconductors, etc., the type of thing China is beginning to be known for), as well as developing a larger domestic sector with their newfound export-gained wealth and purchasing power.
China, as another proponent of the East asian economic model pioneered by Japan, has a situation that kind of mirrors this, though whether it will be able to develop a proper domestic sector is unknown. It's also fundamentally different because its relationship to the US (its main export market) is adversarial, meaning its situation is far more precarious than that of Japan in the 70s and 80s. Also: trade wars, demographics hitting earlier than in Japan, dealing with the broader trend of deglobalization and reindustrialization (whereas Japan rode the wave of globalization and offshoring during its stable growth period), etc.
Also don't forget China has a centrally planned economy whereas Japan did not. That comes with some benefits but also issues with corruption and inefficiencies.
@@quietus13 I wouldn't say it's a planned economy anymore after 1991. The current industry policy strategy is based on lessons learned from Japan.
Excellent analysis. I have three quibbles, though: one is that China enjoys the benefit of hindsight, which means it can foresee the pitfalls inherent to the “Japanese strategy”; another is that China has been practicing economic colonialism, which was absolutely not a factor for Japan, and massively complicates things; and the last is that its relationship to the US is adversarial (ha ha). This means no Plaza Accords, no strongarming by an ally, no codependent industrial chain. China is aiming for a weird mix of technological self-sufficiency and international commercial cooperation, something that has never been tried before at this scale. I wouldn’t write them off, at all.
Similarities : housing , cars, tech. But china trying * to dominate almost all high end sectors unlike Japan.
@@Ildskalliespecially with how many people they've got , how much they produce , how many smart people they have , ability to solve any problems in the economy by force .
They're competent and knew well America will try to do what it did to Japan so they already diversified they exports to latin america , Europe , Aisa , Oceania , etc .
Also japan was defenceless, small land area , smaller population(low self sufficiency)
Isn't this a little bit of what the US economy is doing right now? Most sectors are down, there's inflation, unemployment is rising, and demand is slowing down, yet there is so much investment in AI right now that it is off setting the other sectors and pushing the stock market up and making it look like the economy is doing well.
Yes and no. Both the US and China are active in AI, and some other "growth areas". But growth in China is much more focused on manufacturing, whereas in the US it is the stock market and wealth effect that are playing a much larger role. I give you an obvious example. Both China and the US (Tesla) have expertise in electric cars. BYD sells about twice as many cars globally as Tesla, but its value on the stock market is only just over $100bn. Tesla is worth over $1tn, or something like 8 times that. So the wealth effect of EVs in the US is huge, through share price ownership, the real impact via employment link and cashflow effect is rather tiny (and likely to become smaller, as US policy changes delay or derail the transition to EVs). It is the exact opposite in China, where the government is supporting EVs and green energy on a massive scale.
@@lozkkobut tesla’s high evaluation comes from being recognized as a tech company instead of a car company
@@sponge4270truuu
So 5% for the second biggest economy is slow? In my opinion, the main reason for the ''slowing' is China becoming too big.
fejk Numbers
It is not becoming too big for its population. It GDP Per capita is still about 13k USD, it's not supposed to be slow down yet unless the economy is unhealthy in the first place
Higher, Faster and Stronger
Hi Joeri! will you cover the effects of the Donald Trump's one big beautiful bill, its long-term impact on the US debt and the conservative's rationale behind it? Miran and the council of economic advisors wrote a 27 page paper on it, so I'm curious to see what your thoughts are.
I am no economist, but have followed the news to recognize big differences between Japan and China. Japanese households save a disproportionally high percentage of their income, in cash and low-interest savings account. Japan's 'lost decade' was due to bursting of hugely inflated commercial real estate, together with higher value for the Yen imposed by the US (leading to less competitve Japanese exports in world markets). There was/is no housing bubble in Japan. In China, on the other hand, there is a huge still-unsolved over-invested real estate sector (both commercial and residential) which has tied up a BIG chunk of Chinese household savings. What the CCP government has done in the last 4-5 years is to force large Chinese financial companies (including insurance), but not state-owned banks, to buy and hold shares of financially insolvent property developers, with no effects to date. As their life savings effectively shrink due to practically in-default property developers they have not much and dare not to spend on, except the bare day-to-day necessities. Japan still has a lot of fully convertible cash (trillions of dollars) which has been invested overseas (in US, EU, UK, etc. bonds, as well as companies & factories). Chinese Yuan is still NOT convertible, and has to be carefully managed by this dual onshore and offshore setup. It is very STRANGE for a country like China, with its huge population (mostly still in the developing-country income range) to have presistent deflation.
The US on pace to have lost decades far worse than what we saw in Japan
People think deflation is bad, but only because big businesses have spent decades brainwashing us into believing so. Deflation is good for your average citizen, as it makes their money go further with each purchase. It only hurts larger businesses in the main.
You didn't mention automation which I think partially at least explains rising unemployment and deflation along with rising industry profits and productivity.
Absolutely accurate and onpoint anaysis. Makes me trust your analyses even more. Not as detailed as some economists that study China exclusively but totally forgivable.
Japan wanted to move their economy toward consumption based economy after the 1990s but stagnant till today. Meanwhile korea and taiwan follow export- growth model that helped them to reached japan level. I think china saw this study case and want to adjust between consumption based and export oriented economy. But the paradox is that china has much larger popoulation base so their industrial output will be larger and will the world can asorb it?
Thanks
This was a fantastic watch. Your channel is a total gem for cutting through the noise.
My background is in tech, so this is way outside my field, but I'm hooked. Any chance you could recommend some books on this? I'm looking for those "popular science" type books but for economics—the kind that explain complex stuff to a curious person who isn't an expert.
Can you please analyze the algerian economy?
看到这些西方人用资本主义思维和传统经济学观点来分析中国经济我真的觉的好笑，1.房地产在资本主义国家和传统经济学中是经济的一大支柱，但是对于中国来讲，它只是经济发展过程中，以及在某一阶段（提升城市化率）占据重要性，目前的中国城市化率目标基本已经实现，政府也已经认识到让老百姓承担过多的住房债务会降低其他方面的消费，所以选择主动给房地产市场降温，除了大城市稀缺地段资源，其他地区和城市让房子回归到居住属性，而且是当前收入可承受的范围内。2.中国国内的消费能力并不比美国低，可以看看中国每年的汽车，手机，电脑等各种生活必需品和各种食物消费量，数量都比美国多很多倍，从销售价值上感觉比美国低，主要原因是中国的物价低，以及人民币的汇率远远低于它的实际购买力。而美国之所以消费高，除了实物价格高溢价之外，更多是服务类消费价格比中国高很多，美国同类型的医疗，教育，法律，住房维护以及生活服务费用比中国高几十倍，中国上大学一年学费5000RMB，美国上大学一学期几万美元，中国看病一次只需几十美元，而美国都是几百几千美元起步。3.中国已经通过实际行动证明了要想发展并不一定要走西方那条路（殖民，掠夺，剥削，垄断），同样，消费型社会，借贷型社会也并一定是成为发达国家的唯一路径。提高生产力，发展科技，创造更好的产品，完善社会福利，也能刺激社会消费（比如新能源智能汽车让消费者愿意花钱替换老式燃油车，发展人形机器人可以让很多家庭把它当成手机，电视，洗衣机一样的生活必需品，高铁能让更多人愿意出门旅行，5G，6G快速低延迟网络能催生新型的职业和商业模式，自动化工厂能让生产力和生产效率提升，降低生产成本，让更多收入不高的人有机会购买产品，享受现代科技和生活，也能让人有更多休闲时间去旅游，产生更多服务型消费）。最后说一点，当西方垄断或者占据某类产品或行业的时候，他们的思维和策略是采用高溢价，高利润，让极少部分人享有。而中国人的思维是普惠，让更多人能使用它，拥有它，让用户量变得更多。想想看，难道非洲人，阿富汗人，拉丁美洲人，中亚人就不想要先进的智能手机，不想要自动驾驶的汽车，不想要低廉，稳定的电力，不想要家里有空调，洗衣机，不想要快捷低廉的公共交通，不想要优质的通信网络，这些国家和地区的孩子不想要优质的教育？拜托，是个人都需要这些。
You're right about a lot of this but "China has proved through practical actions that if you want to develop, you do not have to take the Western path (colonization, plunder, exploitation, monopoly)." isn't the most objective take, China has done all of that to some extent (less than the West obviously), and it has also been restricted from doing that in certain ways it wants to by the current geopolitical status quo. There's always an incentive to have and or be as big a hegemon as manageable and that drives things on both sides
講得好
@@J_C95 你所谓的中国某种程度上做到了这些应该是指中国制造的商品占据了全世界很多的细分市场，而且市场份额很大，中国控制了大部分的工业原材料（比如稀土）对吧？那我请问你，这究竟是中国太残忍，太霸道了，还是其他国家太菜了，竞争力太弱了导致的？中国是靠逼迫其他国家打开市场得到的这些？还是靠市场经济因素竞争得到的？而且到目前为止，这三四十年里谁才是真正获利最多的人，中国生产了大部分的苹果手机，但谁拿走了最多的利润？
It's not a bad thing to analyze China in wrong way, because it's precisely because of these experts that the US's strategies towards China are wrong every time. However, it should be pointed out that this video does not fall under the category of "mistake analysis". It has its own purpose, which is different from those purely misleading videos. Building confidence in capital towards the country is what the US needs most in this trade war. This video is one of the countless bricks used for this building,and intimidating capital don't go to China or they will lead to misfortune . because, the facts of the past two years have shown that even the Federal Reserve itself has difficulty getting American capital to cooperate with it.
是的，现在普通中国人能买到的最贵的工业品是汽车，再过几年就是人形机器人助手啦，想想都知道这个赛道有多宽
You completely miss the mark on foreign demand for green tech made in China.
Everything made in china is in high demand . That's why tariffs are placed to stop people buying from china
The problem with China transitioning into consumption economy is 2 fold, 1 Chinese people median salary isn't high enough to support a sustainable consumption economy with the population issue adding salt to wound, 2 more importantly, the Chinese culture around money, as a Chinese diaspora myself, the Chinese love saving money and reject consumerism, given China's lack of social benefits and safety nets, this makes sense, hence dun let their high savings rate deceive u, they need that money cos there's no backup, also their affinity toward real assets, hence property but the trust towards that sector is gone, hence they are buying gold, they generally view paper assets like equities with distrust and think it's speculative, hence there's less private capital to invest in new businesses, and crypto is banned in China
Good analysis.
I kind of find it hilarious to view equities (which are generally cash flow producing assets) as more speculative than gold (a commodity with a price that's almost entirely pure social speculation).
@@arbohillThat's mainly because the Chinese goverment has extreme control over the chinese stock market.
There you borrow a stock from the goverment.
@@arbohillTou don’t really own your stocks in a totalitarian regime, political risk is real.
I don't get it, why don't they just finance their burritos on Klarna like the greatest country ever
I feel China is more interested in "taking" key high-tech industries from rest of the world (especially the West) than sustainable growth. They are betting they can outlast all other economies in subsidies.
Sure, major economies (EU, Japan, Brazil) can ban Chinese car and airplane imports, but what do they do if their own industries cannot export any of their own products for a profit for a decade?
If a German/Japanese car costs $30k but a Chinese car costs $15k, it is hard to convince non-luxury buyers in 3rd country (e.g. business purchases) to buy German/Japanese.
Luckily Chineese cars are shiet (dissolve after 50k km of usage). So more and more they will geta fair coverage on their quality
搶奪？那太低能了，現在中國流行的是自主研發與繞過西方專利，一來是不需付出專利費，二來會國內歷史留名，所以卯起來做。
No one is buying Chinese EVs in meaningful quantities outside of China. Even if half the price, no one is willing to spend $15k on junk.
China doesn't believe in the same economics that normal economists believe
They have their own school of economics called the marxist school of economics and follows their own economic theories
I feel sorry for actual economists who wasted 30 years of their life learning a junk science
A junk science that china rejected, made their own plans going against economic theories, and did what economists said was impossible and grew from 3rd world to the world's most powerful economy over 50 years
@@張恩霖-c9w rewind your propaganda head
Thanks!
This guy is deeply confused. He had an entire video about how it would be a bad idea for China to invest in R&D, technology, and science. Literally the definition of innovation. Except to economists innovation is just supposed to be a slogan to manipulate the stock price.
He also basically discredited his own video about China lying about its GDP, though makes it sound like having a discredited video is no big deal. The fact he now feels confident about China's GDP based on just one US think tank report suggests that his earlier video about China lying about its GDP wasn't well researched at all
You misunderstood what he meant. What he meant was that Western countries' investment is right, but Chinese investment is wrong. No matter what China does, it is wrong. This is a typical double standard with a preconceived position. Why did he say that investing in the research and development of science and technology is a bad idea? Because related Chinese industries will squeeze the market share of related Western industries. So it is wrong. This is the most common expression of Western media people. Shameless and hypocritical.
@@poshbo yeah he just keeps getting shit wrong over and over again
@@zachroush3816 I think the problem is that he, like many Youtubers, is under pressure to constantly release popular content so he has to cover a wide range of topics, including some in which he has limited expertise, such as China. That's in contrast to the videos about topics that he clearly does understand, such as the Netherlands and Europe.
He overall has a very Western-centric view of China and the non-Western world, but that's difficult to change unless he gets the opportunity to actually live in China and experience it directly. He's also too much of an academic so he gets caught up in academic writing and loses sight of the real world
@@poshbo Lol. It has been proven in history over and over again that people outside China talking about China end up being more accurate than the useful idiots that 'live in China' and 'experience it directly'. As it is with China, so it was with the Soviets.
I think the core difference here is that the popping of the Chinese housing bubble is a controlled and deliberate endeavour to bring property prices under control and reduce housing's dominance in their financial markets: a controlled deflation, rather than a pop per se. In some parts of China, the average property value to average income exceeded 40, with entire families saving everything they could to buy a low quality one bedroom shoebox for their youngest generation family members. While increasing property prices enhance consumer spending, higher property prices reduce consumer spending (i.e., the act of them rising increases consumer spending, but the absolute value of property prices being higher reduces consumer spending, thus to pump up a property bubble is to essentially steal consumer spending from the future economy and bring it to the present), and this reached a crisis point in China. Indeed, it is still a crisis and is one reason why they can not transition to a consumer economy, they must deflate their property bubble to do so. If they do so too quickly however, then the contagion effect on the rest of their economy will be diabolical, so they deflated it themselves, early, before it popped on its own. In doing so, they gradually bring down the property price to wage ratio to more sane levels, gradually freeing up more capital to go into their stock market (for additional industrial investment) and consumer spending, and by ensuring that this is both sufficiently gradual whilst also encouraging industrial lending, they keep their economy ticking along and growing, particularly into higher value added industries that require a lot of investment, which is an additional goal of theirs: to move up the value chain.
With all the above said, I expect that this current state of affairs, i.e., falling property prices, with an economy that still achieves reasonable economic growth (although obviously well below the stratospheric 10% growth rates that they were achieving before) will endure for another decade or two, it needs to, to bring property price/ average wage ratio to a reasonable level, at the current rate of change, and I don't think they will either accelerate the process or halt it any time soon, for the above reasons.
说得对
Watching more, the problem is that consumption led growth is inferior to export-led growth. Economic output, in the long-run, is driven by investment. Someone has to buy the items investment outputs, and making foreigners do it is better than having your own consumers do so.
But with an economy the size of China's, you will inevitably hit saturation. China I think is aware of the need for consumption-led growth, but wants to put it off as long as possible, because that's China going from 5% to 3% growth.
Moreover, the high tech industries China wants (EVs, batteries, semiconductors) allow China to do a final investment burst; it is de facto out of the Middle Income Trap, but after that, it's stagnation.
Thanks!
It’s going through a detached reality where top of the pyramid is pushing the numbers higher but the base of the pyramid is not getting any of that benefit and is collapsing.
Growing up in China, I watched the government repeatedly over doing things, then do hard turns again and again. The hardline one child policy leads to shrinking population, hard turn to promote more children. The focus on infrastructure which started well but eventually became excessive and money losing infrastructures. At the same time, to avoid the middle income trap, the government promotes consumer investment to shift towards service economy. Of course it lead to the huge bubble which it then ordered a hard stop, crashed the housing market and wiped out consumer wealth and spending. So never mind about the previously promoted consumer and service economy, double down on export instead. Which of course makes other countries mad about their own industries and put up trade barriers... It's interesting to watch the hard 90 degree turns over the decades. Fortunately I was about to study abroad and now live comfortably overseas. The domestic economy is hard, lots of unemployment and stagnant wages, especially for the millions of university graduates who are now deliving food or doing live streaming instead.
没办法，人口过剩，资源匮乏，能力强的都移民了，留下的也就会拍脑子
Yep finally someone who really knows what theyre talking about and not just paid to spee chinese propaganda
Snapshotor
Yeah a sensible government will change its policies depending on the country's circumstances, I don't see how that's a bad thing.
Also, all the issues China is experiencing is basically reflected in most economies in the world. Wages in most developed economies have barely grown faster than inflation since COVID began, underemployment is a serious issue (e.g. Canada has a 7% unemployment rate but is probably higher if you count uber drivers and fast food workers) or barely straddling a recession (like the UK economy which shrunk last month or the US economy which shrunk in Q1). All things considered, China isn't doing much worse than most other countries.
@@hankhill6707 disagree only with "isn't doing much worse than most other countries"
much better
In China guy with 600$ income can buy twice more than guy from US with 3000$
It is not an economic miracle. Deflation can indeed work simultaneously with high economic growth like the US in the late of the 19th century.
Yes, the CCP is actively trying to keep prices low, and even reduce some existing prices. It's all to create "common prosperity" so that people on lower incomes can still enjoy a higher quality of life. Anybody that lives in China and who uses online shopping apps like Pinduoduo, Douyin or Meituan can see this.
I recently had a Sichuan dinner with my parents at a nice restaurant in Beijing that cost just RMB 130 (USD18) total for 3 people. A few days later we had a very nice Peking duck dinner at another nice restaurant for just RMB 240 for 4 people. Both were paid for by purchasing vouchers from Douyin (Chinees Tiktok). I suspect Douyin was subsidising the cost of the dinners at the behest of the government, all part of "common prosperity" (though foreign visitors cannot easily use these apps which are all in Chinese and require a Chinese phone number).
And you're right that high economic growth can sit alongside lower prices; it happens whenever a wealthy country gains access to cheap imported goods. Think about how much cheaper toys, clothes and electronics became for US consumers after Asian factories (initially Japan, Korea, Hong Kong and Taiwan, then China) started pumping them out for much lower prices than did American factories.
One of the most impressive experience, I've ever had was my trip to China. You can just feel the energy pulsing there.
Much of urban southeast Asia feels like that, places like Jarkata, Manila, and Hanoi are building like crazy. Still small potatoes compared to Shenzhen or Guangzhou
depends on when you went there: Prior to covid yes, but after covid, no way not even close to how it was during the golden years.
@@toom2141I went last year. It was quite something
When though? I felt way more of that energy in Indonesia and the Philippines since China’s Zero-COVID finally ended
@doujinflip I have no idea what you are talking about. I'm in Indonesia now (Jakarta) and it's feels very behind China in everything....
There is nothing new about this. That's how the west first started out in the first place. When China refused to import, they even used warships to force them to import. Japan didn't fail because its own policy per se, but because 1. it replied too much on a market that it has no negotiation power against. 2. China replaced it and forced it out of a lot of markets. 3. Capital market liberation, again being forced upon it by someone. It is funny how economists keep on coming up with new excuses for their failed predictions.
BTW, Chinese are consuming. They are the largest market for a lot of things already. Economists just choose to be blind to it while also claiming Chinese labor is too expensive to sustain its industries. So now we know, Chinese are paid a lot (according to economists), Chinese industry is booming (according to economists), Chinese are so poor that they are heavily indebted (according to the same economists), so where did the money go?
Yes, if the observable data does not agree with your theory, there must be something wrong with the data.
The chart at 10:43 has updated on its X account, showing that the loan to the industry falls rapidly, because of Beijing's "anti-involution campaign"
That's very recent. It's largely because the excessive export is not sustainable. With more and more countries putting up trade barriers, the export companies are now fighting each other for a shrinking pie and are killing each other. This is a direct result of the previous policy to push for more export causing a international pushback.
@@xiphoid2011 It's also something the govt. wants, for several of the sectors with dozens of firms to consolidate down to about maybe half a dozen national champions. That's why they pull back subsidies once the sector has matured, to force only the best firms to survive - and likely gobble up the less effective ones.
Anti-China account 😂
@@xiphoid2011 you are wrong. china policies are always shifting, that is why they are winning. think of economy as a football game. you do not always use the same formation and tactic for the entire match. china pushing industrialise expansion was the right move because it created experience and talented specialist who would go on to found their own company even without any subsidy. this cannot happen without the 30 year industrial material plan and 25 year manufacturing plan.
this dellusion of countries pulling up barrier make no sense in reality when ASEAN just concluded yet another new FTA with China under pressure from US tarriff, so the world is moving closer to China not further from western deglobalization threat. free trade always grow the pie. the west might not understand economic anymore, but Asian do. you have to realise, most of the world cannot produce the type of equipment china can, there is nothing to protect when we don't make cars in the first first. this is why countries like australia is so open to chinese EV, because there is no australia car company to protect.
alot of the time we have european and american projecting their own national problems and assuming it the same for all other countries, this is simply not the case. most countries will not have a car industry because it make no economic sense for everyone to build their own cars. at most, you ask for local assembly, but the part will still come from Japan and Germany so why not from China if it is cheaper? that's the decision most countries are making.
@@lagrangewei > lot of the time we have european and american projecting their own national problems and assuming it the same for all other countries,
As opposed to this arrogant Singaporean and his emotional tangent?
Great content! Keep up the good work!
Thanks, will do!
@@MoneyMacrodidn't you made same absurd claims as before
There was a very big assumption stated in this video - that all advanced economies become mainly service economies. But surely the examples of this you might point to are all neoliberal economies which have deindustrialised and become dominated by finance and real estate. Such economies are in a very poor state with slow or non existent growth, falling living standards and public serices, and an increasingly discontented electorate. Why on earth would China want to copy this model? Instead they have consciously decided to reduce their property market and focus on high end manufacturing and tech. This seems an eminently sensible strategy.
By the way, Michael Pettis stats on chinese consumption are wrong - consumption and living standards are rising and falling consumer prices are helping this.
100% agreed! De-industrialised is not even an option for China.
Seems wise. All that neoliberalism has done is create an endless death spiral of borrowing and austerity, with weakened workers' rights to boot. Basing your economy solely on speculation leads to disaster...mind-blowing revelation!
I totally agree. Neoliberalism is a failure, homelessness virtually non existent in China while in the peoplearebeingwipedout . I think his confusion is from Neoliberal brain washing.
@Junkyboi-e9t7u when you said "China has world domination goals", that basically put all your argument to null.
the core of industrial power is the good infrastructure, efficiency in management and the availability of work force, clearly China knew it will face a demographic problem just like every other nations as better living condition would mean people rather want fewer offspring, in general.
so thats why they going full force in automation, other country will have a very hard time to compete with a country where they have very concentrated industrial capacity, and availability of automation. (you can get parts or material for your factory in close distant, something not many country can achieve)
India's problem lies with its education, a huge "young" population would only land you in the lower chain of the manufacturing network, which China once at, you want to compare both country's literacy rate and STIM graduate? also their infrastructure is clearly not helping.
@Junkyboi-e9t7u That is why strategies like subsidies and protectionist policies are necessary for the stage that China currently is. Instead of de industrializing because "that's the third stage of econ development". A balanced approach is needed and a nation needs to acknowledge that certain strategic goods should be produced domestically and protected. The other option, the de industrialization over night due to a completely open market, can be disastrous in the long term, leading to other serious problems that western economies face.
Japan has lost 3 decades, mostly due to it has lost all new industries. Such as home appliances, Electronics, TV, fridge, wash machine etc, and Internet, apps, Smartphones, EVs and AI. It lost all these industries to China and South Korea. Aging population and low birth rate is same among China , South Korea and Japan. I m Chinese and our Plan is to take over All the Advanced manufacturing and modern technology, become top tier in All Sectors. The aging population will not be a big problem because now we installed more Industrial robots than the rest of the world combined.
Entirely off topic. But when did the term "vicious cycle" get replaced with "doom loop"? I'm not complaining, they both describe the same thing clearly. It's just that I never heard the term "doom loop" until like 2 years ago, and now it seems to have entirely replaced "vicious cycle" in all the media i consume. There must have been some influential driver of this new term to have switched common use soo rapidly, but i have no idea what it was. Just brought it to mind because in this vid, even when compared directly to a "virtuous cycle" the term "doom loop" was still chosen, instead of the direct opposite. Seems like if "vicious cycle" was ever going to be used, it would be then
Interesting remark. Happened subconsciously for me.
Two-thirds of China is urbanized. There is still a great deal of opportunity to build infrastructure. China is nowhere near done doing this.
There’s a massive difference between building infrastructure and building productive infrastructure sure they could build highways between two towns of 50 people over mountains, but it would cost more than there would be economic benefit from it.
Less than half by what metric?
A small town in China is 2 million people, not 50 people. 😂
@@johnlynch1353 China's infrastructure is overall very productive. Less used infrastructure serves to unite the country.
@@horridohobbies most of their infrastructure is productive. Yes, most of the infrastructure they could still build however is not, and you can’t pay back debt with a hug.
Most economies are complex and multiple things are happening all the time. Properties may be down but infrastructure construction maybe up or oil prices may be up or down.
A high service or consumption based economy is fine for some but a disaster for others.
Any country with a large population and few natural resource needs to export manufacturing. If you want to export, you need to keep cost down.
Any government that does not plan or tune it's economy is not a government.
I think you can only understand Chinese economy by understanding the principles of a socialist market economy
It's the foundation of knowing what they try to achieve, why they try, and how they'll try
It's far from perfect, but from when here I'm sitting in the equally imperfect Western Europe - it's starting to look they're more successful than any capitalist market economies
Sees economic planning "Omg guys it's another miracle!!"
you can fuck up economic planning as easily as you can make it succeed, that's what makes successful planning "a miracle"...
@MoneyMacro - 2025-07-14
Get access to global coverage at an exclusive 20% discount at https://economist.com/moneymacro
Further reading from the Economist:
1. https://www.economist.com/science-and-technology/2024/06/12/china-has-become-a-scientific-superpower
2. https://www.economist.com/china/2025/07/03/chinas-growth-targets-cause-headaches-even-when-met
3. https://www.economist.com/finance-and-economics/2025/06/30/xi-jinping-wages-war-on-price-wars
@matrixfull - 2025-07-14
Hmmm I don't like China per say but I also don't want their downfall. It would negatively impact consumers all over the world. I hope there is some good status quo solution where both "west" and "asia" can be prosperious together. Economical ties also prevent many wars ( unless you have complete madman like Putin who doesn't care about pros vs con calculations but he's kinda exception ). There were so manyy wars in Europe before EU. Protectionistic economical system worldwide is very dangerous. More intertwined we are more we talk and understand each other higher the price of starting a war gets thus making it too high to be worthwhile.
@zodiacfml - 2025-07-14
simple, there is too much propaganda against china. truth is China's economy not comparable to anything especially they have more sense of urgency and less local politics/corruption. EVs and renewable energy are no brainers for prosperity but no other country does it like China whereas US should be the powerhouse of investments into these. US also slacked on semicon or chips which I think China will dominate in a decade or two, depending on perspective.
@youxkio - 2025-07-15
China will beat the EU's green targets before anyone else. Soon, the EU will have to adapt fast and competitively, compared to China, if the EU really wants to achieve its self-imposed green targets. Otherwise, the EU will have to import more green products from China to achieve the green targets, as China becomes SPECIALIZED IN ITS MAIN INDUSTRY ;). Thanks, Joeri. This is quite an inspiring one.
@sumanadasawijayapala5372 - 2025-07-15
Respectfully, the Economist and most Western outlets are poor sources for understanding the Chinese economy.
None of them predicted how far China has come.
6:00 Again respectfully, it is utter nonsense and mirror-imaging to believe that Chicom decisionmaking rests on lobbies as in the West. Just look what happened to Jack Ma. They keep their big business on a tight leash while letting the smaller players compete ferociously and drive down prices. We have the opposite model in the West where we keep the small guy on a leash while letting big business dictate to the govt.
The Chicoms rely on real-world production concepts like labor force composition, human capital, tech/IP, institutions etc., not abstract Western economic ideas like savings and consumption.
There is a point of view that the Chicoms do not necessarily oppose consumption as a component of domestic demand but they do oppose direct income transfers to households.
They prioritizes full employment as employed people make the best consumers.
The export sector is no longer driving growth. This Western view of China is 15-20 years out of date. The export market is now shifting to the developing world bc China is much less dependent on Western tech.
Since the GFC, construction has been the driver. Beijing is trying to transition to advanced manufacturing primarily for the domestic market (and secondarily for the developing world). For now, CHina is utilizing its aging blue collar labor to build as much as it can before it disappears.
There will be fewer advanced manufacturing jobs, but that high-productivity sector will result in high wages which in turn will support service sector jobs.
Credit to Glenn Luk
@wuwuyu-lz9py - 2025-07-15
😊