Some thoughts on the Chinese economy
How to correctly understand China's economy? If you focus on real estate, the stock market and local debts, you will feel that the economy is terrible. If you focus on agriculture and industry, you will feel that China is capable of anything. The truth is that China's economy is composed of a variety of industries. Some of them are performing poorly, while others are performing well.
In the industrial sector, the current popular concept is "domestic substitution". In the past, equipment and materials that needed to be imported from Western countries at high prices are now being gradually replaced by locally produced products. The technological and trade sanctions imposed by the US government are accelerating this process.
Westerners often believe that China's economy relies on exports and price advantages brought by cheap labor. This view is inaccurate. China has realized that it cannot rely on exports to build itself into a developed country. China's economy emphasizes "internal circulation". For a country with a population of 1.4 billion, it is impossible to build its economy on external market dependency.
The real difficulties and challenges in China's economy lies in management. Chinese people are familiar with agriculture and industry. If you view China as a giant factory, there is no problem, China knows how to build a factory. But the real world is much more complex than a factory. Society is composed of many different commercial activities, and each commercial sector needs proper management if it wants to develop healthily. This takes time, because every business has its own logic, you need time to observe it, find a way to manage it, and implement it for a long time to make these management methods routine. These routines become part of the culture. All of this takes time, and China has not had much time to become rich from poverty, only 20 to 30 years.
Westerners often believe that all industries in China are strongly regulated by the government and that everyone is under surveillance. This is a very wrong impression. The truth is exactly the opposite. A large number of commercial activities lack management. Either there are no rules and regulations, or the rules and regulations have not been implemented.
Chinese football is an example. The Chinese professional league is full of bribery and unfair competition. In the past, people used to think that as long as you inject funds into the football industry and reduce regulation, relying on market forces can automatically lead Chinese football to the right development path. What happened next proved that this was just an illusion. It was not until recently that Chinese football began to study management methods such as "fiscal fair play" that require all clubs to control their debts.
If we view "becoming an advanced economy where various commercial activities operate well" as a goal, China's economy has only traveled 30% of the way. There is still a lot of work to be done. That also means that China's economy still has enormous potential. At this moment, China is in a state of "just beginning to understand what is really needed".