[HN Gopher] 2022 Letter
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2022 Letter
Author : jger15
Score : 75 points
Date : 2023-03-04 15:52 UTC (7 hours ago)
(HTM) web link (danwang.co)
(TXT) w3m dump (danwang.co)
| marianatom wrote:
| China is in a state of terminal decline and closing off to the
| world, barring any huge macro trend reversal (CCP loses power)
|
| - Factories are quickly moving out of China. Judging by the
| recent -40% export collapse from Hong Kong
| https://asia.nikkei.com/Economy/Trade/Hong-Kong-exports-post...,
| where Hong Kong serves as the main hub to transport stuff out of
| China, at least 40% of factory outputs have moved out of China. A
| few apple suppliers have confirmed the fact
| https://fortune.com/2023/02/28/airpods-maker-goertek-apple-s....
| Unlike the majority consensus on hacker news that "it's too hard
| to move out of China", almost half the factories that were in
| China in 2022 had already left. The factories that left and went
| to Southeast Asia are mainly from the Guangdong and Shenzhen
| regions.
|
| - Apple, a China laggard, has finally decided to pull the string
| and move itself and all its related supply chain out of China.
| Tesla is building its next big factory in Mexico. Samsung has
| completely left China. Dell is asking all of its suppliers to
| move out of China. The list of technology multinationals leaving
| is increasing day by day. The age of China's hold on
| technological supply chain is over.
|
| - There's about 80% reduction in retail activities in China, 50%
| reduction in home prices, and 80% reduction in labor demands.
| Judging from on the ground testimonials from social media in
| China, such as https://www.youtube.com/@realchina,
| https://www.youtube.com/@baixingzhengxiang,
| https://www.youtube.com/@XMKZG666, https://www.youtube.com/@ZGQSL
| (need to understand mandarin to view). There are millions of
| unemployed young men walking the city streets, and millions that
| have gave up and returned to the country side to farm. There are
| people with entire savings lost in real estate and small
| business. It's a very volatile situation.
|
| - China's unwavering decision to be friends with Russia with "no
| limit" is slow changing into "directly giving military aids". US
| and EU is threatening sanctions on China for this, something that
| most on this board would consider impossible a year ago.
| throwaway4good wrote:
| Yet China is set to come out of 2023 with GDP growth above 5%
| with numerous economic forward indicators indicating a massive
| rebound, ie:
|
| https://www.reuters.com/markets/asia/china-feb-manufacturing...
|
| China's factory activity stuns with fastest growth in a decade
|
| BEIJING, March 1 (Reuters) - China's manufacturing activity
| expanded at the fastest pace in more than a decade in February,
| an official index showed on Wednesday, smashing expectations as
| production zoomed after the lifting of COVID-19 restrictions
| late last year.
|
| The manufacturing purchasing managers' index (PMI) shot up to
| 52.6 from 50.1 in January, according to China's National Bureau
| of Statistics, above the 50-point mark that separates expansion
| and contraction in activity. The PMI far exceeded an analyst
| forecast of 50.5 and was the highest reading since April 2012.
| marianatom wrote:
| Government numbers, enough said.
|
| This is a government that just raised the retirement age from
| 60 to 65, proclaimed that one can take on a mortgage at age
| 70 and let the heirs inherit the mortgage, and do not issue
| passports freely. Where its banks has delayed its customers
| from paying off mortgage in full, and from withdrawing large
| amount of cash. Does that sound like a healthy economy?
|
| Again, watch online testimonials from average citizens, and
| you will see entirely empty malls in Beijing, Shanghai, and
| Shenzhen: https://www.youtube.com/watch?v=oApzG9ycwkw,
| https://www.youtube.com/watch?v=jBpybdnYVEs
| throwaway4good wrote:
| You can also look at the US-China trade numbers which are
| at record high if you don't trust the Chinese government.
| marianatom wrote:
| that's for 2022. 2023 numbers will be horrendous, based
| on the 40% export collapse seen in January 2023.
|
| Hong Kong exports post biggest plunge in 70 years
| https://asia.nikkei.com/Economy/Trade/Hong-Kong-exports-
| post...
| throwaway4good wrote:
| No. They won't. That's what the manufacturing PMI shows.
| jjeaff wrote:
| What accounts for a 40% collapse? That's an enormous
| shortfall for such a large economy.
| marianatom wrote:
| - factories in Southeast Asia that were started shortly
| after the Trump sanctions in 2017 or covid 2020, that
| have finally come online
|
| - CHIP act in mid 2022 from Biden that spurred Apple to
| finally drag its immoral lazy feet
|
| - Russia invasion of Ukraine, and Chinese proclamation of
| friendship with no limits shortly after
|
| - covid lockdowns in China in early 2022 that shut down
| factories
|
| - increasing electric rationing every year in China that
| shut down factories
|
| - Foxconn factory riots
|
| - very loud geopolitical risks that C level execs can no
| longer pretend not to hear
|
| - can't move money out of China. 'I can't get my money
| out': Billionaire investor Mark Mobius says China is
| restricting flows of capital out of the country.
| https://markets.businessinsider.com/news/stocks/mark-
| mobius-...
| vehementi wrote:
| > - can't move money out of China. 'I can't get my money
| out': Billionaire investor Mark Mobius says China is
| restricting flows of capital out of the country.
| https://markets.businessinsider.com/news/stocks/mark-
| mobius-...
|
| This has been true for 10+ years
| seanmcdirmid wrote:
| A lot of that GDP growth is in real estate, construction,
| tearing things down (GDP!), building new things (GDP!),
| tearing them down again (also GDP...), repeat. Youth
| employment numbers will give you a better idea of how the
| economy is really doing, I've been through plenty of non-
| recessions in China where growth is still amazing yet kids
| are having trouble finding jobs.
| marianatom wrote:
| China's youth unemployment is at 20% end of 2022.
| https://www.france24.com/en/asia-pacific/20221021-i-feel-
| lik..., a Great Depression type of number. With the recent
| estimated 80% reduction in factory jobs in 2023, One can
| assume the unemployment is a lot worse than 20%. If you
| look at some of the online videos, you will see factories
| that are now requiring only female workers, workers under
| 23, etc. You will see 100 people in line for 3-4 positions.
| Convolutional wrote:
| > China is in a state of terminal decline
|
| People have been saying this 1949.
| whendoyoushrink wrote:
| And they were right for 35 of those years. Will they be right
| or wrong in the next 35?
|
| Wealth is a headwind against bad policy. Rich nations can
| survive many, many bad policies simply because they are rich.
| The policies it takes to get rich, stay rich, and continue to
| grow into the future all vary, and the transition is
| difficult to manage.
|
| I think the relevant question is: are China's current
| policies pushing the country in the right direction? I don't
| see how they are.
|
| Jack Ma shows how dangerous it is to be truly successful, so
| the next generation will at best be more conservative in what
| they pursue, and at worst won't even try. Given Western money
| won't be investing any more - the ability to realise capital
| gains is growing more difficult - and the CCP steals the
| wealth of potential investors, not being able to pursue big
| bests is probably inevitable anyway.
|
| China has AWFUL demographics that are getting worse - their
| population is projected to be 650M by 2100 - and worse it is
| aging fast, with > 50% post retirement age in the next decade
| to 3.
|
| On top of that, the CCP has re-emerged as the only force in
| China. CCP officials see stealing the wealth of other's as
| their right - a twist on the old joke to "the problem with
| socialism is that eventually you run out of other people's
| fortunes to steal".
|
| Minimal foreign investment, killing internal investment by
| stealing the wealth of anyone rich, rising wages, awful
| demographics and a polity determined to remain isolationist
| (with few to any friends) and knock down the high achievers
| sounds like a recipe for imminent (in the decades sense)
| collapse to me. Not to levels of Sub-Saharan Africa, but even
| just with their population decline, China's GDP is going to
| fall in absolute terms, even if their GDP PPP per capita can
| be improved.
|
| The scary thing is a Nuclear China in decline is likely to
| become increasingly erratic. Hopefully, the war in Ukraine
| gave China some pause, but having gone from starvation to
| world's largest economy in a generation, I'm not sure China
| is equipped for stagnation, let alone decline. I feel bad
| rooting for a likely vicious and brutal CCP internal
| crackdown over invasions of their neighbours, but that seems
| to me the lesser of two possible evils.
| vehementi wrote:
| Well depends on what terminal decline means. GP added the
| caveat of regime change. You can't be right for X years and
| then wrong thereafter, that just meant you were incorrect
| that there was _terminal_ decline.
| Upvoter33 wrote:
| and, wow, it was true under Mao.
|
| In 1960, something like 30 million people starved.
|
| GDP up until the 80's was like that of a small US state.
| Barrin92 wrote:
| while Mao's era was comically brutal and took a wrecking
| ball to economic development it also unified the country
| (China's foremost problem throughout thousands of years of
| history), life expectancy jumped by 30(!) years, and the
| country obtained universal literacy. Today in India a
| quarter of the population is still illiterate.
|
| The evaluation of Mao's legacy seems somewhat emotional,
| short-sighted and ahistorical given that modern state
| formation, for example in Europe, was almost always
| preceded by catastrophic violence.
|
| And of course the rise of China in the following decades
| invalidates the claim that China 'declined terminally',
| unless we're literally inverting the meaning of the word
| 'terminal'.
| bsder wrote:
| > Apple, a China laggard, has finally decided to pull the
| string and move itself and all its related supply chain out of
| China.
|
| Apple got shaken down by the Chinese government right before
| Covid. If they didn't finally pull the plug after that, I would
| have to question whether anybody was awake at the helm.
| mtlmtlmtlmtl wrote:
| I wonder what happens when Western megacorps run out of third
| world to put their factories in.
| satvikpendem wrote:
| That means wages have equalized in every country, which is a
| good thing. I was talking with someone a few years ago who is
| from one of these third world countries who lamented that
| corporations were coming in. I asked them whether they
| thought the people who worked there would prefer a relatively
| stable factory job over backbreaking farm work, factory jobs
| which usually pay more than the average wage of the area
| anyway in order to entice people to start working there. Free
| trade is good.
| bryanrasmussen wrote:
| >That means wages have equalized in every country, which is
| a good thing.
|
| maybe climate changes makes lots of hotter countries
| unlivable.
| throwaway4good wrote:
| Foreign companies in China will probably do fine as they live
| in the real world and not in the wild world of politics and
| speculation.
|
| https://www.bbc.com/news/business-64563855
|
| US-China trade hits record high despite rising tensions
|
| Trade between the US and China hit a record high last year
| even as their diplomatic relations deteriorated.
|
| Imports and exports between the two countries totalled
| $690.6bn (PS572.6bn) in 2022, official figures show.
| mtlmtlmtlmtl wrote:
| Really not sure what trade relations between the US and
| China has to do with the very general strategic practice of
| placing factories in countries with low wages and limited
| worker rights, in order to cut costs.
| throwaway4good wrote:
| China is not the cheapest place in terms of labour costs.
| Hasn't been for decades.
|
| But my point is that contrary to the rhetorics and the
| politics, western countries hasn't stopped trading with
| China, actually the opposite has happened.
| mostlysimilar wrote:
| Hopefully put them in their home countries.
| twblalock wrote:
| Increased investment in automation.
|
| Factory work is not going to come back to the west in a big
| way. Labor costs would make goods more expensive than
| customers would be willing to pay.
|
| When there are no more humans willing to do the work for
| cheap, which will happen when the third world catches up with
| the first world, everyone (including third-world factories)
| will pivot to robotics and automation as much as possible.
| _dain_ wrote:
| > China is in a state of terminal decline and closing off to
| the world, barring any huge macro trend reversal (CCP loses
| power)
|
| While everyone would love this to be true, I've been hearing
| this shit for a decade.
|
| I'll believe it when there are Islamic dronelords rampaging
| through the hinterlands of Sinkiang province, neo-steppe
| cyberwarriors laying waste to Peking, and Elon Musk has a
| territorial concession over Shenzhen.
|
| That's what a proper true-blue "China collapse" scenario looks
| like in the 21st century, accept no substitutes.
| Dah00n wrote:
| >While everyone would love this to be true
|
| Please speak for yourself only. Also, not everyone want bad
| things for others because of some hatred guided by
| politicians. PRC is no worse than the US - just different.
| [deleted]
| [deleted]
| seydor wrote:
| "China is terminal" is such a strong meme now that the Chinese
| will sure find a way to capitalize on it. And pay some
| royalties to Zeihan
| Simon_O_Rourke wrote:
| The Apple-focus is indicative of a wider trend - viewing China
| and its economy through a Western lens - even seeing what we
| want to see. The CCP is going nowhere, the market while having
| taken a recent hit, is in no way about to collapse.
|
| > There are people with entire savings lost in real estate and
| small business. It's a very volatile situation.
|
| The same could be said of NYC or Switzerland in the previous
| couple of years too.
| marianatom wrote:
| Export is 20% of China's economy, real estate is another
| 20-30% of China's economy. That's 50% of the total economy.
| Based on on the ground estimate (short sale/foreclosure by
| the court figures), real estate price has collapsed 50%.
| Based on Hong Kong numbers, export has collapsed 40%. The
| vicious cycle of collapsing demand -> job losses -> weakening
| spending -> investments pulling out -> collapsing demand will
| see no end.
| whendoyoushrink wrote:
| Can you clarify what is "the market"? The stock market? The
| economy?
| kilgnad wrote:
| >The Chinese state is usually levelheaded; but every so often it
| succumbs to a manic episode, in which it grips the population,
| not relenting until it has shaken them out of their pots for
| backyard steel furnaces, out of their schools for class struggle,
| or out of their minds for dynamic zero clearing.
|
| What happened here isn't a case of the government going insane.
| What happened here is the case of the government making a
| hypothesis and then being completely wrong about the hypothesis.
|
| China isn't the only country that has been wrong. Parts of the US
| was definitely wrong about the pandemic in the initial stages and
| they suffered for it as a result.
|
| If omnicron turned out to be as lethal as ebola or equivalent
| than China took the right action. That is really all there is too
| it. They took appropriate action for a coming disaster and they
| turned out to be wrong about the disaster.
|
| The interesting thing here is not the fact that China was wrong.
| The interesting thing is that if China was right, then China is
| literally the only first world country with the capability to
| execute these drastic measures at a massive scale. From these
| massive lock downs to the creation of hospitals to deal with the
| fallout in mere weeks... illustrates the true controversies
| between authoritarian and democratic governments.
|
| As a US citizen I grew up indoctrinated on freedom and democracy.
| But the truth is actually not so black and white. Either way I
| know which government I'd rather be under if a zombie outbreak
| broke out.
| jddj wrote:
| There's a bit of a glaring omission here.
|
| They persisted with covid 0 well into mid-late 22. It was very
| clear 2 and a half years into the pandemic that covid was not
| ebola.
|
| Hard-line initially is defensible, rationalizable.
|
| Later not so much.
|
| The other conclusions seem off too. Other Asian and South
| Pacific countries demonstrated their willingness to lock down
| and turn more authoritarian in the face of an unknown threat.
| They pivoted though.
| kilgnad wrote:
| >They persisted with covid 0 well into mid-late 22. It was
| very clear 2 and a half years into the pandemic that covid
| was not ebola.
|
| It was not clear what omicron was.
|
| Anyway I don't entirely blame them for maintaining the
| hardline even well past the advent of conflicting evidence.
| This is actually normal human behavior. People cannot flip
| their opinions and beliefs in the exact instant they are
| presented with opposing evidence. Humans just don't work this
| way. There's no individual or government that will reverse a
| policy and admit a mistake instantly. Literally not one. It's
| not right, but I don't expect any other form of behavior from
| a human or humans running an organization.
|
| >The other conclusions seem off too. Other Asian and South
| Pacific countries demonstrated their willingness to lock down
| and turn more authoritarian in the face of an unknown threat.
| They pivoted though.
|
| Naw not at the scale of China. It's easy for a small island
| to execute lockdown. It's extremely hard for a landmass as
| large as china to execute the same thing.
| rippercushions wrote:
| > What happened here isn't a case of the government going
| insane.
|
| You're missing Dan's references to the two notable previous
| cases of the Chinese state adopting batshit insane policies and
| persisting with them for years, namely the Great Leap Forward
| ("their pots for backyard steel furnaces") and the Cultural
| Revolution ("out of their schools for class struggle"). Both
| were calamitous, directly leading to millions of deaths, and
| accomplished nothing at all of use.
| kilgnad wrote:
| How am I missing those? Yes those are cases of the Chinese
| state being insane.
|
| But what does this have to do with the Chinese response to
| covid? My comment is specific to the example I quoted in the
| specific post.
|
| I think there's a bit a team mentality going on here. Pick a
| team. Team China or Team USA and the opposing side is a
| villain.
|
| What's really going on here is not a team situation. Just two
| different fruits: Apples and Oranges. Both can and Have gone
| rotten at times.
| dmitriid wrote:
| If there's a seemingly "free region" that everyone knows about
| and deflects to, you can be 100% sure that the state knows about
| it, knows everyone who "deflected" there, and keeps tabs on
| everyone.
|
| A smart authoritarian government will have these "free" zones as
| a pressure release valve:
|
| - Most active dissidents jailed
|
| - Active dissidents allowed to flee the country
|
| - Somewhat active ones allowed to "flee the regime to the free-
| thinking zones far from government control"
| rippercushions wrote:
| It's not a "free" region, just a remote, poor province where
| the central government is less relevant. As the Chinese say,
| Shan Gao Huang Di Yuan : the mountains are high and the emperor
| is far away.
|
| If there was a genuine insurgency, as in Xinjiang and Tibet,
| the central government does get involved and stomps down hard.
| yuy910616 wrote:
| Feels weird to read about Dali in such context. As a 90s kid who
| grew up reading Mr Jin Yong's books, and the only thing I know
| about Dali is Liu Mai Shen Jian
| awinter-py wrote:
| props for citing any scott book other than seeing like a state
|
| the word 'legible' doesn't appear here once
| blindriver wrote:
| The title is so mundane, and the first dozen paragraphs weren't
| very interesting, but I'm very glad to have persevered through
| it. His first-hand account of COVID in China was one of the most
| interesting I've read in a very long time. It was great! If he
| could create a separate, edited version focusing on just COVID in
| China, it would be newspaper/magazine worthy!
| netsharc wrote:
| Looking around his site, he did write about Covid in China in
| magazines, one article in April 2020[1], curiously entitled
| "Life After COVID-19", and one in April 2022, during/after the
| Shanghai lockdowns.
|
| [1] https://nymag.com/intelligencer/2020/04/life-after-covid-
| the...
|
| [2] https://nymag.com/intelligencer/2022/04/locked-down-in-
| shang...
| netsharc wrote:
| What an interesting piece of writing! Even after you think it's
| ended, he starts writing about the food he had. It's inspiring
| me to pay more attention to the little things in life (like
| having interesting meals so I can write/talk about it
| later...).
| ETHisso2017 wrote:
| Not one mention of the tech sanctions placed on China, but so
| much focus on COVID controls. Easy to see where this author's
| bread is buttered
| eimrine wrote:
| Friends spoke about three types of shock. First, the raw novelty
| of extended physical confinement. Second, the wonder of feeling
| food insecure in this age and in this city. Third, a
| disenchantment with government pronouncements.
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