Three Charts Related to China

Read this post, and spend a good amount of time asking yourself some questions about the three charts. Here are my questions (note that I don’t have the answers):

  • Is China’s decoupling a good thing or a bad thing? For whom?
  • What time horizon should we use to think about the answer to the first question? Why?
  • To what extent is China’s reduction in exports as a percentage of GDP deliberate? Was it deliberate all along, or did they observe a trend, think through the consequences, and then make it a deliberate policy?
  • Is China’s decline the share of global GDP growth a good thing for the world? Why?
  • What about India, is it a good thing for India? If yes, along which dimensions? If no, along which dimensions?
  • Does China count the last chart in this blog post as a victory or a defeat, or is it “too soon to tell”? Whatever the answer, why so?
  • What are other data related stories from China that we have not been paying attention to?

I don’t have, as I said, the answers. And maybe I have missed asking some obvious questions. If you have material that will help me think through these issues, please do share.

One thought on “Three Charts Related to China

  1. IS CHINA’S DECOUPLING A GOOD THING OR A BAD THING? FOR WHOM?

    It depends on which side you are looking at because the answer has macroeconomic and geopolitical angles. For a moment, let’s look from a macroeconomic point of view.

    I think it is an overall good thing.
    -Chinas population is getting older, and wages are increasing. So it is against the principle of cost-efficiency. In this regard, manufacturing and assembly plants are shifting more towards the young country is a good sign. There is an issue with this shift. MNCs will not get subsidized infrastructure that helped them in china to scale production in less time and enjoy the fruits of the central planning authority. It will not be the same for a developing democratic country like India.
    – Decoupling from China is well aligned with the risk management principle of business operation as covid episode exposes the supply chain’s vulnerability when corporations put all eggs in one basket. Well, apple can be an excellent case to study how they are shifting their manufacturing bases to India while maintaining a balance between importing electronic components from china and designing and producing its chip. It is a new trend in all organizations producing complex products. Whose components are coming from different places.
    -According to economic, industrial development theory, Agglomeration tendencies helped firms diversify their business and optimism their business operation. It is the tip of the iceberg. What is unnoticed is labor supply, infrastructure, government policies, technologies, and pull factors of other regions. Detroit bankruptcy is a good case even recently, Maruti Suzuki planned to shut down Manesar plant in gurugram, and its effect on the backward link industry is quite devastating.

    OVERALL, decoupling from china is painful in the short term as no other destination in this world is well-positioned to provide service of chinas industrial hub but sustainable in the long term (even though it pushes the cost of operation)
    China is the best location for the industry to set up and start export, just like plug and play, that will not be the case in other destinations.
    Second, For foreign investors locating in one zone was helpful from the perspective of regulation to capital investment. In other developing countries, poor macroeconomic conditions will be a significant hurdle.

    Here I am attaching link for reference.

    1) https://www.mckinsey.com/business-functions/operations/our-insights/risk-resilience-and-rebalancing-in-global-value-chains?cid=soc-web

    2) https://twitter.com/SuB8u/status/1164376476675821568?s=20

    3) https://www.mckinsey.com/business-functions/operations/our-insights/overcoming-barriers-to-multitier-supplier-collaboration?cid=soc-web

    4) https://www.ft.com/content/8a7cdc0d-99aa-4ef6-ba9a-fd1a1180dc82

    5) https://gulzar05.blogspot.com/2020/06/the-resilience-and-efficiency-trade-off.html

    6) https://gulzar05.blogspot.com/2020/06/the-limits-of-pursuit-of-efficiency-at.html

    7) https://www.mckinsey.com/business-functions/sustainability/our-insights/could-climate-become-the-weak-link-in-your-supply-chain?cid=soc-web

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