Hi Gero
These posts perhaps belong in the But, but, but, China.... thread but here we go anyway.
Did a couple of posts there, removed for being ot iirc.
There is considerable ongoing pain in parts of the Private Sector (e.g. Property, Solar panel Production). The attached graphs of 2 of the most important market indices in China are sobering. (Bllomberg news headline: Chinese Stocks on Verge of Five-Year Low as Recovery Hopes Fade)
The 'party' warned people not to invest in property speculatively or as part of their retirement plans, so when the developers began taking huge upfront 'dividends' the banks were ordered to let the whole thing deflate. The purpose, as stated, was to make property affordable for the young again. There's serious overproduction in the solar panels sector and the market is no longer expanding hence there's an extreme level of competition and some are going to have to fail. Attached graphs?
The question is to what extent China is supporting State-owned Enterprises and the Local Governments who have lent them oodles of cash via the shadow banking system. And there is the question of the validiity of PRoC published GDP growth figures.
It's difficult, not to say a mistake to judge China using western economic parameters. They have no legacy manuacturers on the scale of the west, so every industry was a start up funded by the government owned banking system in buildings funded by local gov. banks on land leased from the local gov. Simultaneously educational institutions were built and staffed to help develop products and align skills with requirements. Mostly these start-ups began by producing an imported product template, copies i you will. If you've ever seen a production process being put together you'll know that the engineers never get it right. They make a plan then stick to it and make it work, ironing out the wrinkles once up and running, but learning as they go and almost invariably having thought out a better way for next time. So when a team of engineers show up in China to build a pilot plant to produce a rival product to their home plants they will already have better ideas and a very receptive team of Chinese engineers to learn from them and advance the process further. So in some sense apart from money spent abroad, recouped by sales of whatever the product was, all of the credit became income. The buildings and infrastructure still exist as does the acquired knowledge whether the enterprise succeeds or not, and repaying the debt merely becomes a dampener on inflation since it was all created by fiat and once repayed is no more or less valuable than the next tranche keystroked into existence. So is that subsidy or the action of China plc.. In some sense as long as the income from exports exceeds the cost of housing and feeding those involved in the whole process, and thus can feed and house more better then it's a very profitable way of getting subsistence farmers locked in to an industrial economy, and for most escaping that grind is a great step up.
Even without political shenanigans I've never believed in gdp as information, more as something measurable. For instance the loss of the towers on 9:11 and subsequent clean up was a huge boost to gdp, by extending that logic if someting similar happened every day would the US be far more prosperous??
I am glad you pointed out how population reduction may be dealt with through automation/robotics/AI. There are many countries where birth rates are lower than that required to maintain the population, with often immigration filling the gap.
What China's doing may work in China, and one of the important things it's doing is encouraging people to invest in local banks and enterprises, it's hard to discern whether any western state has a plan or is even thinking of thinking one up. In the UK for sure there are no assets set aside to meet national or local gov. pension obligations never mind care costs, and many pension funds have been ordered over time to take up some very dodgy securities as part of their reserves. IF some assets had been set aside then the whole burden may not fall on the home economy, which doesn't even look like it can keep the priviliged in the manner to which they've become accustomed for much longer.
If automation/robotics/AI fulfils the promises of its developers, many countries will only need immigration for a few very specialised roles. Over the next few years will immigration be facing Fortress USA, Fortress Europe, Fortress UK, Fortress Japan etc etc?
Immigration is just kicking the can down the road